October 30, 2014 – Republic of Mining

NEWS RELEASE: NDP DEMANDS CONSERVATIVES SHOW LEADERSHIP PROMISED ON RING OF FIRE

October 30, 2014

FOR IMMEDIATE RELEASE

October 30, 2014

OTTAWA – Following claims from Cliffs Resources’ chief executive officer that the future of the Ring of Fire is in question, New Democrats are demanding Conservatives drop the silent treatment and work to make sure the project moves forward.

Today, NDP MP Claude Gravelle (Nickel Belt) demanded answers from the Conservatives as to when Northern Ontarians can finally expect the economic investment in the Ring of Fire they’ve been promised.

Claude Gravelle:

The new CEO of Cliffs Natural Resources sees zero hope of developing the Ring of Fire in the next 50 years, he cites no plan, no infrastructure, no leadership.

This means no jobs, no investments for Northern Ontario and no benefits to Ontario’s broader mining, finance and technology sectors.

Almost all of the government’s Ring of Fire announcements failed to materialize. When will this government show the leadership it promised over a year ago and work with ‎Ontario to make Ring of Fire happen?

Record crowd expected as major issues loom for miners – by Tim Bradner (Alaska Journal of Commerce – October 30, 2014)

October 30, 2014

http://www.alaskajournal.com/

The annual Alaska Miners Association convention will set another attendance record this year with about 1,000 signed up to attend so far, AMA Executive Director Deantha Crockett said.

It is also marks the 75th anniversary of the AMA, making it one of the state’s oldest trade and professional organizations. The AMA was organized in 1939 to give the mining industry, then one of the territory’s two industries (the other being fishing) a way to present a united front in dealing with new land policies being formed in Washington, D.C.

Not much has changed, Crockett said.

The Alaska statehood movement, which even then was gaining strength, was also an issue the mining industry wanted to be involved in.

This year, however, the convention has also moved to a new venue and larger spaces at the Dena’ina Civic and Convention Center in Anchorage, having outgrown the capacity of the downtown Sheraton, its location in previous years. The event will take place from Nov. 3 to Nov. 9.

Attendance has been steadily climbing at AMA’s annual gatherings. There were 700 last year, setting a record then, and 500 to 600 in previous years, Crockett said.

Report highlights economic impact of gold mining in Ontario – by Henry Lazenby (MiningWeekly.com – October 29, 2014)

October 30, 2014

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

TORONTO (miningweekly.com) – A recent independent report has highlighted the significant economic impact of Ontario’s mineral sector and found that all stakeholders – including miners, Aboriginal and other local communities, governments and supplier industries – benefitted from the sector’s activity.

The University of Toronto’s Rotman School of Management was commissioned by the Ontario Mining Association to assess the impact openpit and underground gold-mining scenarios in a relatively remote part of Northern Ontario would have on gross domestic product (GDP), employment and government revenue.

The school’s Peter Dungan and Steve Murphy of the Policy and Economic Analysis Programme authored the report and considered two hypothetic scenarios.

The first was to investigate the impact of building an openpit mine over three years at a capital cost of $750-million, while the second was to examine the impact on local economies of building an underground mine over the same period at a capital cost of $600-million.

The construction costs used in the study excluded all exploration, planning, permitting and other preconstruction expenditures.

The study found that an openpit mine would generate sales of $300-million a year, potentially for more than 20 years into the future, and employ 440 people on site with total compensation of $142 200 a worker.

Chinese rail money for Ring of Fire? – by Staff (Northern Ontario Business – October 30, 2014)

October 30, 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.

The plate tectonics for Ontario’s stalled Ring of Fire development project could significantly shift if Premier Kathleen Wynne’s visit to China pays dividends down the road.

The China Daily reported that the Far North mineral deposits could be cause for a constructive arrangement between the province and its second largest trading partner.

Fang Li, Chinese consul general in Toronto, who accompanied the premier on her first overseas trip was quoted as saying “Ontario is the most important for China among the provinces of Canada,” adding that the large, but inaccessible chromite and nickel deposits in the James Bay lowlands could lead to a cooperative arrangement between the two countries.

“The demand for the minerals is high in China; we can work together if the necessary infrastructure such as a rail line can be built in this area,” Fang said.

Accompanying Wynne on the trip is Brad Duguid, minister of economic development, employment and infrastructure, and Michael Chan, minister of citizenship, immigration and international trade, and representatives of about 60 clean tech and science and technology businesses and organizations.

The party is ending for Latin America – by John Paul Rathbone (Financial Times – October 30, 2014)

October 30, 2014

http://www.ft.com/home/us

In the past 10 years, South America never had it so good. The continent surfed a global commodity price boom, helped by abundant global capital. In Sir Martin Sorrell’s clever marketing phrase, the 2010s were to be the “decade of Latin America”. Maserati dealerships opened in Bogotá, while Brazil minted 22 millionaires a day . Nor was it only the rich who gained. Poverty fell and, uniquely, social inequality shrank across the continent.

Like all good things, though, the party is ending. As commodity prices fall with China’s slowing economy, there is a new sense of anxiety. Everywhere, countries are vibrating with mildly suppressed panic – and the end of US quantitative easing does not help the mood. As the economic cycle turns, many governments seem confused as to which direction to take. Given how much has been achieved, there is often profound disagreement about what should come next.

Growth is already slowing fast, to just 1.2 per cent for the region this year. As the World Bank warns in its most recent regional outlook: “It is not clear whether the slowdown is bottoming out.” Levels of investment that had reached heights comparable to those in Asia, spurred by the “commodity supercycle”, are falling. Meanwhile, social protest is on the rise – through both the ballot box, as in Brazil’s closely fought election, and direct action, such as last year’s Colombian farmers’ protests or Brazil’s street riots. Everywhere, the region fizzes with social effervescence.

This mood of agitation spans the political divide. At one end of the spectrum lies Venezuela, a spectacularly mismanaged country blessed with the world’s largest energy reserves yet flirting with default, thanks to a state so incompetent that it gives fresh meaning to the word “lemming”.

Controversial Canadian KSM mine gets key govt. permits – by Mary Catharine Martin (Alaska Journal of Commerce – October 30, 2014)

October 30, 2014

http://www.alaskajournal.com/

JUNEAU — Kerr Sulphurets Mitchell, a British Columbia mine in the transboundary Unuk River watershed that concerns many Southeast Alaska fishermen, Native organizations, tourism and environmental groups, has received early construction permits from the British Columbia government.

“I think people are feeling not just a sense of urgency, and being threatened, but anger, too,” said Heather Hardcastle, commercial fishing outreach coordinator for Trout Unlimited. “To hear that they have these preliminary permits, road construction permits — it seems like such a slap in the face, because the project doesn’t yet have federal approval from the government in Canada.”

KSM has received provincial approval; Seabridge Gold, the company behind the project, expects the federal decision in November.

KSM, while a large mine, is just one of a handful Southeast Alaskans are concerned about. They and Alaska’s congressional delegation are working to spur international cooperation on the larger issue of mines in transboundary watersheds. Sen. Mark Begich hopes to soon jump-start that coordination.

Rob Sanderson, Jr., Co-Chair of the United Tribal Transboundary Mining Work Group and 2nd Vice President of Central Council of the Tlingit and Haida Indian Tribes of Alaska, or CCTHITA, said the provincial approval and permitting “comes as no surprise.”

UPDATE 1-Zambia may be backing off steeper mine royalty rates -Barrick – by Nicole Mordant (Reuters India – October 30, 2014)

October 30, 2014

http://in.reuters.com/

Oct 30 (Reuters) – There are indications Zambia may be backing away from plans to impose a 20 percent royalty rate on open pit mining in the country, a top executive with Barrick Gold Corp said on Thursday.

Zambia’s Finance Minister Alexander Chikwanda rattled mining companies with investments in the copper-rich southern African country earlier this month when he announced that from January royalties on open pit mines will rise to 20 percent and on underground mines to 8 percent from 6 percent currently.

Barrick, which is the world’s biggest gold producer but also owns the Lumwana copper mine in Zambia, has said that a 20 percent royalty would seriously challenge the economics of the large open-pit mine.

“Our sense is that the government realizes that the numbers they have imposed will be very challenging for the industry,” Barrick co-president Kelvin Dushnisky said on a conference call to discuss the company’s third-quarter results, which were released late on Wednesday and beat market expectations.

“I don’t want to handicap anything, but going into this week, our sense is there would be movement away from that number. I can’t guarantee it but that’s certainly the direction discussions were going,” he said.

Mine closures contribute to 60-70% jobless rate in Tumbler Ridge, says deputy mayor – by Jonny Wakefield (Alaska Highway News/Business Vancouver – October 30, 2014)

October 30, 2014

http://www.biv.com/

Hundreds of people in the district of Tumbler Ridge lost their jobs in a rash of mine closures this year.

But the town’s exact rate of unemployment – which district staff say would help a push for government assistance – remains a mystery.

Tumbler Ridge councillor Rob Mackay, who also serves as deputy mayor, said a local unemployment rate of between 60 and 70% “would be in the right ball park” since Anglo American Coal and Walter Energy idled their mines in Northeast British Columbia.

The town of 2,700 has been largely dependent on mining since it was incorporated in 1981. Around 700 people directly lost their jobs over a period of around six months, and by the end of the year, there will be no working coal mines in Tumbler Ridge.

“[60 to 70% unemployment] has got to be fairly close, though I don’t know the exact number,” said Mackay. “Those mines were the major employers in Tumbler Ridge.” Both companies cited falling metallurgical coal prices as the reason for the shutdowns.

Jordan Wall, Tumbler Ridge’s economic development officer, said being able to put a hard number on the town’s unemployment rate would underline how bad things are to senior levels of government.

Ebola Fight Means Taking 5,000 Temperatures at Mittal’s Ore Mine – by Thomas Biesheuvel (Business Week – October 28, 2014)

October 30, 2014

http://www.businessweek.com/

Kleber Silva takes his temperature twice a day, enters the results in his BlackBerry and sends them to the company he works for, ArcelorMittal.

Silva, the head of iron ore for the world’s biggest steelmaker, is home from Liberia for three weeks. When he returns to the African nation next month, he’ll still be in the 21-day incubation period for the Ebola virus. The temperature checks won’t end, and neither will his need for vigilance.

Silva’s experience is typical for those working to keep businesses going, even as a health crisis explodes around them. His job is to keep safe almost 5,000 ArcelorMittal employees working in Liberia, along with their families. The effort, which will cost $3 million by year’s end, is important both on a human scale, and financially: The company relies on the iron-rich Nimba mountains to feed its blast furnaces, and Liberia depends on mining to generate a fifth of its economy.

“We want to keep this mine alive,” Silva said in an interview at ArcelorMittal (MT)’s London offices. “For the country, for the people, for the company. We need to deal with the crisis, deal with the outbreak, but have the vision beyond this. This will not stay forever.”

The outbreak has infected more than 10,000 people in West Africa, killing almost half. It threatens to erase the progress Liberia has made since it emerged from civil war more than a decade ago with Finance Minister Amara Konneh forecasting zero growth this year because of the disease.

Barrick Gold Trims Cost Forecast After Expenses Drop – by Liezel Hill (Bloomberg News – October 30, 2014)

October 30, 2014

http://www.bloomberg.com/

Barrick Gold Corp. (ABX), the largest producer of the precious metal, reduced its forecast for operating costs this year after reporting third-quarter expenses that beat analysts’ estimates.

So-called all-in sustaining costs will be $880 to $920 an ounce, compared with a previous range of $900 to $940, Toronto-based Barrick said yesterday in its third-quarter earnings statement.

Barrick is among gold producers that have reined in spending and delayed growth plans after the metal’s 28 percent decline last year. Third-quarter costs fell 8.8 percent to $834 an ounce, compared with the $916 average of three estimates.

“Their earnings look reasonably good, the cash costs are good, the guidance looks good,” David Christensen, chief executive officer of San Mateo, California-based ASA Gold & Precious Metals Ltd., said in a phone interview. His company manages $250 million including Barrick shares. “All in all, it looks like they’ve done a good job.”

Earnings excluding one-time items were 19 cents a share, topping the 17-cent average of 23 estimates compiled by Bloomberg. Sales declined 13 percent to $2.6 billion, exceeding the $2.49 billion average estimate.

Minister promotes N.L. iron ore in China – by Ashley Fitzpatrick (St. John’s Telegram – October 30, 2014)

October 30, 2014

http://www.thetelegram.com/

Lab West waiting as Derrick Dalley presses mining sector investment

Eight months after the idling of the Scully Mine in Wabush, less than a month after putting a pin in construction of a mine-fuelling power line and facing continued, dismal pricing for iron ore, the Government of Newfoundland and Labrador is actively promoting iron mining in Labrador West.

Natural Resources Minister Derrick Dalley told The Telegram Wednesday the potential in iron ore was key to his presentations and conversations during a 10-day mission to China earlier this month.

He took to the microphone at industry gatherings in Shanghai and Beijing, at the Canada Natural Resources Forum and Canada Mineral Investment Forum. He met with the Canadian Ambassador to China, representatives for China’s National Development and Reform Commission, and Ministry of Land and Resources, and steel producers from companies including Wisco and Hebei Iron and Steel.

“From my perspective, it was a great opportunity to reinforce the relationship that we had forged in recent years, to understand the China economy, but as well to present on behalf of the province some opportunities and to encourage Chinese investment,” he said.

The province, it was noted in a statement issued earlier this month, provided $13,900 to help Mining Industry NL representatives make the trip and maintain a trade show booth at China Mining, the continent’s largest mining conference.

How green energy is fleecing Ontario electricity consumers – by Ross McKitrick and Tom Adams (National Post -October 30, 2014

October 30, 2014

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

Adding renewable generating capacity triggers changes throughout the system that multiply costs for consumers

Ontario’s green energy transformation – initiated a decade ago under then-Premier Dalton McGuinty – is now hitting consumers. The Nov 1 increase for households is the next twist of that screw. As Ontario consumers know all too well, the province has gone from having affordable electricity to having some of the highest and fastest-increasing rates in Canada.

Last year, in a report for the Fraser Institute called “Environmental and Economic Consequences of Ontario’s Green Energy Act,” one of us (McKitrick) explained how the Green Energy Act, passed in 2009, yielded at best tiny environmental benefits that cost at least ten times more than conventional pollution control methods, and was directly harming growth by driving down rates of return in key sectors like manufacturing.

But complex financial structures and a lack of official disclosure around large embedded costs have let supporters of the green energy act deny that green power is responsible for the price hikes. Green industry advocates, including the consulting firm Power Advisory and advocacy group Environmental Defense, have added up the direct payments to new renewable generators, and concluded that since those costs are relatively small, the impact of renewables on the total cost of power is likewise small.

However, such analyses ignore the indirect costs that arise from the way renewables interact with the rest of the power system.

CEO Mocks Analyst, Refuses To Answer His Question On Public Webcast Because His Stock-Price Target Is Too Low – by Myles Udland (Business Insider – October 29, 2014)

October 30, 2014

http://www.businessinsider.com/

Lourenco Goncalves, CEO of the mining and natural resources company Cliffs Natural, doesn’t take questions from haters.

On Cliffs’ earnings conference call on Tuesday morning, Goncalves told Wells Fargo analyst Sam Dubinsky that he wouldn’t answer Dubinsky’s questions because “you already know everything about my company.”

“You have a $4 price target and you think we can’t sell assets, so I’m going to take the next question, I’m not going to answer you,” Goncalves said. It is a jarring exchange.

In a note to clients following the report, Dubinsky wrote that Goncalves was “pretty bold” on the earnings call. It was also Goncalves’ first earnings call as CEO since being named to the position on Aug. 7.

And the exchange, or really just the shutting down of Dubinsky’s questions by Goncalves, shows some of the complications inherent in the relationship between companies and analysts.

It is Dubinsky’s job, as a research analyst, to publish his assessment of the companies in his coverage area and, based on this work, publish a recommendation on how he believes the stock will perform going forward.

Ring of Fire doubts ‘baseless and false’ – by Carol Mulligan (Sudbury Star – October 30, 2014)

October 30, 2014October 30, 2014

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

Cliffs Natural Resources’ new chief executive officer may have shaken the confidence of some this week when he said he had “zero hope” the Ring of Fire would be developed in the next 50 years.

But Lourenco Goncalves didn’t cause three proponents of the chromite deposits 500 kilometres northeast of Thunder Bay to lose faith the Ring will be mined and will add billions to the province’s economy when it is.

Goncalves, 55, told The Financial Post he didn’t expect to see the Ring developed in his lifetime, and that he intends to be around for another 50 years.

The newly named CEO of the Cleveland-based company was, no doubt, expressing the frustration of the company with one of the biggest claims in the Ring of Fire. It has suspended work on its project after investing $500 million in it.

In May 2012, Cliffs and the Government of Ontario announced Cliffs had upgraded its Ring of Fire project to the feasibility stage and reached a number of key agreements with the province. Most important to Sudbury was Cliffs’ decision to locate a $1.8-billion ferrochrome processing plant in Capreol, just north of the city.