October 2, 2013 – Republic of Mining

The Myth of Indonesia’s Resource Nationalism – by John Kurtz and James Van Zorge (Wall Street Journal – October 1, 2013)

October 2, 2013

http://online.wsj.com/home-page

Jakarta’s new mining and oil regulations are really about rent-seeking and corruption.

Mr. Kurtz is head of Asia-Pacific for A.T. Kearney, where Mr. Van Zorge is a senior fellow.

Jakarta – Lately, the Indonesian government has unleashed an array of policies that are keeping mining and oil executives awake at night across this vast and geologically rich archipelago. The unpopular new regulations, aimed at reforming the mining and oil industries, are promoted in the name of “national interest.” Yet left uncorrected, they will inevitably lead to a dramatic decline of output in Indonesia’s extractive industries, damaging foreign investment and economic growth.

Particularly hard-hit will be some of Indonesia’s less-developed regions such as Kalimantan and Papua, where oil and mining play major economic roles. “Equating the government to the Emperor Nero and the local mining industry to ancient Rome,” said Bill Sullivan, leading legal consultant for the mining industry in Indonesia, “It is as if Nero is choosing to complacently fiddle while Rome burns.”

Why exactly this fiddling persists—especially since large investors have already cut back from planned capital outlays—is open to debate.

NEWS RELEASE: Ensuring a balanced and informed debate on conflict minerals: Global Witness’s response to Tim Worstall’s 23rd September piece on Forbes.com

October 2, 2013

http://www.globalwitness.org/

30th September 2013

Last week, Forbes.com published a piece by Tim Worstall in which he argued against the introduction of legally binding measures in the EU to tackle conflict minerals. The piece, titled ‘Global Witness’ Latest Silly Suggestion on Conflict Minerals’ argued for a voluntary industry-led scheme and suggested that the cost to business of implementing legally binding measures will be too onerous. Sadly, Forbes.com didn’t want to publish a separate article to present a different opinion to this one-sided piece. As such, we are publishing our full response below.

We need an informed debate to break the links between natural resources and conflict, not unhelpful rhetoric.

Right now, some of the world’s most brutal conflicts and human rights abuses are being funded by internationally-traded minerals and gems that enter the European market. Armed groups and violent security forces profit from the control of mines and trading routes in places like eastern Democratic Republic of Congo (DRC), Colombia, Burma, Zimbabwe and Central African Republic (CAR). Companies that list on our global markets buy these resources, often without regard for whether they are funding harm.

Mexico’s mining tax causes concern – by Trish Saywell (Northern Miner September 30, 2013)

October 2, 2013

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

A proposed 7.5% mining tax on companies in Mexico and as much as 8% on those extracting precious metals is creating uncertainty in the industry about investing in a country that until now has been thought of as one of the world’s most attractive mining jurisdictions.

The mining tax — which some are describing as a royalty, and has yet to be passed into law — would be on earnings before interest, taxes, depreciation and amortization, and is part of President Enrique Pena Nieto’s goal to reform the tax base in the country.

The original proposal in April had been a royalty of 5%, and many executives complain that every time the subject of a royalty is raised, the figure bandied about keeps getting higher.

“They’ve been talking about this for two years and they’ve had something like three different rates,” says John Gravelle, head of the mining group at PricewaterhouseCoopers in a telephone interview from Brazil. “Every time they make an announcement it’s a different rate, and every time it’s higher.”

What China’s massive urbanization drive means for Canada’s economy – by John Shmuel (National Post – October 2, 2013)

October 2, 2013

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

China’s premier, Li Keqiang, announced earlier this year upon taking office that he
wants to modernize China’s economy. Part of that will involve facilitating the movement
of 400 million rural Chinese to the country’s cities over the next decade. A lot of
expectation is pinned on this mass urbanization. (John Shmuel – National Post)

There’s an ambitious plan underway in China , one that will represent one of the largest migrations of humans in history. China’s premier, Li Keqiang, announced earlier this year upon taking office that he wants to modernize China’s economy. Part of that will involve facilitating the movement of 400 million rural Chinese to the country’s cities over the next decade.

A lot of expectation is pinned on this mass urbanization. Officials in the country hope it will transform China’s economy, the world’s second largest, into one that resembles those of the developed world, instead of the credit-focused, export-driven economy that China is today.

It’s also a transformation that, if successful, will hugely benefit Canada’s economy and companies.

China’s Xi to give first speech by foreign leader to Indonesia parliament – by Kanupriya Kapoor and Yayat Supriatna (Reuters India – October 2, 2013)

October 2, 2013

http://in.reuters.com/

JAKARTA – Oct 2 (Reuters) – Chinese President Xi Jinping will on Thursday become the first foreign leader to address Indonesia’s parliament, signalling a push by the Asian economic powerhouses to expand relations that were for decades frozen in hostility.

Xi arrived in Jakarta on a state visit on Wednesday, his first official visit to Southeast Asia’s biggest economy and the world’s third most populous country. He will oversee the signing of a range of contracts, several of them focused on tapping the huge Indonesian resource sector to help feed the voracious Chinese economy.

A day before his arrival, China agreed a currency swap deal for the equivalent of $15 billion, to help Indonesia if its ailing currency comes under any more attacks. It has fallen more than 16 percent this year.

The urge to improve ties is in sharp contrast with the mid-1960s when Indonesia broke off relations with China, accusing it of backing an abortive coup it blamed on Indonesia’s communist party, then the third largest in the world.

So bitter was the split, that until 1990 when the two resumed diplomatic ties, Indonesia effectively banned anything from China, and its nationals from going to China.

Royal Nickel has high hopes for Dumont mine – by Robert Gibbens (Montreal Gazette – October 1, 2013)

October 2, 2013

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

MONTREAL — Resource companies keep an eagle eye on the economic cycle and Royal Nickel Corp. believes its $1.2 billion U.S. Dumont nickel mine in northwestern Quebec will start up in 2016 as metal prices swing higher.

Base metals, including nickel — the key ingredient in stainless steel — mirror the economic cycle, with their price charts giving early warning of bad news to come.

This year they’ve been in the dumps, with nickel among the most volatile. Analysts blame overcapacity stemming from slower Chinese growth, the European debt crisis and North America’s tepid recovery from the 2008-09 recession.

But Royal, led by a team of former Inco (now owned by Brazil’s Vale SA) executives, has begun negotiating partnerships, offtake agreements and debt and equity financing for its Dumont open-pit nickel mine and mill near Amos, in the Abitibi region. It could rival Vale’s big Voisey’s Bay (60,000 tonnes a year) mine in Labrador when it hits full stride in 2020.

“We’ve been planning this for more than three years and we see a low-cost operation providing more than 500 permanent jobs, a mine life of at least 33 years and able to survive any future global economic cycles,” Tyler Mitchelson, Royal’s CEO, said in an interview.

NEWS RELEASE: Middle Eastern and South African business alliance set to become World’s largest Ferrochrome Exporter

October 2, 2013

2nd October, 2013 – Dubai, UAE: A strategic alliance between high-profile Middle Eastern and South African business leaders is set to challenge global monopolies in the supply of beneficiated ferrochrome after the conclusion of a multi-million dollar investment transaction this month.

Yemeni businessman, Mr Shaher Abdulhak has acquired a 10% stake in South Africa-based Ferrochrome Furnaces (FCF) only a week after the first acquisition of the 50% stake in FCF by the Dubai-based entrepreneur Mr Alibek Issaev.

The joint venture with the new stakeholders from the Middle East will increase the production capacity to 420,000 tons per annum in the next 24 months and make FCF one of the largest producers of low and medium carbon ferrochrome alloys in the world.

“The introduction of these two new international players places FCF in the forefront of the competition with other overseas producers for the supply of low-cost ferrochrome. The stronger our shareholding base, the more determined we become in future to be one of the world leaders in low and medium carbon ferrochrome exports”, said FCF chairman, Mr Abbas Moti.

Wabauskang First Nation granted Supreme Court appeal over mining projects – by Alan S. Hale (Kenora Daily MIner and News – October 1, 2013)

October 2, 2013

http://www.kenoradailyminerandnews.com/

Another Treaty 3 First Nation will have its day at the Supreme Court to argue its case against allowing the province making decisions regarding resource extraction in the First Nations traditional territory. The high court has granted an appeal to Wabauskang First Nation, which has been fighting mining projects inside its territory since it took Rubicon Minerals to court in December 2012.

“We fully expect to be successful at the Supreme Court, and we expect that we will be successful in our lawsuit against Rubicon as well,” said Wabauskang’s chief, Leslie Cameron.

“We’ve always said that Ontario had no jurisdiction to approve Rubicon’s closure plan.”

Lawyers for Wabauskang are planning to make arguments very similar to those of Asubpeeschoseewagong (Grassy Narrows) First Nation in its Supreme Court challenge against the province’s ability to issue forestry licenses in the First Nation’s territory. Wabauskang’s case is deeply intertwined with Grassy Narrows’, often using the other First Nation’s 15-year legal battle against logging in the Whiskey Jack forest as precedent for its own arguments.

Vedanta Still Stuck In a Hole – by Abheek Bhattacharya (Wall Street Journal – October 1, 2013)

October 2, 2013

http://online.wsj.com/home-page

India’s Red Tape Is Tying Up Businesses

Vedanta Resources VED.LN -0.65% wants to play in the big leagues. The London-listed Indian miner made news recently when it hired Rio Tinto’s former chief executive Tom Albanese as an adviser. And for years, the company has been trying to emulate a key strategy of another mining heavyweight, BHP Billiton BLT.LN -0.82% .

After a series of acquisitions, including that of Cairn India 532792.BY -0.49% in 2011, Vedanta is a complex conglomerate with three listed subsidiaries spanning both traditional mining and oil and gas. That combination is very unusual, though BHP is a notable example. Though it provides diversification, there are no real synergies between the mining and oil businesses. What’s more, it doesn’t help with a key risk for Vedanta: its lack of geographic diversity.

Two-thirds of the company’s revenue comes from India. Vedanta says its home market offers long-term potential. But right now India’s red tape is tying up its businesses.

For example, Indian authorities banned all iron-ore mining in two key states in 2011 and 2012 in response to allegations of illegal activity, including at a Vedanta unit.

MiningWatch Canada News Release: Quebec’s Proposed Mining Act Must Catch Up to National and International Standards for Aboriginal Consultation, Accommodation, and Consent

October 2, 2013

http://www.miningwatch.ca/

FOR IMMEDIATE RELEASE

October 1, 2013. Today, First Nations from across Quebec are staking out positions on the Parti Quebecois’ proposed reforms to the Quebec Mining Act. Bill 43 is the third attempt to revise the act in recent years. Like its predecessors, Bill 43 includes important improvements for environmental management and municipal authority, but lacks any serious attempt to reconcile the rights given to mineral claim holders with the constitutional rights of Aboriginal peoples. First Nation leaders are in Quebec City making submissions to the legislative committee tasked with finalizing the bill before it goes back to the National Assembly. They are arguing for substantive changes to the status quo.

“Quebec’s current Mining Act is an anachronism that is out of step with modern values and doesn’t meet standards for the protection of Aboriginal rights and title,” says MiningWatch Canada spokesperson Ramsey Hart.

The standards Quebec needs to meet include a growing body of Canadian case law, including the recent Ross River Dena decision of the Yukon Court of Appeal as well as international standards such as the United Nations Declaration on the Rights of Indigenous Peoples. The standard is very clearly for early and meaningful consultation and accommodation in order to obtain the consent of Aboriginal peoples. This consent should be acquired before a third party can establish an interest on the traditional territory and again before activities on the ground begin.

Foreign investment in the oil sands have dropped off a cliff since Nexen takeover – by John Ivison (National Post – October 2, 2013)

October 2, 2013

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

While at a reception in Beijing earlier this year, I talked to a director of the China Investment Corporation, the world’s fourth biggest sovereign wealth fund.

He told me that if the Canadian government had not approved the takeover of Nexen by the Beijing-based state-owned oil company, CNOOC, Chinese investment in Canada would have dried up overnight.

“We don’t want to be where we’re not wanted,” he said. So much for investment flowing where it gets the best return.

The Conservatives did approve the takeover but also introduced new rules that stipulated that any investment in Canada by a state controlled enterprise greater than $344-million in asset value would trigger a review.

The result: Investment in Canada by Chinese state-owned enterprises — which totaled $33-billion between 2005 and 2012 — has fallen off a cliff. The new rules state control of an oil sands business by a state-owned enterprise will only be deemed to be of net benefit to Canada in “exceptional” circumstances.

The boreal flying pigs agreement – by Peter Foster (National Post – October 2, 2013)

October 2, 2013

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

Those responsible for negotiating and extending the 2010 Canadian Boreal Forest Agreement (CBFA) are on a charm offensive, claiming that the agreement has been a great success, and should be a template for similar agreements in industries such as oil and gas.

No word if they are also pushing a Canadian Flying Pig Agreement (CFPA).

Under the CBFA, members of the Forest Products Association of Canada, FPAC, were forced into bed with a group of radical anti-development environmental NGOs — including the Suzuki Foundation, Greenpeace and ForestEthics — to negotiate development of one of the largest forests in the world.

Avrim Lazar, the former bureaucrat who headed the association when the deal was signed, is doing the media rounds explaining how boffo the CBFA has been. Also on the promotion circuit are Bruce “Slow Death by Rubber Duck” Lourie, a renowned chemophobe and environmental alarmist, and Aran O’Carroll, the CBFA’s interim executive director. Mr. Lourie, as president of the Ivey Foundation, helped “broker” the CBFA, along with the giant U.S.-based Pew Charitable Trusts, the ironic legacy of the Pew family that pioneered commercial development of Canada’s oil sands.

Potash in our province – by Lori Wiens (Regina Leader-Post – September 28, 2013)

October 2, 2013

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

Potash mines 14 billion $investment in Saskatchewan

Potash has brought billions of dollars of investment to the province and is a fundamental part of the Saskatchewan economy, according to the minister responsible for energy and resources, Tourism Saskatchewan, and trade. “The current expansions at the existing potash mines have created almost $14 billion of investment in our province,” said Tim McMillan, whose portfolio falls under the ministry of the economy. “Many of those are completed, some are underway and some are still in the planning stages.”

He said the provincial government is also excited to see new mines being built for the first time in four decades. “For a lot of years, the policy choices were not conducive to development,” explained McMillan. “In fact, the CEO of K + S Potash has said they were upset for years about the way they were treated in Saskatchewan, but today they recognize our province is the best place in the world to do business. They are now investing $4 billion to develop the first new mine in Saskatchewan since the early 1970s.”

The intense focus on potash has been a welcome development for Saskatchewan, according to McMillan. “Ten years ago, potash was a sleepy commodity,” he said. “Now it is in the news on a regular basis.”

He attributes global interest to the demand for food as the world’s population continues to rise. “Countries like China and India, which have ever-increasing standards of living, want access to higher quality food,” he said.

Digging in: Saskatchewan poised to remain world leader in potash – by Ryan Hall (Regina Leader-Post – September 28, 2013)

October 2, 2013

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

For decades, potash has been a linchpin of the Saskatchewan economy. From the earliest mining efforts in the 1950s and ’60s, up to the high volume trading that takes place today, a significant part of the history of mining in Saskatchewan is tied to potash production. Among the many groups working to make sure potash continues to be a part of the province’s future is the Saskatchewan Mining Association (SMA), which is concerned with representing and supporting a safe, responsible and growing Saskatchewan mining industry, and encouraging research and training within Saskatchewan. These mandates prove to be a demanding job, as Saskatchewan’s potash industry continues to grow.

Much of this development can be attributed to the wealth of potash that exists within the province. The prairie evaporate unit, which hosts the potash deposits, stretches from an area west of Saskatoon, east to Rocanville, and southward to Moose Jaw. As a result, recent estimates indicate that, at the current rate of production, Saskatchewan’s reserves will last for hundreds of years and will continue to provide a stable foundation for expansion.

Within Canada itself, Saskatchewan stands as the leading producer of potash, with over 85 per cent of the nation’s total coming from the province’s 10 operational mines. From these mines, approximately 14 million tonnes (Mt) of KCl was produced in 2012, with future expansions looking to add another five to 10 Mt of production by 2020.