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Day: July 9, 2014

Australia’s big three miners look to tighten their iron grip – by Jamie Smyth (Financial Times – July 8, 2014)

 

http://www.ft.com/intl/companies/mining

Port Hedland – The man who made a US$10bn bet on the global iron ore market is predicting Australia’s big three miners will tighten their grip on the global industry over the next few years as higher cost producers fall victim to lower iron ore prices.

Andrew “Twiggy” Forrest, founder and chairman of Fortescue Metals Group, says the sharp fall in iron ore prices since the start of the year is causing some smaller Australian producers and overseas competitors to exit the industry.

“Because you have incredibly low operating costs with the big Australian producers we are seeing more substitution take place from China and India as competitors switch off production,” says Mr Forrest, who owns one-third of Fortescue shares.

“The wholesale shutting down of iron ore production industries basically happens in other countries. The Pilbara [in Western Australia] has always been historically the big player.”

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Alcoa pledges finished products push as results beat Wall Street – by Nicole Mordant (Reuters U.S. – July 8, 2014)

http://www.reuters.com/

(Reuters) – Alcoa Inc’s (AA.N) chief executive officer said on Tuesday the aluminum company would push deeper into the market for more profitable finished products like truck wheels and aircraft fuselages as it reported quarterly results that beat analysts’ expectations.

At the same time, CEO Klaus Kleinfeld said Alcoa was focused on cutting costs and improving the performance of its traditional commodity business, which has been hit by weaker aluminum prices.

Alcoa’s shares rose as much as 2 percent in after-hours trading. The company’s stock price is up nearly 40 percent this year.

“The transformation of Alcoa truly is in high gear and the results show this. Our strategy is working,” Kleinfeld said on a conference call.

Alcoa’s strategy to boost value-added fabricated product output and broaden its footprint in other light-weight materials like nickel, titanium and lithium has partially offset the pain of prolonged weak underlying primary aluminum prices on the London Metal Exchange CMAL3, which have been close to or below breakeven for many smelters over the past year.

Alcoa has idled or permanently closed loss-making smelting capacity as it ramps up its smelter complex in Saudi Arabia, which will be the world’s lowest-cost.

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Lac Seul stakes its development claim – by Ian Ross (Northern Ontario Business – July 9, 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. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

A 2012 Friendship Accord struck between Lac Seul First Nation and Sioux Lookout is already paying huge dividends if you judge the brisk foot and vehicle traffic through the local Tim Hortons.

Instead of residents driving an hour south to Dryden along moose-infested Highway 72 to Dryden to get a double-double fix, it’s now available in their own backyard.

The northwestern Ontario First Nation community of 1,000 is the proud owner of the franchise on the south side of Sioux Lookout, which opened last summer to great fanfare and a continuous outpouring of patronage.

Chris Angeconeb, Lac Seul’s economic development general manager, said it’s not uncommon for folks visiting from the remote fly-in communities to make a special detour from their in-town appointments to almost clean the place out of coffee and doughnuts.

“We have a tough time keeping the shelves stocked.” But ownership of a fast food outlet is really only the window dressing of the steady progress Lac Seul has made on a number of fronts through partnerships and agreements in the energy, mining and mineral exploration, forestry and training fields.

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The Ring of Fire’s slow burn (Global Business Reports – July 2014)

Global Business Reports is an international provider of industry specific reports to the global trade and investment community. This article is from a profile about Ontario mining for Engineering & Mining Journal.

http://gbreports.com/industry.php?i=2

Making progress in the mineral-rich region despite setbacks

Development of the Ring of Fire has experienced its share of setbacks recently. In November 2013, Cliffs Natural Resources decided to halt its Big Daddy chromite project, citing risks associated with developing infrastructure in the frontier area of northern Ontario. Companies in the mineral-rich area are dependent upon getting federal and provincial support to fund badly needed infrastructure to the region.

“Obviously, having an industry participant leave the region is never a positive development but we are hoping that there is a
silver lining and this event will underline the need for more timely- decision making regarding key issues such as environmental permitting and infrastructure,” said Alan Coutts, president and CEO of Noront Resources Ltd., whose Eagle’s Nest project is the most advanced in the Ring of Fire.

A number of developments in early 2014 may be the starting point to solving the dilemmas that caused Cliffs to suspend its operations. First, the province of Ontario announced the formation of the Ring of Fire Development Corp. to assess various possibilities to fund infrastructure development and engage with First Nations communities affected by development in the region. The Liberal government went even further, announcing a C$1 billion investment to fund a transportation solution.

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Frustration Builds for Newmont Investors – by ALISTAIR MACDONALD and JOHN W. MILLER (Wall Street Journal – July 9, 2014)

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

Shareholders Lose Patience, Urge Gold Miner to Break Itself Up or Revive Deal With Barrick

In the lobby of the local Elko, Nev., office of Newmont Mining Corp. NEM +2.42% , the world’s second-biggest gold miner by production, a series of posters celebrate almost a century of mining, exploration—and fighting takeovers.

But after another attempt to take over the company failed in April, many investors have lost patience. They are urging the miner to either rekindle this year’s aborted deal with No. 1 Barrick Gold ABX.T +0.35% Corp., or break itself up.

All gold miners are facing a lengthy list of problems—lower gold prices, high costs and declining accessible gold grades. Newmont, based in Greenwood Village, Colo., posted a loss of $2.5 billion last year, the biggest in its history, and its share price has fallen by half since 2011, making it one of the worst performers in the S&P 500.

Investors “are frustrated because they wanted something to happen, after being bruised and battered for the past 18 months,” said Dan Denbow, a portfolio manager for the San Antonio-based United Services Automobile Association, a Newmont shareholder.

Newmont “hasn’t communicated the specifics of what they’re doing,” he said. Now, as many Newmont shareholders clamor for action, the question is: what kind of change do they want?

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Aboriginal group on Vancouver Island signs deal for LNG project – by Brent Jang (Globe and Mail – July 9, 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.

VANCOUVER — A self-governing aboriginal group on Vancouver Island has signed a deal with a fledgling liquefied natural gas company in hopes of developing a massive project to export LNG to Asia.

Members of the Huu-ay-aht First Nations say they are eager to work with project leader Steelhead LNG Corp. to build an export terminal near Bamfield on the southwest side of Vancouver Island.

Huu-ay-aht First Nations chief councillor Jeff Cook said his group is in a strong position to help nurture a major venture in the resource sector. He noted that the Supreme Court of Canada ruled last month that the consent of aboriginals is required for how their ancestral lands are used.

The Huu-ay-aht are part of the 2011 Maa-nulth First Nations Final Agreement, one of only a handful of treaty and land claim pacts in British Columbia. “We’re open for business.

For too long, we’ve been left behind in the resource industry and basically consulted after the fact. We want to be part of this LNG project,” Mr. Cook said in an interview.

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BHP nickel sale hits hurdle – by Nick Evan (The West Australian – July 9, 2014)

https://au.news.yahoo.com/thewest/

A native title ruling could throw a shadow over BHP Billiton’s attempts to sell its Nickel West assets, after the Federal Court ruling last week paved the way for native title claims over BHP’s Kambalda nickel concentrator and Gold Fields’ St Ives mine.

In a decision released last week, the Federal Court ruled that the transfer of mining tenements from State Agreements between 2004 and 2007 should have triggered negotiations for a land use agreement with the Ngadju people, who claim native title over the region around Norseman and Kambalda.

The ruling covers more than 200 mining leases transferred from State agreements originally held by Western Mining Corporation.

They include leases over BHP’s Kambalda nickel concentrator and Gold Fields’ 400,000 ounce-a-year St Ives mine, the fourth largest gold producer in Australia last year.

Gold Fields said in January the action could force the closure of St Ives if the native title claimants sought an injunction to do so.

But the company softened its rhetoric this week, saying in a statement the decision “does not affect the grant of mining tenure to St Ives”. It added operations would continue as usual pending the outcome of the process.

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Ontario miners, loggers await Supreme Court of Canada decision on treaty rights – by Drew Hasselback (National Post – July 9, 2014)

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

Get ready for another big aboriginal rights decision from the Supreme Court of Canada.

On Friday, the Supreme Court will release a crucial decision on the wording of a 1873 treaty between the crown and the Ojibway Nation. The agreement, called Treaty 3, covers about 142,000 square kilometres in what is now a large part of northwestern Ontario and a small part of eastern Manitoba.

The legal rights of aboriginals have soared in public attention after the Supreme Court released its game-changing June decision that recognized the Tsilhqot’in Nation’s claim to aboriginal title in a case called Tsilhqot’in Nation (Roger William) v. British Columbia.

Much of the discussion about the Roger William case focuses on its implications for British Columbia. Most aboriginal groups in the other provinces have ceded their land to the crown by treaty. B.C. is unique because First Nations claim title to most of the provincial land mass. This raises questions about the certainty of tenure for resource projects located in B.C., and it leads to the suggestion that projects located in the treaty provinces might be more secure because they won’t be affected by aboriginal title claims.

Yet the existence of a treaty alone may not provide absolute certainty of tenure. It all comes down to how the courts interpret the wording used in those treaties.

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India needs to restructure Coal India to raise output -govt report – by Krishna N Das (Reuters India – July 9, 2014)

http://in.reuters.com/

(Reuters) – India needs to restructure state behemoth Coal India Ltd quickly to raise output to feed fuel-starved power plants, the finance ministry said in a report, as the country grapples with rising imports amid a push for electricity to all.

Coal India (CIL), the world’s largest coal miner, accounts for about 80 percent of India’s production of the black rock but has failed to meet its output targets for years due to delays in obtaining environmental approvals to expand mines and what critics say are inefficiencies owing to its size.

Millions go without power in India and blackouts are common. “The process of restructuring CIL needs to be pushed through swiftly to boost coal production,” said the finance ministry in the Economic Survey report presented to parliament on Wednesday.

The report – submitted a day before Finance Minister Arun Jaitley delivers his maiden budget – did not say what kind of restructuring it was recommending for CIL.

Reuters reported in May that newly elected Prime Minister Narendra Modi could explore breaking up some of CIL’s eight local units and making state governments equity holders to help speed land acquisition and other such processes.

The government should also allow commercial mining by private companies, said the ministry’s report.

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New Potash Corp. CEO Jochen Tilk stresses continuity despite differences from Bill Doyle – by Peter Koven (National Post – July 9, 2014)

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

Investors who tired of Bill Doyle’s bombast will probably appreciate Jochen Tilk.

The new chief executive of Potash Corp. of Saskatchewan Inc. could not be more different from his predecessor. While Mr. Doyle was the ultimate stock promoter, Mr. Tilk is a quiet and conservative mine operator. While Mr. Doyle rarely got through an interview or conference call without saying something outrageous, Mr. Tilk has dodged the limelight his entire career.

What Mr. Tilk does know how to do is operate mines as efficiently as possible. That is what Potash Corp. needs at this stage of the cycle, experts said, and that is one of the things he stressed on Tuesday.

“I believe, as most operators believe, there’s always an opportunity to get better,” the 50-year-old said in an interview from Saskatoon.

Mr. Tilk, who took over last week upon Mr. Doyle’s retirement, is only the third CEO in Potash Corp.’s history. He acknowledged that he has very big shoes to fill after Mr. Doyle’s wildly successful 15-year run, and he stressed continuity of his predecessor’s longstanding strategies — including the famous price-over-volume strategy — rather than any serious overhaul.

“When you look at the evolution of Potash Corp. from its origins to where it is today, you have to give [Mr. Doyle] credit for that. I certainly do,” said Mr. Tilk, who was formerly CEO of copper miner Inmet Mining Corp.

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Diamonds Regain Their Sparkle for Miners on Rising Demand and Prices – by Alexis Flynn (Wall Street Journal – July 8, 2014)

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

Sector Now Delivering Some of the Healthiest Returns in the Mining World

LONDON—Diamonds, it turns out, may not be forever. There hasn’t been a major new diamond lode discovered for years. Along with rising demand from new consumers in the East, that is good for mining companies whose profits are rising at the most lucrative part of the business: the rock face.

The industry’s shifting dynamics have prompted a rethink by some the world’s biggest mining companies, including Rio Tinto and Anglo American.

For years, falling commodity prices and rising costs made many of them question whether it was worth staying in the diamond business. But now, diamonds have regained their sparkle.

“We expect the demand requirements to grow around 6% per annum for the course of the decade,” said Alan Davies, head of the diamond unit for Rio Tinto, the world’s third-largest diamond producer. “And when you look at the supply response there hasn’t been a major find brought on for a long time.”

Just 18 months ago, BHP Billiton and Rio Tinto each had their diamond units on the block. In 2012, BHP sold its Ekati mine in Canada to jewelry maker Harry Winston Co. for $500 million.

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[Ontario Northland] ONTC workers still wondering about their future – by Jennifer Hamilton-McCharles (North Bay Nugget – July 8, 2014)

http://www.nugget.ca/

While Ontera comes to grips with the news Tuesday that they will lose half of their workforce once the sale is completed with Bell Aliant, Ontario Northland Transportation Commission employees are left wondering about their fate.

Brian Kelly, spokesman for the General Chairperson’s Association, said the government hasn’t been clear about the future of the ONTC.

“Are we going to form a strategic alliance with Metrolinx? Are we going to be part of the Ring of Fire development? There’s just a lot of uncertainty right now,” he said. Kelly said the future of the ONTC remains up in the air.

“The government has given us no indication what the plan is,” he said. “The work in the shops is slowly drying up. The contracts should be completed by the end of the year and then there will be very little work in refurbishment,” he said.

“It’s nice the government is not selling the ONTC, but employees want to know ‘what’s the rest of the story?’” The Liberal government announced in 2012 the divestment of the ONTC, however they have since changed their position and decided to leave the majority of the corporation in public hands.

ONTC’s telecommunications division, Ontera, is scheduled to be sold to Bell Aliant by the end of the summer. The transition will mean the loss of about 66 jobs.

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Joe Oliver to announce more provinces to join national securities regulator – by Gordon Isfeld (National Post – July 9, 2014)

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

OTTAWA — Saskatchewan, and perhaps one or more Atlantic provinces, will join Ontario and British Columbia in Ottawa’s proposed national securities watchdog, sources say.

On Wednesday, Finance Minister Joe Oliver will announce that Saskatchewan will sign onto the fledgling Co-operative Capital Markets Regulator (CCMR), according to sources.

Possibly one or more of the Atlantic provinces will come on board, as well. If so, there is speculation that New Brunswick will be the front-runner to join the CCMR. Officials in provincial Finance Minister Blaine Higgs’ office did not respond to a request for confirmation.

However, even with just one province agreeing to participate, the federal government will have the “critical mass” of regional support to go ahead with the CCMR, said Ian Russell, president and CEO of the Investment Industry Association of Canada.

“You need at least three provinces to give you the critical mass that you need. And that would give you virtually 50% of the capital markets,” Mr. Russell said.

“There have been rumours for some time that at least one or two Atlantic Canada provinces have been leaning towards joining the cooperative regulator,” he added.

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A model for First Nations relations – by David Zimmer (National Post – July 9, 2014)

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

David Zimmer is the Ontario Liberal Minister of Aboriginal Affairs.

The Supreme Court of Canada’s recent decision in the Tsilhqot’in Nation case arising out of British Columbia will inform the way business is conducted across Canada. Here in Ontario, I believe the ruling is consistent with the progress our government has been making in the area of aboriginal consultation and resolving land claims for many years — an approach that has created a province well-prepared for sustainable development benefitting aboriginal people, industry and all Ontarians.

The Tsilhqot’in Nation decision builds on earlier decisions of the Supreme Court, including the Delgamuukw, Haida and Mikisew cases, that have given meaning to the constitutional protection of aboriginal and treaty rights and established principles that guide governments in their relationships with aboriginal communities. Consistent with the spirit of these decisions, Ontario launched the New Relationship Fund in 2008.

The Fund has so far helped almost 200 First Nations and Métis communities and organizations engage in consultations with governments and industry on resource-based economic development activities. And the principles underlying the decisions are the same as those that led the province to modernize the Mining Act in 2009, creating the first legislation in Ontario that embeds consultation principles related to established or asserted treaty and aboriginal rights.

It’s also in the spirit of these earlier rulings that, this year, the government signed a historic regional framework agreement with the nine Matawa member First Nations for negotiations on sustainably developing the Ring of Fire.

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