COLUMN-LME zinc stocks cancelled – signal or noise? – by Andy Home (Reuters U.S. – September 19, 2014)

 http://www.reuters.com/

(Reuters) – The zinc rally has run out of steam. The galvanising metal is still, just, the second-best performer among the base metals traded on the London Metal Exchange (LME) this year. But the benchmark LME three-month price has over the last couple of weeks retreated from above $2,400 per tonne to a current $2,260.

Some of the hot money that drove the price higher over June and July has left the market. The LME’s Commitments of Traders Report showed money managers trimming their net long position by 12,271 lots, or 306,775 tonnes, in the week to Sept. 12.

Given the likely preponderance of technical funds in that category, this collective rush for the exit may have been no more than a reaction to the loss of upside momentum and the subsequent price decline.

The real problem for zinc’s many bull followers is the gap between expectation and reality. The zinc story is one of looming supply crunch as some of the world’s biggest mines come to the end of their operating lives. But there is still scant evidence of any stress in the zinc supply chain.

Global mined and refined production are still rising and there are ample stocks of concentrate and metal to fill any emerging gap with demand. The rally, in other words, had got ahead of the story, leaving the London market vulnerable to precisely the sort of speculative blow-off experienced this month.

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Mining companies must win hearts and minds or face further opposition – by Simon Rees (MiningWeekly.com – September 19, 2014)

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

“We know the Ring of Fire’s future will not be determined within the region
itself but in southern Ontario, where the majority of the political ridings
are,” she noted. “Or it will be decided [in Ottawa] to the extent that the
federal government is involved.”

“So we must win the hearts and minds of those people sitting at home because
that’s how your project is going to be approved,” she said, stressing that
meaningful CSR and engagement with locally affected communities was one of
the best methods of doing this. (Kate Lyons)

TORONTO (miningweekly.com) – Opposition to the extractive industries continues to grow in Canada, with increasing influence on decisions that surround project approval, delegates at the Canada-Southern Africa Chamber of Business risk mitigation and corporate social responsibility (CSR) seminar were told last week.

“The world of the stakeholder is large. From the comfort of a home heated by natural gas or cooled by electricity, and probably using a device laden with metals, a person can discover whether they are ‘against’ an industry,” Goodmans partner Kate Lyons said.

Opposition can develop among thousands of people living many kilometres away from a mining region, their opinions shaping and influencing project outcomes. Lyons highlighted northern Ontario’s Ring of Fire as an example.

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Gold price low and heading lower – by Evan Schwarten (Sydney Morning Herald – September 19, 2014)

 http://www.smh.com.au/

Gold prices are set to fall to a multi-year low as the US Federal Reserve winds back stimulus and contemplates lifting interest rates.

Gold has fallen to its lowest level since January and analysts say the slide is likely to continue, putting a number of Australian gold producers under threat.

The metal has fallen from more than $1,300 an ounce in August to around $1,220 and CMC Markets chief market strategist Michael McCarthy expects it to move towards its multi-year-low of $1,180 within weeks.

And he doesn’t expect that level to hold in the longer term. “With the fundamentals running against it and no sign of inflation, it’s hard to see what will hold it and we could be looking at new multi-year lows,” he said.

The key factor pushing gold prices up in recent years has been the US Federal Reserve’s economic stimulus program, which has pushed the US dollar lower and boosted demand for safe haven investments like gold and bonds.

But the Fed will completely wind back its asset purchases in October and is expected to start lifting interest rates in 2015, which is bad news for gold.

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New planning tool could lead to ‘better results, less confrontation’ – by Bryan Phelan (Wawatay News – September 18, 2014)

http://wawataynews.ca/

Representatives of environmental groups and Matawa First Nations Management (MFNM) had preliminary talks earlier this year about Regional Strategic Environmental Assessment (R-SEA) as a new planning tool for the Ring of Fire.

The Canadian Council of Ministers of the Environment once praised R-SEA as “an inherently proactive approach” and “a means to ensure that planning and assessment for a region support the most desired outcomes rather than the most likely one.”

There are numerous examples from around the world where R-SEA has been used successfully, including in Vietnam, Mauritius, Ghana, and Sierra Leone, says Anna Baggio, director of conservation planning for Wildlands League. “It produces better results and helps avoid confrontations and legal challenges.”

Baggio organized a meeting in February when informal discussion of an R-SEA for the Ring of Fire took place. In addition to Wildlands League, other environmental groups represented at the gathering were Mining Watch, WCS (Wildlife Conservation Society) Canada, and Ecojustice. Also present were various Matawa advisors and experts, Baggio said.

She anticipated a follow-up meeting after the nine chiefs of the Matawa tribal council and the Ontario government signed a framework agreement in March for negotiations on development in the Ring of Fire.

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China economic stimulus is like drinking beer – by Clyde Russell (Reuters U.S. – September 18, 2014)

http://www.reuters.com/

LAUNCESTON, Australia, Sept 18 (Reuters) – Many years ago my first-year economics lecturer at university used beer to explain the law of diminishing marginal utility.

While the first beer on a Friday night tastes great and gives immense satisfaction, each subsequent drink delivers less until you stop enjoying yourself, and eventually the utility becomes negative at the point where the alcohol makes you ill.

This was one of the few economic theories I grasped instantly as it was relevant and easily understood by an 18-year enjoying the new-found freedom of university life.

These days it strikes me that the law of diminishing marginal utility applies to efforts by the Chinese authorities to stimulate their economy in order to maintain growth close to the target of 7.5 percent per annum.

Each subsequent stimulus effort appears to deliver less of a kick to economic growth, and in some instances just seems to further fuel the imbalances that imperil the Chinese economy.

Of course, not all the stimulus efforts are equal, unlike my beer example, and therefore couldn’t have been expected to deliver equal outcomes. The point is that they appear to be delivering less in the way of economic growth each time, and for shorter periods.

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Posco sees Indonesia as a hot spot – by Joo Kyung-Don (Korea JoongAng Daily – September 18, 2014)

http://koreajoongangdaily.joins.com/

CILEGON, Indonesia — Sweat comes easily and often in Indonesia, where average daytime temperatures reach a humid 33 degrees Celsius (91 degrees Fahrenheit). And the hottest place in the country just might be Krakatau Posco, Southeast Asia’s first integrated steel mill.

“If you look at the history of steel industry, there is no mill on the Equator because it’s not easy to work in hot weather,” says Min Kyung-zoon, president of Krakatau Posco. “We are doing something that is outside the realm of common sense.”

The mill is a joint venture of Korea’s largest steelmaker, Posco, and Indonesia’s state-run steelmaker, Krakatau, in which the Korean company has a 70 percent stake.

It takes about 90 minutes, depending on Jakarta traffic, to drive to the industrial city of Cilegon on the northwest coast of the island of Java. Here, Posco is trying not only to make appositive change in the city, but in all of Indonesia.

For Posco, the success of Krakatau Posco – which has an annual capacity of 1.5 million tons each of slabs and steel plates – is important because it is the company’s first integrated steel mill overseas.

Considering that Posco was established 46 years ago in Pohang, North Gyeongsang, primarily by acquiring foreign technologies and know-how, it also signals the company’s evolving role in the global steel industry.

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Iron ore mafia flourish despite police action – by Naresh Chandra Pattanayak (Times of India – September 18, 2014)

http://timesofindia.indiatimes.com/international-home

KEONJHAR: The authorities in the past few days have crack down on iron ore smugglers in Keonjhar district, making several seizures of illegally-extracted ore. However, such action has done little to daunt mineral mafia of the region.

Sources alleged that authorities here are hand in glove with the ore smugglers and arrest only the small fish, allowing actual criminals to operate freely.

On Friday, 130 MT of illegally extracted ore was seized from Dumirta village in Sidhamatha reserve forest. On Thursday, 309 MT of iron ore was recovered from the reserve forest. On Wednesday, the mining department seized 400 MT ore from Murga-Bilepada road near Deojhar railway siding.

Around 839 MT iron ore worth Rs 20 lakh have been seized from Joda mining area in the past few months. Police and mining department officials have also seized several tippers, trucks and light vehicles carrying stolen iron and manganese ore.

Despite multiples raids in various forest areas to curb mineral theft, mineral mafia are continuing their activities in Joda, Bamebari, Rugudi, Barbil and Bolani police limits with impunity. Illegal mining is rampant in Sidhamatha, Kundurpani, Roida, Chormalda,Thakurani, Mahaparvat, Kalaparvat, Tankura, Murga reserve forest and some mining leased areas that are lying abandoned.

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Environmental groups pitch planning solution for Far North – by Bryan Phelan (Wawatay News – September 18, 2014)

http://www.wawataynews.ca/radio

Ontario’s three major political parties promised during the 2014 provincial election campaign to speed mining development in the Ring of Fire.

At the same time, however, two environmental groups were making finishing touches on a report calling for the province to put the brakes on that development, at least for now.

Just four days after the Liberals were re-elected to power in June, the environmental groups Wildlife Conservation Society (WCS) Canada and Ecojustice released a report suggesting Ontario needs a whole new approach to planning for the Far North. In the meantime, no Ring of Fire projects should be approved, the groups said in their report, titled Getting it Right in Ontario’s Far North: The Need for Strategic Environmental Assessment in the Ring of Fire (Wawangajing).

The existing legal framework for industrial development in the region is “broken,” said Anastasia Lintner, a lawyer and economist who co-authored the report on behalf of Ecojustice along with a conservation scientist from WCS, Cheryl Chetkiewicz. Part of the problem, they showed, is that planning taking place now is piecemeal and narrowly focused on individual projects or pieces of projects. “The Far North faces uncoordinated resource development with little consideration for cumulative impacts (of multiple projects),” the co-authors wrote in the report’s summary.

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As heat leaves mining, rest of Australia gets to breathe – by Wayne Cole (Reuters India – September 19, 2014)

http://in.reuters.com/

Sydney – (Reuters) – Australia’s miners face tough times amid a meteoric fall in the price of their cash cow, iron ore, but there are plenty of reasons to believe the rest of the economy can weather the storm and perhaps even profit from it.

Instead, the cool down in mining should be a relief since it offers breathing space for the 90 percent of the economy that doesn’t involve digging up resources – much of it sucked up by China, Australia’s major export market.

“Essentially we were told we had to make way for the miners – so put up or shut up,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital.

“Now mining is fading the rest of the economy can rebalance. We’ve had relief on rates, debt servicing costs are down, home prices are up and the Aussie dollar should ease over time,” he added. “Really, we should be celebrating.”

That is not to belittle the contribution of mining, or China’s importance, to the economy. The hundreds of billions spent on resource projects helped Australia sail through the global financial crisis relatively unscathed, and extend its enviable record of avoiding a recession for 23 years.

That investment is also fuelling a sharp rise in export volumes, which is helping temper the drag from falling prices which has seen iron ore shed 37 percent so far this year.

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Lalor and Reed mines officially opened – by Ian Graham (Thompson Citizen – September 19, 2014)

The Thompson Citizenwhich was established in June 1960, covers the City of Thompson and Nickel Belt Region of Northern Manitoba. The city has a population of about 13,500 residents while the regional population is more than 40,000.  editor@thompsoncitizen.net

NDP Mineral Resources Minister Dave Chomiak attended official opening ceremonies for Hudbay’s Lalor and Reed mines in the Snow Lake area Sept. 16, saying the projects would create 373 jobs and pour millions of dollars into the local and regional economy.

“Mining has been an important part of Manitoba’s economy for decades and these new mines will produce real benefits for local communities including employment for more than 370 workers,” said Chomiak in a news release. “These are good jobs that will help improve living standards and create significant economic growth.”

The Lalor mine is 13 kilometres west of Snow Lake and contains gold, copper, zinc and silver and is expected to be in production until 2030 and beyond. The total budget for construction of the mine is $441 million and its ore will be processed at the refurbished Snow Lake concentrator, which now has a capacity of 2,700 tonnes per day.

The Reed copper mine, which was approved on Sept. 24 last year, is in Grass River Provincial Park, 45 kilometres south-southwest of Snow Lake, and is a joint venture between Hudbay and VMS Ventures Inc., 70 per cent owned by Hudbay. Chomiak said the copper reserves at the Reed Mine have an estimated value of $800 million. Highway 39.

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Democrats Try To Stop Coal Industry From Swindling Sick Miners – by Dave Jamieson (Huffington Post – September 18, 2014)

http://www.huffingtonpost.com/politics/

WASHINGTON — Senate Democrats rolled out a plan Thursday that they said would make it harder for coal companies to cheat miners suffering from black lung disease out of the benefits they should be entitled to.

The bill, proposed by Sens. Bob Casey (D-Pa.) and Jay Rockefeller (D-W.Va.), is designed to reform the legal system administering workers’ black lung claims so that lawyers and doctors working for the coal industry can’t game it so easily.

“We’ve seen in the last year the scourge of black lung and the tremendous difficulties miners have in claiming benefits,” Casey said on a call with reporters Thursday. “These hard-working miners and their families deserve much better.”

Among other measures, the legislation would require companies to fully disclose all the medical evidence in individual cases, ramp up criminal penalties for false statements by lawyers and doctors, and give miners better access to health assessments when companies dispute their claims.

The reforms directly address the findings of an investigative series published by the Center for Public Integrity last year. The stories by reporter Chris Hamby detailed how lawyers and doctors on the coal industry payroll have managed to defeat miners’ benefit claims by misdiagnosing illnesses and withholding critical evidence.

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Keystone XL battle in Year 6: How a pipeline grew into a political phenomenon with a life of its own – by Yadullah Hussain (National Post – September 19, 2014)

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

Friday marks the sixth year to the day TransCanada Corp. filed an application with the U.S. State Department to build the 1,897-kilometre pipeline. Since then it has become not only the most polarizing energy project in North America, but also has taken on a life of its own almost separate from the Calgary-based company that proposed the project.

“Keystone XL is a political phenomenon that has gone to a place that no company would want – it is symbolic of a lot of different things,” said Sarah Ladislaw, director and senior fellow, energy and national security program at Washington, D.C.-based Centre for Strategic and International Studies. “It is used now as a short-hand … to signal ideological divisions.”

For the industry, the controversial project is seen as an efficient access point to its key market in the Gulf Coast; for environmentalists it is a portal to climate hell. For others it is neither an access issue or environmental cause célèbre.

For Dave Domina, a lawyer and Democrat candidate for the U.S. Senate, it is about re-enforcing landowners’ rights. Mr. Domina has been making the case for landowners against the Nebraska governor’s approval of the pipeline’s route in front of the state’s Supreme Court in Lincoln, Neb.

“All of my work in this lawsuit has been focused on protecting these landowners,” Mr. Domino said in a phone interview from Lincoln. “That’s what this case is about – it is a siting and landowner’s rights issue. There is no environmental dimension to my work as a lawyer here.”

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Ebola and Mining: The need for action – by BEn Hagemann (Australian Mining – September 5, 2014)

http://www.miningaustralia.com.au/home

The African continent is rich in mineral reserves, and a great deal of interest has been generated in Australian companies wishing to invest, explore and mine there.

Interest in the prospect of investing in Africa has grown over the past five years to a reported $686 billion worth of discoveries across the continent with Australian involvement.

The Africa Downunder Conference in Perth focussed on the upturn in sentiment for investment there, however a discussion about the recent Ebola outbreak in western Africa highlighted one of the key concerns in terms of making positive investments in the region: Stability.

Dr David Heymann, director and head of global health security at the British policy think tank Chatham House, addressed the Perth conference on the subject of Ebola with some positive, albeit grisly news.

Heymann said that a robust response was needed to prevent the spread of the disease, and despite the difficulties with a wide area distribution through Guinea, Sierra Leone and Liberia, he was “fairly certain that it will be contained and it will stop spreading.”

“It’s too virulent, it kills people too rapidly and it’s very easy then to get rid of,” he said.

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Time to stop ‘saving’ U.S. Steel Canada – by Peter Foster (National Post – September 19, 2014)

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

Five years ago, outside the gates of U.S. Steel Canada’s Nanticoke plant on Lake Erie, unionized workers sported a sign reading “Guantanamo North.” The sign might have been accurate if the company had been trying to lock workers in rather than out, but its main significance lay in indicating the poisonous relations between the United Steelworkers and U.S. Steel, which had taken over the plant as part of its acquisition of Stelco in 2007.

This week the union was again posturing angrily following the announcement that U.S. Steel Canada has filed for bankruptcy protection. Since the end of 2009, it has suffered an aggregate loss of US$2.4-billion. Its liabilities surpass its assets by around US$2 billion. The company also announced this week that expansion plans north of the border were being shelved. The news sent the shares of parent U.S. Steel to a three year high.

Analysts have suggested that the need for protection be laid at the door of poor management, and that may well be a factor. However, at least as important is the Great Recession of 2008-2009. Meanwhile there are other major culprits: principally the Ontario and federal governments, with President Obama’s Buy American policies another major negative factor.

Ontario’s attempt to make Stelco a more desirable purchase by providing a forgivable loan to U.S. Steel, provisional on refurbishing Stelco’s depleted pension fund, has turned out to be a millstone. The fund is at least $800-million underwater, with requirements for the company to kick in further hundreds of millions of dollars in coming years.

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Japan’s predicament a boon for future of energy exporters – by Brian Milner (Globe and Mail – September 18, 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.

This is another of an occasional series from The Globe and Mail’s Brian Milner, who visited Japan to assess the results of dramatic efforts to revitalize the world’s third-largest economy.

One commercial office building in Tokyo’s busy Uchisaiwaicho district is notable for its constant police presence. That’s because it’s the headquarters of Tokyo Electric Power Co. (TEPCO), provider of power to nearly 30 million people and one of Japan’s more reviled companies.

TEPCO gained its spot in the Hall of Shame over its dreadful handling of the Fukushima nuclear disaster triggered by the massive earthquake and tsunami in March, 2011, as well as subsequent revelations of poor maintenance and safety flaws and anger over the slow pace of compensation. Huge anti-nuclear demonstrations followed, and the public outcry has scarcely abated. As recently as its annual meeting in June, management had to fend off activist shareholders demanding a permanent end to nuclear power.

Now, a year since the complete shutdown of the rest of Japan’s 48 reactors for safety checks, those demands have taken on new urgency. The Nuclear Regulation Authority, the government’s watchdog, has given the green light for another utility, Kyushu Electric Power Co., to restart two reactors at its Sendai plant in southwestern Japan. Other utilities are seeking the go-ahead to turn another 18 reactors back on.

Prime Minister Shinzo Abe needs to get at least part of the country’s substantial nuclear capacity back on line to cut a soaring energy import tab – including hefty government subsidies – that makes Japanese industry less competitive and presents one more obstacle to his recovery strategy.

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