September 10, 2014 – Republic of Mining

Goldman Calls End to Iron Age After ‘Dramatic’ Drop in Ore Price – by Jasmine Ng (September 10, 2014)

September 10, 2014

http://www.bloomberg.com/

Iron ore declined sooner than expected this year as supplies exceeded demand and prices are unlikely to recover, according to Goldman Sachs Group Inc., which said 2014 will mark the end of a so-called iron age.

This year “is the inflection point where new production capacity finally catches up with demand growth, and profit margins begin their reversion to the historical mean,” analysts Christian Lelong and Amber Cai wrote in a report today titled: “The end of the Iron Age.” The 2016 forecast for seaborne ore was cut to $79 a metric ton from $82 and the 2017 outlook was reduced to $78 from $85, according to the New-York based bank, which stuck with a forecast for $80 next year.

The raw material tumbled into a bear market this year as the biggest producers including Rio Tinto (RIO) Group expanded low-cost output, betting higher volumes would more than offset falling prices while less competitive mines were forced to close. The decline in prices came sooner than expected, according to Goldman, which said in November that iron ore would probably drop at least 15 percent this year. The commodity is seen in a structural downtrend, JPMorgan Chase & Co. said today.

“The price decline has been dramatic, but a weak demand outlook in China and the structural nature of the surplus make a recovery unlikely,” Lelong and Cai wrote. “Lower prices for iron ore and steel are unlikely to boost demand in a material way. Instead, the day when steel production in China will peak gets ever closer.”

Ore with 62 percent content at the Chinese port of Qingdao fell 39 percent to $82.22 a dry ton this year, the lowest level since September 2009, according to data from Metal Bulletin Ltd.

Philippine lawmaker sees five-year grace period before ore export ban – by Enrico Dela Cruz (Reuters U.S. – September 9, 2014)

September 10, 2014

http://www.reuters.com/

MANILA – (Reuters) – A proposed Indonesia-style ban on exports of unprocessed metal ores from the Philippines may not be implemented for about seven years, the proponent of a bill before Congress said on Tuesday, potentially easing pressure on nickel prices.

Congressman Erlpe John Amante said a law aimed at forcing miners to process raw minerals before export could take two years to be enacted, while miners deserved a five-year grace period before mandatory domestic processing took effect.

News last week of the proposed legislation has unsettled the nickel market, which was caught off guard when Indonesia banned nickel ore exports in January. Nickel jumped 7 percent in four sessions to Monday’s close and is up 41 percent this year.

The Philippines currently supplies China with virtually all of the nickel ore that it uses to make nickel pig iron, a raw material used by steelmakers, following the Indonesian ban.

Amante said the Philippines could triple its revenue from mineral exports if his bill, which was filed in July and has been approved at the committee stage in the lower chamber of Congress, becomes law. A matching bill was filed in the upper house Senate in late August.

“We’ve started the ball rolling so I’m very hopeful with the timeline,” he said in an interview with Reuters in his office in Congress, adding that he hoped the bill would become law within two years.

NEWS RELEASE: Productivity, capital decisions, social license earn top three spots on mining risks list: EY report

September 10, 2014

Access to water and energy new to mining business risks list this year

(Vancouver, September 10, 2014) EY’s annual Business risks facing mining and metals report reveals productivity, capital decisions and social license to operate as the top three risks facing the sector this year.

“Productivity claimed the top spot on this year’s mining risks list as boards and CEOs begin to realize that regaining lost productivity will be critical for long-term profitability,” says Bruce Sprague, EY’s Canadian Mining & Metals Leader. “Capital decisions and social license to operate challenges also continue to weigh heavily on the minds of mining and metals executives here and around the world.”

The complete 2014 top 10 strategic business risks list includes:

1 Productivity (2 in 2013)
2 Capital dilemmas – allocation and access (1)
3 Social license to operate (4)
4 Resource nationalism (3)
5 Capital projects (7)
6 Price and currency volatility (6)
7 Infrastructure access (9)
8 Sharing the benefits (8)
9 Balancing talent needs (5)
10 Access to water and energy (new)

COLUMN-Proposed Philippines minerals ban spooks nickel – by Andy Home (Reuters India – September 10, 2014)

September 10, 2014

http://in.reuters.com/

The opinions expressed here are those of the author, a columnist for Reuters.

(Reuters) – News that the Philippines was preparing to follow Indonesia in banning exports of unprocessed minerals caused panic in the London nickel market last week.

The Philippines has emerged as the main supplier of nickel ore to China’s massive nickel pig iron (NPI) sector after the cessation of exports from Indonesia. The threat that this flow too would be cut off appeared to represent a dramatic acceleration of an already bullish story.

Until it emerged on Tuesday that any Philippines ban is several years away. On the London Metal Exchange (LME) benchmark three-month nickel collapsed by $1,000 per tonne to $18,925 on Tuesday, wiping out the gains notched up over the previous days.

However, the market might be overly complacent about the apparently extended time-line before any Philippines ore ban, if it’s collectively assuming that events in that country will mirror those in Indonesia.

What is less in doubt is what the recent price roller coaster says about the bullish mindset in this market, particularly its responsiveness to supply-side news.

Illegal Gold Miners In Brazil Destroying Amazon, Indigenous Tribes At Risk – by Alex Létourneau (Kitco News – September 10, 2014)

September 10, 2014

http://www.kitco.com/

(Kitco News) – Illegal gold mining is by no means a new phenomenon, but it has been getting more and more attention with gold’s decade-long bull run. In the past, the focus on illegal gold mining has been more about the money countries are losing, but the spotlight is how starting to shift to the impact of these illegal practices on the environment.

At the moment, the Amazon rainforest, Earth’s largest rainforest, is seeing a growing number of illegal miners operating within it, causing environmental damage and disrupting Indigenous tribes living on government protected land.

In a joint statement to Kitco News, Marco W. Lentini, head of the Amazon program of WWF-Brazil, and Jean Timmers, superintendent of public policy at WWF-Brazil, said the region between the Amapá state in Brazil and French Guiana is one area that is experiencing major problems.

The two added that although there aren’t any specific survey’s documenting the number of illegal miners in the area “ it can certainly reach tens of thousands workers across the Amazon.”

“Illegal mining has intensified land use conflicts and also give incentives to encroach and access remote areas within protected areas in the Amazon, frequently with great conflicts with indigenous and other traditional populations,” they said.

Ring of Fire: First Nations scold Mines Minister Michael Gravelle – by Jody Porter (CBC News Thunder Bay – September 10, 2014)

September 10, 2014

http://www.cbc.ca/news/canada/thunder-bay

First Nations ‘grow weary’ of being shut out of decisions

CBC News has obtained letters from several First Nations in the Ring of Fire detailing a breakdown in the relationship with Ontario that could threaten the already fragile mining project.

Chiefs are reacting to the Aug. 28 announcement that the new Ring of Fire Infrastructure Development Corporation was established with an interim board, made up of four senior Ontario civil servants, and no First Nations representatives.

“I am growing weary of your lack of attention to EFN’s [Eabametoong First Nation’s] concerns and our clearly stated request to work collaboratively,” wrote Chief Elizabeth Atlookan in an Aug. 29 letter to Northern Development and Mines Minister Michael Gravelle.

“I know you have heard EFN’s concerns, but the MNDM continued to push this item forward, particularly in the press,” Atlookan wrote.

“So, are we to be ‘key’ partners in this potential development, as your press release states, if EFN’s legitimate requests are being ignored? Not likely.” Gravelle said the Aug. 28 announcement was necessary to meet an election promise, and to appease “other interests.”

First Nations protesters shut down northern B.C. drilling site – by Mark Hume (Globe and Mail – September 9, 2014)

September 10, 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 — After a summer of protests aimed at mining companies, members of the Tahltan Nation in northern B.C. say they have shut down an exploratory drilling operation by taking over the site.

“HAPPENING RIGHT NOW!!!!” states a Monday night posting on the Facebook page for Tahltan elders. “The Klabona Keeper members are occupying a black hawk drill pad above Ealue Lake!!!”

The elders’ group, which is based in Iskut just south of Dease Lake, has staged several protests in the area in recent years blocking resource companies from working in a place known as the Sacred Headwaters. The region is highly valued by the Tahltan because it holds the headwaters of three important salmon rivers – the Stikine, Skeena and Nass.

Rhoda Quock, a spokeswoman for the Klabono Keepers, said Tuesday a group of protesters hiked to the remote drill site and took it over.

She said Black Hawk Drilling Ltd., a Smithers, B.C., company that works for Firesteel Resources Inc. of Vancouver and OZ Minerals of Australia, flew its drilling crew out after the occupation began.

Ring of Fire: Miners urged Ont. to ‘seize opportunity’ – by Carol Mulligan (Sudbury Star – September 10, 2014)

September 10, 2014

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

There are many reasons it’s taken longer to develop the Ring of Fire than expected, and there are lessons to be learned from that.

One is when the mining industry tells government, “You’ve got to seize the opportunity,” it’s true, says the president and chief executive officer of the Mining Association of Canada.

That’s what the industry told the government of Ontario several years ago when metal prices were really strong, said Pierre Gratton.

It would be good to have some of those mines in production or at least going into construction now, Gratton told The Sudbury Star before speaking at the 2014 North America Mining Expo Gala Dinner on Tuesday night at the Caruso Club.

“Now it’s more challenging for the Noronts of this world to raise capital,” said Gratton, “and it’s all been because we’ve struggled with issues we ought not to be struggling with.”

They include roads, who owns what land, protracted government issues and uncertainty around First Nations and their level of participation in developing the area. On a more positive note, Gratton said some of the building blocks for real long-term success in the Ring of Fire are being put into place.

Nickel price rally still has a long way to go – by Frik Els (Mining.com – September 9, 2014)

September 10, 2014

http://www.mining.com/

Indonesia, supplying more than a fifth of global exports, surprised the mining world in January by putting into effect an outright ban on nickel ore exports.

Initially record warehouse inventories, massive stockpiling by Chinese pig iron producers and growing mine supply kept a lid on the price which was languishing at near five-year lows below $14,000 a tonne at the start of the year.

But the Asian nation, against expectations, stuck to its guns and the ban, in combination with fears that tensions with Russia could affect supply from top miner Norilsk, sent the price of the steelmaking ingredient above $20,000 in May.

The price subsequently pulled back from those levels, but last week saw nickel take another stab at $20,000 a tonne after the Philippines – the only other source in the region of high-grade laterite ore required by China and responsible for 9% of global mine supply – hinted that it may follow Indonesia’s playbook.

Even before suggestions of an ore export ban Philippine supply has been sketchy

Nickel was last trading at $18,750 and is up 35% in 2014, but expectations are for the price to appreciate sharply this year and next. Capital Economics, a research house, says Chinese pig iron makers are likely to have run down their stocks by the first half of next year.

First Nations leadership complain of inadequate Ring of Fire consultation from province – by Matt Vis (tbnewswatch.com – September 10, 2014)

September 10, 2014

http://www.tbnewswatch.com/

Neskantaga First Nation, Ont. — Another First Nation close to the Ring of Fire is calling out the Ontario government for their handling of the newly created development corporation.

Neskantaga First Nation chief Peter Moonias last week sent a letter to Premier Kathleen Wynne, Minister of Northern Development and Mines Michael Gravelle and Minister of Natural Resources Bill Mauro, expressing disappointment with inadequate consultation from the province.

“It didn’t happen in this case,” Moonias said in a telephone interview Tuesday, saying he was not contacted until shortly before the announcement.

“It’s not that I don’t support (the development corporation). It’s just the way it was done. The framework agreement was signed by the chiefs and the province of Ontario to work together to develop the Ring of Fire together with decisions being made by the province and First Nations communities.”

The province in late August officially created the development corporation, a non-profit organization first announced late last year that is intended to bridge together First Nations, industry and senior levels of government to propel Ring of Fire development.

It became a pillar of the Liberal government’s Ring of Fire development strategy in the spring election, with Wynne vowing to establish it within 60 days of taking office.

Making sure First Nations gain from resource development – by Brian Davey (Onotassiniik Magazine – Fall 2014)

September 10, 2014

http://onotassiniik.com/

Brian Davey is the Executive Director of the Nishnawbe Aski Development Fund

Much has been said about the Ring of Fire, impact and benefit agreements, new mines coming online, new infrastructure and employment opportunities. Many First Nation communities are probably wondering how we will actually benefit, or more importantly, how do we make sure we benefit? The last thing we want is a repeat of years gone by where First Nations received little or no benefit in terms of the business and employment opportunities stemming from resource development.

The first thing First Nation leaders must decide is whether we accept the outside government’s decision-making process on mines and related infrastructure, including whether the project is environmentally sound or has the approval to proceed. If the answer is ‘no,’ we should not engage in any form of participation that could be interpreted as consultation. If we do accept the framework that includes the government’s environmental assessment process and its right to permit, subject to our meaningful consultation or consent, then we are also telling our people that we are ready to negotiate with the developer in good faith to develop the traditional lands on behalf of our people.

For some, this may mean we are parking the sovereignty issue and our understanding of the Treaty. This may not be acceptable for some Treaty people, while others will be unwilling to risk the potential of losing opportunities that could lead to better living conditions. After all, the intent of the Treaty is to take care of our well-being for the benefit of our people.

Whatever we decide as a people, one thing is certain: resource development is not going away. There will be tremendous pressure on the community if a project has a valid business case, where governments, including First Nations, stand to make millions or billions of dollars over the long term.

Recent Mining Disasters Underscore Significant Challenges Posed by Huge Open Pit Mining Projects – by Frances Causey (Huffington Post – September 9, 2014)

September 10, 2014

http://www.huffingtonpost.com/green/

Frances Causey is a documentary filmmaker and journalist.

The Mount Polley mining disaster on Aug. 4 in Canada’s Cariboo Regional District is being called possibly the worst environmental disaster in British Columbia history. A tailings dam collapsed at an open pit copper and gold mine tailings dump, sending huge volumes of toxic waste into critical waterways 370 miles north of Vancouver, British Columbia. The environmental catastrophe wreaked havoc throughout the region, initiating an emergency drinking water ban, severely damaging the region’s important sockeye salmon habitat, a critical food and income source for the area’s First Nation’s communities and abruptly putting a halt to the area’s vibrant tourism.

Years before the disaster, the B.C. Ministry of Environment repeatedly warned the Mt. Polley mine owner, Imperial Metals, that the waste water level of the Mt. Polley tailings pond was too high. The Mt. Polley spill is being compared to the Exxon Valdez disaster in 1989, which spilled 11 million gallons of crude oil into Prince William Sound in Alaska.

The area around the Valdez spill contained a thriving spring herring fishery that has not fully recovered and may never, according to government scientists. The impact and cost to clean up the Mt. Polley spill is still being evaluated and will be for years to come, but one can’t help but wonder what the sockeye salmon run there will look like in 25 years.

And just last week, 25 miles across the border from Arizona, Grupo Mexico’s Buenavista copper mine in Canenea, Sonora, had a tailings dump failure that poured 10 million gallons of copper sulfate acid into a river that supplies water to tens of thousands of people living in rural areas along the Rio Sonora. The river of orange poison reportedly is killing livestock and wildlife.

Odisha [India] to ensure long-term [chrome, iron] ore supply to industries (Times of India – September 9, 2014)

September 10, 2014

http://timesofindia.indiatimes.com/defaultinterstitial_int.cms

BHUBANESWAR: The Odisha government on Monday decided to put in place a long-term raw material linkage policy to supply iron ore and chrome ore to industries that have signed MoUs with it.

The decision, taken at a meeting of the state cabinet headed by chief minister Naveen Patnaik, aims at encouraging establishment of mineral-based industries in the state, official sources said.

It follows repeated demands from different industrial houses for assured raw material supply. “The Odisha Mining Corporation will enter into five-year contracts with industries having MoUs with the state government,” chief secretary Gokul Chandra Pati said, briefing mediapersons.

The state-owned corporation will provide half of its production or iron ore to such industries while it would sell the rest in the open market. “The industries will get assured supply, but will have to pay the market price,” the chief secretary noted.

Official sources said the OMC will have a sales agreement with such industries akin to central PSUs National Mineral Development Corporation and Mahanadi Coalfields Limited. “We will consider supplying bauxite and manganese through similar arrangements in future,” a senior officer said.

In Canada’s north, a suicide epidemic – by Colin Alexander (National Post – September 10, 2014)

September 10, 2014

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

Colin Alexander was publisher of the Yellowknife News of the North and senior consultant for education for the Ontario Royal Commission on the Northern Environment.

Today, September 10, is World Suicide Prevention Day — a day with special significance for traditional Indians, Inuit and the Canadian North.

In 2013, there were 45 suicides in Nunavut, almost entirely among the Inuit population of 27,000. That’s a new statistical peak since the founding of the territory in 1999. That rate comes to 166 per hundred thousand. If this pattern played out in Ottawa, with a population of 900,000, the city’s annual rate would be about 1,500, or four per day.

The suicide rate in Nunavut is almost five times the world’s highest national rate of 35 per hundred thousand in Lithuania. There, many of the suicides derive from financial problems among older and working-age people. But among Canada’s Indian and Inuit, the incidence is concentrated among male youth, with one suicide, in 2013, of a boy of 11, in Repulse Bay.

The overall suicide rate in Canada has been holding fairly steady at about 12 per hundred thousand. So the Nunavut rate is running 14 times the national average. By comparison, the rate of shooting homicides in Canada holds steady at under two per hundred thousand (with a significant proportion of them gang-related, and also disproportionately among aboriginals in dysfunctional communities.)