September 18, 2014 – Republic of Mining

Cliffs wants out of the Ring of Fire – by Staff (Northern Ontario Business – September 18, 2014)

September 18, 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.

Cliffs Natural Resources is considering selling its Ring of Fire chromite properties, and a Toronto junior miner operating in the remote region of Ontario said it’s arranging the financing to take control of the project.

KWG president-CEO Frank Smeenk told the Globe and Mail newspaper he has discussed a transaction with new Cliffs boss Lourenco Goncalves, who is eager to sell the dormant Far North project as the new corporate blood at the Ohio miner looks to divest itself of its international projects and focus on its core U.S. iron assets.

Smeenk declined to tell the newspaper of his source of funding, but he expects it to be in place very soon. Goncalves was named chairman, president and CEO on Aug. 7 after a New York hedge fund, Casablanca Capital, toppled management in a proxy battle. He replaced Gary Halverson, a Sudbury native, as CEO.

Smeenk had met with Casablanca officials at Cliffs’ annual shareholders meeting in July and pitched the concept of a partnership with the fund with KWG being the development vehicle in the Ring.

Earlier this week, rumours began circulating that Cliffs had sent a letter to First Nation chiefs that it was considering selling its chromite properties in the James Bay region.

Colorado’s coal mining industry in dire straits as EPA rules tighten noose – by Henry Lazenby (MiningWeekly.com – September 18, 2014)

September 18, 2014

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

DENVER, Colorado (miningweekly.com) – Colorado has been blessed with a bounty of minerals that has historically played a critical role in ensuring the state’s economic success; however, new legislative measures has cast doubt over the future stability of the region’s coal mining industry.

Increasingly strict legislation aimed at reducing the US’s reliance on coal-fired electricity was making residents nervous about impending rising electricity rates, as cheaper coal-fired power plants are forced to shut down in favour of more expensive sources of energy, while removing a critical prop that underpinned local economies.

COAL IN DISTRESS

In June, the US Environmental Protection Agency (EPA) introduced its toughest action yet to cut down on carbon emissions, ordering a 30% reduction in carbon dioxide emissions from power plants from 2005 levels by 2030, which did not augur well for struggling North American thermal coal producers, which had earlier this year expressed some optimism for recovering prices.

Under the direction of US President Barack Obama, the Clean Power Bill would be implemented through a state-federal partnership, under which states would identify a path forward using either current or new electricity production and pollution control policies to meet the programme’s proposed goals.

Ontario’s ‘Ring Of Fire’ In Limbo: Cliffs Resources Says It Wants Out – by Sunny Freeman (Huffington Post – September 18, 2014)

September 18, 2014

http://www.huffingtonpost.ca/news/staking-claim/

The largest player in the efforts to develop large-scale mining in Ontario’s Ring of Fire is signalling that it is looking to unload its $3.3-billion project in the region.

Cliffs Natural Resources said Thursday that it sent a letter to the Marten Falls First Nation to alert the band that it is exploring “strategic alternatives,” which could include a sale of its stalled Black Thor chromite project. The U.S. mining giant has been struggling with debt amid low commodity prices in recent years.

Marten Falls is one of nine First Nations that will be most affected by development in the 5,000 square kilometre crescent believed to contain $50 billion worth of mineral deposits. “We should expect there will be a change, with a sale of the project one of the potential outcomes,” Cliffs executive Bill Boor said in the letter, The Globe and Mail reported.

Cliffs spokeswoman Patricia Persico said the letter was sent only to the Marten Falls First Nation to update them on the company’s situation, as it directs resources to focus on its iron ore business.

“Marten Falls First Nation is an important stakeholder to Cliffs and this business update is part of our normal course of business with them,” she told Huffington Post Canada.

KWG Resources, which already has a chromite project in the area, said Thursday that it is in talks with Cliffs to acquire the stalled Black Thor project and is looking into how to finance a deal.

Anglo ‘reaping benefits’ of diversified base – by Paul Garvey (The Australian – September 18, 2014)

September 18, 2014

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

ANGLO American chief executive Mark Cutifani says the downturn in coal and iron ore prices has reinforced his faith in the mining giant’s diversified asset base, in contrast to the efforts by BHP Billiton to jettison its non-core commodities.

Speaking to The Australian, Mr Cutifani said a “tough” outlook for iron ore and coal contrasted with the improved conditions in other Anglo American commodities such as diamonds and platinum.

As a result he said he had ruled out Anglo following a similar path to BHP, which last month announced it would spin off its aluminium, manganese, nickel and silver operations and some of its coal mines into a new vehicle.

“The diversity in our portfolio is working for us today. Everyone else is struggling in iron ore and coal in particular, but we’ve got a diamonds business that is going really well, our platinum portfolio looks like it’s starting to rise from the ashes, and nickel,” he said.

“While like everyone we’re suffering a little in the bulks, we’re doing very well in other areas.” Mr Cutifani said Anglo American had a more even spread of quality throughout its various assets than the other diversified miners such as BHP and Rio Tinto.

Goldcorp’s Jeannes Sees Limit to Output Growth – by Liezel Hill (Bloomberg News – September 18, 2014)

September 18, 2014

http://www.bloomberg.com/

Goldcorp Inc. (G), the Canadian producer starting up three new mines to boost output 50 percent, says there’s such a thing as too much gold.

The largest producer by market value, which expects annual output to reach as much as 4 million ounces by 2016, would prefer to fine-tune its mining assets to increase profitability than just keep growing to a point where it’s difficult to replace reserves, Chief Executive Officer Chuck Jeannes said.

“That means constantly trying to add high-quality things and, as we do that, dispose of the non-core things,” Jeannes said in an interview this week at the annual Denver Gold Forum. “We don’t want to be 7 or 8 million ounces.”

While Goldcorp has pressed ahead with expansion in the past year, other large producers have suspended projects, sold mines and curbed output as the industry grapples with faltering metal prices. Barrick Gold Corp. (ABX), the biggest by sales, has forecast 2014 output of 6 million to 6.5 million ounces this year, which would be the lowest in nine years, according to data compiled by Bloomberg. Barrick’s output peaked at 8.64 million ounces in 2006, the data show.

Jeannes’ view on future growth is “good to hear,” said Chris Mancini, an analyst for the Gabelli Gold Fund, which has about $260 million under management, including Goldcorp shares.

Human rights group sues SEC over delays on resource extraction rule – by Sarah N. Lynch (Reuters India – September 18, 2014)

September 18, 2014

http://in.reuters.com/

WASHINGTON – (Reuters) – A human rights organization sued the U.S. Securities and Exchange Commission on Thursday, saying the agency is “unlawfully” delaying work on a rule that would require oil, gas and mining companies to disclose payments they make to foreign governments.

Oxfam America, which has been championing the disclosure rule, said in the suit that the SEC’s failure to complete work on it directly violates a deadline set by Congress.

The group’s complaint, filed in the U.S. District Court for the District of Massachusetts, is focused on a measure required by the 2010 Dodd-Frank Wall Street reform law known as the “resource extraction” rule.

It requires oil, gas and mining companies to disclose how much they pay governments in taxes, royalties and other types of fees for exploration, extraction and other activities. The resource extraction rule has been the target of litigation numerous times.

Oxfam America also sued the SEC over delays on the rule in 2012. A few months later, the SEC adopted a final rule. But it then became the legal target of trade groups, including the American Petroleum Institute and the U.S. Chamber of Commerce. Those groups accused the SEC of failing to conduct a proper analysis of the costs the rule imposed on businesses.

Perfect Policy Storm Causes High Nickel Prices – by Tim Maverick (Wall Street Daily – September 17, 2014)

September 18, 2014

http://www.wallstreetdaily.com/

Back in March, I told Wall Street Daily readers that the stars were aligned for a nickel bull market. Sure enough, nickel became a commodities standout this year. It’s up about 40% so far in 2014 at $19,400 per metric ton.

The reason behind the rise was a ban on raw nickel ore exports from Indonesia – the world’s top supplier of high-grade nickel ore. Now the world’s second-largest producer of raw nickel ore, the Philippines, may be following suit.

On top of that, China, a huge consumer of nickel and a major customer of the Philippines, is running low on its once-vast stores of iron ore. This means that the Chinese will be looking to buy nickel from other sources soon. With these two factors looming on the horizon, the market is sure to swing into a deficit in 2015.

With Indonesia out of the picture, the Philippines has become a key cog in the Chinese industrial machine, supplying 98% (that’s five million metric tons) of China’s nickel ore imports. The raw nickel produced by both of these countries is much cheaper than the refined product produced by the other major providers.

Nickel is also crucial for making stainless steel and thus an essential commodity for China. In 2014, exports of raw nickel ore to China tripled and now make up 61% of China’s total nickel ore imports.

GFMS sees gold price ‘recuperating’ – by Lawrence Williams (Mineweb.com – September 18, 2014)

September 18, 2014

http://www.mineweb.com/

GFMS looks for a price bottom at around $1,200 and perhaps the start of a tentative new bull market in late 2015.

LONDON (MINEWEB) – In its latest update to its 2014 Gold Survey, Thomson Reuters GFMS sees gold as entering a period of recuperation, but holds out little hope for any short term price appreciation, with physical demand falling sharply in the first half of the year compared with a year ago. It sees last year’s substantial price falls as highly anomalous and talks of the market regaining its composure.

However the report will have been written ahead of the recent gold price collapse, down to a nine-month low yesterday following some heavy sales on COMEX after the release of the latest statement from the FOMC. (Although, given that it kept its ‘not for a considerable time’ wording for the likelihood of interest rate increases, and no other surprises on tapering, this might actually have been seen as gold positive.)

Indeed we foreshadowed this reaction on Mineweb as a follow-on from a pattern seen in previous FOMC statement gold price reactions whether they were generally seen as gold positive or no.

GFMS reckons the Asian markets over-bought gold during the 2013 price falls and this has affected purchases which otherwise might have been made this year.

A case of buyer’s remorse? What went wrong at U.S. Steel Canada – by Kristine Owram (National Post – September 18, 2014)

September 18, 2014

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

The exuberance that greeted United States Steel Corp.’s purchase of Stelco Inc. in 2007 is a distant memory as the company begins restructuring its Canadian operations under bankruptcy protection.

When the deal was announced seven years ago — shortly after Stelco emerged from its first trip through bankruptcy protection — the tone was as positive as could be. “Our acquisition of Stelco is another example of how we are building value for our stakeholders,” then-U.S. Steel CEO John Surma said when the $1.9-billion deal was announced.

“The fit with U.S. Steel is excellent,” agreed then-Stelco CEO Rodney Mott. “This is an outstanding deal for Stelco’s owners, employees, customers, suppliers and communities.”

But it didn’t turn out that way. Late Tuesday, U.S. Steel Canada Inc. said it had received creditor protection under the Companies’ Creditors Arrangement Act (CCAA), citing an aggregate operating loss of US$2.4-billion since December 2009 and US$1-billion in pension liabilities.

“I am disappointed and sad to see the former Stelco go into CCAA again,” former Stelco CEO Courtney Pratt said in an email. U.S. Steel’s shares rose by more than 10% to a three-year high Wednesday following the announcement, which included a decision not to pursue US$800-million in expansion projects.

Uralkali CEO Says No Talks to Resume Potash Marketing Pact With Belarus – by Alexis Flynn (Wall Street Journal – September 16, 2014)

September 18, 2014

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

Dmitry Osipov Says Potash Firm Has Regained Its Market Share After Splitting BPC

LONDON—Russian potash giant Uralkali URKA.MZ +4.26% JSC has no plans to restore a sales partnership with Belarus, dimming prospects for reviving a global pricing cartel for the fertilizer ingredient.

Share prices of major potash producers in North America, Germany and Israel have rallied this year, partly on hopes that two of the world’s leading producers of the crop nutrient could be reconciled. But Uralkali Chief Executive Dmitry Osipov said in an interview there have been no talks since April and none are planned.

“There are no negotiations going on at the moment with Belarus, with the BPC,” said Mr. Osipov, referring to the Belarusian Potash Co., its trading partnership with state-run Belaruskali OAO that collapsed last summer.

Uralkali’s decision to exit BPC ended an informal global-pricing cartel made up of BPC and North America’s Canpotex Ltd. that once controlled two-thirds of the world’s potash supply. The Russian miner’s move sent potash company stocks plunging last year, sparked a furious response by Belarus and landed the Russian company’s former boss in a Belarusian jail.

Prices that averaged $400 a ton before Uralkali broke away from the BPC fell in the wake of the move, but have since begun to recover.