PWC NEWS RELEASE: Commodities report: 2013 roundup & gold, silver and copper performance 2014 outlook

http://www.pwc.com/ca/en/mining/index.jhtml

Click here for a copy of the Gold, Silver and Copper Report: http://pwc.to/1bx16cR

TORONTO – December 9, 2013 – Amidst write downs, drop in commodity prices and lower revenues, gold, silver and copper are among the most closely watched metals in the mining sector. They are also some of the hardest hit metals in 2013, according to PwC’s new Gold, silver and copper report.

Gold has been the big mining story of the year. The metal, which surpassed $1,900 per ounce in 2011, fell to around $1,200 this summer. The worst performing metal this year goes to silver – with prices plummeting 40% in 2013. As for copper, prices fell from $3.70 per pound at the start of the year to above $3 currently– becoming the metal that ‘outperformed’ this year.

Gold producers are preparing for another challenging year. Reflecting lower levels of confidence, 47% of gold producers expect the price to increase in the next 12 months, compared to 88% a year ago.

Despite being the worst performing metal this year, silver miners are optimistic for 2014 with only 9% anticipating the price of silver to fall further next year.

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The 2014 Metals Outlook: Nickel – by Cole Latimer (Australian Mining – December 9, 2013)

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

Australian Mining has investigated the current state of Australian metals and looks into how they will perform in the coming year. In the third part of this five part series we look at nickel.

The nickel industry has always been one of sharp busts and booms, with the busts now lasting longer and longer. To sum up the sector in a single word – volatile.

After an astounding leap in revenues in 2006-07, where it skyrocketed 132.9 per cent after shrinking 5.7 per cent the previous year, nickel has undergone a series of sharp price corrections, seeing an annualised fall of 12.1 per cent in revenues from 2008 through to this year.

This was due to prices retreating from unsustainably high levels. However after two years of serious gloom for the sector, following another brief spike in 2010-11, nickel is predicted to grow again, according to IBISWorld reports.

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Province confirms, but mum, on special rate for Ring – by Darren MacDonald (Sudbury Northern Life – December 09, 2013)

http://www.northernlife.ca/

Energy minister says $60B chromite project exempt from new rate hike

Ontario Energy Minister Bob Chiarelli confirmed in a conference call with reporters last week what many people had long assumed: the province has offered Cliffs Natural Resources a special hydro rate for its Ring of Fire project.

Chiarelli was promoting the province’s long-term energy plan, entitled Achieving Balance, which forecasts energy demand in Ontario for the next 20 years. Steep hikes are forecast for the first three years of the plan – 33 per cent – but he said the increases are much lower than they would have been if the province hadn’t cancelled proposed gas plants and plans to build new nuclear plants.

He also touted the end of “dirty” coal plants, which he said cost the province $4.4 billion in added health-care costs, as well as polluting the environment.

But the rate increases announced as part of the plan mean Ontarians will pay about $40 a month more for energy by 2016. When asked about the implications for Cliffs, Chiarelli said a separate arrangement had already been struck.

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Miners eye Jakarta’s planned iron ore ban – by Barry Filzgerald (The Australian – December 10, 2013)

http://www.theaustralian.com.au/business

NO one is getting too excited just yet, but there is a chance that Indonesia of all places may be about to do Australia a big favour — more particularly, our tin, nickel and bauxite producers.

Like the rest of the mining sector, all three could do with a bit of early Christmas cheer. Apart from the broader fallout from the recent spying scandal and the ongoing tragedy of boatpeople, Indonesia has not exactly endeared itself to the local resources industry, with its regular shocks and horrors when it comes to security of tenure.

But if the Indonesians deliver on their big commodities threat of early 2014, much of that will be quickly forgiven. The big threat is to follow through on the government’s plans to proceed with a mineral ore export ban from January 12 — a drastic attempt to force through value-adding processing of minerals with all the attendant jobs and investment creation.

Until the recent backing of parliament, few if any observers thought the ban would see the light of day. But the fact the parliament followed through — presumably after intense lobbying by those interests opposed to the move — means mineral export market watchers are beginning to factor in the potential for the Indonesians to do what they say they are going to do.

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COLUMN-Leave critical minerals to the market – by John Kemp (Reuters India – December 9, 2013)

http://in.reuters.com/

(John Kemp is a Reuters market analyst. The views expressed are his own)

Dec 9 (Reuters) – The Critical Minerals Policy Act of 2013, backed by a bipartisan group of 18 senators, is one of those pieces of special-interest legislation that deserves to die in the U.S. Congress.

The bill (S 1600), pending before the Senate Committee on Energy and Natural Resources, directs the secretary of the interior to designate a list of up to 20 “critical minerals” based on the risk of potential supply restrictions and their importance to the economy.

The bill identifies minerals that must be imported and are therefore at risk from trade embargoes, military action, cartels and other anticompetitive behaviour, for designation, particularly if they are used in important sectors such as energy production, defence, agriculture, consumer electronics and healthcare.

The bill authorises the federal government to spend up to $20 million to compile a comprehensive national assessment for each critical mineral, including how much is produced domestically and how much is imported. It makes $8 million available to speed up the inter-agency review process for issuing mining permits on federal lands.

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Massive investment will complete Kitimat smelter project – by Richard Gilbert (Journal of Commerce – December 9, 2013)

http://www.journalofcommerce.com/

Rio Tinto is planning to invest US$2.7 billion to complete the modernization of its aluminium smelter in Kitimat, B.C., while the company is cutting back on capital spending at projects around the world.

“For nearly 60 years, the smelter has been a major impetus for the economic development of northwest British Columbia,” said Jean Simon, president, primary metal, Rio Tinto Alcan.

“We are very proud to announce this US$2.7 billion investment to complete the modernization project. This is one of the largest private investments in B.C.’s history and it will ensure the sustainability of the aluminium business in Kitimat for decades to come.”

Rio Tinto announced on Dec. 1 that the US$3.3 billion Kitimat modernization project will be completed in 2014.
The project involves the demolition of several buildings on the site of the existing smelter and clearing space for a new plant.

The project began in 2011 and will create 2,500 jobs during the peak period of the construction phase.

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[Saskatchewan Premier] Wall plays politics with potash – by Bruce Johnstone (Regina Leader-Post – December 7, 2013)

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

So what are we to make of the latest war of words between Premier Brad Wall and Potash Corp. of Saskatchewan? Is PotashCorp CEO Bill Doyle seriously saying that dividends to shareholders are more important than the jobs of more than 1,000 workers, including 440 in Saskatchewan?

Is the premier seriously suggesting that companies, especially Saskatchewan headquartered ones, don’t have the right to manage their business as they see fit? Clearly, Wall is casting himself as the knight in shining armour coming to the rescue of the hundreds of Saskatchewan potash miners given layoff notices this week.

First, Wall expressed concern for the workers facing layoffs just weeks before Christmas, adding that “obviously this is not good news for those employees and their families.” Then he allayed fears of major damage to the Saskatchewan economy or the provincial treasury, noting that potash revenues account for just 3.5 per cent of total government revenues.

For his part, Doyle said that he was equally concerned about the workers, promising to do “everything we can to make sure that these people are well taken care of.” But Doyle also said that PotashCorp’s dividend was “sacrosanct” and won’t be touched.

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Miners’ job hunt major feat – by Janet French (Regina Leader Post – December 7, 2013)

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

PotashCorp job cuts a challenge for mine workers

Since high school, Daren Nakoneshny had a plan. The Lanigan native wanted to study a trade, then come home to work in Potash Corp. of Saskatchewan Inc.’s Lanigan mine. His family is there. The benefits and wages were unmatched.

“I achieved my long-term dream to work at PCS, and it was short-lived,” Nakoneshny, 25, said Friday. “It seemed like a pretty good idea at the time.” The electrician bought a house in Lanigan last year, where he lives with wife Caitlin and two young children.

On his Monday night shift, after nearly two years at the company, Nakoneshny knew something was up when he and his colleagues were ordered to a meeting at 6:30 a.m. Tuesday. Rumours swirled.

Nakoneshny called Caitlin several times that night, asking her to look online for potential bad news.

At 6:30 a.m., he and 300 of his colleagues stood in a room at PCS Lanigan, watching a video broadcast of PotashCorp CEO Bill Doyle explaining why many of their jobs were about to evaporate.

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Peter Munk’s lament: Barrick’s spiral started with formation of gold ETF – by Peter Koven (National Post – December 7, 2013)

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

Peter Munk admits it: he is not handing over his pride and joy in the best of condition. “If I were to [look at it] as a photograph, a snapshot in the moment of time, I would be unhappy,” he said in a detailed interview in his office this week.

If he’s in the dumps, there’s good reason. This last year has been one of the worst in the history of Barrick Gold Corp., and plenty of the damage was self-inflicted. Fixing up the company during a bear market for gold will be a major challenge for John Thornton, his handpicked successor.

Mr. Munk, 86, announced his retirement from Barrick on Wednesday. The lifelong entrepreneur will finally step aside next spring, paving the way for Mr. Thornton to put his China-influenced stamp on the company.

Mr. Munk’s accomplishments at Barrick are too lengthy to list. In three decades, he took a company that started with US$20-million in the bank and built the world’s biggest gold producer, acquiring several industry stalwarts along the way and beating the Oppenheimers at their own game. Mr. Munk had the time of his life as he built Barrick into a powerhouse.

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Premier promises more Northern meetings – by Benjamin Aubé (Timmins Daily Press – December 7, 2013)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Ontario Premier Kathleen Wynne’s visit to Timmins for the first Northern Ontario Leaders’ Forum included a commitment to quarterly meetings between her Northern ministry and municipal and regional leaders.

Michael Gravelle, the province’s Minister of Northern Development and Mines, explained he’d be at meetings approximately every three months with groups such as the Northwestern Ontario Municipal Association (NOMA), the Federation of Northern Ontario Municipalities (FONOM), the Northern Ontario Large Urban Mayors (NOLUM), and leaders of the First Nations and Métis Nation.

Wynne admitted there was a disconnect between Queen’s Park and the communities and people it services in the North that needs to be fixed.

“Where there are bottlenecks and where there are procedural issues that need to be addressed, having an opportunity to talk about those on a regular basis makes a lot of sense,” said Wynne. “We’re very supportive of Minister Gravelle’s suggestion that those (meetings) happen on a regular basis.”

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Way ahead for North is east or west of us – by Karl Lehto (Thunder Bay Chronicle-Journal – December 7, 2013)

Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

Two articles in the past few days in this newspaper and a Sunday morning Global Television clip concerning the Ring of Fire are in serious need of comment:

1. The Nov. 30 Viewpoint, NWO Prime For Manitoba Power, could be the surprising game changer for Northern Ontario and the entire province.

For years, many have advocated the possibility of importing cheap, green hydroelectric power from Manitoba to our region but were met with resistance due mainly to the political inter-provincial restrictions, some of them greater than international restrictions between Ontario and the United States. And, more recently, others stated Manitoba had no more excess energy to export.

Well, apparently former federal minister of state for transport, Steven Fletcher of Manitoba begs to differ. He claims the real possibility now exists for 1,000 megawatts and up to 6,000 megawatts will be available for export to Ontario or Saskatchewan with the future completion of the Nelson River hydroelectric projects .

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Change to Vale’s buying scheme makes city more attractive – by Jonathan Migneault (Sudbury Northern Life – December 06, 2013)

http://www.northernlife.ca/

Changes to Vale’s procurement system will result in new jobs and opportunities in Sudbury, said the executive director of the Sudbury Area Mining Supply and Service Association (SAMSSA).

Dick DeStefano, SAMSSA’s executive director, said Vale’s new regional focus on supply and service procurement will improve Sudbury’s reputation as a world-leader for the mining supply and service sector.

“This will attract a number of satellite offices,” DeStefano said, as companies will set up shop in Sudbury to be closer to the buying action. Mining supply and service companies previously had to deal with Vale’s offices in Toronto and Brazil to set up contracts with the mining giant.

But in 2012, Vale started to change its organizational structure, and shifted its gaze to regional markets. “It was about getting more autonomy in the different regions,” Kelly Strong, Vale’s vice-president of Ontario operations, said regarding the shift in focus.

In early 2014 companies in Sudbury will be able deal with Vale employees who handle procurement directly in Sudbury.

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Potash advantage illusory – Editorial (Winnipeg Free Press – December 5, 2013)

http://www.winnipegfreepress.com/

Potash Corp. will lay off 1,045 employees, 18 per cent of its workforce, because of low prices and poor sales of the crop nutrient it produces, the company announced this week. The decision marks a sharp setback for the Saskatchewan government’s attempt to maintain cartel pricing in the potash market by preventing an Australian mining giant from buying the Saskatoon-based company and making it compete in an open market. A well-organized open market would serve Canada better.

Saskatchewan Premier Brad Wall put the bravest face he could on the failure of his policy. The province is enjoying good employment growth despite declines in the resource sector, he said after the massive layoff was announced. That seemed odd, because just three years ago, when BHP Billiton was trying to buy Potash Corp., he was telling the country the company was strategically important to Saskatchewan and could not be allowed to fall into foreign hands. Now, suddenly, Saskatchewan doesn’t need it so much after all.

In October 2010, when Billiton was offering $130 a share for all the outstanding shares of Potash Corp., Premier Wall told the Saskatchewan public it was a bad deal for the province. Billiton was going to take the Saskatchewan company out of the Canpotex producers’ cartel and compete for sales. This would not work and the Saskatchewan industry would suffer, Mr. Wall believed. He urged Prime Minister Stephen Harper and the ruling Conservatives to block the takeover.

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Ring of Fire high on agenda for Northern leaders – by Laura Stricker (Sudbury Star – December 7, 2013)

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

Some of Ontario’s top politicians — including Sudbury Mayor Marianne Matichuk — met with their Northern Ontario colleagues in Timmins on Friday. Not surprisingly, the stalled Ring of Fire development was very much on everyone’s minds.

“We’ve had a great session here this morning with northern leaders – municipal and First Nations and Metis,” Premier Kathleen Wynne said in a teleconference with reporters. “This is really about a relationship that’s extremely important to our government.

“Whether we’re talking about infrastructure in the North or whether we’re talking about availability of health services or whether we’re talking about relationships between government and First Nations governments, all of those issues are of real importance (to) us.”

Joining Wynne in Timmins were ministers Eric Hoskins (Economic Development and Trade), David Orazietti (Natural Resources), Linda Jeffrey (Municipal Affairs and Housing), David Zimmer (Aboriginal Affairs), Michael Gravelle (Northern Development and Mines), Glen Murray (Infrastructure and Transportation), Michael Coteau (Citizenship and Immigration), Deb Matthews (Health and Long-Term Care) and Steven Del Duca (parliamentary assistant to Finance Minister Charles Sousa).

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The man with the key to China: Barrick Gold’s quest to open new doors – by Rachelle Younglai (Globe and Mail – December 7, 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.

Incoming Barrick Gold Corp. chairman John Thornton has friends in high places in China – including the country’s premier, central bank chief and anti-corruption czar, to name a few.

Now Mr. Thornton’s job is to turn those connections into new business opportunities for the gold miner as it seeks to turn the corner on a string of costly setbacks.

Mr. Thornton’s clout in China is the key reason Barrick founder and outgoing chairman Peter Munk chose him as his successor and persuaded the company’s board to award a $11.9-million (U.S.) signing bonus – an amount that became a flashpoint for shareholders already upset with the company’s performance. Barrick’s stock price has dropped sharply amid nearly $14-billion in writedowns tied to two major projects and a recent $3-billion share issue to help pay down its $15-billion debt load.

Since becoming Barrick’s co-chairman in a June, 2012, management shakeup, Mr. Thornton said he has been laying the groundwork with the Chinese.

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