November 20, 2014 – Republic of Mining

Why mining companies might be the Arctic’s best hope – by Edvard Glücksman (The Conversation.com – November 19, 2014)

November 20, 2014

Economic interests are set to play an increasingly important role in shaping development in the Arctic. Yet prominent members of the mining industry, familiar with the economic and reputational perils of impatient investment, remain cautious. They can – and should – play a pivotal role in guiding responsible industrial activity in the region.

Corporate development of the Arctic appears to be a foregone conclusion and this is reflected by the development of major transnational agreements. For example, with Arctic shipping projected to increase massively in the coming years, the UN Maritime Safety Committee (MSC) will adopt the Polar Code, international guidelines for the safety of ships operating in polar waters.

On the back of such recognition, countries are making longer term economic commitments. China, for instance, has just agreed to purchase oil and gas from the Russian Arctic over the next decades, while at the same time having secured stakes in Russian oil platforms in the region.

The Arctic is rich in oil, gas, and metals such as nickel, copper, gold, uranium, or tungsten. It even has large diamond reserves. Rapidly shrinking sea ice exposes new shipping routes through the Arctic Ocean that will save time and money for companies moving goods from Asia to Europe, while also providing new opportunities for tourism and fishing.

Teck to control contaminants from mining operations in B.C.’s Elk Valley (Canadian Press/Huffington Post – November 19, 2014)

November 20, 2014

http://www.huffingtonpost.ca/british-columbia/

VICTORIA – A plan to address decades of coal-mining contaminants leeched into the Elk Valley watershed has been approved by the B.C. government.

The water treatment plan by Teck Resources Ltd. would control selenium and nitrate that have been dumped into nearby rivers and streams as the mining giant expanded operations over the years.

The company will construct water diversions and treatment facilities at several of its mine sites, including at Line Creek, Fording River and Elkview Operations, the government said. Environment Minister Mary Polak said Tuesday that the measures will improve water quality.

“This plan represents the next step in the long-term plan to ensure a healthy watershed in the Elk Valley,” she said in a statement. “Many different groups have come together to find solutions.”

In April 2013, the government ordered Teck Resources to stabilize and reverse water-quality concentrations. It cited the presence of several chemicals, including selenium, cadmium, nitrate, sulphate and the formation of calcite in the water.

Miners unite to market platinum – by Allan Seccombe (Business Day – November 19, 2014)

November 20, 2014

http://www.bdlive.co.za/

SA’s platinum miners have set up an international council to drive investment in the metal as prices remain stagnant, despite the five-month blow to supply earlier this year and recycling being a competitive source of metal.

Anglo American Platinum (Amplats), Aquarius Platinum, Impala Platinum, Lonmin, Northam Platinum and Royal Bafokeng Platinum will each fund the council in a formula based on their refined platinum production, and have representatives on the council’s board.

The London-based World Platinum Investment Council, funded by SA’s six largest platinum miners, will set up offices in Asia and the US to encourage platinum investment by financial institutions, wealthy individuals and retail investors.

“If we see gaps in countries or regions that don’t have exchange-traded funds of the right kind or don’t have enough inventory of bars and coins to stimulate the market and satisfy demand, we will encourage financial services companies to fill those gaps and we’ll work with them to understand what those needs are that haven’t been satisfied,” said Paul Wilson, the council’s CEO.

The council would also talk to central banks about holding platinum in the same way they held gold, as a source of value in their countries’ reserves, he said.

Kompania Pleads for Polish Utilities to Rescue Coal Mines – by Maciej Martewicz and Maciej Onoszko (Bloomberg News – November 19, 2014)

November 20, 2014

http://www.bloomberg.com/

Kompania Weglowa SA, the European Union’s largest coal producer, faces massive job cuts to survive unless Poland quickens the state-owned industry’s revamp, which may include help from power utilities.

“If we want to quickly heal Kompania, we should shut five mines and fire 15,000 people,” Chief Executive Officer Miroslaw Taras said at an industry summit in Katowice, Poland today. “But if we want to avoid social unrest, we should probably think about somehow combining coal mining with power generation either by means of agreed prices or takeovers of some mines.”

Poland, which relies on coal for 90 percent of its electricity production, is under growing pressure to overhaul the cash-burning industry after its two biggest producers this month failed to sell bonds abroad to finance operations. The government of new Prime Minister Ewa Kopacz yesterday appointed Wojciech Kowalczyk, a former banker, to oversee the mining restructuring.

Coal producers, which employ more than 100,000 people, have struggled to survive as sluggish economic growth cut demand for the fuel and sent prices to a seven-year low. Kompania, which runs 14 mines in the southern industrial region of Silesia, produces about a quarter of the EU’s coal output and half of Poland’s.

Province on defensive after federal accusations of Ring of Fire inaction – by Jamie Smith (tbnewswatch.com – November 20, 2014)

November 20, 2014

http://www.tbnewswatch.com/

The provincial and federal governments seem to be in a war of words over the Ring of Fire. Federal Natural Resources Minister Greg Rickford (Con., Kenora) said in the House of Commons Wednesday that the province’s much-touted $1 billion for infrastructure and development corporation in the Ring of Fire isn’t actual policy.

“Ontario has not committed a red cent and has set up a development corporation that is not supported by First Nation communities, the private sector, and it is not a policy option for this government in its current form,” Rickford said.

“We have made significant investments in the Ring of Fire and will continue to demonstrate our commitment by working with First Nation communities and the provincial government should it identify the Ring of Fire as an actual priority.”

He was responding to a question by MP David McGuinty (Lib., Ottawa South) on whether Prime Minister Stephen Harper will meet with Ontario Premier Kathleen Wynne by the end of the year on the issue.

In Queen’s Park Thursday Ontario Northern Development and Mines Minister Michael Gravelle (Lib., Thunder Bay-Superior North) said the province is absolutely committed to the project despite the absence of the federal government.

Canada’s natural-resources companies: Reputation management (The Economist – November 22, 2014)

November 20, 2014

http://www.economist.com/

The government promises to keep promoting miners’ and energy firms’ interests abroad if they behave themselves

OTTAWA – FEW governments have aligned their interests so closely to those of their country’s energy and mining firms as Canada’s Conservative administration. The prime minister, Stephen Harper, has boasted of Canada as an “emerging energy superpower”. Under the banner of “responsible resource development”, his government has done its best to ease the way for minerals firms, at home and abroad, including directing some foreign aid to countries where Canadian firms wanted to drill.

Ministers point with pride to the C$174 billion ($169 billion) in export revenues from sales of minerals, oil and gas in 2013 and to the fact that Canada is home to more than half of the world’s publicly listed exploration and mining companies.

But the downside of seeming so cosy with extractive firms is that whenever one of them gets in trouble—an inevitable occurrence with 1,500 firms active in more than 100 countries—the country’s image is tarnished too. So the government has recently begun to reduce that vulnerability by taking a stricter line on corporate social responsibility (CSR) and bribery by Canadian firms operating abroad. Protecting the national brand is “a huge part of it,” says Andrew Bauer of the Natural Resource Governance Institute, a group that monitors the industry and lobbies for openness.

Ed Fast, the international trade minister, admitted as much on November 14th, as he introduced new rules that require Canadian resources firms involved in disputes with local communities to take part in a resolution process. If any firms refuse, the government will withdraw its economic diplomacy on their behalf.

China ‘triple bubble’ points to long slide for commodities – by William Watts (MarketWatch.com – November 20, 2014)

November 20, 2014

http://www.marketwatch.com/

Don’t try to catch a falling China knife, says Credit Suisse

NEW YORK (MarketWatch) — The “commodity super cycle” is dead. Now, it’s time to get used to the “commodity super down cycle, and China is the biggest reason why, warn strategists at Credit Suisse in a Thursday note.

Commodity demand tends to be very cyclical. Commodities, however, have been underperforming cyclical indicators of growth, including industrial production and new manufacturing orders (as measured by Institute for Supply Management survey data), they say. Much of the blame is on China, the strategists argue, noting that the country remains the “most significant source” of demand for most industrial commodities.

Moreover, they see China on track for a “hard landing” at some point in the next three years.

The report adds to some of the recent gloom around China, where the fate of the economy remains a topic for debate. Standard & Poor’s Ratings Services on Wednesday said its negative outlook for Chinese property developers is casting a pall on the rest of the Asia-Pacific region, though it sees prospects for the sentiment to recover next year thanks to looser government policies, particularly on mortgages.

The Credit Suisse strategists, meanwhile, see a “triple bubble” in credit, real estate and investment.

Rock-bottom prices forcing Cliffs to pull up stakes in Canada – by Bertrand Marotte and Nicolas Van Praet (Globe and Mail – November 20, 2014)

November 20, 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 — Cliffs Natural Resources Inc.’s Canadian adventure is winding down. The Ohio-based mining giant is preparing to shut down its money-losing Bloom Lake iron ore mine in northeastern Quebec amid rock-bottom prices for the mineral and high operating costs. It has already closed a Labrador iron ore property at Wabush and said it is looking to sell its chromite deposits in northern Ontario’s Ring of Fire.

Cliffs has spent hundreds of millions of dollars developing the high-potential Ring of Fire deposit and the existing Lake Bloom operations, but has run into a series of roadblocks, including a five-year low for iron ore prices, slumping Chinese demand and major delays in getting agreements with Ontario and First Nations over essential infrastructure for the Ring of Fire.

A shutdown of Bloom Lake would be a major blow to the local economy and to the provincial government’s multibillion-dollar Plan Nord economic development strategy pinned on natural resources extraction north of the 49th parallel.

Likewise, the Ontario government had made the Ring of Fire the centrepiece of its ambitious development plans for the mineral-rich region about 500 kilometres northeast of Thunder Bay in the James Bay Lowlands. And Cliffs had been the leading mining player in that plan.

INTERVIEW-India to allow foreign firms mine and sell coal – by Krishna N. Das (Reuters India – November 20, 2014)

November 20, 2014

http://in.reuters.com/

NEW DELHI, Nov 20 (Reuters) – India will allow locally registered foreign firms to mine and sell coal when commercial mining is permitted as part of the opening up of the nationalised industry after four decades, Coal Secretary Anil Swarup told Reuters.

To end a chronic coal shortage that cripples power plants and curb the country’s imports of the fuel, the Narendra Modi government will also spend about $1 billion by 2019 to buy railway wagons and transport coal from remote mines, Swarup said in an interview on Thursday.

The government last month made provisions for private firms to commercially mine coal but did not set any timeline for when actual digging will start.

The decision will open the door to global giants like Rio Tinto and BHP Billiton and help ramp up output from India’s huge reserves – the world’s fifth biggest.

“Any company registered in India can bid (when a commercial coalfield auction takes place),” Swarup said. “So a foreign company registered in India can also bid, provided they fulfil other conditions.”

Opening up the industry will increase private coal production to about 400 million tonnes by 2019 from less than 50 million tonnes last year, Swarup said.

What Uralkali’s mine shutdown may mean for the potash market – by Jonathan Ratner (National Post – November 20, 2014)

November 20, 2014

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

A major supply outage at one of Uralkali’s potash mines in Russia raises the prospect of a much tighter global market for the commodity and could serve as a much-needed catalyst for Canadian fertilizer stocks.

The shutdown of the Solikamsk-2 potash mine after Uralkali detected an increased flow of brine, which can weaken a mine’s structure, bodes particularly well for producers such as Potash Corp. of Saskatchewan Inc. to increase their sales since the Russian mine has annual capacity of approximately 2.3 million tonnes.

Raymond James analyst Steve Hansen said early indications are that the shutdown will be an extended one or possibly worse, and it comes during a period of international contract negotiations, which could influence both Chinese and Indian contract pricing to the upside.

He raised his 2015 international pricing benchmarks by US$10 per tonne to reflect the additional bargaining leverage that potash marketer Canpotex, whose members include Agrium Inc., Mosaic Co. and Potash Corp., should get from this development.

“With both Uralkali and Belaruskali running close to flat out of late, we believe that much of the volume shortfall stemming from this supply outage will accrue disproportionately to the western-based producers (i.e., Canpotex) who possess ample slack capacity,” he told clients.

Cliffs’ massive closure costs at Bloom Lake stun analysts – by Peter Koven (National Post – November 20, 2014)

November 20, 2014

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

Three weeks ago, Lourenco Goncalves warned that shutting down the Bloom Lake mine in Quebec would not be a simple task. “Going away from [Bloom Lake] is not deleting it on a computer. It’s a pretty complicated process,” the chief executive of Cliffs Natural Resources Inc. told the Financial Post.

He wasn’t kidding. Cliffs announced on Wednesday that it plans to exit Bloom Lake. And if it can’t find a buyer, it expects to be on the hook for astounding closure costs of US$650-million to US$700-million during the next five years. The stock plunged US$2.04 or 20% to US$8.17 in New York on the news.

The Cleveland-based miner did not respond to requests for comment. But analysts said a key problem for Cliffs is the penalty costs involved in breaking a “take or pay” rail contract between Bloom Lake and the Quebec North Shore and Labrador Railway Company. If the mine shuts, there is no choice but to terminate that contract.

Citigroup analyst Brian Yu was forecasting US$360-million of care and maintenance and transport penalty costs over three years to close Bloom Lake, noting the company’s estimate is “obviously much larger.”

Cliffs said in a filing this month that if Bloom Lake were to close, “various commitments including rail minimums, royalties, and other ongoing costs could be incurred.”

Red Chris mine failure would eclipse Mount Polley damage: report – by By Cara McKenna (CBC News British Columbia – November 19, 2014)

November 20, 2014

http://www.cbc.ca/news/canada/british-columbia

Porous soil at site of proposed tailings pond dam called a ‘major design issue’

The Canadian Press – The results of a third-party review into the design of a northwestern B.C. gold and copper mine says it has the potential to cause significantly more environmental damage than the recent collapse of the Mount Polley tailings pond.

Engineering firm Klohn Crippen Berger made 22 recommendations for the owner of the mine, Imperial Metals, to improve the tailings dam of the Red Chris mine, 500 kilometres north of Terrace.

The review found the design of the dam is feasible, but that there are issues that must be addressed. The three-phased review looks at the tailings pond design, water quality predictions and geohazards at the mine site.

It identifies a “major design issue” for the soil on which the dams would be built, noting the porous soil could cause damaging water leaks if the planned installation of a fine-grained tailings blanket isn’t enough to limit seepage.

It also suggests that designers carefully monitor the water balance for their tailings reservoir and complete a risk assessment around the effects of another nearby landslide.

Quebec-Ontario power-sharing shows energy synergy – by Martin Regg Cohn (Toronto Star – November 20, 2014)

November 20, 2014

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Quebec has put separatism on the backburner. Is Ontario ready to reciprocate — by renouncing its own costly history of electricity separatism?

For decades, Ontario built political moats around its nuclear reactors — and raised the drawbridges to prevent the flow of cheaper hydroelectric power from our neighbouring province. But as Central Canada faces up to an era of economic upheaval and energy uncertainty, against a backdrop of newfound political stability, the calculus is changing.

We’ll get a hint of the economic and political benefits of energy co-operation Friday, when Quebec Premier Philippe Couillard and a dozen of his senior ministers sit down with Ontario’s cabinet. The meetings of ministers will produce a meeting of minds:

After months of negotiations kicked off by Wynne and Couillard, the two provinces are set to sign a historic power-sharing agreement — electrical, not political. The goal is to backstop each other’s base load electricity during peak periods, going beyond the traditional stop-gap approach of buying and selling power on short-term deals at peak periods.

This new approach will lead to ongoing power swaps without any money changing hands: Quebec’s peak load occurs during the winter heating season, when electrical baseboard heating puts a strain on its abundant reservoirs of hydroelectricity.

OBITUARY: Engineer Walter Curlook was ‘Pied Piper of productivity’ – by Judy Stoffman (Globe and Mail – November 20, 2014)

November 20, 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.

Walter Curlook’s favourite film was the Danish drama Babette’s Feast. Perhaps this story, of a Parisian chef who takes refuge in an austere religious community, then spends all her money to prepare a sumptuous meal that awakens her hosts’ repressed senses, confirmed Mr. Curlook’s belief in generosity – sharing wealth to enlarge people’s horizons.

As a metallurgist, engineer and manager who spent his entire career as an executive at Inco when it was the world’s largest nickel miner, he understood how to create wealth as well as share it. Mr. Curlook, who died on Oct. 3 in Toronto of a brain hemorrhage at the age of 85, held 14 patents for improvements to nickel refining and played a role in the establishment of a science centre, a college and a research facility for particle physics in Sudbury that has no equal in Canada.

Brilliant and tenacious, he never stopped working. After he retired from Inco, he became an adjunct professor in materials science and engineering (unpaid) at the University of Toronto and donated $1-million to set up two laboratories there for the study of minerals.

“He was one of those people able to use a larger percentage of his brain than most of us,” his son Michael said. His daughter Christine Stinson recalled her father’s ability to be so absorbed in some problem that he would not hear his children speak: “He would sort of zone out and my mother would tell us, ‘Quiet – your father is thinking.’”

PR trickery tarnishes oil patch’s credibility – by Jeffrey Jones (Globe and Mail – November 19, 2014)

November 20, 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.

CALGARY — It’s become the mantra of the oil patch and its top executives: What this country needs is an adult, fact-based conversation about energy. According to a newly unearthed document with TransCanada Corp.’s logo on it, it could also do with a heaping helping of manipulation.

And there, encapsulated in a neat package, is precisely what’s wrong with public discourse about energy development and building pipelines.

Rather than actually sticking to a policy of engaging in open dialogue, promoting economic benefits and addressing concerns with real explanations from experts – all things the industry has pledged to do time and again – there are factions preferring communications black ops, phony grassroots campaigns, squadrons of dutiful Twitter trolls and search-and-destroy missions on opponents.

The document, prepared by Edelman, the global PR firm, for TransCanada and its $12-billion Energy East pipeline proposal, was obtained by Greenpeace and released on Monday.

Some parts include obvious strategies like sticking to a positive message and framing a communication to try to gain trust. Other parts urge the kind of mean-spiritedness the company will want to avoid as it promotes a project that would change the face of the energy industry by moving oil sands crude across six provinces.