July 28, 2014 – Republic of Mining

COLUMN-Big 3 iron ore miners in volume, price sweet spot – by Clyde Russell (Reuters India – July 28, 2014)

July 28, 2014

http://in.reuters.com/

LAUNCESTON, Australia, July 28 (Reuters) – One thing has become clear from the latest production reports from the big three iron ore miners: They appear intent on ensuring their dominance by boosting low-cost output.

BHP Billiton mined a record 225 million tonnes of the steelmaking ingredient in the year to end-June, beating its own forecast by 4 percent. BHP said in its latest production report that it expects to increase output further, to 245 million tonnes in the 2014-15 financial year.

Fellow Anglo-Australian miner Rio Tinto boosted output 23 percent in the second quarter from the same period last year to 75.7 million tonnes. It also is forecasting higher annual output, with the quarterly report released on July 16 pointing to 2014 production of 295 million tonnes, up 11 percent from 266 million in 2013.

The world’s biggest iron ore miner, Brazil’s Vale , also had record output in the second quarter, posting a 12.6 percent gain to 79.45 million tonnes. The company is planning to boost its annual output to 450 million tonnes by 2018 from 306 million last year.

The three global iron ore giants have effectively gambled that they can continue to boost production and grab bigger slices of global demand, given that they can withstand lower prices due to their low-cost mines and economies of scale.

What is Harper’s ‘real interest’ in Mongolia? – by Campbell Clark (Globe and Mail – July 28, 2014)

July 28, 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.

OTTAWA — John Baird was given a ceremonial welcome in Ulan Bator, and invited to try a bow-and-arrow at a festival in the Jargalant Valley. The Foreign Affairs Minister is on a trip to Asia, visiting big powers China and Japan. But last week, his first stop was in a sparsely populated nation of three million.

Stephen Harper’s government is taking a particular interest in, of all places, Mongolia. Why?

Mongolia’s Foreign Minister, Luvsanvandan Bold, called Canada an important part of his country’s foreign policy. Canada just put Mongolia, a middle-income country, on its list of “countries of focus” for foreign aid.

Yes, there’s potential mining trade. But there’s also an invitation that the Harper government finds alluring: to help a little democracy maintain its independence from its two authoritarian neighbours, Vladimir Putin’s Russia and the People’s Republic of China.

“The Prime Minister has taken a real interest in Mongolia,” Mr. Baird said in a telephone interview.

Mr. Harper long ago turned from strident China critic to pragmatic trader with a rising economic power, but he still views its global influence darkly. And Mr. Harper has been a vocal critic of Mr. Putin’s actions in Ukraine: He’s called the Russian President a “throwback” to the Soviet Union.

INTERVIEW-Mozambique still counting on coal, despite price doldrums – by Pascal Fletcher (Reuters India – July 28, 2014)

July 28, 2014

http://in.reuters.com/

MAPUTO, July 28 (Reuters) – Mozambique is still counting on increasing coal exports to expand its infrastructure and drive economic growth, despite depressed global prices which might delay the timing of some major railway and port projects, the transport minister said.

Gabriel Muthisse told Reuters the government was also keen to attract investors to help build the infrastructure needed to exploit huge offshore natural gas reserves in the north.

The World Bank has forecast that coal and gas may generate up to $9 billion in revenues by 2032 for the southern African state, which is still poor and recovering from a 1975-1992 civil war.

Rio Tinto , Brazil’s Vale and India’s Jindal have invested heavily in developing Mozambique’s coal deposits – the fourth-largest untapped recoverable coal reserves in the world.

But billions of dollars of investment in rail and port expansions are still needed to carry the coal from the inland Tete mines to the seaborne market.

With global prices for coal in the doldrums because of oversupply and sluggish demand, experts and producers say Mozambican coal mining operations face an uphill battle to be competitive in the next few years, especially when so much infrastructure capacity still needs to be built.

World’s Best Mining Debt Defies Gold Woe in a Volcano – by David Stringer and Benjamin Purvis (Bllomberg News – July 27, 2014)

July 28, 2014

http://www.bloomberg.com/

Newcrest Mining Ltd. (NCM) bonds are delivering the best returns this year among metal producers even as the gold miner prepares for new writedowns at a floundering asset inside an extinct volcano.

Debt securities issued by Australia’s biggest gold producer returned 24 percent this year through July 25, compared with 15 percent for the world’s largest extractor Barrick Gold Corp. (ABX), according to a Bank of America Merrill Lynch index of dollar notes sold by investment-grade miners. Falling costs have buoyed the company, which last week flagged a charge of as much as A$2.5 billion ($2.4 billion) mainly on its Lihir mine in Papua New Guinea.

While the writedown may raise Newcrest’s gearing by as much as 6 percent, the miner forecasts cash flow will stay positive after production costs fell 8 percent in the three months to June 30 and gold rose 3.4 percent. Output expenses have been helped by a decline in the Australian dollar, which averaged 10 U.S. cents less in the first half than it did in the same period a year earlier. For every one-cent drop in the Aussie, earnings before interest and tax are boosted by A$28 million, the Melbourne-based company said in February.

“Cost-cutting initiatives and the recent move in the Australian dollar have provided some relief,” Tariq Chotani, a credit strategist at Commonwealth Bank of Australia in Sydney, said in a July 24 interview. “The company’s plan to reduce capital expenditure has also been a credit positive overall.”

‘Nationalisation alone will fix capital’s crime’ – by Chris Barron (Business Day Live – July 27, 2014)

July 28, 2014

http://www.bdlive.co.za/

THE National Union of Mine-workers (NUM) was shocked by Anglo American Platinum’s decision to sell its most labour-intensive South African mines, but Dick Forslund, the economist who advised the Association of Mineworkers and Construction Union (Amcu) during its devastating platinum strike, seems unmoved.

“We say good riddance. This is one of the Anglo American subsidiaries that have caused a lot of damage to the South African economy,” says Forslund, an economist and researcher at the Alternative Information and Development Centre.

The NUM said after the announcement by Amplats CEO Chris Griffith this week that it feared 20 000 jobs would be lost. Analysts believe the Amplats decision is the inevitable consequence of the five-month strike.

Forslund, 60, a hardcore socialist from Sweden, rejects the possibility that his advice may have prolonged the strike and put these jobs on the line.

Anyway, he says, Griffith “was planning this long before the strike”.

This is what Griffith implied when he said the decision to walk away from its deepest and most labour-intensive mines had nothing to do with the strike, even if the results announced this week left no doubt about its hugely damaging impact on Amplats.

The Brics have a $100bn bank. Can the West start taking them seriously now? – by Jim O’Neill (The Telegraph – July 25, 2014)

July 28, 2014

http://www.telegraph.co.uk/

Before this decade is over, there is a reasonable chance that India and Brazil will be larger than the UK

Earlier this month, the political leaders of the so-called Brics countries, who were meeting in the city of Fortaleza in northern Brazil, announced plans to set up a joint development bank. The new institution will be headquartered in Shanghai, run by an Indian president, and backed by $100bn (£59bn) of capital.

It is two years since this idea was first mooted. If nothing else the plans demonstrate that these extremely diverse countries can agree on something quite specific if they put their minds to it. It is a development that I have more than a passing interest in, having coined the BRIC acronym – for Brazil, Russia, India and China – back in 2001. So how significant is the launch of this new institution?

Some have suggested that it will start vying for influence with the World Bank and could mark the beginning of the demise of the global order that has existed since the end of the Second World War. Well, maybe. Much will depend on the remit of the Brics bank and how the World Bank and the International Monetary Fund respond. It is worth noting that the IMF issued a statement welcoming the new organisation. I suspect that neither it nor the World Bank will see the Brics bank as direct competition. After all, there are already the Asian and African development banks, and many countries have their own versions – the BRICS countries included.

The first article I wrote that included the Bric acronym (South Africa has since been added to make it Brics but the country was never part of my economic vision) was called “The World Needs Better Economic Brics”.

Pact Putinia: How Russia’s gas plan will unfold – by Diane Francis (National Post – July 26, 2014)

July 28, 2014

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

Speculation about President Vladimir Putin proliferates. Does he want to occupy Ukraine? Has he gone too far by arming and training Russian mercenaries who shot down the Malaysian Air jet with 298 passengers? Why is he thumbing his nose at global outrage and more sanctions? What will stop him?

Such questions miss the mark.

Putin has been executing the same business/geopolitical model for years aimed at guaranteeing his natural gas monopoly in Europe and keeping out rivals.

Ukraine is his latest victim because it ousted his puppet, Victor Yanukovych, and also because its huge oil and gas reserves could eventually make Ukraine a competitor for European customers.

Russia has controlled Ukraine since it declared independence in 1991, mostly through corruption. But in 2005, the populace staged the 2005 Orange Revolution and the 2013-14 Maidan uprising rose up against and finally expelled Yanukovych. But their victory became defeat because Putin changed tactics by shifting from managing a Ukrainian kleptocracy to engineering a fake insurrection in parts of the country to turn its resource base into a no-go zone.

Airport/port authority possible for Ring of Fire – by Rick Garrick (Wawatay News – July 25, 2014)

August 3, 2014July 28, 2014

http://www.wawataynews.ca/

A former deputy minister of Transport Canada recently recommended an airport/port transportation authority model for the Ring of Fire mineral development area.

“It would be at arms length from the government, it would have its own fiduciary financial responsibilities and management responsibilities,” said Nick Mulder, author of the Northern Policy Institute commentary: The Airport/Port Transportation Authority Model Is It Applicable for Ontario’s Ring of Fire Mineral Development. “It would decide on the chair and the management team, it would finalize the plans for the road and railroad or whatever else is needed. It would finalize all the funding with the mining companies and transportation companies and private sector interests, pension funds, whatever.”

Mulder described his recommendation during his July 8 Northern Policy Institute speaker’s breakfast at the Valhalla Inn in Thunder Bay, where he indicated the Ring of Fire infrastructure authority would not be involved in the social and economic infrastructure needs of the First Nation communities in northern Ontario.

“Those 40 or whatever number of communities there are have their own special needs,” Mulder said. “It isn’t up to a business-driven or market-driven kind of entity that I am recommending — they should decide on what kind of water or sewer or other kind of systems they need or local roads in the community or so on.”

Mulder said some of the monies required to finance the Ring of Fire road or railroad could come from the provincial government, but the majority should be raised in the marketplace or through the mining companies.

Surface mining’s price – by Rebecca Schmoyer (Albany Times Union – July 26, 2014)

July 28, 2014

http://www.timesunion.com/

Mountaintop coal removal leaves environmental and health impacts

A few weeks ago, I stood on top of Armstrong Mountain. The day was clear and the valley below filled with spruce, fir and hardwood forest. Unbroken ridges extended into the distance. As my final summit of the 46 Adirondack High Peaks, it was a moment of accomplishment. But while I took in the view, I was troubled by a somber national milestone.

As of this year, over 500 of the Appalachian Mountains have been destroyed by mountaintop removal coal mining. It’s time for New York state to divest from this industry.

According to the Office of State Comptroller’s 2013 asset report, the state has millions invested in companies that practice what the industry decorously calls “surface mining.” But the impact of mountaintop removal mining on the people and landscape of central Appalachia is far from superficial. The U.S. Environmental Protection Agency estimates the industry has left 1.2 million acres, or over 2,000 square miles, of barren, scarred land — an area bigger than the state of Delaware. And the devastation continues.

A few days later, Vernon Haltom and I are standing on a flattened ridge in southwestern West Virginia. Here, in the dust above Coal River Valley, summertime means blasting.

“They’re at it six days a week,” says Haltom, executive director of Naoma, W.Va.-based Coal River Mountain Watch.

The Devil’s Miner [Child Bolivian Silver Miners] (Mining Documentary – 2005)

April 5, 2015July 28, 2014

http://en.wikipedia.org/wiki/Main_Page

The Devil’s Miner is a 2005 documentary film directed by independent film directors Kief Davidson and Richard Ladkani. The film follows a fourteen-year-old Bolivian boy named Basilio Vargas who along with his twelve-year-old brother Bernardino work in the mines near the city of Potosí. The film includes many subtle realities of the miner’s lives such as the need to chew coca leaves to numb the pain of hunger and the long shifts they work regardless of age.[1] The film made its world premier at the Rotterdam film festival and its U.S. debut at the Tribeca Film Festival.

The film concentrates on the concerns of local workers who have fear of what they call “Tio” or devil. In the film, an elder miner claims that over 8 million people have died in the unsafe mines. The workers believe this is because “Tio” controls the mine and that Christ has no power in the mine. The workers often give offerings such as coca leaves, alcohol, cigarettes and perform sacrifices, such as slaughtering a llama and applying its blood to the mine entrance to appease a makeshift statue of “Tio”.

Each mine has its own Tio which all of the workers pray to upon entering so that they may find a good vein of silver and so that they may be granted protection from explosions, toxic gas, silicosis, and falling rocks.

Mass grave with hundreds of skeletons found in Bolivian mining town – by Cecilia Jamasmie (Mining.com – July 27, 2014)

July 28, 2014

http://www.mining.com/

Construction workers in the southern city of Potosi, Bolivia, have uncovered the remains of hundreds of miners believed to be from the Spanish colonial era.

They mostly mined at Cerro Rico Mountain, home to what became the world’s biggest silver mine and provided the Spanish with so much of the precious metal to ship to Europe that people used to say a bridge of pure silver could be built from the top of hill to the royal palace’s entrance in Spain.

But that boom came at an extremely high price tag — an estimated eight million miners died in Potosi alone between 1500 and 1800. What it is still unclear is how those miners met their deaths.

Some say the area was an indigenous burial ground for slaves and indentured servants who may have worked in the mines.

Another explanation could be that the remains are linked to the collapse of a reservoir in Potosi during the 17th century, which killed around 2,000 people.

“We are talking about a common grave found at about 1.8 metres, and the human remains are scattered over an area of four by four metres,” Sergio Fidel, a researcher at a museum belonging to Potosi’s Tomas Frias University, told AFP.