November 19, 2014 – Republic of Mining

Lacking buyers, Cliffs Natural looks to exit Quebec’s Bloom Lake mine – by Bertrand Marotte (Globe and Mail – November 19, 2014)

November 19, 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.

MONTREAL — Hobbled by an iron ore price plunge and high costs, Cliffs Natural Resources Inc. says it is “pursuing exit options” for its Eastern Canadian iron ore operations which may result in the closure of the Bloom Lake mine.

The U.S. iron ore producer, cut to junk status by Standard & Poor’s last month, said on Wednesday that a “potential investment” in Bloom Lake is not “achievable within a time frame acceptable to Cliffs.”

Closing costs at the mine, located north of Sept-Îles, Que., would be in the range of $650-million (U.S.) to $700-million over the next 5 years, the company said. About 500 people work at Bloom Lake.

The price for iron ore – a key ingredient in steel-making – has slipped to its lowest level in more than five years. It is now in the $72-per-tonne range and could fall to less than $60 as output continues to rise and global demand remains weak, Citigroup Inc. said in a report.

A slump in Chinese demand and a global iron ore glut as Australian producers ramp up production have pushed prices down. “The drop in the iron ore price is forcing the closure of some of the higher-cost ore mines,” Raymond James analyst Adam Lowe said.

Nickel Rises Most in Three Weeks as Indonesia Adheres to Ore Ban – by Debarati Roy and Laura Clarke (Boomberg News – November 19, 2014)

November 19, 2014

http://www.bloomberg.com/

Nickel prices rose the most in three weeks after Indonesia said a ban on exports of unprocessed ore remains in place, reinforcing concern that global demand is set to exceed supplies.

Today, Bambang Adi Winarso, senior adviser to the coordinating minister for economic affairs, affirmed the policy by Indonesia, the world’s largest producer of mined nickel ore. Residential-construction permits in the U.S. climbed in October to a six-year high, the government said. Copper, aluminum and lead prices rose.

“Strong U.S. data, combined with supply concerns from Indonesia, is pulling nickel higher,” Tim Evans, the chief market strategist at Long Leaf Trading Group, Inc. in Chicago, said in a telephone interview. “We are seeing some buying across base metals.”

Nickel for delivery in three months on the London Metal Exchange advanced 3.2 percent to $16,149 a metric ton at 4:50 p.m. A close at that price would mark the biggest jump since Oct. 28. Through yesterday, the commodity rose 13 percent this year.

Citigroup Inc. yesterday forecast a global deficit of 62,400 tons in 2015, expanding to 103,600 tons in the following year. “Inventories of nickel in all its various forms have fallen in China, with supply now falling as well in the form of a seasonal decline in Filipino exports,” the bank said. “Optimism remains strong toward nickel prices for 2015.”

Xi’s visit to Tasmania positive, but exposes mining to dining myth – by Clyde Russell (Reuters U.S. – November 19, 2014)

November 19, 2014

http://www.reuters.com/

HOBART, Australia – Why would arguably the world’s second-most powerful person bother to visit an island at the bottom of the world most famous for a cartoon character that bears little resemblance to the real animal?

Chinese President Xi Jinping’s visit on Tuesday to Hobart was a series of photo opportunities with real Tasmanian devils, school children and very eager to impress political leaders in Australia’s southern island state.

But while Xi was busy showing his softer side, the real business was happening across town where Australian and Chinese business leaders were attending a forum on investment opportunities in Tasmania.

Tasmania is hoping to leverage its clean, green environment into booming Chinese demand for quality agricultural produce such as beef, lamb, salmon and seafood like rock lobster and abalone.

Tourism was also a key component, with Xi’s visit sparking hopes of increased Chinese interest in the natural beauty of Tasmania, which is roughly the size of Sri Lanka but has a population of only around 500,000 people. The forum also highlighted the mining opportunities in the state, particularly those for copper and nickel as well as minor metals such as tungsten.

The Commodity Supercycle Ain’t Over – Yet – by Erik Swarts (Market Anthropology – Novmeber 18, 2014)

November 19, 2014

http://marketanthropology.tumblr.com/

As surprising as it might sound today, we believe the secular trend for commodities has higher elevations to travel, before eventually running its course – possibly as far out as early into the next decade. While in 2011 we became adamant that the thesis trade in commodities – specifically in its leading sector of precious metals, had become crowded and overhyped, those excesses have been wrung out of the markets over the past three and a half years and offer what we perceive to be extremely compelling long-term valuations going forward.

This idea remains supported by our research that implies yields are not headed materially higher anytime soon – despite the anxieties surrounding the Fed raising interest rates over the next few years. Moreover, we expect that real yields (nominal – inflation) will remain suppressed and eventually retrace the rise that began in the back half of 2011.

When the real yield cycle finds its zero bound and breaks below, commodities tend to outperform in the market over an extended period of time. All things considered, the death knell spike in real yields that has historically punctuated the end of major commodity booms in the past – has yet to appear for us on the horizon.

Over the years we have shown a long-term Hawking view of the nominal yield cosmos, which depicts an antithetic and gradual troughing, versus the violent and exhaustive secular peak in yields the markets experienced in the early 1980’s. While 10-year yields this year have retraced back to the mid point of our expected range (1.5%-3.0%), taking into account the symmetrical structure and mirrored return of the long-term yield cycle, an estimated secular pivot higher would not take place until early in the next decade.

Tumbler Ridge Residents Fear for Town’s Future – by Jeremy J. Nuttall (The Tyee.ca – November 18, 2014)

November 19, 2014

http://www.thetyee.ca/

‘It’s not nice’ in region that brought in foreign workers.

Two years after politicians rushed to defend a mining company that was hiring workers from China over locals in Tumbler Ridge, B.C., residents are worried about their town’s future after layoffs at two nearby mines.

“It’s not nice,” said Clayton Knowles, who lost his job at Wolverine mine seven months ago. “Every day I’m counting the hours I get to make sure I can pay my mortgage.” As residents fret about their economic futures, local politicians are conspicuously silent.

“The federal government, the provincial government are not going to help this town,” Knowles said. “They haven’t yet, have they?”

A local newspaper recently quoted Tumbler Ridge’s deputy mayor as estimating that the unemployment rate in the town of 2,700 was as high as 70 per cent. And some local residents told The Tyee that people are leaving their homes behind as they flee the desperate economic circumstances of the town.

In April, Tumbler Ridge was walloped with news that Walter Energy’s Wolverine coal mine would be idled due to poor coal prices. Months later, Peace River Coal said it would follow suit at the end of the year, also citing low prices and a need for maintenance.

‘Yes’ vote in Swiss referendum not certain to lift gold prices-Deutsche Bank – by Jan Harvey and Anirban Nag (Reuters U.S. – November 17,2014)

November 19, 2014

http://www.reuters.com/

Nov 17 (Reuters) – A vote in favour of boosting Switzerland’s gold holdings at a Nov. 30 referendum won’t necessarily lift bullion prices, Deutsche Bank said in a note, adding there was a “considerable” chance the motion would pass.

The Swiss National Bank could spread out its gold buying, take transactions off market, or use derivatives to cushion gold prices from the impact of a ‘yes’ vote, Deutsche said.

The “Save our Swiss gold” proposal, spearheaded by the right-wing Swiss People’s Party (SVP), would force the SNB to hold at least 20 percent of its assets in gold, make it repatriate gold held overseas and commit never to sell bullion.

A survey last month said the proposal had 44 percent support, short of the majority needed to pass into law. A poll this month showed support had waned.

Gold bulls have flagged the vote as a potential driver of higher prices, but Deutsche said gold, now 38 percent below its 2011 record high, would not necessarily benefit.

Canada’s Estractive Sector Strategy well received, expected to fuel prosperity of sector – by Tracy Hancock (MiningWeekly.com – November 19, 2014)

November 19, 2014

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

JOHANNESBURG (miningweekly.com) – The Canadian government has an important role to play in supporting both the global competitiveness of the Canadian mineral industry and its ability to contribute to the sustainable development of the societies in which it operates, said Prospectors & Developers Association of Canada (PDAC) president Rod Thomas on Tuesday.

The organisation has welcomed Canada’s commitment to assist the mineral exploration and mining industry to succeed abroad, noting that measures to support the sector were included in the updated Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector that was released on November 7, as well as the Extractive Sector Strategy on Tuesday in Ottawa by Minister of International Trade Ed Fast and Minister of Natural Resources Greg Rickford.

The Ministers made the announcement at the Mining Association of Canada’s annual Mining Day on the Hill luncheon. The Extractive Sector Strategy builds on Canada’s plan for responsible resource Development, ensuring that mining and energy continued to represent an engine of economic growth and prosperity for Canadians.

“Our government recognises the importance of the mining industry to Canadian jobs and long-term economic prosperity. We’re working aggressively to attract investment and open new markets. Once again, we are demonstrating our commitment to creating the conditions that enhance Canada’s competitive position as a global mining leader, ” said Rickford.

NEWS RELEASE: Cliffs Natural Resources Inc. to Pursue Exit Options for its Eastern Canadian Operations

November 19, 2014

CLEVELAND, Nov. 19, 2014 /CNW/ — Cliffs Natural Resources Inc. (NYSE: CLF) announced today that it is pursuing exit options for its Eastern Canadian iron ore operations which may result in the closure of the Bloom Lake mine.

Lourenco Goncalves, Cliffs’ Chairman, President and Chief Executive Officer said, “Despite the continued interest of the prospective equity partners in Bloom Lake and in its high quality ore, the potential investment is not achievable within a time frame acceptable to Cliffs. With expansion no longer viable, we have shifted our focus to executing an exit option for Eastern Canadian operations that minimizes the cash outflows and associated liabilities.”

The Company previously disclosed that to make Bloom Lake viable, the development of the mine’s Phase 2 was necessary. The investment was estimated to cost $1.2 billion. In the event of a closure, the estimated closure costs are expected to be in the range of $650 million to $700 million in the next five years.

Cliffs stated also that the Company’s subsidiary, Cliffs Quebec Iron Mining Limited, along with Bloom Lake General Partner Limited and The Bloom Lake Iron Ore Limited Partnership, recently lost an arbitration claim they filed against a former Bloom Lake customer relating to the August 2011 termination of an iron ore sales agreement. In November 2014, the arbitrators decided in favor of the former customer and awarded it damages in an amount of approximately $71 million as well as attorneys’ fees and accrued interest from the date of termination of the offtake agreement in August 2011.

West African Mining Projects Take Hit From Ebola Crisis – by Patrick McGroarty, David Gauthier-Villars and Alex MacDonald (Wall Street Journal – November 18, 2014)

November 19, 2014

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

Epidemic Delays Rollout of Jobs Meant for Residents of Guinea, Liberia and Sierra Leone

Liberia, Guinea, London – When Guinea’s government pledged to open its vast iron-ore reserves this year after countless delays, Moïse Foulah prepared for a boom. His business, after all, is selling explosives to mining companies—and they were piling into Guinea and its neighbors.

Instead, a promising corner of the global economic frontier is pocked with stalled mining projects. The Ebola epidemic has scared off ships and planes; prompted expatriates to abandon their posts; and delayed the rollout of thousands of jobs meant for residents of the three poor West African countries hardest hit by the virus: Guinea, Liberia and Sierra Leone.

“All the projects are at a standstill,” Mr. Foulah, chief executive of the mining-explosives firm ECP Guinée.

Steel giant ArcelorMittal SA has delayed a $1.7 billion expansion at its iron-ore mine in Liberia. One of Sierra Leone’s biggest investors, London Mining PLC, filed for bankruptcy last month after falling iron-ore prices and Ebola concerns hampered its ability to attract financing to address long-standing woes. And in Guinea, Rio Tinto PLC has stopped work on a $20 billion iron-ore mine deep in territory hard hit by the virus.

As a result, the sector that officials in the region were counting on to pull their poor nations out of poverty has become a victim of the worst Ebola outbreak on record.

Lawrence Martin elected Mushkegowuk Grand Chief – (CBC News Sudbury – November 17, 2014)

November 19, 2014

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

Lawrence Martin has been elected as the new Grand Chief of the Mushkegowuk Council. Martin, who is a member of the Moose Cree First Nation, beat out six other candidates in a by-election. He has also served as Mushkegowuk Grand Chief before, from 1998 to 2001.

The grand chief position has been open since the death of long-time leader Stan Louttit, who lost a battle with cancer in June. “We have a lot of the housing issues, we have a lot of the water and sewage problems,” Martin said of the challenges he will face as Grand Chief.

“But there’s all kinds of money out there. Minister Rickford just announced the Canada Build program that has millions and millions of dollars and now we can actually start applying for those funds for the infrastructure in the communities.”

After Martin served a term with Mushkegowuk Council, he was active in off-reserve politics. He served as mayor of the towns of Cochrane and Sioux Lookout.

“Lawrence Martin made history as the first Aboriginal person in Ontario elected to lead a non-native municipality, then made history again by becoming one of the only people in Canada elected to lead two different municipalities,” Nishnawbe-Aski Nation Grand Chief Harvey Yesno said in a release.

Ring of Fire funding held up by Ottawa, Ontario battle – by Bill Curry (Globe and Mail – November 19, 2014)

November 19, 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.

OTTAWA — Plans to spend billions of federal and provincial dollars on infrastructure in Ontario are being held up by a behind-the-scenes battle over the Ring of Fire, as the province wants Ottawa to match $1-billion in new money to develop the ambitious mining project.

Nearly two years have passed since Ottawa announced a 10-year, $14-billion Building Canada Fund for infrastructure, but the Conservative government is expressing its strong frustration that Ontario has yet to submit a list of projects. Ottawa has said Ontario qualifies for $2.7-billion from the fund, but the province argues that using that money for the Ring of Fire would leave very little for other provincial needs such as transit and new roads.

As a result, the two governments appear to be at loggerheads, though ministers and officials are attempting to break the impasse. The waiting, combined with falling chromite prices, has proved to be too much for Cleveland’s Cliffs Natural Resources – the region’s leading mining firm is now looking to sell its Ring of Fire assets.

Federal Natural Resources Minister Greg Rickford, who represents the Northwestern Ontario riding of Kenora, insisted Tuesday that there is momentum around the Ring of Fire and that he expects the two governments to make progress shortly.

MPP says Ontario dragging its feet on Ring of Fire – by Jeff Labine (Timmins Daily Press – November 19, 2014)

November 19, 2014

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – The MPP for Timmins-James Bay is blaming the Liberal government for squandering the proposed Ring of Fire project and causing friction with mining companies.

Ontario Finance Minister Charles Sousa delivered his fall economic statement, saying the government is working to meet fiscal targets despite modest economic growth and later than expected revenues. He said the revenue projection for 2014-15 is $118.4 billion – $509 million lower than first forecast.

In that same report, Sousa once again called on the federal government to match the Liberal’s $1-billion investment into the Ring of Fire.

New Democrat MPP Gilles Bisson said because the Liberals have dragged their feet, major companies like Cliffs Natural Resources have left the project. He said Cliffs and many other mining companies continue to voice their frustration with the government.

“They have been talking about the Ring of Fire for eight or nine years,” he said. “They have mentioned it now in two or three budgets and a couple of Throne Speeches. Now they got this fallacy going on that they are going to do something when it comes to infrastructure in the Ring of Fire but we have to wait for the feds.