November 21, 2014 – Republic of Mining

Federal government right to question province for plan, Ring of Fire stakeholder says [KWG Resources] – by Jamie Smith (tbnewswatch.com – November 21, 2014)

November 21, 2014

http://www.tbnewswatch.com/

THUNDER BAY — A major Ring of Fire player says the federal government is right in asking the province to show their plans for the massive mining project.

Federal Natural Resources Minister Greg Rickford (Con., Kenora) said recently that the province hasn’t spent any money despite making a $1 billion commitment to the project.

KWG exploration and development vice-president Moe Lavigne said the commitment is putting the cart before the horse and mining companies don’t have a social license in the area without an actual plan to bring infrastructure to the North.

“It’s great to make that commitment for a billion dollars but you need a place to spend it,” he said. “You need a plan and that doesn’t exist.”

The plan is supposed to be developed through the province’s development corporation but so far no one from the province has contacted KWG or any First Nations to be a part of the organization. “There’s absolutely no update there. We haven’t had any contact with anybody in the development corporation,” he added.

Meanwhile, a former Ring of Fire stakeholder continues to declare its skepticism that the region will ever become a profitable venture for private interests.

Lies we wish were true [Ring of Fire transportation] – by David Robinson (Northern Ontario Business – November 2014)

November 21, 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.

Dave Robinson is an economist with the Institute for Northern Ontario Research and Development at Laurentian University.drobinson@laurentian.ca

Here is a fantasy about Northern development and the Ring of Fire. Everyone in the story really exists. Not a single event in the story has happened — yet.

In late 2014, the chief of the Moose Cree First Nation, Norm Hardisty, wrote to Stephen McGlennan, CEO of Hybrid Air Vehicles in Britain, asking if their Airlander 50 would be a suitable vehicle for CreeWest, a First Nations-owned air carrier. Hardisty didn’t have a clear plan in mind, but he knew that if First Nations controlled an essential transportation system they would be big winners in the development of Ontario’s North. McGlennan phoned Hardisty back saying he would fly a half-dozen people to the hangar in London where the radical airship is being built.

According to the International Business Review, McGlennan’s super blimp has a top speed of 160 kilometres per hour, can carry 50 tons of equipment, and can operate in the most extreme weather. If there is no runway, it can deliver 20 tons to any clearing bigger than a football field. In comparison, a CH-47 Chinook helicopter can only lift a maximum of 10 tons. And helicopters are fuel hogs. The Airlander has much better fuel efficiency than any conventional aircraft.

Five mineral value-chains prioritised in South Africa’s draft beneficiation plan – by Terence Creamer (MiningWeekly.com – November 21, 2014)

November 21, 2014

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

The Mineral Beneficiation Action Plan (MBAP), which is currently in draft form, should be finalised by the end of March 2015, the Department of Trade and Industry (DTI) has confirmed. The department is leading the drafting process, which also involves the National Treasury, the Economic Development Department, the Department of Mineral Resources (DMR) and the Department of Science and Technology.

The Economic Sectors, Employment and Infrastructure Development Cluster announced this week that the MBAP would seek to advance “local value-addition across five mineral value-chains, namely, iron-ore and steel, platinum-group metals, polymers, titanium and mining inputs”.

In response to questions posed by Engineering News Online, DTI deputy DG Garth Strachan reported that the main objective of the MBAP was to break down the objectives of the ‘Beneficiation Strategy’ into incremental and achievable targets.

It would also seek to identify specific policies and projects to enable South Africa to leverage its “comparative resource advantage to build a dynamic industrial economy”.

Some elements of the plan would be incorporated into the mineral beneficiation section of the 2015/16 version of the rolling Industrial Policy Action Plan (Ipap), which is overseen by the DTI. But the other departments would also play a role in implementation, with the Ipap mainly focusing on the project components.

How Canada Can Help Combat the ‘Resource Curse’ – by Lina Holguin (Huffington Post – November 20 , 2014)

November 21, 2014

http://www.huffingtonpost.ca/business/

Lina Holguin is a Policy Director at Oxfam Canada and Oxfam-Quebec.

Recently, Canada’s Parliament introduced the Extractive Sector Transparency Measures Act, which could have a huge impact on people around the world experiencing the “resource curse.”

More than 60 per cent of the world’s poorest people live in countries rich in natural resources — but they rarely share in the wealth. Too often, poor communities have no say in the extraction of resources from their land and receive little information about the scope of these projects, the revenues they generate, their timelines and potential impacts.

The legislation would increase transparency in the oil, gas and mining industry by requiring Canadian companies to disclose the payments they make to governments for the extraction of natural resources. The legislation, part of the omnibus bill introduced last month, is an important first step to helping citizens of resource-rich countries increase accountability and fight corruption.

The finalized legislation needs to align with global transparency standards already in place around the world, including in the European Union and the U.S., which require company by company, country by country, public, project-level disclosure. Publish What You Pay Canada, of which Oxfam is a member, has proposed amendments to the law that would bring it into line with these standards. At the moment, the act has critical gaps that must be filled to make it effective and to deter corruption.

Go where it is darkest: When company, country, currency and commodity risk collide! – by Aswath Damodaran (Musings on Markets – November 20, 2014)

November 21, 2014

http://aswathdamodaran.blogspot.ca/

Aswath Damodaran is a Professor of Finance at the Stern School of Business at NYU.

You learn valuation (and find out how much you don’t know) by valuing businesses and companies, not by talking, reading or ruminating about doing valuation. That said, it is natural to want to value companies with profit-making histories and a well-established business models in mature markets. You will have an easier time building valuation models and you will arrive at more precise estimates of value, but not only will you learn little about valuation in the process, it is also unlikely that you will find immense bargains, because the same qualities that made this company easy to value for you also make it easier to value for others, and more importantly, easier to price.

I believe that your biggest payoff is in valuing companies where there is uncertainty about the future, because that is where people are most likely to abandon valuation first principles and go with the herd. So, if you are a long-term investor interested in finding bargains, my advice to you is to go where it is darkest, where micro and macro uncertainty swirl around every input and where every estimate seems like a stab in the dark. I will not claim that this is easy or comes naturally to anyone, but I have a few coping mechanisms that work for me, which I describe in this paper.

While I enjoy valuing companies with uncertain futures, there are cases where my serenity about valuation is disturbed by the coming together of multiple uncertainties, piling on and feeding of each other to create a maelstrom. In this post, I want to focus on two companies, one Brazilian (Vale) and one Russian (Lukoil), where bad corporate governance, a spike in country risk, currency weakness and plunging commodity prices have conspired to devastating effect on their stock prices.

Ring of Fire is ‘beyond the point of no return,’ mining company says – Bill Curry and Bertrand Marotte (Globe and Mail – November 20, 2014)

November 21, 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 and MONTREAL – The Ring of Fire project is “beyond the point of no return” in spite of renewed government pledges to move ahead, says the CEO of the mining company that owns the rights to most of the resources in the remote Northern Ontario mineral deposit.

Cliffs Natural Resources Inc. CEO Lourenco Goncalves made headlines last month with his declaration that he had “zero hope” that the Ring of Fire would be developed in his lifetime.

In an interview with The Globe and Mail this week, Mr. Goncalves said recent pledges from the federal and Ontario governments to support the project with public infrastructure cash have not changed his assessment of the project’s viability.

“Last month I said it would not happen in the next 50 years. This month I will say it’s not going to happen in 49 years and 11 months,” he said. “We are beyond the point of no return.”

The Cleveland-based company bought three chromite deposits in 2010 for $350-million and has spent about $200-million on development. Since large chromite deposits were first discovered in 2008, estimates have pegged the mineral potential of the region at $60-billion.

EXCLUSIVE-Foreign firms challenge Poland over access to mine concessions – by Adrian Krajewski and Anna Koper (Reuters India – November 21, 2014)

November 21, 2014

http://in.reuters.com/

WARSAW, Nov 21 (Reuters) – Two foreign-owned mining firms have challenged the Polish government over what they see as the unfair allocation of copper and potash extraction permits to state-controlled miner KGHM.

Poland’s environment ministry, which allocates concessions, denied it gave preferential treatment to KGHM over Canadian Miedzi Copper, which has filed a lawsuit, or British firm Darley Energy, which has submitted an appeal.

KGHM, Europe’s second-largest copper producer and an industrial champion for Poland, is 31.8-percent owned by the state. It said it did not limit competition.

Whatever the outcome, the row could rattle foreign investors at a time when Poland’s resource sector, struggling with low prices on the world market, badly needs investment.

The government is also anxious to bring investors into shale gas, which it hopes will reduce its reliance on imported Russian gas. But a number of firms have pulled out, citing difficult geology and unclear regulations.

Cliffs Natural Resources retreats from Canadian ‘disaster’ – by Nicolas Van Praet (Globe and Mail – November 21, 2014)

November 21, 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 — The chief executive officer of mining giant Cliffs Natural Resources Inc. is taking aim at his predecessors for their decision to pump billions of dollars into Canada, saying every single investment it made here in recent years was a “disaster” that failed to produce any profit.

“I’m walking away from Canada big time – Canada for Cliffs has not been a good thing,” Lourenco Goncalves, the company’s chairman and CEO, said in an interview Thursday. “All these investments that the company made in Canada after the Wabush mine were a disaster.”

“I’m not the type of guy that’s too much of a Monday morning quarterback,” he said. “But these [decisions] are very clear. Misguided decisions all the way.”

Cleveland-based Cliffs, the biggest U.S. iron ore producer, has spent $6-billion (U.S.) in all on its Bloom Lake iron ore mine in northeastern Quebec over the past three years and “never made a penny” on the investment, Mr. Goncalves said. The company on Wednesday announced that it is “pursuing exit options” for its Eastern Canadian iron ore operations, evaluating its maximum exposure to close the Bloom Lake site at $700-million. The company will also close its mine in Wabush, Nfld., which had been in operation for more than 40 years.

Wall Street Banks dumping some physical commodities units – by Dorothy Kosich (Mineweb.com – November 21, 2014)

November 21, 2014

http://www.mineweb.com/

Several witnesses indicate they could support increased regulation of their activities.

RENO (MINEWEB) – As Goldman Sachs, JPMorgan and Morgan Stanley defended their commodities activities before the Senate Permanent Subcommittee on Investigations Thursday, the world’s largest aluminum consumer and U.S. senators argued the lack of adequate regulation is hurting consumers of aluminum, copper and other commodities.

At least two of the Wall Street banks under investigation by the U.S. Senate told the subcommittee they are in the process of or have eliminated their ownership of assets such as power plants and oil tankers, and substantially lowered their physical copper holdings.

However, two executives involved in and around the aluminum industry asserted Goldman Sachs’ Metro International Trade Services warehousing interests are having “a profoundly negative impact” on aluminum consumers. Goldman, which is in the process of selling Metro, is not about to get out of the commodity trading business or physical committees.

Jorge Vasquez, managing director of HARBOR Aluminum Intelligence, told the subcommittee Thursday that the London Metal Exchange (LME) “has partially failed as an effective ‘market of last resort’ for the aluminum consumer (the manufacturers of aluminum semi-finished products”.

Richest Woman in Asia-Pacific Buys Iron as BHP Calls End to Era – by Jasmine Ng and David Stringer (Bloomberg News – November 21, 2014)

November 21, 2014

http://www.bloomberg.com/

Gina Rinehart, the Asia-Pacific’s richest woman, is set to start exports in September from her new A$10 billion ($8.6 billion) iron ore mine undeterred by prices trading near five-year lows and forecast to extend losses.

“We don’t like the ore price going down, but we’re in the lower quartile” of production costs, Rinehart, chairman of Hancock Prospecting Pty, said yesterday in an interview at the Roy Hill mine in Australia’s iron-rich Pilbara region.

She was talking just hours after Andrew Mackenzie, chief executive officer of BHP Billiton Ltd. (BHP), called an end to the era of “massive expansions of iron ore.” BHP and rivals Rio Tinto Group (RIO) and Vale SA (VALE5) are flooding the global market, spurring a surplus after a $120 billion spending spree to boost the capacity of their mines from Australia to Brazil.

“I don’t think next year would be ideal to be adding new supply,” Daniel Morgan, a Sydney-based analyst at UBS AG, said in a Nov. 17. phone interview. “The market is pretty well supplied for the next few years.”

BHP stock lost 4.7 percent in Sydney this week for the biggest weekly loss since March, while Rio shares fell 6.1 percent. Fortescue Metals Group (FMG) Ltd., the country’s third-biggest shipper, retreated 54 percent this year.

There are many good reasons for takeover interest in Nevsun — and one really big downside – by Peter Koven (National Post – November 21, 2014)

November 21, 2014

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

Canadian miner Nevsun Resouces Ltd. has emerged as a potential takeover target, but any bidder is going to have to overcome a major deterrent: Eritrea.

The Vancouver-based miner revealed Thursday it recently received inquiries from “various parties” about a potential transaction. The announcement came after Bloomberg News reported that a Qatar-backed private equity fund called QKR Corp. is eyeing a US$1-billion bid for the company. Nevsun shares jumped 11%, giving the firm a market value of $942-million.

There are good reasons for the interest. Nevsun’s Bisha mine is extremely rich, with high-grade copper output that will transition into high-grade zinc output in a couple of years, when many analysts are forecasting shortages in the zinc market. The company has promising exploration ground in the area that could yield more mines. It also has close to US$400-million of cash, which means a takeover would largely pay for itself.

But the downside is that Bisha is in Eritrea, which is ruled by one of the world’s most repressive governments. The country is facing international sanctions, and Western governments may not look kindly at any company looking to do business there.

The Eritrean government has caused major problems for Nevsun.

By erecting new hurdles for Energy East, Quebec is caving to pipeline opponents – by Claudia Cattaneo(National Post – November 21, 2014)

November 21, 2014

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

As if TransCanada Corp.’s 30,000-page application to the National Energy Board for its proposed Energy East pipeline wasn’t good enough, the Quebec government has laid out seven conditions of its own before allowing the $12-billion project.

In a Nov. 18 letter (in French) to TransCanada president and CEO Russ Girling, Quebec Environment Minister David Heurtel said the conditions include passing an environmental assessment that examines its impact on greenhouse gas emissions, echoing President Barack Obama’s warning that he won’t approve Keystone XL if it exacerbates greenhouse gas emissions.

“If the company doesn’t respond to the conditions, the project cannot go ahead,” Mr. Heurtel said.

Quebec approval of Energy East, which would take 1.1 million barrels per day of Alberta crude oil to refineries in Quebec and New Brunswick and to ports in both provinces for export, is also contingent on the project providing a thorough emergency plan with a compensation fund in case of a spill; consultations with communities on the potential social impacts; use of the highest technical standards to assure public safety and protection of the environment; satisfying issues dealing with First Nations; generating economic benefits for all of Quebec, especially in job creation in areas where the pipeline will be located.

RPT-Quebec’s ambitious Plan Nord mineral project goes south – by Allison Lampert and Nicole Mordant (Reuters India – November 21, 2014)

November 21, 2014

http://in.reuters.com/

Nov 20 (Reuters) – A plan by the Canadian province of Quebec to spend billions to develop the mineral riches of its northern region has been dealt a crippling blow by the pending closure of a major mine as iron ore prices sink and China’s interest wanes.

The Plan Nord project hopes to attract C$80 billion ($71 billion) of investment to the vast northern region, of which the iron ore-rich Labrador Trough is a major component. The French-speaking province is trying to sell the plan globally and is hoping miners will flock to northern Quebec after the government invests in the infrastructure necessary to open it up.

But Plan Nord took a big hit on Wednesday, when Cliffs Natural Resources said it is closing its Bloom Lake iron ore mine after struggling to secure funds to expand the mine and make it viable. Chinese steelmaker Wuhan Iron & Steel owns a minority stake in Bloom Lake.

Bloom Lake, one of three producing iron ore mines in Quebec, would have become a major customer for a railway line being considered under Plan Nord.

“Without Bloom Lake there’s no Plan Nord,” Cliffs Chief Executive Lourenco Goncalves told Reuters. “Without the mine, there’s pretty much nothing for Plan Nord to transport from point A to point B.”

NEWS RELEASE: Could demolition of Sudbury’s superstack signify environmental progress?

November 21, 2014

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

Imagine Paris without the Eiffel Tower, Seattle without its Space Needle and Kuala Lumpur minus the Petronas Towers on the skyline. Now, try to imagine Sudbury without the Superstack! Okay these may not be structures designed for similar functions but they do cast a shadow over their cities, the psyches of their residents and how the rest of the world views them.

Recently, it was widely reported that Kelly Strong, Vice President of Ontario and U.K. Operations for mining giant Vale, told the Greater Sudbury Chamber of Commerce that his company was assessing the possibility of no longer requiring the 1,250 foot tall Superstack. It was built by Vale predecessor company Inco for an estimated cost in 1970 of $25 million. Construction started on the tallest smoke stack in Canada in 1970 and it was first operational in 1972.

The purpose of this structure was to disperse sulphur dioxide emissions and other waste from the nickel and copper smelter process. It was considered to be the right thing to do environmentally at that time. So the possibility of its dismantling must be a good sign environmentally, right?

“Given the tremendous reduction in emissions and change in our processes, we are working to figure out if we should continue to use the current 1,250 foot stack, or build something much smaller,” said Mr. Strong at the Greater Sudbury Chamber of Commerce event.

Australia positioned as an Indo-Pacific power with new China, India trade deals – by Matthew Fisher (National Post – November 21, 2014)

November 21, 2014

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

CANBERRA — Australia is on the kind of diplomatic tear Canada can only dream of. Brisbane got lots of global attention by hosting the Group of 20 leaders summit in Brisbane last weekend because so many participants lined up behind Canada’s Stephen Harper to disparage Russian President Vladimir Putin for the Kremlin’s malignant actions in Ukraine.

Less than 24 hours later in Canberra, the Australian capital, Chinese President Xi Jinping and Australian Prime Minister Tony Abbott signed China’s biggest trade deal ever. Mr. Abbott followed that triumph by announcing a strategic security alliance with Indian Prime Minister Narendra Modi and, perhaps rashly, promised another trade deal could be expected by the end of 2015.

As Australia’s daily Financial Review crowed, “Simultaneous visits by Xi and Modi mark us as no longer an appendix to Asia, but as a core Indo-Pacific power.”

The optics must have looked good to the 2.6 billion people back home in China and India, too. The two leaders were accorded rapturous welcomes when they addressed Australia’s parliament on consecutive days.

Mr. Xi talked about how it was best to achieve peace through trade. Mr. Modi spoke of the bonds that Indians and Australians share. Both countries are democracies, he said, and their citizens love cricket.