January 29, 2014 – Republic of Mining

Commodities poised for a comeback – by Eric Atkins and Carrie Tait (Globe and Mail – January 29, 2014)

January 29, 2014

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.

TORONTO and CALGARY — U.S. growth and a steadying Chinese economy are giving a boost to beaten-up commodities, slowing a multiyear slide that has weighed on Canada’s most important exports.

Commodity prices have been on a downward slope for the better part of three years, as limping western economies and a slowing China curbed demand for raw materials. More recently, however, signs of stability in key commodity-consuming regions have provided some optimism that the worst could be over.

The widely watched Thomson Reuters-Jefferies CRB index of commodities has climbed 4 per cent from its recent low earlier this month. Natural gas has been a standout among commodities, surging about 25 per cent since early December.

From zinc to copper and oil, a range of commodities is expected to find a floor this year as markets overcome recent hurdles and factories boost production to meet rising consumer demand, according to some analysts.

Idle No More – Northern Manitoba: A year on – Thompson Citizen Editorial (January 29, 2014)

January 29, 2014

The Thompson Citizen, which was established in June 1960, covers the City of Thompson and Nickel Belt Region of Northern Manitoba. The city has a population of about 13,500 residents while the regional population is more than 40,000.

Last year was the winter of our discontent to borrow the famous line from William Shakespeare’s 16th century play, The Tragedy of King Richard the third. What about this year? Until last week, an eerie quiescence had walked this land for months.

No more. Not after legendary former Winnipeg rocker Neil Young brought his “Honour the Treaties” tour to Canada to raise funds for the Athabasca Chipewyan First Nations, who have filed a legal challenge to a multi-billion dollar proposed expansion of Royal Dutch Shell’s oil-sands Jackpine Mine, Fort McMurray, Alta., from 7,500 hectare to 13,000 hectares.

And not after former Assembly of First Nations National Chief Phil Fontaine, an Anishinabe from the Sagkeeng First Nation on the southern tip of Lake Winnipeg in Treaty Territory 1, who accepted a job in December with TransCanada Pipeline, a Calgary based natural gas and oil pipeline developer that wants to build the proposed Energy East Pipeline to transport oil from Western to Eastern Canada, postponed a scheduled talk Jan. 22 at the University of Winnipeg after being confronted with angry protesters, some armed with anti-oil sands signs, others with drums and some with their faces painted red and black.

Chromium market growth continues but ferrochrome producers face headwinds – Roskil (Steel Guru – January 29, 2014)

January 29, 2014

http://www.steelguru.com/

Roskil reported that at end 2013, ferrochrome prices remained near 4 year lows. European benchmark charge chrome prices were rolled over at EUR 112.5 per lb in Q4, while Chinese domestic spot high carbon ferrochrome prices stood at EUR 83 to EUR 85 per lb. World ferrochrome consumption reached a record level of 9.8Mt in 2012, however, and demand was estimated to have risen by a further 6% to 10.3 MT in 2013. The diverging trends reflected the expansion in the Chinese ferrochrome industry, low ore prices and currency depreciation in leading exporting countries.

China soaks up more ore as domestic ferrochrome output soars;

In 2012, China overtook South Africa to become the largest producer of ferrochrome worldwide. Chinese output of 3.12 MT accounted for 33% of the world total, a rise from 13% in 2005. With low chrome ore reserves and production, growth of 20%py in Chinese ferrochrome output has been based on imported raw materials, mainly from South Africa but also from Turkey, Oman and Albania. Imports from South Africa in the first nine months of 2013 already exceeded the 2012 total, with two thirds comprising UG2 concentrates. Concern over the displacement of South African ferrochrome production by Chinese material smelted from South African ores and concentrates has stimulated debate over the introduction of an export tax or quotas.

Demand for ferrochrome closely reflects trends in the stainless steel sector, which accounts for 80% of consumption. Over the past five years, world consumption has risen by 5%py to an estimated 9.8 MT in 2012.

NEWS RELEASE: Northern Superior Resources Inc. responds to Government of Ontario’s Statement of Defence

January 29, 2014

Sudbury, Ontario – (January 29, 2014) – Junior mineral exploration company Northern Superior Resources Inc. (“Northern Superior” or “NSR”) (TSXV:SUP) received the Government of Ontario’s (“Ontario”) Statement of Defence last week in response to the company’s pending $110 million lawsuit against Ontario, for failure to consult with First Nations. The lawsuit, filed in November 2013, is the result of extraordinary circumstances that prevented NSR from accessing its Thorne Lake, Meston Lake and Rapson Bay gold properties in northwestern Ontario.

Ontario’s response acknowledges that beyond sending a standard form letter identifying Sachigo Lake First Nation (“SLFN”) among others, as a community to be contacted, the government did not undertake any consultation nor did it assist NSR in engaging with the community until after NSR was issued an “eviction” notice by the First Nation. Ontario also admits that NSR did all it could reasonably do to meaningfully engage with SLFN.

Despite these admissions, the Statement of Defence raises the same tired arguments heard previously from Ontario and, significantly, fails to address several key items of NSR’s lawsuit. Ontario’s position will be of interest to the industry in that it is clear that despite the requirements repeatedly laid down by the courts, Ontario will leave companies to fend for themselves, at their expense, when issues arise with Aboriginal communities, whether justified or not.

Ontario’s position in the lawsuit reaffirms that in Ontario, exploration and mining companies who peacefully retreat from areas from which they have been evicted by Aboriginal communities and ensure that the rule of law is upheld will be left to their own devices, while companies who in similar situations risk or bring about civil disobedience and escalate matters will be compensated by the government.

COLUMN-Gold rallies won’t sustain without more China, India buying – by Clyde Russell (Reuters U.S. – January 29, 2014)

January 29, 2014

http://www.reuters.com/

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

LAUNCESTON, Australia, Jan 29 (Reuters) – Gold’s positive start to the year seems to be based more on hope than any real change to the factors that saw the precious metal shed 28 percent last year.

Spot bullion has gained 4.25 percent since the start of the year to the close of $1,256.09 an ounce on Jan. 28, with China and India factors helping to drive the rally.

The optimistic view for gold is that top buyer China will continue to buy record amounts and that India, which was supplanted by its Asian neighbour last year, will ease the restrictions that crimped its demand last year.

Taking India first, and the gold bulls have taken heart from comments on Jan. 27 by finance ministry officials that the curbs on gold imports will be reviewed by the end of March. India progressively hiked import taxes to a record 10 percent last year and imposed a requirement that 20 percent of imported gold must be fabricated and exported.

Osisko CEO says Goldcorp’s $2.6-billion hostile bid bad for mining sector – by Peter Koven (National Post – January 29, 2014)

January 29, 2014

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

TORONTO – The chief executive of Osisko Mining Corp. thinks the hostile bid for his company is not only bad for his shareholders, but negative for other investors in the gold mining space.

Speaking at the TD Securities Mining Conference in Toronto, Sean Roosen said if offers as low as Goldcorp Inc.’s $2.6-billion hostile bid become acceptable in the sector, then it is hard to see how portfolio managers can make money investing in emerging growth stories like Osisko.

“Losing access to a very entrepreneurial mid-tier [miner] that’s been a top performer in the space and the management team that built it, most [fund managers] feel that’s not helping their investment model,” he told reporters.

“And I think from an overall standpoint of investors, if you’re going to invest in growth assets and they’re going to trade at a zero premium at the end of the day, that doesn’t really make a business model for portfolio managers.”

NEWS RELEASE: More Canadians employed in mining than previously reported

January 29, 2014

New report details Canadian mining’s economic contributions and top needs for 2014

OTTAWA, Jan. 29, 2014 /CNW/ – New data shows a dramatic increase in the number of Canadians employed in the mining and related industries with more than 418,000 people in full-time-equivalent jobs working in various facets of the sector, according to the Mining Association of Canada’s latest Facts & Figures 2013 report.

Drawing from a new data source, Natural Resources Canada released a more comprehensive estimate of mining sector employment. The source includes data for support activities of the mining sector that was not previously captured, including drilling and exploration. This grew the number of mining employees in Canada from 330,000 people in 2011 to 418,000 people in 2012, accounting for one in every 41 Canadian jobs. Year-over-year employment growth shows an increase of more than 11,000 jobs, or 2.8%, from 2011 to 2012.

“This remarkable employment figure is a much more accurate view of the Canadian mining industry’s role as both a major employer and economic driver in Canada,” said MAC’s President and CEO, Pierre Gratton. “It also adds to our already impressive employment figures. Not only is the mining industry the top paying industrial sector in the country, but it is also the largest private sector employer of Aboriginal people on a proportional basis and supports thousands of indirect jobs.”

First Quantum reveals larger copper forecast for Cobre Panama – by Peter Koven (National Post – January 29, 2014)

January 29, 2014

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

TORONTO – When First Quantum Minerals Ltd. acquired Inmet Mining Corp. for almost $5-billion early last year, the key rationale is that it expected to find enormous cost savings at Cobre Panama, Inmet’s flagship project and one of the world’s largest undeveloped copper deposits.

On Tuesday, nearly a year later, First Quantum finally released its Cobre Panama projections. The headline number was an eye-opener, as the company’s proposed capital cost of US$6.4-billion is actually higher than the US$6.2-billion that Inmet was talking about. However, First Quantum also plans to produce a lot more copper than Inmet did.

“The re-engineering of the Cobre Panama project has resulted in a very much larger project of substantially lower capital intensity, and with a considered but clearly defined timeline to completion,” President Clive Newall said on a conference call.

Vancouver-based First Quantum plans to churn out a whopping 320,000 tonnes of copper a year at Cobre Panama, roughly 20% more than Inmet proposed. It also expects to produce 100,000 ounces of gold, 1.8 million ounces of silver and 3,500 tonnes of molybdenum per year from the mine.

UPDATE 2-Anglo’s overhaul starts to pay off with sharp output rise – by Silvia Antonioli (Reuters India – January 29, 2014)

January 29, 2014

http://in.reuters.com/

LONDON, Jan 29 (Reuters) – Anglo American on Wednesday produced a forecast-beating rise in fourth quarter iron ore output and a new quarterly record for copper, a sign efforts to improve performance at its major mines are starting to pay off.

Anglo, the fifth-largest diversified mining group, has embarked on an overhaul plan under chief executive Mark Cutifani, after years of sector-lagging returns.

Cutifani said in December the plan would focus mainly on improving operations of major mines but did not envisage immediate asset sales. Anglo has long lagged rivals in returns and share performance. Its shares have lost about 60 percent of their value in the last three years compared with a 40 percent decline for the sector.

In the past two years, it has been hit by labour troubles in South Africa, operational hiccups at copper mines and multibillion-dollar cost overruns in Brazil. The fourth-quarter production figures helped to boost Anglo’s shares which were one of the top gainers in the FTSE 100 index.

Mining firms watch case of Hells Angels at Xtreme Mining – by Dan Zakreski (CBC News Saskatoon – January 29, 2014)

January 29, 2014

http://www.cbc.ca/saskatoon/

Reviewing hiring policies in wake of dismissals and threatened lawsuit from Hells Angels at PCS Cory

They’re characterized by police across Canada as a dangerous criminal organization. Until last year, Hells Angels from the Saskatoon chapter worked at the Agrium potash mine near Vanscoy and at the Potash Corp. mine at Cory.

They lost those high-paying jobs when Leonard Banga at Xtreme Mining and Demolition decided he didn’t want Hells Angels in his company. This decision has triggered alleged death threats and a potential lawsuit.

Mining companies across the province are closely watching the story unfold.“I think it did make people reflect on their hiring policies and their harassment policies in the workforce, and making sure that contractors were accountable for the actions of their employees,” said Pamela Schwann, executive director of the Saskatchewan Mining Association.

Three Hells Angels from the motorcycle club’s Saskatoon chapter are threatening to sue Banga for defamation and wrongful dismissal. They lost their jobs at the company when they revealed on a company questionnaire that they are members of what Banga calls a criminal organization.

Lack of critical minerals processing capacity U.S. ‘Achilles heel’ – Wyden – by Dorothy Kosich (Mineweb.com – January 29, 2014)

January 29, 2014

http://www.mineweb.com/

U.S. Senate leaders say the nation must address inadequate U.S. mining processing capacity as well as promoting domestic mining of critical and strategic minerals.

RENO (MINEWEB) – During a U.S. Senate hearing Tuesday on S. 1600, the Critical Minerals Policy Act of 2013, Senate Energy and Natural Resources Committee Chairman Ron Wyden, D-Oregon, noted, “A crucial but too often neglected part of this [U.S. critical minerals] supply conversation is mineral processing.”

“Although mining is an important part of the supply equation, and S. 1600 encourages federal agencies to expedite permitting for new critical minerals extraction, it is the lack of processing capacity—transforming the raw materials that we pull out of the ground into the high-purity compounds needed for manufacturing—it is that challenge that is my concern and the concern of many experts,” he observed.

Opposition to Critical Minerals Policy Act is misguided – by Colin T. Hayes (Alaska Journal of Commerce – January 9, 2014)

January 29, 2014

http://www.alaskajournal.com/

Colin T. Hayes is an executive vice president at McBee Strategic Consulting and formerly served as senior professional staff to Sen. Lisa Murkowski on the U.S. Senate Committee on Energy & Natural Resources.

As someone deeply familiar with Sen. Lisa Murkowski’s leadership on the “Critical Minerals Policy Act,” John Kemp’s Dec. 9 Reuters column criticizing the bill struck me as a cynically misguided reaction to her important work.

Sen. Murkowski introduced the legislation in order to, as she put it, “keep the United States competitive and begin the process of modernizing our federal mineral policies.” This is a laudable goal and an important process, particularly as our foreign reliance increases for materials needed to build semiconductors, skyscrapers, and everything in between.

In Kemp’s view, however, the bill “deserves to die” because it would authorize new federal funding that he views as a sop to “special interests.” With all due respect, he’s wrong.

Cliffs Doesn’t Pass the Hess Test – by Liam Denning (Wall Street Journal – January 28, 2014)

January 29, 2014

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

Despite the name, Casablanca Capital’s approach to Cliffs Natural Resources CLF +2.11% is likely to be anything but the beginning of a beautiful friendship.

Cliffs, one of the worst U.S. stocks to own in 2013, has joined the rapidly swelling ranks of companies targeted by an activist. The iron-ore miner is being urged to split its international operations from its U.S. iron-ore and coal-mining operations. Casablanca says this could push the share price to $53, far above Monday’s closing level of $19.40 and the $25 and change the fund paid to amass its 5.2% stake. Having jumped as much as 13% Tuesday morning, Cliffs stock finished the day’s trading up just 2%.

The plan makes some sense on paper. Cliffs’s U.S. iron-ore output sells mainly to semicaptive domestic steel mills and so is somewhat shielded from big swings in global prices. As Chinese economic growth slows, global iron-ore prices look vulnerable. A separated U.S. business would appeal to those investors wanting to dial back exposure to China. The real bulls could stick with the newly separate international business.

There likely is some value in that—but nearly three times as much? Casablanca values the resulting entities at six or seven times earnings before interest, tax, depreciation and amortization.

Province responds to Sudbury firm’s lawsuit – by Harold Carmichael (Sudbury Star – January 29, 2014)

January 29, 2014

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

Ontario cannot be held responsible for the failure of mining claims filed by a Sudbury-based exploration company in northwestern Ontario, the provincial government says in a statement of defence.

Instead, the government says it was the failure of Northern Superior Resources and the Sachigo Lake First Nation to strike a deal that led to the company walking away from the mining claims in 2012.

The government filed the statement of defence in response to a $110-million lawsuit Northern Superior Resources has brought against the province. Northern Superior Resources wants another $15 million from the province it says it spend on developing its Thorne Lake, Meston Lake and Rapson Bay gold properties.

In addition, the company’s lawsuit is also seeking a declaration by the province that it failed to consult with First Nations as required by law and that Northern Superior Resources experienced damages as a result.

The company alleges the province failed to consult properly with Sachigo Lake First Nation, and that led it to abandon the mining claims.