January 20, 2015 – Republic of Mining

COLUMN-China 2014 growth the template for years to come – by Clyde Russell (Reuters U.S. – January 20, 2015)

January 20, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Jan 20 (Reuters) – The important thing from China’s economic deluge isn’t that fourth quarter growth was slightly higher than expected, or even that growth over the whole of 2014 was the weakest in 24 years.

These are merely the headline grabbers. What really matters is that 2014 provided the template for what China’s economy is going to look like in the next decade.

The trends that started to come to fore in the past year are likely to continue, and these include an economy less reliant on export-led manufacturing, slower growth in commodity consumption and imports and a lesser role for state stimulus spending. There will be those who bemoan the slower growth, having grown accustomed to China’s extended and rapid expansion over the past three decades.

However, a gradual slowing of the Chinese growth rate has to be seen as an overall positive, lowering the risk of creating unsustainable bubbles in the economy and transitioning the world’s most populous nation from the source of the world’s cheap labour to being the engine of middle-class consumerism.

Fourth-quarter gross domestic product (GDP) expanded 7.3 percent, above expectations for a gain of 7.2 percent and matching the third quarter number, according to official data released Tuesday.

What can we learn from latest German gold repatriation? – by Lawrence Williams (Mineweb.com – January 20, 2015)

January 20, 2015

http://www.mineweb.com/

German gold repatriation continued in 2014 at a higher pace – but the overall slow speed leaves many questions unanswered and again raises arguments for auditing the Fed. Be careful what you wish for.

Germany’s Bundesbank has made great play of the fact that it managed to repatriate some 85 tonnes of gold from New York in 2014 and 35 tonnes from Paris. Technically, as the Bundesbank points out this is very much on schedule with its promise to bring back into German vaults some 300 tonnes held in New York and 374 tonnes from France by 2020 – but still the question has to be asked: why is the agreed schedule so slow? If Germany truly wants its gold back why would it have to take so long to achieve this?

One assumes the French portion could be just loaded onto a few trucks and shipped cross border, while the U.S. part likewise flown across the Atlantic on a few 747 freighters.

It’s almost certain that the song and dance the Bundesbank is making about the latest repatriation figures is as a direct result of the media furor over the minuscule amounts repatriated in 2013 – only 5 tonnes from New York and 32 tonnes from Paris. That was true fodder for the theorists who, abound in the gold sector, seriously believe that the amounts of gold held in many of the big Central Bank vaults – notably those in the U.S., the U.K. and France – have been leased out and title to any that is remaining may belong elsewhere.

Copper takes shine off Rio Tinto result – by Matt Chambers (The Australian – January 20, 2015)

January 20, 2015

http://www.theaustralian.com.au/business

MINING giant Rio Tinto has had an uncharacteristically subdued fourth quarter, missing copper guidance and analyst forecasts and not delivering to some expectations on iron ore.

Mined copper output slumped 23 per cent from the previous quarter to 128,300 tonnes, as the big Escondida mine in Chile, which Rio (RIO) owns in a joint venture with BHP Billiton, was hit by water restrictions.

The Rio-operated Oyu Tolgoi copper and gold mine in Mongolia was hit by a fire at the concentrator. Deutsche Bank had been expecting quarterly production of 147,600 tonnes and UBS was predicting 138,900. As a result of the weak quarter, 2014 mined copper production of 603,000 tonnes missed guidance of 615,000 tonnes.

Fourth-quarter shipments (including minor partners’ share) from Rio’s WA-dominated iron ore unit rose 13 per cent to a record 82.2 million tonnes as the company continues to expand its Pilbara region infrastructure and mines.

This brought full-year sales to 302.6 million tonnes, just beating guidance of 300 million tonnes. The quarterly effort missed UBS sales expectations of 83.9 million tonnes but beat Deutsche Bank expectations of 81 million tonnes.

Investors to blame for supporting dithering juniors – by Henry Lazenby (MiningWeekly.com – January 20, 2015)

January 20, 2015

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

VANCOUVER (miningweekly.com) – In the aftermath of several key mining-related indexes having dropped significantly since 2011, the mining industry as a whole, and particularly the junior explorers and project generators, have had to “reset” and undergo a paradigm shift from being project promoters to true value creators.

This was the message institutional investor adviser Jayant Bhandari relayed to affiliated investors attending the Cambridge House International Vancouver Resource Investment Conference 2015.

He pointed to several indexes, such as gold, gold exchange traded funds, the Market Vectors Junior Gold Miners ETF and the TSX, having each shown significant declines since 2011. The fountainhead of the problem, Bhandari argued, was uneducated investors, who were supporting dithering companies that were not creating value.

He had found that investors were often influenced by passions and half-truths such as the myth of price leverage in a rising cost environment and fads, such as the axiom of “grade is king”, or the promise of a new geographic “flavour of the month”, such as Colombia or the Yukon, all while failing to look at the specific company’s financial and legal documents.

Bhandari explained, for instance, that the ‘grade is king’ fad was not always true.

Rio Tinto Digs Up Record Volumes of Iron Ore in Australia – by Rhiannon Hoyle (Wall Street Journal – January 19, 2015)

January 20, 2015

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

Output Adds to a Global Glut that Has Driven Down Prices

SYDNEY— Rio Tinto PLC dug up record volumes of iron ore in Australia last year, adding to a ballooning global glut that has driven down prices of the commodity to their lowest level since 2009.

On Tuesday, Rio Tinto reported an 11% rise in full-year production of iron ore to 295.4 million metric tons, slightly ahead of its target of 295 million tons. The Anglo-Australian mining company also produced more copper despite the softening price of the industrial metal.

Rio Tinto has been expanding its operations in the Pilbara iron-ore mining hub of northwest Australia in a bet that China will need more of the commodity to make steel for its skyscrapers and for industries such as auto manufacturing, even as its economy slows. China buys three in every five tons of iron ore traded by sea, with Australia its biggest supplier.

But the strategy of swamping the market with more iron ore it isn’t without its critics, including Glencore PLC, which approached Rio Tinto’s board about a takeover in July. Several major banks, including Citigroup and UBS, recently scaled back their forecasts for iron-ore prices. Citi now estimates a full-year average of just US$58 a ton this year.

Executives at Rio Tinto, which runs the world’s No. 2 iron-ore business by volume, behind Brazil’s Vale SA, shrug off the impact of rising supplies. They say the scale of Rio Tinto’s business and ore quality allows the company to produce material profitably and at a significantly lower cost than competitors.

COLUMN – A few rays of sunshine break through coal’s storm clouds – by Clyde Russell (Reuters India – January 19, 2015)

January 20, 2015

http://in.reuters.com/

LAUNCESTON, Australia – The new year has started positively for Asian coal, with prices rallying from a 5-1/2 year low, Chinese imports jumping to the highest in 11 months and renewed merger and acquisition interest.

While these are undoubtedly welcome developments for a sector that has witnessed four years of falling prices, there are still serious questions as to whether these swallows really do indicate a summer of good fortune ahead.

The spot price of thermal coal at Australia’s Newcastle port, an Asian benchmark, rose to $62.91 a tonne in the week ended Jan. 16, up 3 percent from $61.04 the prior week, which was the lowest since April 2009.

The obvious caveat here is that prices are still some way below the breakeven point for many miners in top exporters Australia and Indonesia, and it will take weeks of sustained gains to bring the sector as a whole back into the black.

Chinese imports were 27.22 million tonnes in December, the highest since January last year, again a positive sign but not enough to mask that imports for 2014 as a whole were down 10.9 percent to 291 million tonnes, the first annual drop in a decade.

Mosaic lifts profits hopes, citing strong phosphate, potash demand (Agrimoney.com – January 20, 2015)

January 20, 2015

http://www.agrimoney.com/

Shares in potash groups rose after Mosaic, one of North America’s biggest producers of the fertilizer, unveiled a, rare, upgrade to its profits hopes, saying the buyers had returned “in force”.

The US-based fertilizer giant said it had raised its guidance for earnings in the October-to-December quarter to $0.83-0.88 a share excluding one-off factors.

Besides representing a more-than-doubling in the underlying $0.36-a-share result from the same period of 2014, the upgraded guidance is above the $0.58 a share that Wall Street had been expecting.

Potash shares traded firmer on Tuesday, with shares in Germany’s K+S up 2.3% at E25.40 in afternoon deals in Frankfurt, outperforming a 0.2% rise in the Dax index, while in Toronto shares in PotashCorp gained 3.9% to Can$43.33 in early deals. Stock in Mosaic itself opened up 2.8% at $47.27 in New York.

‘Customers came in force’

Mosaic said its upgrade reflected demand for potash and phosphates which had “exceeded our expectations” during the latest quarter, boosted by sales to fertilizer retailers, which had run down their stocks.

Eagle GM: Nickel a ‘good place’ – by Christie Bleck (The Mining Journal – January 20, 2015)

January 20, 2015

http://www.miningjournal.net/ [Michigan]

MARQUETTE – The business of producing nickel is in good shape, Michael Welch, general manager of Lundin Mining Corp.’s Eagle Mine, told the Economic Club of Marquette County Monday.

Welch was the guest speaker at the club’s monthly program at the Ramada Inn. He joined Eagle Mine in January 2014, coming from Xstrata’s Raglan operation, a large nickel mine in northern Quebec situated in subarctic conditions and facing challenges similar to Eagle.

Eagle Mine in Michigamme Township – a Lundin subsidiary – employs more than 400 people and is producing nickel, copper and small amounts of other metals over its expected duration of eight years.

“Short term, nickel has a very good supply-and-demand outlook,” said Welch, who noted 2015 will be a transition year as demand for nickel will outstrip supply. “Bottom line is, nickel’s going to be a good place to be.”

Laptops, cell phones – items used by just about everybody in the room, according to an impromptu poll by Welch – use nickel battery technology, he pointed out.

Mining: Copper’s reputation tarnished (The Africa Report – January 20, 2015)

January 20, 2015

http://www.theafricareport.com/

Between the infrastructure deficit, revisions to the mining code, instability and Gécamines’ dodgy deals, copper is losing some of its conductivity with investors.

The year 2013 was a record breaker for the Democratic Republic of Congo (DRC), which produced an estimated 913,000tn of copper, a third more than in 2012 and its highest level for many years.

The government had predicted that copper output would be even higher in 2014, topping 1m tonnes, but a chronic and debilitating shortage of electricity has put paid to that. Annual copper output for 2014 looks like it may be less than 900,000tn.

Investors are also worried about long-delayed changes to the mining code and militia activity in Katanga Province. The electricity crisis is immensely frustrating to international mining companies operating in Katanga, all of whom were promised adequate power by the Société Nationale d’Electricité (SNEL) when they invested.

Tired of endless arguments with SNEL, the big companies went to prime minister Augustin Matata Ponyo to voice their concerns. In January 2014, he told companies that SNEL would ration power and that companies would have to restrain their expansion programmes.

Zinc and nickel price upside ‘imminent’: Clarus – by Peter Koven (National Post – January 20, 2015)

January 20, 2015

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

There has been a lot of bullish talk in the metals community about zinc and nickel over the past couple of years, as many insiders believe those commodities are poised for a rally. You can include Clarus Securities analyst Mike Bandrowski in that group.

He published a detailed note on Tuesday that suggests zinc and nickel have “imminent” upside and will perform very strongly over the next two years as inventories disappear.

In the case of zinc, Mr. Bandrowski noted the market is already in deficit, and that deficit should get bigger following the closures of the Lisheen and Century mines this year. He said exchange inventories have fallen by more than half over the last two years and should be at “critical” levels later in 2015.

“We believe the lack of funding in zinc mine development and exploration has now caught up with the marketplace and zinc prices will respond in 2015,” he said in a note. “Despite the broad commodity sell-off, zinc has held up quite well, likely an indication of the favourable supply/demand fundamentals.”

Nickel has received more attention than zinc due to an Indonesian export ban on raw ore that was imposed a year ago, which removed about 25% to 30% of global nickel supply.

Mining firm takes on B.C. environmental group in defamation court battle – by Tamsyn Burgmann (Canadian Press/CTV News – January 19, 2015)

January 20, 2015

http://www.ctvnews.ca/

VANCOUVER — Criticism of a proposed mine by an environmental group and allegations of defamation by the project’s owner have landed both parties in British Columbia Supreme Court.

Taseko Mines Ltd. (TSX:TKO) launched the lawsuit after the Wilderness Committee made claims during a 2012 public comment period that the New Prosperity mine could destroy Fish Lake. The proposed gold and copper mine, 125 kilometres southwest of Williams Lake, was undergoing a federal environmental assessment when the statements were made.

Taseko lawyer Roger McConachie told court on Monday the company’s civil complaint is based on five articles published by the non-profit organization, which were emailed to supporters and posted online starting in January 2012.

“You will hear submissions related to corporate entitlement to have its reputation protected by a defamation lawsuit,” said McConachie, noting he expects to spend weeks presenting evidence.

The material involves libellous descriptions of the proposed project, a letter-writing tool that encouraged re-publication of the organization’s claims and statements the company was pursuing a lawsuit with the purpose of silencing public debate, McConachie argued.

Industries urged to build trust with First Nations – by Len Gillis (Timmins Daily Press – January 20, 2015)

January 20, 2015

http://www.timminspress.com/

TIMMINS – One of the most respected legal minds in Canada told an audience in Timmins Monday that it is about time for mainstream Canadians to start showing more trust and respect to the Aboriginal community.

The Honourable Frank Iacobucci, former chief justice of the Federal Court of Canada and a former member of the Supreme Court of Canada, was speaking at a special lunch sponsored by the Misiway Milopemahtesewin Community Health Centre on Monday.

“I think it is the No. 1 societal issue facing our country, and that is the plight of our indigenous people,” he told the audience. Aside from being a renowned author, speaker and jurist, Iacobucci is also the man representing the Government of Ontario for negotiating with the Matawa First Nation tribal council for the Ring Of Fire project.

He spoke on the Ring Of Fire project only in passing, but he said it will have to be an example of the non-Aboriginal segment of our society treating First Nations and individual Aboriginals with more trust and respect.

At one point in his speech, he told the Timmins audience that resource companies need to include consultation and accommodating with First Nations.

Goldcorp buys Probe Mines’ promising gold project – by Lisa Wright (Toronto Star – January 20, 2015)

January 20, 2015

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.

‘Feels like a new gold market,’ says analyst of the $526 million deal

Amid a struggling metals market, Goldcorp Inc. has struck an all-stock deal valued at $526 million to buy Toronto’s Probe Mines Ltd. and scoop up one of Canada’s most promising new gold discoveries in northern Ontario.

The friendly takeover gives the Vancouver bullion giant control of the highly-touted Borden gold project near Chapleau, Ont., about 160 kilometres west of Goldcorp’s century-old Porcupine mine in Timmins.

Shares in the Toronto-based junior explorer jumped 49 per cent after the Goldcorp announcement Monday that analysts say, among other recent industry acquisitions, signals new interest in the depressed gold mining sector.

“It feels like we are in a new gold market,” said analyst Barry Allan of Research Capital Corp. “It means we should see a lift on other gold assets if they are also well-located and high quality,” he said.

The price of gold has jumped 10 per cent so far this year after limping through a bear market that has rocked the cyclical industry since the heady days of its all-time high of $1,921 U.S. an ounce in September, 2011.