February 12, 2015 – Republic of Mining

Empire Editorial: Mining disasters must end with Mount Polley (Juneau Empire – February 12, 2015)

February 12, 2015

Two.

That’s how many tailings dams holding back mine waste are expected to fail every decade in British Columbia.

Thirty.

That’s the number of proposed mines and sites under advanced exploration in British Columbia right now.

Four thousand.

That’s how many Olympic-sized pools worth of toxic sludge spilled out of the retention basin at the Mount Polley Mine on Aug. 4, 2014.

If you’re not too concerned about these numbers, you should be. If you’ve glazed over news reports about the recent transboundary mining efforts across the border from Southeast Alaska, it’s time to sit up and pay attention. There are big plans afoot — some with proposals eclipsing the Hoover Dam — that have the potential to decimate our way of life.

On Jan. 30 an independent review panel, established by British Columbia’s government through the Ministry of Energy and Mines with support from the T’exelc and Xat’sull First Nations, found that design flaws were to blame for British Columbia’s Mount Polley Mine tailings dam breach.

Rio Tinto Shows Steel as Commodities Swoon – by Helen Thomas (Wall Street Journal – February 12, 2015)

February 12, 2015

http://www.wsj.com/

Miner Increases Dividend, Unveiled Buyback Despite Commodity Price Weakness

Rio Tinto is getting over its existential angst about a lack of diversification.

The not-so-diversified miner relies on iron ore for more than 70% of its cash flow, and the price of the steelmaking commodity has tumbled by about 50% over the past year. Yet Rio on Thursday boosted its dividend and announced a $2 billion share buyback. Stranger still, that doesn’t look too foolhardy.

Rio’s efforts have created space to increase returns to shareholders, even at a time when iron ore, copper and other commodity prices are under pressure. Cost cutting helped shore up profitability. Capital spending of about $8 billion was $1 billion lower than expected. A large improvement in working capital helped Rio’s net debt drop sharply. At 19%, net debt to total capital is below the bottom end of Rio’s 20% to 30% target range.

The miner’s $14.3 billion in cash flow from operations last year nicely covered its capital expenditure and about $4 billion in dividends. The planned buyback would only push its gearing to 21%.

For the moment, it looks as though Rio can keep this up. There is a clear risk that iron ore stays lower for longer. About 300 million metric tons of low-cost production is set to come onto the market before mid-2017, according to Morgan Stanley, 18% growth from last year’s supply.

UPDATE 2-Glencore to spin-off Lonmin stake, cut spending to counter price rout – by Silvia Antonioli (Reuters U.S. – February 12, 2015)

February 12, 2015

http://www.reuters.com/

CAPE TOWN, Feb 11 (Reuters) – Miner and commodities trader Glencore will spin-off its stake in troubled platinum producer Lonmin and cut capital spending to help it cope with a plunge in commodity prices, it said on Wednesday.

Like peers, Glencore has been hit by a rout in prices of commodities such as copper, coal and oil in recent months. Its shares have fallen by about 9 percent this year.

“What this feels like to me is that Ivan (Glasenberg, Glencore’s CEO) is trying to get ahead of the story again, to make himself look proactive and everyone else reactive,” said Bernstein analyst Paul Gait, who rates Glencore “outperform”.

“Both of those measures fit the same strategic goal from a Glencore perspective: to show leadership, like they did with the buyback.” Last year Glencore was the first mining firm to deliver on promises to return cash to shareholders.

Responding to what it called a “volatile market backdrop,” Swiss-based Glencore said it would cut “sustaining and expansionary” capital spending for this year to $6.5-$6.8 billion, with reductions across its businesses. In December, it had forecast spending of $7.9 billion this year.

Understanding the copper heart of volcanoes (Science Codex – February 11, 2015)

February 12, 2015

http://www.sciencecodex.com/

The link between volcanism and the formation of copper ore has been discovered by researchers from the University of Bristol, UK. Their findings could have far-reaching implications for the search for new copper deposits.

With global demand for copper high (the average UK house contains about 200 kg of the metal, mostly in electric cables and transformers) and current reserves relatively limited, finding new reserves is a priority.

The researchers, led by Professor Jon Blundy of Bristol’s School of Earth Sciences, studied giant porphyry copper deposits of the variety that host 75 percent of the world’s copper reserves.

Copper forms in association with volcanoes such as those around the Pacific Ring of Fire but the nature of this association has never been entirely clear. Copper ore is predominantly in the form of copper-iron sulphides so an enduring problem has been how to simultaneously create enrichments in both copper and sulfur. Volcanoes rich in copper tend to be poor in sulfur and vice versa.

To resolve this copper-sulphur paradox, the Bristol team, working in collaboration with BHP Billiton, the world’s largest mining company, drew on observations of modern arc volcanoes, including several in Chile, source of most of the world’s copper, to postulate a two-step process for porphyry copper formation.

Indigenous Canadians Are Fighting the Uranium Mining Industry – by Michael Toledano (Vice Canada – February 11, 2015)

February 12, 2015

http://www.vice.com/en_ca

This post originally appeared on VICE Canada.

On November 22, 2014, a small group of Dene trappers called the Northern Trappers Alliance set up a checkpoint on Saskatchewan’s Highway 955, allowing locals to pass while blockading the industrial traffic of tar sands and uranium exploration companies. On December 1, officers of the Royal Canadian Mounted Police descended on the site with an injunction from the province and forcibly dismantled the blockade.

Eighty days later, the trappers remain camped on the side of the highway in weather that has routinely dipped below -40 C. They are constructing a permanent cabin on the site that will be a meeting place for Dene people and northern land defenders.

“We want industry to get the hell out of here and stop this killing,” said Don Montgrand, who has been at the encampment since day one and was named as one of its leaders on the police injunction. “We want this industry to get the hell out before we lose any more people here. We lose kids, adults, teenagers.”

“They’re willing to stay as long as it takes to get the point across that any of this kind of development is not going to be welcomed,” said Candyce Paul, the alliance’s spokesperson and a member of the anti-nuclear Committee for the Future Generations. “It’s indefinite.”

Mining’s alternative summit: Painting a different picture of Africa’s most conflicted industry – by Rebecca Davis (Daily Maverick – February 12, 2015)

February 12, 2015

http://www.dailymaverick.co.za/page/home/#.VN01bvnF8ds

How can you tell the difference between the Mining Indaba and the Alternative Mining Indaba? One trick is to look for people who are actually miners, or who come from mining-affected communities. If there are any around, chances are good that you’re at the Alternative incarnation. Another trick is to ask people if they paid up to R23,000 for a ticket to the event. If the answer is ‘yes’, then they’re at the Mining Indaba. REBECCA DAVIS has been at the other one.

In 2002, a young man called Fortunate Siziba was walking home in Mapanzure, Zimbabwe, at night when he fell into an open, unsecured, un-lit pit previously used for chrome mining. The pit was 17 metres deep. Siziba was left partially blind.

In 2012, nine-year-old Asa Mpofu fell into an open, unsecured, un-lit chrome mining pit in the same area. She drowned.

In neither case was any compensation paid by the chrome mine operators, or even an apology given. The most assistance that Siziba received from the mine operator was to be transported “in the bucket of a front-loader” to a nearby clinic.

Over the course of a few days at the Alternative Mining Indaba, you hear so many of these kinds of stories that it becomes hard to keep track of each individual case. The atmosphere here is a world apart from that in the glitzy exhibition halls of the Cape Town International Convention Centre, just a few kilometres down the road, where the Mining Indaba is taking place.

What investors want to see in SA mining – by Patrick Cairns (Mineweb.com – February 12, 2015)

February 12, 2015

http://www.mineweb.com/

Addressing key issues in a complex industry.

South Africa’s mining industry remains a highly complex and contested space. Aligning competing interests has proved difficult.

To some extent this is what has resulted in the uncertainty that continues to permeate the mining sector. Mining companies, labour and government seem to have very different opinions on how things should be done, and this leads to instability.

Speaking from the side lines of the 2015 Mining Indaba, the director of equity research at Credit Suisse, Justin Froneman, said that international investors are worried about a number of serious issues in South Africa’s mining industry. And they are prepared to take their capital elsewhere as long as this uncertainty persists.

“The thing people most want is active leadership at both corporate and country level,” Froneman said. “There is a perception that not enough is being done. Things are quite unstable at the moment and investors want to see mechanisms put in place to address that. But unfortunately we are not yet seeing anything.”

He pointed out that one of the major talking points of the Mining Indaba had been the South African government’s desire to create a national mining champion.

COLUMN-China’s aluminium tug-of-war to repeat in 2015 – by Clyde Russell (Reuters India – February 12, 2015)

February 12, 2015

http://in.reuters.com/

LAUNCESTON, Australia, Feb 12 (Reuters) – Anybody looking at China’s vast aluminium sector may be struck by a sense of deja vu, as the issues of last year appear set for a repeat performance in 2015.

The sector is still plagued by overcapacity and poor profitability, but perhaps the biggest concern is the apparent lack of any willingness to deal with the issues.

China produced about 27.5 million tonnes of aluminium last year, according to consultants AZ China, a figure above the official 24.4 million tonnes, which AZ China says doesn’t include some privately-owned smelters.

This represents roughly half of global output, but is still some way short of China’s capacity to produce 36 million tonnes per annum. China will add as much as 3.5 million tonnes of new production this year, but not all of this will be fully utilised, AZ China said in a Jan. 9 briefing note.

With some additional capacity at existing plants, some planned closure of older smelters and the new plants, AZ China expects total Chinese aluminium output to reach 29 million tonnes in 2015, a gain of almost 5.5 percent on the 2014 figure.

Kinross Gold Corp puts massive Tasiast project expansion on ice – by Peter Koven (National Post – February 11, 2015)

February 12, 2015

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

TORONTO – Kinross Gold Corp. confirmed Tuesday it will not proceed with the massive Tasiast expansion project in Mauritania as the gold price remains weak and the company tries to preserve its balance sheet.

Chief executive Paul Rollinson described it as a “prudent” move that is in the best interests of shareholders. In an interview, he noted that the construction period at Tasiast is expected to last 35 months, and there is a chance the gold price could drop significantly during that period and leave the company short of capital to finish the job.

Gold needs to be higher for this project to make good sense. According to a technical report filed by Kinross last year, Tasiast has a net present value of just US$500-million at a gold price of US$1,200 an ounce (very close to the current level). That does not provide a great return on a project that is expected to cost US$1.6-billion.

“This is a major capital expansion and I want to be extremely disciplined as we contemplate embarking on that expansion,” Mr. Rollinson said in an interview. He added that he continues to look at ways to improve the project.

But this news closes the book on Tasiast for the time being. The project has simply been a disaster for Kinross. The Toronto-based miner acquired Tasiast in 2010 when it spent US$7.1-billion to buy Red Back Mining Inc.

Eagle Spirit pipeline plan obtains ‘licence’ as B.C. First Nations chiefs sign on to project – by Claudia Cattaneo (National Post – February 12, 2015)

February 12, 2015

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

Just as proposed bitumen pipelines through British Columbia seemed hopeless because of widespread opposition, backers of the aboriginal-led Eagle Spirit pipeline plan announced a major breakthrough Wednesday. The group has solid support from the province’s First Nations for its $14-billion-to-$16-billion project linking Alberta’s oil sands to the West Coast and an invitation to the oil community and the Alberta government to get on board.

What made the difference? The one million barrel-a-day pipeline plan, plus a possible refinery that would cost extra, started with getting First Nations involved, offering them a large equity stake, and obtaining their ‘social licence.’ There were also growing concerns about transportation of oil by rail, which aboriginals see as inevitable if oil pipelines aren’t built. And there was encouragement from Alberta First Nations familiar with resource development and benefiting from the oil sands business.

“We are very cognizant of how important this is to Canada, and Alberta in particular, and we have a solution,” Calvin Helin, chairman and president of Vancouver-based Eagle Spirit Energy Holdings Ltd., and a member of the Tsimshian First Nation in northwestern B.C., said Wednesday at a news conference in Calgary. “The chiefs came out today to say they are prepared to be partners.”

First Nickel committed to Lockerby Mine -by Carol Mulligan (Sudbury Star – February 12, 2015)

February 12, 2015

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

First Nickel wouldn’t be planning to invest as much as $900,000 in exploration drilling in 2015 if it didn’t believe Lockerby Mine had a future longer beyond a year or two.

The company made tough decisions in December, bringing in a new vice-president of Sudbury operations, developing a plan to cut expenses and employees, and resuming mining its ramp development between the 6,800-foot level, says FNI’s Thomas Boehlert. FNI issued layoff notices to about 25% of its own employees and cut 75% of the contractors it was employing so it could save 130 other jobs at the mine formerly owned by Falconbridge Ltd.

The economics of the market, the low price of nickel and the cost of running the mine forced the company to stop ramp development in 2014. But it decided to resume mining below that level, mining the ore it believes will last until 2016, as it invests in diamond drilling to define and “prove up” other ore bodies at the mine, says Boehlert, the president and chief executive officer of First Nickel.

If cuts to expenses, including some at FNI’s Toronto office, hadn’t been made, the company would have quickly mined out the remaining reserves at and above the 6,800-foot level and had to close the mine, said Boehlert in a recent interview.