July 24, 2014 – Republic of Mining

Beleaguered Cliffs posts Q2 loss, beats expectations – by Henry Lazenby (MiningWeekly.com – July 24, 2014)

July 24, 2014

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – US iron-ore and coal producer Cliffs Natural Resources, which is locked in a proxy fight with an activist shareholder for control of the board, on Wednesday reported a net loss for the three months ended June 30, as lower iron-ore and metallurgical steelmaking coal prices and reduced sales pressured the balance sheet.

The Cleveland, Ohio-based miner reported a loss of $2-million, or $0.01 a share, compared with a net income of $133-million, or $0.82 a share, in the second quarter of 2013.

The year-over-year consolidated revenues were 26% lower at $1.1-billion, mainly impacted by a 24% drop in sales volume from the company’s US iron-ore operations.

Seventeen Wall Street analysts had on average expected a loss of $0.06 a share, based on revenue of $1.17-billion.

The cost of goods sold decreased by 17% to $1-billion, mainly driven by reduced volumes, lower idle costs and favourable foreign exchange rates when compared with the second quarter of 2013.

Brazil’s Vale Posts Record Iron-Ore Output – by Paul Kiernan (Wall Street Journal – July 24, 2014)

July 24, 2014

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

Mining Company Says Output at New Plant at its Carajas Complex Is the Main Reason for the Increase

RIO DE JANEIRO—Brazilian mining company Vale SA said Thursday it churned out a record amount of iron ore in the second quarter, as expansion projects at its Carajas complex in the Amazon began to bear fruit.

Vale, the world’s largest producer of iron ore, said its output of the steelmaking material surged 13% from a year earlier to 79.4 million metric tons, the most ever for the April-to-June period.

Scant rainfall, the result of a drought that has hurt other sectors of the Brazilian economy, allowed Vale to maximize its production. But the ramp-up of output at a new plant at Carajas—where Vale is carrying out a nearly $20 billion expansion plan to supply the Chinese steel industry—was the main reason for the increase.

Production of iron-ore pellets rose 2.4% to 9.95 million tons, Vale said. Other segments of Vale’s business didn’t perform as well during the second quarter.

Output of nickel, of which Vale is the world’s No. 2 producer, fell 5.2% to 61,700 tons, as the company was forced to suspend its Copper Cliff smelter in Sudbury, Canada, due to a worker fatality. An environmental accident at Vale’s nickel operation in New Caledonia caused production to fall there, as well.

Will Cutifani answer call for Anglo change? – by David McKay (Miningmx.com – July 24, 2014)

July 24, 2014

http://www.miningmx.com/

[miningmx.com] – A YEAR ago, at Anglo American’s 2013 interim results presentation, the group’s then relatively new CEO, Mark Cutifani, set out the broadest of blue-prints for winning back investor interest.

Return on Capital Employed (ROCE) needed to be 15%, not the 11% that had been previously achieved; the project pipeline, described by Cutifani as ‘constipated’, had to be – for want of a better word – loosened; and any under-performing assets would be culled from the group.

At the time, a mere 11% of the group’s 90-odd assets had met operational targets to which Cutifani provided the gloss: “We have to get our arses into gear”.

The question at the time was how a change in gear would be achieved, and whether Cutifani would be bold and quick enough? A year on, and the answer is becoming clearer.

As with its peer, BHP Billiton, Anglo is taking the scalpel to some of its South African assets starting with the less profitable platinum mines held in the 80%-controlled Anglo American Platinum (Amplats).

“He has made it absolutely, abundantly clear that the Rustenburg and Union assets in Amplats are not priorities for the group’s capital,” said a Johannesburg-based analyst.

NEWS RELEASE: Productivity still down in mining and metals sector: EY report

July 24, 2014

http://www.ey.com/CA/en/Home

Companies must overhaul business models to get productivity back on track

(Vancouver, July 24, 2014) Miners will need to drastically transform their business models if they want to reverse the decade-long decline in productivity, according to a new EY report.

Productivity in mining: A case for broad transformation describes the drop-off in productivity, on both a volume and cost basis, as a result of companies choosing to pursue production growth and headline revenue during the commodity price boom.

“Companies caught in the race to capitalize on high commodity prices are now facing a number of business model challenges,” says Bruce Sprague, EY’s Canadian mining and metals leader. “Operation expansion and inefficient use of labour and equipment are all compromising productivity.”

Many companies adapted processes, performance measures and corporate culture solely toward growth during the supercycle and are now paying the price.

“There’s no easy solution to solving these challenges,” says Sprague. “Cost-cutting exercises and minimal process and technology improvements aren’t enough.”

A narrow focus on continuous improvement will not solve the problem and could even be counterproductive by simply moving the problem along the supply chain, the report emphasizes.

COLUMN-New Indonesian president can bring certainty, consistency to mining: Russell – by Clyde Russell (Reuters India – July 24, 2014)

July 24, 2014

http://in.reuters.com/

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

LAUNCESTON, Australia, July 24 (Reuters) – The election of reformist Joko “Jokowi” Widodo as Indonesia’s new president has spurred hopes of a rapprochement with global miners and the scaling back of some of the nationalistic resource policies.

Certainly the new leader of the world’s fourth-most populous nation is making the right noises, telling Reuters in an interview published July 22 that he wants to sit down with mining companies and resolve differences.

And indeed this was followed by Freeport-McMoRan, which owns the giant Grasberg copper mine, saying it expects to “imminently” sign an agreement with Indonesia that will allow for the resumption of exports of copper concentrate.

Newmont Mining Corp also said it was close to a memorandum of understanding with the government that would allow it to resume exports of copper concentrate and re-open its Batu Hijau mine.

These negotiations with the two U.S. mining giants, which account for 97 percent of Indonesia’s copper output, have been ongoing for months, so it’s not clear that Jokowi had any influence on the talks, but equally his election victory may have provided momentum to the talks.

Central America’s biggest nickel mine reopens amid violent clashes – by David Hill (The Guardian – July 24, 2014)

July 24, 2014

http://www.theguardian.com/uk

Guatemala’s Fenix mine, closed for 30 years, faces disputes over land ownership and lawsuits for gang-rape and murder

Fenix, Guatemala – The biggest nickel mine in Central America has restarted operations amid violent clashes between indigenous people and security forces, disputes over land ownership, and ongoing lawsuits for gang-rape and murder.
The Fenix mine in Guatemala had been closed for 30 years, and was inaugurated by a recent visit to the site by president Otto Pérez, who called it the biggest investment in the history of the country.

But just one week later a community bordering Fenix known as Lot 8 Chacpayla, who are part of the predominant Maya Q’eqchi’ group in the region, say there were invaded by private security forces working for the firm which runs the mine, Compañía Guatemalteca de Níquel, now a subsidiary of the Cyprus-based Solway Investment Group.

Residents of Lot 8, where large nickel ore deposits are believed to lie, and the neighbouring community, Lot 9 Agua Caliente, told the Guardian that about 10 men turned up unannounced, “armed to the teeth”, intent on preventing a meeting from taking place.

“When we asked why they were there, they said they had been asked to protect the lands of the company,” says Lot 9’s Rodrigo Tot. “They said they wouldn’t leave and assumed a position to shoot. They were out in the corridor, but pointed their weapons at us.”

Jim O’Neill: What Jokowi’s Win Means For Jakarta’s Market? – by Shuli Ren (Baron’s Magazine – July 23, 2014)

July 24, 2014

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

The following is a guest post by my colleague Assif Shameen:

“Jokowi’s victory is potentially as important as Modi’s was for India,” says Jim O’Neill, former Chairman of Goldman Sachs Asset Management and the man who coined the term BRICs or the world’s largest emerging markets. O’Neill has long regretted not including Indonesia among the emerging giants.

As the world’s third largest democracy, O’Neill says Indonesia can’t just be dependent on the global commodities cycle. “Indonesia has huge potential and a guy like Jokowo could just be the one to unleash it but he has to be bold and take on vested interests and those that allow corruption as well as other forms of misallocation of capital,” he says.“Indonesia needs a Modi-type figure to galvanize its young dynamic population to deliver on its potential,” O’Neil says.

But the former Goldman Sachs economist notes “expectations in Indonesia are now as high, if not higher than they are in India” in the wake of Jokowi’s victory. “India and Indonesia now need to deliver or otherwise the scope for disappointment in both places is obvious, specially in the short term. If the changes are for real in Indonesia and India then the case for further re-weighting in both those markets is huge,” he says.

Year-to-date Jakarta Composite Index is up 21.1% . The market has risen 9.1% over the past 12 months. But stocks may have gotten ahead of themselves. Sam Le Cornu, Senior Portfolio Manager at Macquarie Funds Group who co-manages the Macquarie Asia New Stars Fund in Hong Kong says while the macro picture in Indonesia looks encouraging the only problem now is valuations.

Noront appeals Ontario Mining Recorder ruling – by Henry Lazenby (MiningWeekly.com – July 24, 2014)

July 24, 2014

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – Noront Resources, the proponent of what could possibly be one of the first projects to get off the ground in Ontario’s prospective Ring of Fire mining district, has launched an appeal to the province’s mining and lands commissioner to set aside the finding of the Provincial Mining Recorder that rival KWG Resources is the first to stake two 16-unit claims when they came open on the morning of June 17, 2011.

KWG on Wednesday said it was on Tuesday served with a notice of Noront’s appeal.

The two claims were next to the southern two claims of Fancamp Exploration’s Koper Lake claims, where KWG is assessing the economic potential of the Black Horse chromite deposit under an option agreement with Bold Ventures and Fancamp. Noront is developing the Eagle’s Nest nickel/copper/platinum/palladium deposit.

“Koper Lake is an important amphibious aircraft facility for the Ring of Fire and the area used for landing and docking is within the eastern boundary of these claims. In the past, our exploration crews have been blockaded there, or embargoed from landing there, or [have] been levied substantial landing fees,” said KWG president Frank Smeenk.

He stressed that the firm believed that this was a critical part of the area’s transportation assets and should be operated as a public facility, from which the concept sprang of a federally sponsored port authority.

Coherent national mineral policy a must for U.S. manufacturing, Congress told – by Dorothy Kosich (Mineweb.com – July 24, 2014)

July 24, 2014

http://www.mineweb.com/

The lack of U.S. mineral supplies is stifling U.S. manufacturing and discouraging new technology development by miners and manufacturing, witnesses told a Congressional subcommittee hearing.

RENO (MINEWEB) – “America’s dependence on foreign nations for minerals is a choice. Our solution to our dependence isn’t a lack of resource; it is a lack of courage and commitment to produce the resources here,” declared Rep. Doug Lamborn, R-Colorado, chairman of the House Subcommittee on Energy and Resources Wednesday.

During a subcommittee hearing to examine the domestic critical minerals supply and demand chain, U.S. rare earths advocate Lamborn declared, “It is a policy of the Obama Administration that is bent on destroying jobs in the mining industry, from vetoing approved coal mines in Appalachia, to pre-emptively vetoing mines which haven’t even been proposed in Alaska.”

“If we are legitimately concerned about rare earth minerals, we should be asking why it will take a decade to approve a mine in one of the world’s largest resources in Wyoming. Why are Obama Administration Forest Service employees actively lobbying communities in opposition to the rare earth mine?” Lamborn asked.

However, Rep. Eric Swalwell, D-California, said his Securing Energy Critical Elements and American Jobs Act of 2014 — which would have stepped up America’s exploration of critical elements — failed to pass a full vote of the U.S. House of Representatives Tuesday because of threats from what he called “extreme right-wing groups”. Nevertheless, Swalwell told Lamborn Wednesday he was willing to work with Lamborn and the subcommittee to get the U.S. “in the game” as far as having a domestic supply of rare earths.

Third party probes [Timmins mine] blast – by Len Gillis (Timmins Daily Press – July 24, 2014)

July 24, 2014

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – It could take as long as week for Goldcorp Porcupine Gold Mines (PGM) to find out what went wrong Tuesday when a blast threw a piece of rock into the company’s parking lot at the old Hollinger Mine building.

PGM Timmins mine general manager Marc Lauzier revealed Wednesday that a third-party consultant is being brought in to try to figure how the rock escaped the blast zone during a routine blast Tuesday morning at the Hollinger open pit.

“We had a small blast of about 13,500 tonnes or so, near surface. A piece of flyrock was expunged from the blast and landed in the parking lot on one our employee vehicles,” Lauzier explained.

“Immediately we suspended all blasting activities. Of course public safety is our No. 1 concern, so I want to understand what caused a piece of rock to land in the parking lot and what is going to be done to prevent this in the future.”

The consultant will be reviewing blasting procedures and video of the incident, since Goldcorp makes a video record of every blast at the new mine. This is the first known incident involving flyrock landing outside the mining zone since the first blast at the Hollinger pit occurred back in February.

“So until I get the results of that investigation and we are comfortable that we can blast without this reoccurring, we won’t be blasting,” Lauzier said. “And so it will take about a week to do the investigation properly.”