October 7, 2014 – Republic of Mining

UPDATE 1-Goldcorp’s El Morro mine halted by Chile Supreme Court (Reuters India – October 7, 2014)

October 7, 2014

http://in.reuters.com/

Oct 7 (Reuters) – Chile’s Supreme Court has halted the development of the El Morro gold and copper mine owned by Canada’s Goldcorp, saying that local indigenous groups who oppose the $3.9 billion project need to be better consulted.

The court said on Tuesday that an environmental permit awarded last year should be stopped until a fresh consultation, based on an International Labor Organization convention, has taken place with the local Diaguita community.

Goldcorp has just received the ruling and is reviewing it, spokeswoman Christine Marks said. “Goldcorp remains committed to open and transparent dialogue with its stakeholders.”

The decision is the latest in a string of rulings that have found against mining companies looking to invest in the top copper exporter. Like many of its resource-intensive Latin American peers, Chile is struggling to find a balance between mining-led growth and environmental protection.

Billions of dollars worth of projects have been put on ice or delayed in recent years, snarled up in red tape and opposed by local communities.

Open The Door [Global Nickel Outlook] – by Richard (Rick) Mills (Ahead of the Herd – October 6, 2014)

October 7, 2014

http://www.aheadoftheherd.com/

Nickel is present in over 3000 different alloys that are used in over 300,000 products for consumer, industrial, military, transport/aerospace, marine and architectural applications.

Nickel’s biggest use, about 65 percent, is in alloying – particularly with chromium and other metals to produce stainless and heat-resisting steels. Its primary function is to stabilize the austenitic (face-centered cubic crystal) structure of the steel. Normal carbon steel will, on cooling, transform from an austenite structure to a mixture of ferrite and cementite.

When added to stainless steel nickel stops this transformation keeping the material fully austenite on cooling. Austenitic stainless steels have high ductility, low yield stress and high tensile strength when compared to carbon steel – aluminum and copper are examples of other metals with the austenitic structure.

Another 20 percent is used in other steels, non-ferrous alloys (mixed with metals other than steel) and super alloys (metal mixtures designed to withstand extremely high temperatures and/or pressures or have high electrical conductivity) often for highly specialized industrial, aerospace and military applications.

Australian National University dumps mining stocks as global ‘divestment campaign’ focused on universities starts to gain traction in Australia – by Babs McHugh (Australian Broadcasting Corporation Rural – October 7, 2014)

October 7, 2014

http://www.abc.net.au/news/rural/

A global campaign to get funds and investors to sell their shares in fossil fuels appears to be gaining traction in Australia. There have been announcements by religious, educational and super funds on so called ‘divestment’ of these stocks in recent days.

Over the weekend the Anglican Diocese of Perth decided to sell shares and holdings it has in fossil fuel companies. Bishop Tom Wilmott, who is also the chair of the Anglican Eco Commission, says it plans to put funding into renewable energy investments instead.

“I’m not a financial person, I’m not an accountant, I’m a Bishop and it is for the trustees themselves to determine if they will move from fossil fuel exposed industries and shares into renewables.

“But just take for example the return on coal; over the last two years coal has gone from $125 a tonne to $65, and in the international market the smart money is moving into renewables as well.

“Two weeks ago the Rockefeller family announced they were moving out of petroleum into renewables. Now when a big organisation like that moves from fossil fuels to renewables, you can see where the direction is.”

Bottom reached as upside potential for gold equities grows, IBK Capital – by Simon Rees (MiningWeekly.com – October 7, 2014)

October 7, 2014

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

TORONTO (miningweekly.com) – Opportunities for equity investors seeking to achieve gains from the next upcycle, particularly in the gold space, as the bottom in the market is reached, are growing, IBK Capital president and CEO Michael White told attendees at the recent Cambridge House Toronto Resource Investment Conference.

“We believe that we’re at the bottom, although it’s sometimes difficult to appreciate this because of all the noise, [owing to] the bombardment in headlines we receive every day,” he said, adding that while it was important to keep up with current affairs, “you should always keep your eyes on the bigger picture”.

For White, a bigger picture can be found in gold equities. “I can’t tell you when gold equities will turn up, but I know it will happen. This sector is cyclical; it goes up, it goes down, then it goes back up. I know that to be true, I just can’t time it.

“Still, how do I satisfy myself that we’re at the bottom? How do I satisfy myself that the downside is limited or derisked and that there is an upside? Well, I start by looking at things like the S&P-TSX Global Gold Index. When we assess this from 2005 to 2014, it looks like we’re at the bottom,” he said.

White also recommended looking at exploration and considering the valuations of mergers and acquisitions.

Lundin bulks up on copper with purchase of Freeport mine – by Rachelle Younglai (Globe and Mail – October 7, 2014)

October 7, 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.

Canada’s Lundin Mining Corp. has agreed to buy a Freeport-McMoRan Inc. copper mine for $1.8-billion (U.S.), a move that will double its production as the red metal slumps on fears of weaker Chinese demand.

Lundin’s deal to acquire 80 per cent of Freeport’s Candelaria mining complex in Chile comes at a rocky time in the mining industry. Mining giants such as Phoenix-based Freeport are trying to divest assets to pay down hefty debt loads incurred during the commodity boom.

Meanwhile, economic growth in China, the world’s largest consumer of copper and other commodities, is slowing. And big new copper mines are expected to start producing next year, which will add to an already well-supplied market and likely weigh on prices for some time.

For Lundin, however, the downturn represents a buying opportunity. The base-metals miner will fund the deal through debt and an equity financing.

Toronto-based mining royalty company Franco-Nevada Corp. will help finance the deal by paying Lundin $648-million for a stream of Candelaria’s future gold and silver production. The Candelaria complex includes an open-pit copper mine, infrastructure and the nearby Ojos del Salado underground copper mines.

Rio Tinto rejects Glencore merger approach amid iron ore slump – by Sonali Paul (Reuters U.S. – October 7, 2014)

October 7, 2014

http://www.reuters.com/

MELBOURNE – (Reuters) – Rio Tinto rejected a merger approach from smaller rival Glencore Plc to create a $160 billion mining and trading giant in August just as the price of its most profitable product, iron ore, slid toward a five-year low.

The miner said on Tuesday Glencore had contacted it about a potential merger in July, adding that it turned Glencore down in August and there had been no further contact between the companies on a deal.

A merger would have created the world’s biggest miner, supplanting BHP Billiton. “The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto’s shareholders,” Rio Tinto said in a statement to the Australian stock exchange.

Rio’s Australian shares jumped as much as 4.7 percent to a 9-day high of A$60.28 in a weaker broader market after the company issued the statement.

Rio revealed the approach after Bloomberg reported that Glencore had talked to Rio’s top shareholder, Chinese state-owned Aluminum Corp of China (Chinalco) [ALUMI.UL], to gauge its interest in a deal.

Glencore, Rio Tinto merger whispers leave analysts skeptical over financial details – by Eric Reguly (Globe and Mail – October 7, 2014)

October 7, 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.

ROME — Is Glencore CEO Ivan Glasenberg about to strike again? The great white shark of the global commodities industry is laying the groundwork for a blockbuster deal that would see Glencore Xstrata PLC merge with Rio Tinto Group to create a mining giant that would displace BHP Billiton Ltd. as the world’s top mining company, Bloomberg reported on Monday.

A Glencore spokesman in Switzerland would not confirm or deny that Glencore, the world’s biggest trader of commodities, from coal to grain, is contemplating a merger with Rio Tinto. “No comment,” he said.

Rio Tinto said late Tuesday that it had rejected a merger approach from its smaller rival in August, finally responding to a string of media reports over the past month that have said Glencore wanted to merge with Rio. It also said there had been no further contact between the companies on a merger.

“The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto’s shareholders,” Rio Tinto said in a statement to the Australian stock exchange.

The American depository receipts (ADRs) of Rio shot up 18 per cent after the Bloomberg story appeared, then slipped back for an 8 per cent gain. On the London exchange, Rio shares rose 1.6 per cent, giving it a market value of £56.3-billion.

Junior exporers find way to survive – by Barry FitzGerald (The Australian – October 7, 2014)

October 7, 2014

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

The way veteran minerals economist Richard Schodde from MinEx Consulting sees it, the junior explorers are the cockroaches of the market in that they seem to be able to survive nuclear winters.

Which is just as well, given that there has been no joy for the sector on the commodity price front of late.

The economist in Schodde backs up his assessment that the juniors are supreme survivalists with some hard numbers from an in-depth study, all of which is posted on MinEx’s website (http://www.minexconsulting.com/publications.html).

Basically, Schodde says that most junior companies will weather the current downturn. Shareholders might not be enjoying the experience but at least their bits of paper will continue to be worth something. Pick the right juniors, and they could even make serious money.

In the study, Schodde compiled data on the cash position and market capitalisation status of no fewer than 1980 junior companies in Australia, Canada and other mining market jurisdictions. It showed that one in five Australian junior explorers have less than $200,000 in the bank. The good news in that for ASX-listed players is that the story in Canada is worse, with 50 per cent of the juniors there having less than $200,000 in the till.

Schodde says that while bank balances may be depleted, a more important metric for assessing ongoing viability is to look at a company’s market cap.

INDIGENOUS CANADIANS ARE BLOCKADING A MINE TO PROTEST POLLUTION – by Sarah Berman (Vice.com – October 6, 2014)

October 7, 2014

http://www.vice.com/en_ca

On Friday, Imperial Metals, the company responsible for Canada’s largest-ever mining waste spill, served an injunction application to indigenous protesters blocking roads to its Red Chris copper and gold mine near Iskut, British Columbia.

A group of Tahltan First Nation elders known as the Klabona Keepers have blocked access to the mine for the second time in two months over concerns that Red Chris is too similar to Mount Polley, a sister mine that spewed 24 million cubic meters of toxic sludge and wastewater into one of the province’s biggest salmon spawning lakes on August 4.

“As a result of the blockades and the conduct of the blockaders, no person and no vehicle are able to access the project site along the access roads,” reads Imperial Metals’ injunction application, which was delivered yesterday morning. “Red Chris has been forced to severely limit its construction activities at the project site, and if the blockade continues, will be forced to halt them altogether.”

Resource companies often use injunctions to break up protests. For example, on October 3, 2013, a company called SWN Resources was granted an injunction to remove Elsipogtog First Nation protesters from a shale gas exploration site north of Moncton, New Brunswick. Two weeks later, the Royal Canadian Mounted Police (RCMP) enforced the injunction with an over-the-top display of force that included beanbag guns, police dogs, snipers, and plenty of pepper spray. Needless to say, shit escalated quickly.

Indian coal import growth outstrips China – by Neil Hume (Financial Times – October 6, 2014)

October 7, 2014

http://www.ft.com/intl/commodities-note

Domestic supply growth is weak and unlikely to improve soon

Could India soon overtake China as the world’s biggest consumer of seaborne thermal coal? For many miners and traders, the answer to that question, posed at the Financial Times’ inaugural Commodities Retreat in Singapore last week, is yes.

Coal is India’s most important energy source – supplying more than half of all power stations – and the country, alongside Korea, is emerging as one of the few bright spots in the 1bn tonne a year seaborne thermal coal industry.

In the wake of adverse legal rulings – the Supreme Court recently cancelled more than 200 coal licences held by dozens of private sector groups – miners and traders are tipping strong import growth from India. They say domestic supply growth is weak and unlikely to improve in the foreseeable future because of bureaucratic and infrastructure challenges.

Glencore, the world’s largest producer of high quality thermal coal, told analysts on a recent site visit that it expects Indian annual imports to rise from 150m tonnes, to 180m tonnes in 2015 and 300m tonnes by 2020.

150th anniversary timeline [Butte, Montana Copper History] (Montana Standard – October 5, 2014)

October 7, 2014

http://mtstandard.com/

1864 to 1889

1864 – Prospector “Seven-Up Pete” McMahon names Silver Bow Creek.

1866 – Residents of Butte City attempt to form a miners’ union.

1870 – The Emma Mine has a new foreman – Marcus Daly, who later would become one of Butte’s famous Copper Kings.

1872 – W.A. Clark, another soon-to-be Copper King, makes first visit to Butte.

1876 – Mining prospector hits a substantial copper vein in the Parrot Mine.

1876 – Mining begins to boom in Butte with the opening of the Dexter Mill and Centennial Mill.

1876 – Marcus Daly, with the help of investors, takes over Alice Mine.

1878 – Cut wages at the Lexington Mine and Alice Mine trigger Butte’s first-ever strike.

150 years of Butte spirit [Copper Mining History] – by Matt Hoffman (Montana Standard – October 5, 2014)

October 7, 2014

http://mtstandard.com/

In 1874, a scant decade after Butte’s founding, the boom town was already on the verge of a bust. It’s population, which had climbed to about a thousand, may have dropped as low as 61. The town was down – but, if you know anything about Butte, far from out.

A few prospectors renewed their interest in the settlement over the next year and found deposits of gold, silver and copper the first wave of miners had overlooked.

“These were daring, innovative individuals,” Chief Executive Matt Vincent said. The character traits of those first rugged miners came to embody the legendary spirit of Butte, an ethos unlike anywhere else in Montana. In this city’s 150-year history, generation after generation of Butte residents have faced new challenges and — somehow — always found a way to thrive.

Sometimes, with a little luck. In those early days, copper was the most abundant but also the least valuable of the findings – until the world changed. The telephone and light bulb were invented over the next few years, and suddenly copper went from an afterthought to a maker of fortunes.

Those who put their faith and sweat into the town were richly rewarded. By 1917, Butte was one of the largest cities in the Northwest, and one of the wealthiest. As the town was built, so was something else.