January 8, 2015 – Republic of Mining

Rare earths and China’s self-correcting folly – Alan Beattie (Financial Time – January 8, 2015)

January 8, 2015

http://blogs.ft.com/beyond-brics/

This week, a trade war that was supposed to tear the world of high-tech manufacturing apart ended peacefully, quietly and with few casualties.

China announced plans that would comply with a WTO decision from last year by removing export quotas and other restrictions on rare earth elements (REEs), the minerals used widely in the manufacture of electronics, computers and cars. It was another success for the US, which has not only chalked up a series of impressive wins against China in the WTO’s dispute settlement process but also (by no means a given) often succeeded in getting Beijing to implement the decisions.

So, a big victory for global governance? Huzzah for the international rule of law, and a celebratory round of Dan Drezners? Sort of. In reality, it was the free market as much as trade rules that did for China’s attempt to corner global commerce in rare earths. Moreover, in a rather choice irony, Chinese companies employed the very tricks that they use to sidestep trade restrictions by other governments to sabotage the export quotas set by their own.

By 2010, China produced 97 per cent of the world’s basic rare earth oxide production and much of the processing business. In its submission to the WTO, Beijing laughably argued that a complex system of export restrictions it had placed on its REE companies since the mid-2000s was aimed at protecting the environment by controlling mining.

Platreef PFS underpins ‘excellent’ economics – Ivanhoe – by Natasha Odendaal (Mining Weekly.com – January 8, 2015)

January 8, 2015

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

JOHANNESBURG (miningweekly.com) – The prefeasibility study (PFS) of TSX-listed Ivanhoe Mines’ Platreef project had demonstrated the robust nature of the latest major new underground, mechanised platinum mine, near Mokopane, in Limpopo, executive chairperson Robert Friedland said on Thursday.

Ivanhoe aimed to develop the Platreef platinum, palladium, rhodium, gold, nickel and copper mine in three phases, with an initial production rate of four-million tonnes a year to establish an operating platform to support future expansions.

The latest study confirmed the “excellent” economics and technical viability of the low-cost operation, Friedland said of the mine that would eventually expand production to eight-million tonnes a year, before reaching a steady-state 12-million-tonne-a-year operation in the third phase.

The PFS – an important milestone in Ivanhoe’s planned transformation of the Platreef discovery into one of the pre-eminent South African platinum-group metals producers – covered the first phase of development, including the construction of an underground mine, concentrator and other associated infrastructure to support initial concentrate production by 2019.

Inquest into Fram, Chenier mining deaths called for April 8 – by Ben Leeson (Sudbury Star – January 7, 2015)

January 8, 2015

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

Briana Fram knows the coroner’s inquest into the death of her brother, Jordan Fram, and Jason Chenier will a difficult time for her family, but hopes it will result in a safer workplace for those who work in mines.

Dr. Reuven Jhirad, deputy chief coroner of the Office of the Chief Coroner for Ontario, announced Tuesday that an inquest will be held into the deaths of Fram, 26, and Chenier, 35, both killed at the 3,000-foot level of Vale’s Stobie Mine when they were overcome by a run of muck on June 8, 2011.

Inquests into workplace deaths are mandatory in Ontario. “With tragedy, often good emerges,” Briana Fram said. “We’re hopeful that this inquest will bring results that will prevent deaths in the future and protect the lives of miners and people that work in mines.”

Dr. David Eden will preside as inquest coroner. Susan Bruce and Roberta Bald will be counsel to the coroner. The inquest will be at the Sudbury Courthouse, 155 Elm St. in Sudbury, beginning on April 20 at 9 a.m. and is expected to last 10 days, according to the chief coroner’s office.

The inquest will examine the circumstances surrounding the Stobie accident and the inquest jury may make recommendations aimed at preventing similar deaths from occurring.

Iron ore bounce likely to be shortlived – by Neil Hume (Financial Times – January 6, 2015)

January 8, 2015

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

Few in the iron ore industry will remember 2014 with any fondness. The steelmaking ingredient was the worst performing major commodity, plummeting 50 per cent as a flood of new supply hit the market and swamped demand.

But it has started 2015 on the front foot with benchmark Australian ore advancing almost 8 per cent since Christmas. The question for the industry is whether this is a dead cat bounce or the start of a recovery in prices, which recently hit a five-and-a-half-year low of $65.60 a tonne.

So far few are convinced the rally will last. Analysts believe the bounce in prices is being driven by restocking at steel mills ahead of the Chinese new year and changes to reserve requirements for Chinese banks. With more supply set to come on line and demand in China weak, many believe prices will come under further pressure this year, even trading into the $50s.

This would be bad news for big mining houses such as BHP Billiton, Rio Tinto and Vale, which have spent billions of dollars expanding operations and generate most of their profits from iron ore.

“We view the upward correction as a similar experience to that recently encountered while climbing Skiddaw (the fourth highest mountain in England) . . . in a gale,” said analysts at Investec Securities in a report.

Sask. potash royalty structure ‘alarmingly inefficient:’ report (Canadian Press/CTV News – January 7, 2015)

January 8, 2015

http://regina.ctvnews.ca/

A new report says Saskatchewan’s potash royalty structure needs to be overhauled because it is too complex and “alarmingly inefficient.”

Jack Mintz, a professor at the University of Calgary, says the royalty program is the most complicated in the world. “Hardly anyone understands the Saskatchewan system,” said Mintz, who is the director of the university’s School of Public Policy.

His report released Wednesday says that while Saskatchewan produces almost one-third of the world’s potash, its tax on the resource isn’t competitive on an international level. “What you really want is something that’s stable,” said Mintz, who added that there are wide fluctuations in the current approach.

The royalties collected by governments from resource companies help fill provincial coffers. Saskatchewan’s system includes a production-based levy, revenue-based levies, profit-based taxes and other taxes on capital investment.

“Saskatchewan is competitive as long as there is a lot of investment that is undertaken by firms,” Mintz said. “But it’s not very competitive — in fact it actually has the highest effective tax rate on investments compared to any other country that we look at — when companies aren’t investing as much as the 2002 period.”

2015 Black Swans – or another BRIC in the wall – by Lawrence Williams (Mineweb.com – January 8, 2015)

January 8, 2015

http://www.mineweb.com/

A New Year newsletter offers some fascinating interpretations of current geopolitical issues and a positive view on gold as the best currency at such a time of uncertainty.

China set to play leading role in setting up and financing financial entities which will be strong rivals to the IMF and the World Bank.

As Mineweb’s principal commentator on precious metals matters I tend to be in receipt of various emails virtually everyday or so from precious metals and geopolitical analysts and commentators – some of whom provide some really good and interesting new material, while others provide views and thoughts which, quite frankly, are not worth taking the time to scan them.

Some of these analysts are somewhat trapped in a groove saying the same things over and over again. Eventually they may well turn out to be right – what goes around comes around – but sometimes this can take an awful long time eventuating. And of course, there are a number out there trying to promote their own premium services, which is fair enough as people need to make a living, but the problem here is that too many of them preach entirely to their own vested interests.

While there is often much that is good in what they have to say it is sometimes difficult to separate the wheat from the chaff.

History of Mining: The evolution of shaft sinking systems in the western world and the improvement in sinking rates (Part 3 of 7) – by C. Graham and V. Evans (CIM Magazine – November 2007)

January 8, 2015

http://www.cim.org/en/

Shaft sinking from 1800 to 1900: Cousin Jacks

During the latter part of the reign of the Tudors in England (1485–1603), Saxon technicians were brought to England to teach Cornishmen to sink shafts and mine Cornwall’s extensive tin and copper deposits. This worked so effectively that by the early 19th century Cornwall possessed some of the best contemporary European mining technology.

Beginning about 1840 and repeating in 1865, Cornish mining prosperity slumped disastrously for a number of technical and economic reasons. The discovery of rich overseas copper deposits coupled with a degree of mismanagement in the Cornish mines worsened the situation, throwing Cornish shaft sinkers and miners out of work. At the same time, the 1800s saw a great deal of British capital investment in overseas mining ventures.

These British-owned mining operations recruited their skilled labour from Cornwall and by the mid-1820s, Cornish miners, or “Cousin Jacks” as they were called, were to be found all across Latin America sinking shafts and developing mines. Cornish miners were also brought in to develop and mine lead deposits in the United States, as well as in Norway and Spain.

Copper was discovered in Australia in 1848 and more Cornish miners emigrated to that area to develop the mines there. Additional mineral strikes across the Americas and Australia followed, which attracted Cornish miners. By 1850, there were an estimated 7,000 Cornish miners and dependents in the upper Mississippi region.

History of Mining: The evolution of shaft sinking systems in the western world and the improvement in sinking rates (Part 2 of 7) – by C. Graham and V. Evans (CIM Magazine – September/October 2007)

January 8, 2015

http://www.cim.org/en/

Shaft Sinking from 1600 to 1800 – The Industrial Revolution

It was during this period of time that the first mining schools were opened in North America and the first technical societies for mining were formed. The first School of Mines in the United States was opened in 1864 at Columbia University in New York. In Canada, McGill University opened a mining engineering program in 1871. This was followed by the University of Toronto in 1892, and Queen’s University in 1893.

Also helping to spread the expertise involved in shaft sinking were the mining technical institutes. In Canada, the first of these to be formed was “The Gold Miners Club of Nova Scotia” in 1887. This organization was reorganized the following year as “The Gold Miners Association of Nova Scotia.” A number of other provinces also set up provincial mining associations in the 1890s. In 1898 the Canadian Mining Institute was formed.

One of the early improvements to shaft sinking techniques during this period was the introduction of horse whims for the removal of material from the shaft bottom. This development occurred in the late 17th and early 18th centuries. A well-designed horse whim could remove material from the shaft bottom many times faster than windlasses operated by manpower.

The second improvement to take place during this period was the replacement of fire setting with drilling and blasting. It took three centuries after gunpowder became known in Europe before some resourceful miner, probably in the late 1500s, thought to stuff some into the cracks in rocks, ignite it, and let chemistry do the work.

History of Mining: The evolution of shaft sinking systems in the western world and the improvement in sinking rates (Part 1 of 7) – by C. Graham and V. Evans (CIM Magazine – August 2007)

January 8, 2015

http://www.cim.org/en/

Shaft sinking prior to 1600 (ancient times)

The sinking of mine shafts has been going on for thousands of years. The Egyptians mined gold as long as 4,000 years ago, and it is thought that the Persians, Greeks, and Romans learned their shaft sinking techniques from the Egyptians.

Shaft sinking in the Egyptian period and early Roman period was carried out by prisoners of war and criminals, and conditions were terrible. Towards the end of the Roman period, prisoners of war became less available and working conditions improved dramatically.

With the fall of the Roman Empire in the 5th century, shaft sinking and mining activity decreased substantially due to the instability in Western Europe. The social chaos and general economic instability persisted until the 11th century.

From 1100 – 1500 AD the status of the miner was much changed from Roman times. The trade of mining, which included shaft sinking, became a respected profession. Agricola, in his book De Re Metallica published in 1556, gives a number of references to shaft sinking. Advance rates at the end of this period were probably in the range of one to two metres per month.

The period from antiquity to 1600 AD covers a huge time period and many changes in civilization; however, from the early mining by the Egyptians, through Roman times, the Dark Ages, and then the Medieval period, very little changed as far as the techniques utilized for sinking shafts.

China’s Big Year Ahead – by Jim O’Neill (Bloomberg News – January 7, 2015)

January 8, 2015

http://www.bloombergview.com/

Halfway through a decade in which China set out to rebalance its economy, it is poised to drastically enlarge its role in the world. Let me explain why.

Back at the start of the decade, I made certain assumptions about how the so-called BRIC economies — Brazil, Russia, India and China — would perform in the 10 years ahead. Five years on, China is the only one of the four to have either met or possibly slightly surpassed my expectations.

Assuming that China’s soon-to-be-published fourth-quarter gross domestic product number will come in at or close to 7.3 percent, as many experts assume, then from 2011 to 2014, China will have averaged real GDP growth of just less than 8 percent. I had assumed it would be 7.5 percent for the full decade (as did Chinese leaders back in 2011), and China could achieve this if its economy continues to grow by 7 percent for the next five years.

If so, it will have become a $10 trillion economy in current nominal U.S. dollars, well more than half the size of the U.S. (probably even bigger, adjusting for purchasing power), twice the size of Japan, bigger than Germany, France and Italy put together and not far off one and half times the size of the other three BRIC economies put together.

Brazil and Russia, for their part, have significantly disappointed my expectations. Indeed, their economic performance supports skeptics of their long-term potential, who attributed earlier growth primarily to high commodity prices. India also disappointed, but its growth rate accelerated in 2014.

Investissement Québec in talks to reopen Cliffs Natural Resources mine in Bloom Lake – by Frederic Tomesco and Liezel Hill (Bloomberg News/Montreal Gazette – January 8, 2015)

January 8, 2015

http://montrealgazette.com/

Quebec is talking to U.S. miner Cliffs Natural Resources Inc. about restarting the Bloom Lake iron-ore mine in the northeast of the province.

It’s too early to provide more details on the discussions or speculate on potential outcomes, Quebec Energy and Natural Resources Minister Pierre Arcand said in an interview yesterday.

Investissement Québec, an investment arm of the provincial government, is talking to the Cleveland-based company “about the next step,” he said. “We’ll look for the best way to relaunch this facility.”

Cliffs announced Jan. 2 it had ended production at Bloom Lake, less than two months after the company said it was considering the closing of the project. Cliffs acquired the mine in 2011 via its C$4.2 billion ($3.6 billion) takeover of Consolidated Thompson Iron Mines Ltd.

Cliffs is exiting higher-cost operations to focus on its domestic business after iron-ore prices slumped to a five-year low amid weakening demand for the steelmaking ingredient in China, the biggest consumer. A Cliffs spokeswoman didn’t immediately respond to requests for comment.

Quebec Finance Minister Carlos Leitao said in June that his government would revive the so-called Plan Nord, a strategy to tap mining and energy resources north of the 49th parallel that the previous administration halted in 2012.

Oil collapse threatens Ottawa’s balance plans: ‘There’ll be a big hit right up front’ – by Gordon Isfeld (National Post – January 8, 2015)

January 8, 2015

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

OTTAWA — With oil prices tumbling and no solid bottom in sight, economists are shaving their forecasts for Canadian growth and predicting interest rates will stay lower for longer.

While weak energy costs will likely keep inflation in check, the drop in crude to more than five-year lows could also throw the federal government’s budget-balancing plans out the window as revenues shrink.

Combined with the collapse in oil — one of the country’s major exports — the already-weak Canadian dollar is being held down by near-record-low lending levels that are now not expected to begin rising until late this year or early 2016.

“Depending on where the bottom is on oil prices and how long they stay there, it will definitely be a negative on the economy,” said Pedro Antunes, deputy chief economist at the Conference Board of Canada.

“The reality is we’re going to suck out of the economy billions and billions in terms of profits, in terms of revenues,” he said. “There’ll be a big hit right up front.”

Ontario’s magical economy isn’t working – by Catherine Swift (National Post – January 8, 2015)

January 8, 2015

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

Socialism in its various guises has never worked to the benefit of average, middle-class people. Take the Government of Kathleen Wynne as a real-time case in point. A number of recent developments in the province have focused the mind on how the current Ontario government’s policies are hurting, not helping, average Ontarians.

The Wynne government professes to be the savior of the lower- and middle-class. All factual evidence suggests otherwise. As last month’s report by Ontario’s Auditor General (AG), Bonnie Lysyk, pointed out in stark terms, all efforts of Ontarians to contain their rapidly increasing hydro bills by doing their laundry in the middle of the night are for naught. Anyone who was paying attention to their hydro bill would have already known this.

A recent bill showed that my household’s hydro consumption was precisely the same as the comparable period last year, with maximum “off-peak” usage, yet the bill increased by 8% – four times the rate of inflation. Informed analysts know that the main driver of hydro costs in Ontario is the “Green Energy” policy imposed by the government, an approach that is being abandoned elsewhere around the world as evidence showed it had negligible environmental benefit. The exodus of manufacturers from Ontario is in part driven by uncompetitively high hydro costs.

Another recent policy proposal that will do nothing but harm average Ontarians is the Ontario Retirement Pension Plan (ORPP). As designed, this plan will hurt lower income families the most.