Is the rally in global miners too good to be true? – by Ansuya Harjani (CNBC Asia – August 14, 2013)

http://www.cnbc.com/

Even as global resource stocks have had a stellar run-up in the recent weeks, driven by signs of stabilization in China’s economy, cheap valuations and short covering, questions are building over the sustainability of this trend.

Shares of large-cap mining companies such as Australia-listed BHP Billiton and Rio Tinto and U.K.-listed Vedanta have rallied between 11 percent and 14 percent since mid-July.

“There has been a lot of trading money coming into the space by longer-term investors who have wanted to buy the mining space, but haven’t had the clarity because of China, falling commodity prices,” Chris Weston, senior investment strategist at IG Markets told CNBC. “But the easy money has been made. The question now is how much more upside do we think there’s going to be,” he said.

According to Weston, further gains are likely in the near term given improving sentiment around the global economy. But beyond that, he says the outlook for mining stocks remains unclear, pointing to the risk of a selloff in commodities once the U.S. Federal Reserve begins to taper monetary stimulus and potential oversupply in resources such as iron ore in 2014.

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EDITORIAL: Industrial policy gone wrong (South Africa Business Day Live Editorial – August 13, 2013)

http://www.bdlive.co.za/

REPORTS that Eskom stands to lose as much as R11.5bn in revenue as a result of its controversial preferential power agreement with BHP Billiton is a brutal lesson in the pitfalls of ill-conceived industrial policy. It will also hopefully provide a learning opportunity for Eskom as it completes the process of negotiating the present round of renewable energy agreements.

In its annual report last week, Eskom said it expected its liability as a result of an agreement signed in 1992 to provide cut-price electricity to BHP Billiton’s aluminium smelters, Mozal and Hillside, to more than double from the R5.9bn reported in last year’s financial statement. While the potential for revenue losses as a result of the agreement is regrettable, the biggest error in the agreement was failing to build in a stop-loss clause. The extent of the liability is calculated as the opportunity cost of supplying electricity to BHP Billiton on the present special pricing formula compared with the revenue that would be generated if it was to sell that power at regular industrial customer tariffs.

When the agreement was signed in 1992, it was hoped it would serve the dual purpose of utilising the power utility’s excess capacity and developing South Africa’s industrial capacity. However, during the first decade of democracy in particular, economic growth and Eskom’s failure to invest sufficiently in new capacity has meant that excess capacity has been eroded, to the point where there are now other industrial users willing to pay more than BHP Billiton — hence the potential for loss.

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Glencore cuts budget for $5.9 billion Philippine project – by Erik dela Cruz (Reuters U.S. – August 13, 2013)

http://www.reuters.com/

MANILA – (Reuters) – Glencore Xstrata (GLEN.L) will cut up to 920 jobs and slash spending at its $5.9 billion Tampakan copper-gold project in the Philippines, one of several future mines under review since the company was formed in a record-breaking takeover.

Tampakan, a challenging project in a restive region of the southern Philippines, has not been officially put up for sale.

But, like many of the big-ticket mining projects previously held by Xstrata, it is under review by its new owners and is one of four projects Glencore has said it could sell to appease Chinese regulators’ concerns over its dominance in copper – if it is unable to sell the Las Bambas mine in Peru.

Sagittarius Mines Inc, which is 62.5 percent-owned by Glencore, said on Tuesday it had revised its work plan as the project still faced “substantial development challenges” – including a ban on open-pit mining in South Cotabato province.

That means it is unlikely to hit an already revised 2019 target for first production. “No investment decision can be made until the current project challenges are resolved and necessary approvals obtained,” Sagittarius spokesman John Arnaldo said.

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COLUMN-Australia’s coal industry enters the final stage of grief – by Clyde Russell (Reuters India – August 14, 2013)

http://in.reuters.com/

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

Aug 14 (Reuters) – Australian coal miners have been in mourning over the rapid loss of profitability and expansion opportunities, but the industry is entering the final stage of the grieving process.

The five stages of grief, as described by Swiss-American psychiatrist Elisabeth Kubler-Ross on how people face events like terminal illness, are denial, anger, bargaining, depression and acceptance.

While not all of the attendees at the annual Coaltrans Australia conference this week have got past the depression stage, most were looking at how the industry deals with the reality of its myriad of issues.

These include an apparent structural shift to lower prices for the foreseeable future, rising public opposition to mining on the back of a well-funded and organised environmental lobby, lack of capital available for new projects, still high labour costs and an increasing burden of government red and green tape.

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Nunavik mine owes $72 million to creditors; Chinese owners turn project over to Toronto bank – by Jane George (Nunatsiaqonline.ca – August 14, 2013)

http://www.nunatsiaqonline.ca/

Canadian Royalties Ltd. owes $53.6 million to eight Nunavik companies

Canadian Royalties Ltd.‘s Nunavik Nickel mine, which was to be Nunavik’s second operating mine, spinning out minerals for hungry markets abroad, appears so far to have left a trail of debt throughout Nunavik.

The creditors owed a total of nearly $54 million by the Chinese-owned mine include Nunavut Eastern Arctic Shipping, Desgagnés Transarctik Inc., the fuel division of the Fédération des Coopératives du Nouveau-Québec, Laval Fortin Adams, Iglu Construction and Nuvumiut Developments (Ganotec-Nunavumiut and Kiewit-Nunavumiut), which all have links to Nunavik Inuit organizations or individuals.

The construction firm Laval Fortin Adams is owed about $14 million, the largest amount of any of the Nunavik-based companies left holding the bill for work on the mine and docking complex. L’Echo Abitibien says another $16.4 million is owed to Construction Promec de Rouyn-Noranda.

Now the Chinese owners of the mine have turned the cash-strapped Nunavik Nickel mine over to a private merchant bank in Toronto, which will see if there’s hope of salvaging the project, where workers are still stockpiling ore.

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Owner puts Nunavut’s Lupin Mine project back into limbo – by NUNATSIAQ NEWS (Nunatsiaqonline.ca – August 13, 2013)

http://www.nunatsiaqonline.ca/

Elgin Mining posts $14.1 million loss for first half of 2013

Beset by financial losses and falling gold prices, the owner of Nunavut’s Lupin gold mine, Elgin Mining Inc., has put the property back into mothballs indefinitely, the company said Aug. 12 in a news release. “The Lupin camp was shut down in late April and will remain closed indefinitely,” Elgin Mining said.

The company said the Lupin camp and its infrastructure are in “excellent condition,” but that it will stay closed until the price of gold and other market conditions improve. To keep the site maintained, Elgin will spend less than $250,000 between now and the end of the year.

In 2011, when gold was trading at above $1,500 an ounce on global markets, Elgin Mining bought the property from MMG Resources Inc., the current developer of a set of lead-zinc projects in the western Kitikmeot.

At the time, Elgin planned to bring the mine, which had pumped out 3.5 million ounces of gold between 1982 and 2003, back into production.

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Four Canadians charged in massive $140M international penny stock fraud scheme – by Adrian Humphreys (National Post – August 14, 2013)

The National Post is Canada’s second largest national paper.

Former Toronto resident Sandy Winick figured he was on to a good thing with his scam raking in millions of dollars from investors, U.S. authorities allege, telling a colleague his scheme was better than another: “That deal is obviously a pump-and-dump. We know enough to be subtle.”

His business partner, Kolt Curry, another Canadian, allegedly boasted: “The money is good, it’s easy. It’s easy money. Definitely easy money, and it’s good money.” And for awhile, they were right.

On Tuesday, however, they were two of four Canadians indicted in the United States, alongside five Americans, charged with running the largest international penny stock and advance fee frauds in history.

Mr. Winick, 55, was named as the mastermind behind the two related schemes that U.S. prosecutors allege bilked victims in 35 countries out of more than $140-million.

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Losing Faith in Gold From Ghana to Vancouver Proves Rout – by Peter Robison & Ekow Dontoh (Bloomberg News – August 13, 2013)


http://www.bloomberg.com/

Akwesi Boahene’s gold dreams ended better than those of some people in Dunkwa-on-Offin, Ghana, whose riverbeds yield flecks of the precious metal to pickaxes. He still had his life.

Boahene, a satellite-television installer, and a partner pooled $10,000 two years ago to rent land and start a mining operation in a muddy West African town then booming with prospectors lured by what was gold’s longest bull market in at least nine decades.

In May, as prices sagged, his venture became another victim in a year of lost faith in the metal. Boahene shut down the no-longer-profitable business and told his 15 workers to stay home. When a former employee phoned one morning in June about returning to work, Boahene, 33, had no good news.

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Canada, Mexico not energy rivals, ambassador says – by Shawn McCarthy (Globe and Mail – August 14, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

OTTAWA — Shrugging off the notion of an industrial rivalry, Mexican Ambassador Francisco Suarez says Canadian companies will enjoy enormous opportunities as his country seeks to rejuvenate its energy sector with sweeping, though politically challenging, liberalization.

In an interview Tuesday, Mr. Suarez said he expects Canada’s highly developed energy sector to figure as a key partner in Mexico’s multibillion-dollar effort to modernize not only its oil extraction sector but the pipeline and refining businesses as well as natural gas and electricity industries.

“This is the mother of all reforms,” he said at his office a block from Parliament Hill. “I think this opens great possibilities for Canada not as competitors but as complementary economies. I think this offers enormous opportunities for the relationship between Canada and Mexico.”

Mexican President Enrique Pena Nieto on Monday introduced a long-promised reform package which includes constitutional amendments to allow foreign companies to invest in energy production, although it stops short of allowing non-Mexicans to own or control oil and gas reserves.

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Eastern Europe seeks shale gas ‘revolution’ – by Daina Lawrence (Globe and Mail – August 14, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Eastern Europe could become the next hotbed of shale gas exploration as oil and gas moguls, such as Chevron Corp., chase opportunities in countries that want to establish their energy independence from Russia and rebuild their economies.

The U.S. Energy Information Administration (EIA) estimates the combined gas reserves in Romania, Bulgaria and Hungary could equal more than 535-billion cubic metres of gas. This would be enough to restock Romania’s consumption for almost 40 years, according to the agency, as Romania’s average annual consumption totals about 14-billion cubic metres.

Despite these motivations, the use of the controversial shale gas extraction method – known as hydraulic fracturing or fracking – has already caused serious domestic opposition in Eastern Europe.

While countries such as France and the Netherlands continue to ban the practice, Romania lifted a moratorium on fracking earlier this year. Protests ensued. However, the country is moving ahead in its pursuit of energy independence and has since granted exploration permits to U.S.-based Chevron to explore the country’s Black Sea region.

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Where Are All the Women in Mining? – by Tara Wiseman (Hujffington Post – August 13, 2013)

 

http://www.huffingtonpost.ca/

The other day, I was watching my friend’s one-year-old daughter as she crawled through the grass. She ripped up dandelions in her chubby fingers, and buried her hands into the warm dirt in the garden. Then, before anyone could stop her, she shoved two fistfuls of mud into her mouth. We all laughed uncontrollably.

Then my friend said, “I hope she never outgrows this.”

My friend wasn’t talking about her daughter’s love for eating dirt. Rather, she was talking about her daughter’s love of the outdoors, her sense of adventure, her desire to get dirty. Then she explained that she wants her daughter to grow up tinkering with machines, collecting rocks, and building things. Essentially, doing things that tend to be associated with boys, not girls.

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The hole in Canadian history – by Dieter K. Buse (Toronto Star – August 11, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Northeastern Ontario has just two National Historic interpretative centres.

Congratulations to Parks Canada for having obtained another World Heritage Site designation. Canada’s 17th such site acknowledges the importance of Red Bay, the 17th century Basque whaling station in Labrador. Perhaps the publicity will inspire more people to experience such sites and to learn more about our diverse heritage. The sites recognize special geographic, geological, biological but especially cultural and historic places. Hence in Canada they include Gros Morne, the Klondike, the Rocky Mountain parks and the core of Quebec City.

However, this achievement needs to be seen in a larger context, and some bones picked with Parks Canada. If one looks at the location of Canada’s sites — easily done on the Parks Canada website map — one finds that many are located in remote and isolated areas. Perhaps that merely reflects the nature of our vast, lightly settled country.

Yet, it does pose the question why no significant place has been identified between the Rideau Canal system near Ottawa and Dinosaur Park in Saskatchewan? Do not some important, special landscapes, such as those made iconic by the Group of Seven, exist between those points? Have no important historical events occurred in such a large area?

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