October 20, 2014 – Republic of Mining

Norilsk to sell African nickel stakes to Botswana’s BCL for $337 mln – by Silvia Antonioli (Reuters India – October 20, 2014)

October 20, 2014

http://in.reuters.com/

Oct 20 (Reuters) – Russia’s Norilsk Nickel , the world’s top nickel and palladium producer, said it had agreed to sell stakes in two African nickel mines for $337 million to BCL, a Botswana-based copper mining firm looking to expand.

Norilsk will transfer to BCL its 50 percent interest in the Nkomati nickel and chrome mine, in South Africa, and its 85 percent stake in the Tati Nickel Mining Company, in Botswana, the two companies said on Monday.

BCL will also assume all attributable outstanding debt and environmental and rehabilitation liabilities associated with the assets.

Norilsk embarked on a new strategy last year that includes pulling out of international assets that it has identified as non Tier-1 mining operations. Tier-1 is an industry designation for what are typically the biggest and lowest-cost mines.

“The sale of the African operations marks a major milestone in our commitment to deliver the new corporate strategy. The transaction is part of the management’s roadmap to release capital from non-core assets and will have a positive impact on the company’s return on invested capital”, Pavel Fedorov, Norilsk Nickel First Deputy CEO said in a statement.

RB Energy meltdown highlights tough times for lithium, rare earth firms – by Peter Koven (National Post – October 20, 2014)

May 13, 2016October 20, 2014

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

TORONTO — As RB Energy Inc. flamed out and fell into creditor protection during the past couple of weeks, investors were shell-shocked.

Despite some start-up problems in recent months, Vancouver-based RB seemed to be in an ideal position. It was emerging as North America’s only serious lithium producer, just as demand for the metal is set to soar because of its use in electric vehicle batteries. Its management team was linked to the legendary Lundin Group, a resource conglomerate with a fantastic track record of success. Lundin companies do not just melt down like that.

But RB did. It filed for protection last Monday after its stock price collapsed and it could not raise capital under reasonable terms.

“I can tell you it’s been a long time since I’ve seen the resource capital market crash as quickly as that,” chief executive Rick Clark said. “I would say the last time was back in the ‘90s.”

There was a time when RB, formerly known as Canada Lithium Corp., had a much easier time raising cash. The company has tapped the capital markets for about $268-million since 2009, according to Financial Post data. RB also received $92-million of debt financing from Bank of Nova Scotia and Caterpillar Financial Services that was partially guaranteed by the Quebec government.

RB Energy says TSX statement a key factor in CCAA filing – by Peter Koven (National Post – October 20, 2014)

October 20, 2014

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

TORONTO — The chief executive of RB Energy Inc. believes the lithium miner might have avoided insolvency if not for a two-sentence statement issued by the Toronto Stock Exchange.

CEO Rick Clark said in an interview the company thought it had a $70-million financing package lined up in mid-September that would have resolved its liquidity issues. But then the TSX, following its guidelines, issued a blanket press release saying it was conducting a de-listing review of the stock.

The TSX statement simply repeated what Vancouver-based RB said the day before. But the stock price collapsed as soon as it came out, and Mr. Clark said he could no longer line up financing on reasonable terms.

Instead, he elected to file for creditor protection last Monday. “We got absolutely hit in the side of the head [by the TSX statement],” said Mr. Clark, who was formerly CEO of market darling Red Back Mining Inc. Regardless, he said he does not want to blame the exchange for what happened.

The impact of the TSX announcement on Sept. 16th is undeniable. The stock plunged 25% that day, with 14.4 million shares changing hands. It then fell another 25% during the following five trading days and could not recover.

In Wake of Mount Polley, Union Wants New BC Safety Regime – by David P. Ball (The Tyee.ca – October 14, 2014)

October 20, 2014

http://thetyee.ca/

Ministry defends miners’ exclusion from WorkSafeBC.

It took a spate of deaths in Nanaimo’s coal mines to create a ministry devoted to regulating the industry in 1877. Since that era, the provincial department’s authority over mine health and safety has endured — and subsequent worker protection laws explicitly excluded mines to this day.

But after the near slaughter of workers by the Mount Polley mine tailings dam disaster this summer, the union representing many miners in B.C. is warning about worker safety in the industry.

Thirteen B.C. mine workers have been killed on the job since 2000, according to annual Chief Inspector of Mines reports. The worst year was 2006, when four died from oxygen deprivation at the Sullivan mine near Kimberley, B.C.

Over the same period, a total of 423 people were injured at mine sites, averaging 33 a year. WorkSafeBC’s prevention jurisdiction does not extend to mines to which the Mines Act applies.

All activities conducted in relation to mining within the boundaries of a Mines Act permit area fall within the [occupational health and safety] jurisdiction of [Ministry of Energy and Mines].

Miner Opposition [Canadian Global Mining Sector’s Reputation] – by James Munson (iPolitics.ca – October 1, 2014)

October 20, 2014

http://www.ipolitics.ca/

Where mining and violence meet

James Munson (bitly.com/MinerOpposition) traveled to Guatemala in July to explore the stories of mines caught up in a global debate over the responsibilities of Canadian-owned mining firms in developing countries. With Canada moving toward a new policy for the sector, Munson explores how the Fenix nickel mine in eastern Guatemala became the test case for bringing allegations of murder, rape and assault tied to the mine to an Ontario court room. Meanwhile, Goldcorp Inc.’s Marlin mine in the western part of the country has been the subject of protests and findings that its operations broke human rights standards. The stories of these mines, and the people who live beside them are the starting point for Miner Opposition — http://www.bitly.com/MinerOpposition (Produced with support of the Ford Foundation)

EL ESTOR, GUATEMALA— One night this past April, while poring over legal documents at around four in the morning, Manuel Xo Cu drifted to sleep and had the dream that would save his life.

The dream involved him grabbing onto the roots of two trees to keep from sliding into a dark hole. During a bus ride the next day, he was confronted by three armed men who asked him to move to the back of the bus. He refused, recognizing the back of the bus as the dark hole, and sat beside a woman who he would later use as an excuse to get off at an earlier stop, thinking the would-be assassins could identify him with more certainty if he were to get off at his regular destination.

Iron ore price collapse claims more victims (Northern Miner – October 17, 2014)

October 20, 2014

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

Cliffs Natural Resources (NYSE: CLF) and London Mining (LSE: LOND) have become the latest casualties of falling iron ore prices, with Cliffs declaring a US$6 billion non-cash impairment charge in the third quarter on its iron ore and coal assets, and London Mining placed into administration.

London Mining says it will try to work with its administrator, PwC, to maintain its Marampa iron ore mine in Sierra Leone as a going concern, while Cliffs is working with its banking group to get an amendment that will eliminate the debt-to-capitalization covenant of 45% currently present in its revolving credit facility, as the non-cash impairment charge will increase the debt-to-capitalization ratio over that threshold.

Iron ore prices have fallen to five-year lows and are down about 40% so far this year at about US$80 per tonne. When London Mining’s Marampa iron ore mine in Sierra Leone entered production in December 2011, iron ore was selling for about US$140 per tonne, well above today’s levels.

It’s not the first time Marampa, which was operated between 1933 and 1975 by the Sierra Leone Development Company and William Baird, has suffered from depressed prices. The mine was closed for a period of time in the 1960s due to low prices for the metal.

AUDIO: [Covergalls Workwear] Sudbury’s Alicia Woods seals deal with dragons (CBC News Sudbury – October 16, 2014)

October 20, 2014

http://www.cbc.ca/news/canada/sudbury

https://covergallsworkwear.com/

Founder of Covergalls appears on CBC’s Dragons’ Den

A Sudbury entrepreneur is one step closer to expanding her business, after successfully landing a deal on CBC’s Dragons’ Den program. Alicia Woods, the founder of Covergalls, was shown on the show during the premier Wednesday night.

The product is clothing for women who work in the mining industry. Woods said it’s the female version of the coverall. She said it has two features, the first being that it fits women properly so no extra material can get caught in equipment.

Woods said the second feature is functionality. “If you can imagine having to use the washroom facility and if you have a one piece coverall, you have to take everything off,” she said.

“So having the hidden rear-trap door just makes it a far more functional garment and easier for those bathroom breaks.” Three dragons took interest and a deal was made during the show between Woods, Arlene Dickinson, Mike Wekerle, and Jim Treliving.

“Having their … knowledge and experience is definitely going to help to grow the brand and get us into industries that we’re currently not in,” she said.

Iron Ore Risks Extending Collpapse on Supplies: Moody’s – by Phoebe Sedgman (Bloomberg News – October 20, 2014)

October 20, 2014

http://www.bloomberg.com/

The collapse in iron ore prices may have further to run as global supply increases and steel-demand growth slows, according to Moody’s Investors Service, which said it may reduce ratings on producers.

About 300 million metric tons of new and expanded supply will come on stream over the next few years, analysts including Carol Cowan said in an e-mailed report received today. Global steel-production growth in 2014 remains muted with China, the key driver of consumption, continuing to slow, Moody’s said.

Iron ore tumbled 39 percent this year after companies including Rio Tinto Group (RIO), BHP Billiton Ltd. and Vale SA raised low-cost output in Australia and Brazil, spurring a global glut. The market is in the midst of a transition without precedent in recent commodity history as supply surges and some higher-cost mines are displaced, according to Macquarie Group Ltd.

“Iron ore prices have collapsed,” Moody’s said in the report, which was dated Oct. 17. “With slowing global steel-production growth rates, iron ore prices remain vulnerable to the downside and we expect continued volatility.”

Ore with 62 percent content delivered to Qingdao, China, posted a third straight quarterly loss in the three months to September, and dropped to $77.97 a ton on Sept. 29, the lowest level since September 2009.

Management innovation may be game changer for mining productivity – by Dorothy Kosich (Mineweb.com – October 20, 2014)

October 20, 2014

http://www.mineweb.com/

According to a new study by EY and The Sustainable Minerals Institute, passion for innovation in the mining sector has not been lost.

RENO (MINEWEB) – Productivity is the number one challenge in the mining sector, says a new study by EY Global Mining & Metals and The Sustainable Minerals Institute at the University of Queensland in Australia.

During boom times, many mines expanded quickly to meet greater demand, ironically generating a decline in productivity levels, “primarily due to the challenge of managing complexity, compounded by the talent challenge, and lack of appropriate skills development,” observes their study titled Productivity in mining: now comes the hard part.

The report is based on more than 60 in-depth interviews with senior mining executives globally. The document assesses the key productivity challenges, initiatives being developed to overcome these challenges and opportunities to better focus productivity-improvement initiatives in the post-supercycle environment.

Among these are depleting reserves and falling grades, which have caused and continue to contribute to declining mining productivity. Meanwhile, the mining sector is also suffering from an aging workforce with retirement rates expected to increase over the next 10 years.

Mining Force Mick Davis Digs In Again – by Alexis Flynn (Wall Street Journal – October 19, 2014)

October 20, 2014

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

With Xstrata Veterans, He Looks to Build Another Powerhouse

LONDON—After building two mining giants in the past two decades, can Mick Davis start from scratch and do it again?

Mr. Davis, 56 years old, is entering the fray again just as companies such as BHP Billiton and Anglo American PLC look to sell off unfavored assets. He is looking to build another mining powerhouse after Xstrata PLC, the Anglo-Swiss company he led for a decade, was taken over last year by Glencore PLC, headed by fellow South African Ivan Glasenberg.

The deal had been conceived initially as a merger of equals, with Mr. Davis slated to be its chief executive. But after resistance from crucial Xstrata shareholders, Mr. Glasenberg recast the deal as a takeover and seized the top job.

Mr. Davis’s new venture, X2 Resources, has raised as much as $4.8 billion from several investors, including commodities trader Noble Group and private-equity firm TPG.

His re-emergence alongside a team of mostly Xstrata veterans comes amid a slump in commodity prices that has put pressure on mining bosses to trim their portfolios.

What is Glencore’s wily boss up to? – by Ben Marlow (The Telegraph – October 18, 2014)

October 20, 2014

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

After Rio Tinto revealed it had recently rejected Glencore, CEO Ivan Glasenberg is plotting his next move

There’s a new game being played in the City at the moment, called “guess what Ivan does next” where participants try to predict what deal Ivan Glasenberg, the chief executive of the commodities giant Glencore, is secretly cooking up.

If it sounds simple, it isn’t. Few individuals encapsulate the term “dealmaker” as perfectly as Glasenberg. A former trader, it is something that genuinely seems to be in his DNA and that has undoubtedly enabled him to turn Glencore into the unparalleled force that is today.

That means two things: firstly, he is likely to keep everyone guessing; and secondly, anything could be on the menu.

The latter point was confirmed a fortnight ago, when Rio Tinto, the world’s biggest iron ore miner, revealed that it had recently rejected a $140bn (£87bn) merger proposal from Glencore. With the company responding by saying it was no longer looking at the deal, under the UK Takeover Code Glencore now has to wait six months before it can attempt the ambitious move again.

Most observers believe Glasenberg will spend that time putting together another bid and it is easy to see why.

Poland’s coal miners dig in for struggle over restructuring – by Henry Foy (Financial Times – October 19, 2014)

October 20, 2014

http://www.ft.com/intl/companies/mining

Knurow, Poland – Almost 1km below the rolling hills of southern Poland, four men, their faces coated in a slick layer of coal dust and sweat, pilot a colossal grinder as it rips metre-wide chunks of glistening black coal from the walls of a narrow tunnel.

At temperatures above 30C, by the dim light of torches and surrounded by the deafening cacophony of the screaming grinder and a thundering conveyor belt, such men and their machines work 24 hours a day, six days a week, churning out a fuel that was supposed to be the answer to Poland’s energy problems. But it has not worked out that way.

Over 300km north, in Warsaw’s government meeting rooms, lit by bulbs that rely on coal for almost 90 per cent of their power, the country’s politicians and bureaucrats have been debating how to rescue an industry in existential crisis: chronically lossmaking, inefficient and under threat from external pressures.

Poland’s vast coal reserves, the second-largest in Europe, were seen as the energy ace up its sleeve – offsetting reliance on Russian resources and providing enough cheap, domestic fuel to power decades of economic growth.

But then the US shale boom sent coal prices tumbling and exposed vast inefficiencies across the country’s state-owned miners. At the same time, environmental concerns have led to pressure from the EU for Poland to wean itself off the black stuff.

BHP won’t rush to follow Rio to automate as its manned trucks beat robots – by Matt Chambers (The Australian – October 20, 2014)

October 20, 2014

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

BHP Billiton’s mining truck drivers are outpacing their robotic counterparts when it comes to efficiency and loading at West Australian iron ore mines, indicating the miner is a long way from any decision to follow rival Rio Tinto in a large-scale driverless truck rollout.

For a little more than a year, BHP has been trialling Caterpillar autonomous trucks at its newest Pilbara region iron ore mine, Jimblebar.

The trial was recently extended to March and a decision to add three more trucks to the nine-truck fleet was taken.

But despite autonomous Caterpillar trucks making up a little over a third of the 25 trucks at the overperforming Jimblebar — the mine came on early, ramped up quicker than expected and will now produce more than flagged — they are only moving 16 per cent of the dirt and ore.

The fact annual truck hours in the manned fleet across BHP iron ore have grown from 4500 to more than 6000, a one-third improvement, is a big factor.

“We’ve seen a very material improvement in the manned truck productivity level,” BHP iron ore mines boss Eduard Haegel said at the company’s Perth office last week.

BHP Billiton leads miners’ retreat from supersizing – by James Wilson (Financial Times – October 19, 2014)

October 20, 2014

http://www.ft.com/intl/companies/mining

More trucks, more shovels, bigger holes in the ground: the mining sector has been supersizing itself for years, convinced that going large was also the way to earn outsized profits.

But the conviction that size alone matters may no longer hold true, with “diseconomies of scale” a significant factor in mining’s waning productivity, according to a report based on interviews with industry leaders.

The problems caused by growing corporate complexity were among the factors that BHP Billiton, the world’s most valuable mining group by market capitalisation, pointed to when it decided on a big company break-up this year.

Andrew Mackenzie, chief executive, said he was worried by diseconomies of scale at BHP, which is to spin off about $15bn of non-core assets into a separate company. BHP will subsequently run just seven mining projects and five petroleum fields.

However, it is not just unwieldy companies that are a concern, according to the report by EY, the consultancy. It finds that individual mining operations are sometimes getting too large to manage as effectively as companies would like, thereby contributing to the productivity problems plaguing the sector.