Zimbabwe to Seize Mines While Compensating Banks – by Franz Wild (Bloomberg News – August 6, 2013)

http://www.bloomberg.com/

President Robert Mugabe’s government plans to seize control of foreign-owned mines without paying for them as part of a program to accumulate $7 billion of assets following his July 31 election victory, a minister said.

The government will compensate bank owners as it takes control of their companies, Saviour Kasukuwere, the minister in charge of the program to compel foreign companies to cede 51 percent of their assets to black investors or the government, said in an interview in Harare, the capital, today. His comments echo a suggestion made by Mugabe earlier this year.

“When it comes to natural resources, Zimbabwe will not pay for her resources,” Kasukuwere said. “If they don’t want to follow the law that’s their problem.” Non-compliant mine owners risk losing their licenses, he said.

Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP), Barclays Plc (BARC) and Standard Chartered Plc (STAN) are among companies that operate in the country. Other industries may have to yield smaller stakes to black owners, Kasukuwere said. Metals and minerals, including platinum and gold, accounted for 71 percent, or $719.9 million, in exports in the first four months of this year, the state-controlled Herald newspaper said, citing the finance ministry.

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Despite gloom, prices for commodities China consumes are up – by Clyde Russell (Reuters India – August 6, 2013)

http://in.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own

LAUNCESTON, Australia, Aug 6 (Reuters) – It’s not hard to find bearish commentary on the outlook for China’s commodity demand, but every so often a little bit of information contrarian to the prevailing market views comes along.

Such a snippet is the latest China Commodity Index compiled by ANZ Banking Group, which shows the weighted average price for a basket of commodities imported by China rose to a three-month high last week.

The index gained 0.6 percent in the week ended Aug. 2, with only industrial metals detracting from the increase. It’s 0.4 percent higher than three months ago, but 2.7 percent below the level a year earlier.

Although it doesn’t have a long history, the ANZ index is useful as it tracks 22 major commodities and is weighted to reflect China’s consumption. The idea that prices of commodities most commonly used in the world’s largest consumer are at a three-month high appears at odds with other recent evidence that economic growth is stalling.

The rise in the official Purchasing Managers’ Index to 50.3 in July from 50.1 in June has been about the only significant recent Chinese economic data that has surprised on the upside.

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The Price Of Gold Is Dropping Like A Brick – by Mark Williams (WBUR Boston NPR – August 6, 2013)

http://www.wbur.org/

Watch out for that shiny pendulum because it’s swinging back fast. Investors are chasing stocks and real estate and fleeing gold. The two former asset classes have experienced solid returns since 2012 while gold has suffered double-digit declines.

Large cracks in the “go-long-gold” strategy are evident. Economic weaknesses in Europe remain but no financial Armageddon has emerged. Keynesian economics remain the drug of choice, Japan being the latest user, yet inflation is non-existent. The strength of the dollar and the increased willingness of the Fed to taper quantitative easing undermine higher gold prices. Investor support is crumbling and gold bugs, those believing it is a stable investment, should be nervous.

Since the historic highs of 2011, gold has dropped by over 30 percent. In 2013 alone, investors have begun to give back several years of gains. Recent paper losses for hedge funder John Paulson have topped $1 billion. In just the last six months, gold has dropped by 22 percent, the worst fall since modern trading commenced in early 1970s. Gold is locked in a bear strangle and prices have plenty of room to fall still further.

It has taken over a decade but the bubble has finally been pricked. The pin that popped this most recent asset swelling is not complicated.

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Mining a challenging career for Vale manager – Women in Mining: Samantha Espley – by Lindsay Kelly (Northern Ontario Business – August 2013)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

At her first summer mining job, while an engineering student at the University of Toronto, Samantha Espley was one of four women—of 10 students—hired on at Falconbridge’s Keno Gold Mine in Val d’Or, Que. It wasn’t until later that it dawned on her how unique it was to work with that many other women.

“I didn’t really think much of it at the time until after I realized how few women there really were to choose from,” said Sudbury-based Espley, who was the only woman in her engineering class. “So it was quite a neat experience.”

After graduating, Stan Bharti, who would later bestow Laurentian University’s engineering school with a $10-million endowment, interviewed Espley for her position at Falconbridge, where she remained for a few years before hiring on at Inco (now Vale). Since then, she’s worked in research, been a general foreman underground, acted as superintendent of business systems, and served as manager of nickel services for mining operations. She’s currently the general manager for mines and technical services.

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Mining engineer an “oddity” in Canada – Women in Mining: Imola Götz – by Liz Cowan (Northern Ontario Business – August 2013)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

Imola Götz’s choice to study mining engineering wasn’t an unusual one while growing up in Romania. “There were many mines around my home town and I knew the possibilities and thought this was a very interesting career,” said the chief engineer at Goldcorp’s Porcupine Gold Mines in Timmins.

It was not unusual to find women working in the industry, with many filling technical positions. However, when she immigrated to Canada more than two decades ago, she was surprised there were not as many women working in the industry or pursuing engineering.

“When I got to Canada I was an oddity and I often got asked why I chose mining,” said Götz. She has been with Goldcorp for nearly 10 years and previously spent about 15 years in Manitouwadge. Her husband, Laszlo Götz, also works for Porcupine Gold Mines as its environmental manager. The couple decided to leave Romania early in their careers since the communist regime was “getting more and more intolerable.”

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NEWS RELEASE: OMA member profile: Brigus Gold — expanding quantity and quality of reserves

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

While the price of gold has slid recently, this doesn’t mean that precious metals explorers and developers have been operating in a holding pattern waiting for a price rebound. Companies have been making adjustments, striving to control costs, advancing projects and building reserves. They know vagaries of gold price movements can be volatile both in going up and tumbling down.

The second quarter of 2013 saw a 13% decrease in average gold prices to US$1,414 per ounce. This marks the largest quarterly decline in gold prices since 1980. During that period, Brigus Gold stayed on course for its exploration program, announcing increases in the quantity and quality of its ore reserves, and production targets.

The company recently updated the resource estimated of its Grey Fox discovery, which was first identified in December 2011. It announced a 31% increase in open pit indicated grade and a 14% improvement in its underground indicated grade. This increase in ounces of gold in the ground enhances the prospects of future production.

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Potash news a wake-up call for government: NDP – by Scott Larson (Saskatoon StarPhoenix – August 1, 2013)

http://www.thestarphoenix.com/index.html

The jolt experienced in the potash industry should be a wake-up call for the provincial government, NDP Opposition Leader Cam Broten says.

“A wake-up call that shows that we need long-term savings, that we need investments in infrastructure while we can, and a wakeup call to this government that we need to diversify the economy,” Broten said.

Shares in potash companies like Saskatoon-based PotashCorp, Mosaic and Agrium have plunged over the last couple of days after Russia’s potash giant OAO Uralkali said it would exit the export marketing group Belarusian Potash Co. and increase output to full capacity.

Experts say potash prices could fall by 25 per cent, which would impact the royalties the province takes in from the industry. “(That) has the potential to be significant, if you look at the contributions it makes to the provincial coffers as well as the thousands of jobs, the homes that are purchased and the spinoff industries,” Broten said.

“What we’ve seen with this government is an approach to have all of the eggs in one basket.

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Saskatchewan potash can be billed as the Porsche of fertilizers – by Les Mapcherson (Saskatoon StarPhoenix – August 3, 2013)

http://www.thestarphoenix.com/index.html

There was a time not so long ago when the Russians threatened us with nuclear annihilation. That they now are only threatening our potash revenues is a big improvement. This, we can handle.

Stuck with piles of surplus potash, the Russians have withdrawn from an international producers’ cartel that helped stabilize prices. They now will unload their potash for a lower price, compelling producers elsewhere to do likewise.

In Saskatchewan, it’s a swift kick right in the potash revenues. The precipitous drop in share prices for Saskatchewan potash producers could foretell the future for provincial royalties.

Potash Corp. of Saskatchewan shares fell overnight by 25 per cent, Mosaic shares, likewise. If provincial potash revenues are similarly reduced, we’ll have to turn in our New Saskatchewanembroidered silk underwear and go back to the old, cotton flour bags with the corners cut off for our legs to go through. Good thing we saved them.

Don’t panic, counsels Premier Brad Wall. Of course, urging us not to panic is the premier’s job. When the time does come for panic, Wall still will be saying don’t panic.

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Falling profits for Vale – by Reuters and Star Staff (August 6, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Battered by falling iron ore and nickel prices, Vale on Wednesday is expected to report a 30% drop in second-quarter profit to $1.85 billion US from a year earlier, analysts are predicting. If so, it would be Vale’s eighth consecutive quarterly profit fall, according to the average preliminary estimates of seven analysts surveyed by Reuters.

Most of the decline is due to a 12% drop in average iron ore prices and a 38% decline in nickel prices, more than offset-t ing increases in volumes shipped by the world’s No. 1 iron ore miner and No. 2 nickel producer.

Its shares have been the worst performer among the world’s big five mining companies, down 27% this year, despite a rally from nearly four-year lows in July. Of the big five, Rio Tinto, Brazil’s Vale, Glencore Xstrata and Anglo American are expected to report sharp drops in profit.

They have been slammed by weaker copper, iron ore and coal prices as they struggle to sell off assets. Anglo — the first of the diversified majors to publish results — said last week underlying operating profit fell in the six months to $3.3 billion, ahead of a consensus estimate of $3.12 billion.

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Miners won’t get a leg-up from state – by Malavika Santhebennur (Mining Australia – August 5, 2013)

http://www.miningaustralia.com.au/home

Gold and nickel miners will not get a lifeline from West Australian premier Colin Barnett, who said he will not be handing out royalty assistance to those affected by falling commodity prices.

Barnett argued modifying royalties due to price variation was not a good idea, saying the cyclical nature of the mining industry is a well known fact. “I know this is a tough time and some of the high-cost producers struggle. [But] at the end of the day the state government owns the minerals and companies pay the equivalent of 10 per cent of the value of the mineral. I think that’s a pretty good price.”

Miners, small and large, have had to cut the fat from their companies as commodity prices fall. They have been curtailing capital expenditure, cutting jobs and slashing operational costs.

BHP recently slashed 100 jobs across its six Nickel West operations in WA in May. The company said many operational roles will feel the brunt. The company also flagged in July it will move service contracts in-house in the Pilbara as it looks to cut contractors to cut costs.

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Queen’s Park: First Nations have iron grip on Ontario’s economy – by Ian Harvey (Law Times News – August 5, 2013)

http://www.lawtimesnews.com/index.php

Ian Harvey has been a journalist for 35 years writing about a diverse range of issues including legal and political affairs. His e-mail address is ianharvey@rogers.com

Ontario’s economic future is in the hands of First Nations who effectively control all resource development. Moving forward, there will be no oil flowing in a pipeline nor will there be any copper, gold, nickel, uranium or chromite pulled from the earth unless a First Nation has approved and is getting its cut.

It’s the result of years of neglect coming to fruition, says Bill Gallagher, a Waterloo, Ont.-area lawyer whose book, Resource Rulers: Fortune and Folly on Canada’s Road to Resources, is turning heads.

“Natives have amassed an unprecedented legal winning streak in the last decade, 185 wins almost in a row, across the resources sector,” says Gallagher, who spent 30 years negotiating deals in the resource sector, including at Voisey’s Bay, N.L., where he sees parallels with Ontario’s Ring of Fire mines. “Ontario is behind in dealing with this.”

The province is also the target of a $100-million lawsuit brought by Solid Gold Resources Corp. this year. The northern gold-mining explorer staked a claim in 2007, but before exploratory drilling, it was advised by the province, following direction in Haida Nation v. British Columbia (Minister of Forests), to consult with the local Wahgoshig First Nation.

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Speaker’s Corner: Piercing of corporate veil in Hudbay case may send Canadian companies elsewhere – by Megan Lem (Law Times News – August 5, 2013)

http://www.lawtimesnews.com/index.php

Compañía Guatemalteca de Níquel (Guatemala Nickel) owns and operates the Fenix nickel mine in Guatemala. Between 2007 and 2009, there were some unfortunate security incidents at the mine when protesters clashed with police and private security details working for a security contractor that had been retained by Guatemala Nickel. These clashes allegedly led to the death of one man, the serious injury to another man, and the rape of several women.

The alleged victims of this violence in Guatemala, rather than suing Guatemala Nickel domestically in that country, brought three separate actions in Canada against Hudbay Minerals Inc., the parent company of Guatemala Nickel, for an aggregate of approximately $67 million in damages. Hudbay, in response, brought a motion in Ontario’s Superior Court to dismiss the Guatemalan claims, asserting that the proper place for a trial, if any, was in Guatemala, and that the proper party that should be responsible for whatever happened in Guatemala, if any, was Guatemala Nickel.

On July 22, Superior Court Justice Carole Brown denied Hudbay’s motion to dismiss the case in Canada, allowing the Guatemalans to continue their lawsuit against Hudbay in Canada. This precedent-setting decision is, according to Murray Klippenstein, counsel for the plaintiffs, “the first time that a Canadian court has ruled that a claim can be made against a Canadian parent corporation for negligently failing to prevent human rights abuses at its foreign mining project.”

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Indonesia’s consumer and natural resources boom falters – by Ben Bland (Financial Post – August 2, 2013)

http://www.ft.com/home/us

Jakarta – Mitra Adiperkasa, the retail group that operates Burger King, Zara and a host of other international food and fashion brands in Indonesia, has ridden the wave of middle-class consumption that transformed Southeast Asia’s biggest economy into one of the world’s hottest emerging markets.

But the group is scaling back its expansion plans and capital expenditure next year, for the first time since 2009, as Indonesian companies contend with problems including rising inflation and slowing Chinese growth.

“The main challenge for us is rising costs,” says Fetty Kwartati, head of investor relations at Mitra Adiperkasa, with salary and rental expenses increasing more quickly than sales. The company plans to open 60,000-70,000 square metres of new space next year, down from 90,000 square metres this year. Rising consumer spending has been one of the two pillars of Indonesia’s exuberant growth in recent years, alongside burgeoning natural resource exports.

But the latter has been badly affected by the slowdown in China, a major buyer of Indonesia’s coal, palm oil and rubber.

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A Shuffle of Aluminum, but to Banks, Pure Gold – by David Kocieniewski (New York Times – July 20, 2013)

http://www.nytimes.com/

MOUNT CLEMENS, Mich. — Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars.

The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers’ aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.

This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country.

Tyler Clay, a forklift driver who worked at the Goldman warehouses until early this year, called the process “a merry-go-round of metal.”

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