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Day: April 23, 2014

Ex-Goldman Banker Emerges as Barrick Gold Dealmaker – by Liezel Hill and Christopher Donville (Bloomberg News – April 22, 2014)

http://www.bloomberg.com/

A week before Barrick Gold Corp. (ABX) Chairman Peter Munk retires, his successor John Thornton is emerging as a dealmaker as the former Goldman Sachs Group Inc. banker pursues a bid to combine the two biggest gold miners.

Negotiations between Barrick and Newmont Mining Corp. broke off last week amid minor disagreements while leaving open the possibility that discussions could still resume, two people with knowledge of the matter said April 19.

The deal under discussion would have seen Thornton become executive chairman of the combined company while the chief executive officer would have been Gary Goldberg, who currently leads Newmont, the people said. Toronto-based Barrick’s CEO Jamie Sokalsky would have led a smaller gold producer spun off from the merged company, according to the people.

The proposed tie-up and its management reshuffle confirm Thronton’s elevation as Barrick’s most senior executive. The 60-year-old, who had no role in the mining industry until he joined the company’s board just over two years ago, is set to succeed Munk, Barrick’s 86-year-old founder, as chairman at the annual shareholders meeting next week. Leading a successful acquisition of Newmont (NEM), in what would be the biggest gold takeover, would set up Barrick to do further deals, including ones involving other commodities.

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Iron ore price fears raise earnings alert – by Barry Fitzgerald (The Australian – April 23, 2014)

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

FEARS that iron ore prices are set to crumble in response to patchy Chinese economic data and the unfolding 20 per cent annual surge in exports from the Pilbara have re-emerged, forcing investors to place the earnings outlook for leading producers on high alert.

Prices for the key steelmaking raw material were sent sharply down on Monday and were lower again in Chinese futures trading yesterday.

Monday’s fall as measured by The Steel Index was $US3.20 or 2.7 per cent to $US113.30 a tonne. The sharp fall comes just as the producers and investors had grown relaxed on iron ore’s near-term price outlook after it had worked its way back from this year’s low of $US104.70 on March 10.

The latest fall was put down to the rise in stockpiles at Chinese ports to near record levels, along with another easing of bans in India, which have kept as much as 50 million tonnes annually off the seaborne market.

India’s Supreme Court lifted a ban on iron ore mining in Goa but restricted output to 20 million tonnes a year. It follows the lifting of bans in the biggest producing state, Karnataka, capped at 30 million tonnes a year.

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Chile creates Mining Tourist Route – by Carolina Contreras (Infosurhoy.com – April 16, 2014)

http://infosurhoy.com/en_GB

In 2015, tourists can see mining developments, learn copper extraction and refining and marvel at the size of the machinery used in large-scale mining.

ANTOFAGASTA, Chile – Beaches, mountains, desert and the Patagonia are some of Chile’s biggest tourist attractions. But in 2015, the country will add a new one: mines in Chile’s northern region, such as Chuquicamata – the largest surface mine in the world that’s in the Antofagasta region – 1,585 kilometers north of the nation’s capital of Santiago.

The excavation area, which is 4.5 kilometers long, 3.5 kilometers wide and 1.1 kilometers deep, is one of Chile’s main mines.

The South American country is the world’s largest copper exporter, with 5.77 million metric tons of annual production and exports worth US$43.1 billion in 2013, according to the Mining Council, which represents the country’s largest mining companies.

Beginning in 2015, Chuquicamata, along with 23 other mines, will be open to tourists as the main attraction on the Mining Tourism Route, created by the Antofagasta Regional Branch of the National Tourism Service (Sernatur) in collaboration with mining companies and the Regional Ministerial Secretariat for Mining.

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Good Friday news reveals bad politics [Tom Steyer and Keystone Pipeline] – by Lorne Gunter (Toronto Sun – April 23, 2014)

http://www.torontosun.com/home

It’s an old public relations strategy in politics that the best time to announce bad news is late on a Friday. That way, the news hits when most of the public (and much of the media) isn’t paying attention. It takes a couple of days for the bad news to trickle down.

Really bad news should be announced on the Friday before a long weekend. So what kind of news gets announced on a Good Friday? Good Friday isn’t just the start of a long weekend, it’s one day into a four-day long weekend.

On top of that, Good Friday is the most solemn day in the Christian calendar. Even nominal Christians who never darken a church door the rest of the year somehow make it to service on GF.

So the attempt by the Obama White House to bury deeply its newest delay on the Keystone XL pipeline by announcing it late last Friday – Good Friday — was not merely tactical, it was cowardly. The time for diplomatic niceties is over. Let’s call a coward, a coward. And Barack Obama is a coward.

He can’t stand up to Russian President Vladimir Putin as Putin prepares to gobble up the old Eastern European client states of the Soviet empire.

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COLUMN-Indonesia to make it even harder for foreign miners – by Clyde Russell (Reuters India – April 23, 2014)

http://in.reuters.com/

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

LAUNCESTON, Australia, April 23 (Reuters) – Indonesia’s decision to start cancelling investment treaties with 62 countries has passed with little comment, but the move may have a greater impact than the recent banning of mineral ore exports.

Indonesia last month kick-started the process of terminating all of its bilateral treaties by notifying the Netherlands that its agreement to protect and promote investment would end in 2015, and signalling that the others would end as soon as possible.

The agreements, which are common between states, protect the rights of investors in each other’s country, and typically include clauses about fair treatment, no expropriation and guarantees that profits can be repatriated.

Most importantly for many investors in countries like Indonesia, with its patchy record on legal certainty, is the right of appeal to the Washington-based International Centre for Settlement of Investment Disputes (ICSID).

Among the countries that have treaties with Indonesia are major foreign investors including China, India, Australia, Britain, Singapore and Russia. However, the United States and Japan are among nations that don’t have agreements.

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[Barrick’s] Munk touts ‘significant synergies’ in potential Newmont deal – by Rachelle Younglai (Globe and Mail – April 23, 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.

Barrick Gold Corp.’s founder and chairman Peter Munk said merging with rival Newmont Mining Corp. could result in “significant” cost savings, especially in Nevada where the two North American gold miners operate.

The world’s two largest gold producers had hoped to announce an all-stock merger deal before Newmont’s annual shareholder meeting in Delaware on Wednesday, but disagreed over which assets to spin off, sources have said. Although talks were halted late last week, the companies are still open to merging in an effort to cut costs amid the deep slump in gold prices, sources have said.

“Combining Barrick and Newmont could result in significant synergies and cost savings, particularly in Nevada, where our operations are literally next door to one another,” Mr. Munk said in an e-mailed statement.

Gold has lost more than a third of its value since peaking above $1,900 (U.S.) an ounce three years ago. The weaker precious metal price, now trading below $1,300 an ounce, has forced the gold industry to overhaul operations to preserve cash.

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Teck Resources Ltd to cut 600 jobs, warns current coal supply is ‘uneconomic’ – by Peter Koven (National Post – April 23, 2014)

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

TORONTO – Steelmaking coal producers have started to slash production in response to lower prices, but Teck Resources Ltd. is warning that a lot more supply needs to be cut by high-cost rivals to bring the market into balance.

“Prices are currently at their lowest level since 2007, and margins are at their lowest level in 10 years,” chief executive Don Lindsay said on a conference call Tuesday. “We continue to be surprised there remains so much uneconomic coal supply on the market.”

Vancouver-based Teck announced on Tuesday that it will cut roughly 600 jobs as it tries to reduce costs and adapt to lower commodity prices, particularly for coal. The company’s realized coal price in the first quarter was US$131 a tonne; by comparison, Teck sold its steelmaking (or coking) coal for an average of US$257 a tonne in 2011.

The market has gotten even worse in recent weeks. The benchmark price for the second quarter is just US$120 a tonne, while spot prices have flirted with US$100.

Prices are falling because of concerns about rising production, slowing growth in China and the fact the Chinese government is closing some the country’s dirtiest steel mills to reduce air pollution.

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Skip malfunction closes North Mine – by Carol Mulligan (Sudbury Star – April 23, 2014)

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

Production at Vale’s Copper Cliff North Mine has been halted, and all but a skeleton crew of workers sent home as Vale personnel and United Steelworkers Local 6500 officials try to figure out why a skip hoist mechanism malfunctioned Sunday.

No one was injured when the conveyance used to bring ore from underground to surface travelled beyond ground, not stopping until it reached the concrete floor at the top of the head frame of the mine shaft.

Vale spokeswoman Angie Robson said the cause of the malfunction isn’t known and the extent of damage is still being assessed.  The area has been secured and production halted until repairs can be done, to ensure employee safety, she said.

In a statement, Robson said she didn’t know how long Copper Cliff Mine would be closed. USW Local 6500 president Rick Bertrand said Tuesday he has never seen anything like it in more than 20 years in mining. “Right now, everyone’s working together to see what caused it to happen,” Bertrand said.

No one was injured in the incident. Employees were above ground when the skip malfunctioned, said Robson. Bertrand said the skip, which could be filled with as much as 10 tons of ore, would weigh about 25 tons if full.

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Ring of Fire infrastructure money will be in provincial budget – by Darren MacDonald (Northern Ontario Business – April 22, 2014)

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.

Ontario’s finance minister was in Sudbury, April 22, sounding upbeat and promoting his budget, which will be released May 1.

But while long on positivity, Charles Sousa was short on specifics, even though many items expected to be in the budget were leaked April 1. Sousa said he was almost glad budget details were “shared” because he’s proud of what’s in it.

“We do want people to be appreciative and to recognize the importance of the things that are going to be in this budget,” he said after completing a tour of the Learning Initiative on Cedar Street. “Those communication plans are something that come out with every government.”

The leak detailed how the province planned to leak its own budget, right down to dates when each item would be released. When asked why the planned leak about funding for road infrastructure into the Ring of Fire wasn’t released as scheduled on April 17, Sousa replied that it wasn’t a planned announcement exactly, but more of an informal “communications plan.”

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NEWS RELEASE: Ring of Fire holds huge potential to share the wealth

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.

Virtually every sector of the economy would benefit from the responsible development of the mineral rich Ring of Fire area, according to the Ontario Chamber of Commerce study Beneath the Surface: Uncovering the Economic Potential of Ontario’s Ring of Fire. This paper believes that in the first decade of its development, the Ring of Fire could generate up to $9.4 billion in GDP, sustain 5,500 jobs annually and generate $2 billion in tax revenue for governments.

“Ontario, now more than ever, must identify and champion opportunities where it can be a global leader,” said Allan O’Dette, President of the OCC. “The Ring of Fire is such an opportunity. We believe that this globally significant deposit of minerals in Ontario’s Far North is one of the province’s greatest economic development opportunities in a generation.”

The jobs and positive economic development opportunities created by the Ring of Fire will be shared throughout many other sectors of the economy. The OCC’s analysis sees major benefits going to the financial services, wholesale trade, retail trade, manufacturing and utilities sectors.

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Globe in Ukraine: In a former mining town, nostalgia for Soviet era – by Mark MacKinnon (Globe and Mail – April 22, 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.

HORLIVKA, UKRAINE — You can smell Horlivka before you see it: the acrid output from the aging chemical plants and machinery factories that still limp along, though only at a fraction of the pace they once did.

Then you hit the jarring, metre-long potholes and get a glimpse of the city’s grim skyline of crumbling apartment blocks. The Soviet Union fell 23 years ago. Horlivka has kept falling ever since.

The next thing you sense in Horlivka is anger. Armed men have taken over the city’s main police station, and have built a wall of tires around it. Checkpoints flying the black-blue-and-red banner of the self-proclaimed Donetsk People’s Republic, often alongside the flag of the Russian Federation, block the roads into the city.

But residents of Horlivka and other parts of eastern Ukraine don’t really want to live in an independent Donetsk. In many ways, they don’t even want to live in today’s Russia, although there’s a lot of admiration for President Vladimir Putin here.

What they want is to go back in time, to when the Soviet Union still existed and Horlivka residents had jobs producing things that people in other places wanted to buy.

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Elemental Human Rights and Sierra Leone’s Iron Ore – by Joe Kirschke (Engineering and Mining Journal – April 16, 2014)

http://www.e-mj.com/

It was the eye of a slow-forming, powerful storm in one of West Africa’s most weathered places. In spring 2012, Bumbuna, a hamlet in a war-ravaged Sierra Leone notorious for its “blood diamonds,” witnessed a confrontation between police and workers protesting conditions at a project owned by U.K.-headquartered iron ore producer African Minerals Ltd. (AML).

Authorities said strikers tried torching an AML fuel depot and a police station, allegations disputed by human rights monitors. But the events ending April 18 were clear: After decimating the town market, police unleashed tear gas and live ammunition on the unarmed crowd—killing a female contractor while wounding eight non-employees; three officers were also injured. Sierra Leone’s independent Human Rights Commission called it a “war zone.”

Whether amid indifference, dismay or connivance—or all three—such episodes have haunted mining for generations. There’s certainly blame to circulate: Barrick Gold Corp., BHP Billiton, Freeport McMoRan and Rio Tinto—among countless others—have long been under fire. But in a world economy globalizing astride social media, bad news—fairly and unfairly—spreads quicker than ever. Consequently, environmental concerns, once at Corporate Social Responsibility’s (CSR) forefront, are taking a back seat to human rights issues—with some companies adapting quicker than others.

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The robot is ready – so when will deep sea mining start? – by Stephen Eisenhammer and Silvia Antonioli (Reuters U.S. – April 18, 2014)

http://www.reuters.com/

NEWCASTLE, England/LONDON – (Reuters) – The world’s first deep sea mining robot sits idle on a British factory floor, waiting to claw up high grade copper and gold from the seabed off Papua New Guinea (PNG) – when a wrangle over terms is solved.

Beyond PNG, in international waters, regulation and royalty terms for mining the planet’s subsea wealth have also yet to be finalized. The world waits for the judgment of a United Nations agency based in Jamaica.

“If we can take care of the environment we have a brand new day ahead of us. The marine area beyond national jurisdiction is 50 percent of the Ocean,” said Nii Odunton, secretary general of the U.N.’s International Seabed Authority (ISA).

“I believe the grades look good, the abundance looks good, I believe that money will be made,” Odunton said from the ISA offices in Kingston.

High-tech advances, depleted easy-to-reach minerals onshore and historically high prices have boosted the idea of mining offshore, where metals can be fifteen times the quality of land deposits.

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Editorial: Still plenty of appetite for M&A – (Northern Miner – April 21-27, 2014)

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

While private equity financing was the talk of the mining industry in the first quarter, heavy duty mergers and acquisitions are punching their way back to centre stage, as mining majors take advantage of depressed metals prices and share valuations to realign their businesses.

The brawling between Yamana Gold and Goldcorp over Osisko Mining and its prized Canadian Malartic gold mine in Quebec has just seen Agnico Eagle Mines jump over the boards and join the All-Canadian slugfest as third man in on Yamana’s side.

In a surprise move on April 16, Agnico teamed with Yamana to table a joint friendly, cash-and-share takeover bid worth $3.9 billion, or $8.15 per Osisko share, trumping Goldcorp’s recently revised hostile cash-and-share bid of $3.6 billion, or $7.34 per share. The offer is a 10% premium to Osisko’s share price on April 15.

As detailed on our front page, the deal would end with Osisko shareholders owning 14% of Yamana and 17% of Agnico, and would include an innovative spin-out of a cashed-up company with a portfolio of royalties, plus assets such as Osisko’s grassroots project in Mexico.

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