February 25, 2015 – Republic of Mining

Drought in Chile curbs copper production, to trim global surplus – by Eric Onstad and Rosalba O’Brien (Reuters Africa – February 25, 2015)

February 25, 2015

http://af.reuters.com/

LONDON/SANTIAGO, Feb 25 (Reuters) – A drought in Chile is hampering copper production, a water-intensive business, in the world’s biggest producer of the metal, one more factor that could trim an expected surplus this year.

Both Anglo American and BHP Billiton have said the extremely dry conditions have hit production due to restrictions on water, used for everything from toilets for workers to separating the metals in the ore body from waste rock and tamping down dust that heavy trucks kick up.

“The one caveat or the risk I think that we need to flag… is Chile is still in drought,” Anglo Chief Executive Mark Cutifani told a results presentation last week. “It remains a risk, and in fact it was impacting our operating performance in November and December.”

In some parts of Chile, January was one of the driest since records began, exacerbating a drought that began in 2007, said Chilean meteorologist Claudia Villarroel. Winters in central Chile are becoming drier because of climate change, she added.

Indeed, Anglo’s Los Bronces mine in central Chile has been the worst affected of the company’s mines. It warned that water scarcity at the mine, the world’s sixth-largest copper producer, could cut as much 30,000 tonnes or 4 percent off Anglo’s overall copper output this year.

Nunatsiavut president Sarah Leo ‘quite disturbed’ over Vale agreement – (CBC News Newfoundland – February 25, 2015)

February 25, 2015

http://www.cbc.ca/news/canada/newfoundland-labrador

The Inuit government in Labrador isn’t happy with the announcement of changes to the Voisey’s Bay agreement, which will allow Vale to continue exporting unprocessed ore from the massive nickel mine.

Nunatsiavut president Sarah Leo said the Newfoundland and Labrador government was required to consult the Inuit because the mine is on land connected to their land agreement with the provincial and federal governments.

“We should’ve been consulted — I mean, it’s in our backyard. It’s right here,” she said. “We have a land claims agreement that specifically has a chapter dedicated to the Voisey’s Bay project,” Leo told CBC News. “So, it’s very important to us that we have an understanding and are involved in what’s happening with the project.”

On Tuesday, Natural Resources Minister Derrick Dalley and Vale VP Stuart Macnaughton announced that they were amending the Voisey’s Bay Development Agreement to allow the company to send nickel concentrate from the mine in Labrador to Ontario and Manitoba for processing.

The delay is connected to delays in completing Vale’s massive processing facility in Long Harbour, in Newfoundland’s Placentia Bay.

Banks Face U.S. Manipulation Probe Over Metals Pricing – by David McLaughlin and Tom Schoenberg (Bloomberg News – February 24, 2015)

February 25, 2015

http://www.bloomberg.com/

(Bloomberg) — The U.S. Justice Department is investigating whether the world’s biggest banks manipulated prices of precious metals such as silver and gold as it pushes to wrap up probes into currency-rate rigging, according to people with knowledge of the matter.

At least 10 banks, including Barclays Plc, JPMorgan Chase & Co. and Deutsche Bank AG, are being probed by the Justice Department’s antitrust division, said one of the people, who asked not to be identified because the matter is confidential.

Precious metals have come under scrutiny as authorities around the world investigate allegations that other financial benchmarks have been rigged. While the Justice Department’s probe is in its early stages, the Swiss finance regulator included the issue in a November settlement with UBS Group AG over currency-rate manipulation. Switzerland’s antitrust regulator said Tuesday that it opened a preliminary probe into the possibility of price fixing in the precious-metals market.

The U.K. Financial Conduct Authority is continuing to scrutinize firms’ behavior in relation to precious metals as part of continuing supervisory work spurred by the foreign-exchange probe. While the FCA doesn’t have authority over physical markets, it does regulate derivatives. In that context, it’s already issued one fine, ordering Barclays to pay 290 million pounds ($447.5 million) in May for a former trader who artificially suppressed the price of gold in 2012 using fake positions to avoid triggering a payout to a client.

South Africa drops out of top 10 in Africa for mining investment – by Frik Els (Mining.com – February 24, 2015)

February 25, 2015

http://www.mining.com/

According to the latest annual global survey released Tuesday by Canadian think tank the Fraser Institute, South Africa has fallen out of the top ten mining investment destinations on the continent and dropped 11 places to 67th globally.

The institute’s Annual Survey of Mining Companies 2014, rates 122 jurisdictions around the world based on their geologic appeal and the extent to which government policies encourage exploration and investment.

“While it is useful to measure the attractiveness of a jurisdiction based on policy factors such as onerous regulations, taxation levels, the quality of infrastructure and so forth, investment decisions are often based on the pure mineral potential of a jurisdiction. Indeed respondents consistently indicate that roughly only 40% of their investment decision is determined by policy factors,” according to the report.

The survey covers Central African Republic, Egypt, Lesotho, Mauritania, Morocco, South Sudan, Sudan, and Uganda for the first time, but it’s at the top of the rankings that trends are most visible. And it’s not encouraging for the continent’s long-time stalwart.

South Africa is ranked the 11th most attractive African destination for investment in the resources sector behind the Democratic Republic of the Congo.

BHP in race between cost-cutting and commodity prices – Clyde Russell (Reuters U.S. – February 25, 2015)

February 25, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Feb 25 (Reuters) – The jump in BHP Billiton’s shares after profits plunged shows a mindset akin to buying tickets for the Titanic’s second voyage because the gash in the hull from striking the iceberg isn’t as bad as feared.

BHP’s Australian-listed stock jumped almost 3 percent on Tuesday to close at A$33.06, and extended gains to A$33.54 in early trade in Sydney on Wednesday, a three-month high.

The world’s biggest mining company posted a 31-percent drop in half-year underlying attributable profits to $5.35 billion, but this was ahead of the consensus forecast of $5.1 billion. An increase in the interim dividend to $0.62 a share was also ahead of market forecasts, and this goes a long way to explaining the boost in the share price.

But delve deeper into BHP’s results for the half-year ended Dec. 31 and the impact of the rout in commodity prices becomes more apparent, as does the prospect of even lower profits in coming reporting periods.

Even Chief Executive Andrew Mackenzie adopted a sombre tone, telling a call with analysts that the price of iron ore, the miner’s main commodity, was likely to remain under downward pressure as more supply comes to market.

Global ferrochrome market to be in 11,000-mt deficit in 2015: Yildirim – by Mayumi Watanabe (Platts.com – February 25, 2015)

February 25, 2015

http://www.platts.com/

Tokyo (Platts) – The global ferrochrome market will be in a deficit of 11,000 mt, as demand from the stainless steel sector outgrows production, Turkey’s Yildirim Group said Wednesday.

Yildirim’s subsidiary, ETI Krom, is the world?s largest high-grade lumpy chromium ore producer and combined with Vargon Alloys in Sweden, is the world’s second-largest high-carbon ferrochrome producer, according to the group’s website.

Global charge chrome and high carbon ferrochrome production in 2015 is expected to rise by 4% from 2014 to 11.69 million mt in total, slowing from the previous year’s 8.8% growth, Yildirim said in a research report. Production in 2014 was 11.23 million mt, it added.

China’s production fell by 330,000 mt in the second half of 2014 from the fist half, triggered by slowing demand from the steel sector. China’s production as a result was 4.4 million mt in 2014, up 10% from 2013.

In 2015, China is expected to produce 4.5 million mt, up a marginal 2%, Yildirim said. Production outside of China is seen at 7.2 million mt in 2015, up 5.2% from 2014.

Malaysia worst global jurisdiction for mining – survey – by Dorothy Kosich (Mineweb.com – February 25, 2015)

February 25, 2015

http://www.mineweb.com/

Finland is ranked No. 1 for global mining investment, says the newly issued Fraser Institute survey.

The 2014 Fraser Institute Survey, which was made public Tuesday, ranks Finland, Saskatchewan, Nevada, Manitoba, Western Australia, Quebec, Wyoming, Newfoundland and Labrador, the Yukon, and Alaska as the top 10 jurisdictions for mining investment.

Five Canadian jurisdictions finished in the top 10 internationally, along with three US states, and the state of Western Australia.

Malaysia ranks as the least attractive jurisdiction for mining investment, followed by Hungary, Kenya, Honduras, Solomon Islands, Egypt, Guatemala, Bulgaria, Nigeria, and Sudan.

Six African countries ranked in the bottom 10 in the worldwide survey rankings in 2014. Kenya’s overall ranking plunged from 79th in the Fraser Institute’s 2013 survey to 112th in the most recent survey. The greater deterioration came from Nigeria which dropped from 75th in 2013 to 116th in 2014. Contributing to Nigeria’s decline was concerns regarding environmental regulations, trade barriers, regulatory duplication and the legal system.

At the same time, 2013’s lowest ranking jurisdictions all climbed out of the bottom 10. Niger, Argentina and its provinces Catamarca, La Rioja, Neuquén and Rio Negro, all improved their scores to move out from the bottom 10 ranking, along with Uruguay and Kyrgyzstan.

NEWS RELEASE: AME BC Responds to Fraser Institute Annual Survey of Mining Companies

February 25, 2015

http://www.amebc.ca/

Vancouver, BC — February 24, 2015 —The Association for Mineral Exploration British Columbia (AME BC) responded today to the release of the 2014 Fraser Institute Annual Survey of Mining Companies. According to the Fraser Institute, the survey attempts to assess how mineral endowments and public policy factors affect exploration investment. The province of British Columbia appears in the top third of the Investment Attractiveness Index, ranking 28th out of 122 jurisdictions in 2014 compared with 16th out of 112 jurisdictions in 2013.

However, its ranking within Canada, at 10th out of 12 provinces and territories compared to 7th out of 12 in 2013, is not consistent with actual investment in mineral exploration and deposit appraisal according to data from Natural Resources Canada.

“We appreciate the efforts of the Fraser Institute in developing an important barometer for sharing qualitative perceptions of jurisdictions,” mentions Gavin C. Dirom, President & CEO of AME BC. “However, according to quantitative data provided by Natural Resources Canada, BC’s share of mineral exploration investment has more than tripled from 6 per cent in 2001 to 21 per cent in 2014. At the same time, BC’s ranking among provinces in attracting mineral exploration and development investment has risen from fourth place in 2009 to second place, only behind Ontario, in 2013 and 2014.

Furthermore, one of the best indicators of success in exploration is seeing discoveries move through to mine development. In recent years, we have seen a number of new major metal mines constructed in our province, including Copper Mountain in 2011, New Afton in 2012 and Mt. Milligan in 2013.

Anglo’s zinc loss now Vedanta’s sweet gain – by Martin Creamer (MiningWeekly.com – February 25, 2015)

February 25, 2015

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

JOHANNESBURG (miningweekly.com) – London-listed diversified mining company Vedanta Resources has found itself in a sweet spot as the owner of the zinc assets that Anglo American saw fit to sell off four years ago, when China seemed in perpetual oversupply mode and small operations abounded.

But China is no longer supplying as it did in the past and there have been anticipatory price improvements over the last eight months on the expectation that zinc supply is leaving the market.
The only other London Metal Exchange commodity that is approaching zinc’s current price firmness is aluminium, also because of market pessimism engulfing it for so long.

Meanwhile, the reserves of Anglo’s former zinc assets have been significantly extended under Vedanta’s management, to a point where the India-rooted company will have full payback of its original investment even before the deal’s key Gamsberg asset comes into play.

Vedanta bought Anglo Zinc for $1 338-million in May 2010 and has been investing in underground and near-pit development since 2012. The additional life it has given to the Black Mountain mine in South Africa’s Northern Cape and the Skorpion operations in Namibia has added significant value.

Vale to pay Newfoundland $230-million for nickel export boost – by Sue Bailey (Canadian Press/Globe and Mail – February 25, 2015)

February 25, 2015

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.

ST. JOHN’S — Mining giant Vale SA will pay Newfoundland and Labrador $230-million for letting the company export more Voisey’s Bay nickel concentrate while a processing plant ramps up in the province.

Vale will be allowed to export another 94,000 tonnes that must be replaced later, Natural Resources Minister Derrick Dalley said Tuesday.

The move will mean $200-million in compensation from Vale over three years. Another $30-million in community investments from the company are to be negotiated with the province. Complex design and other issues have delayed full operation of the Long Harbour processing plant, about 120 kilometres west of St. John’s.

The $4.3-billion facility will be an asset for years to come, Mr. Dalley said. The announcement is on top of other export allowances in 2013 and 2002, totalling 633,000 tonnes in potential processing exemptions that must be replaced.

Stuart Macnaughton, Vale’s vice-president of operations in the province, said the added flexibility means mining at Voisey’s Bay in Labrador will continue while the plant in Long Harbour is finished.

Obama’s veto of Keystone XL bill is a slap in Canada’s face – by Claudia Cattaneo (National Post -February 25, 2015)

February 25, 2015

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

U.S. President Barack Obama made good Tuesday on his threat to veto a bill to approve the Keystone XL pipeline, maintaining under his full control the final decision on the Canadian project’s future.

His office downplayed the gesture, only the third veto of his presidency. There was to be no “drama or fanfare around it,” said White House press secretary Josh Earnest.

It’s “certainly possible” that Obama will approve the pipeline once a State Department review of the project is completed, he added, though he gave no deadline for a decision.

Yet the move is another slap in the face to Canada, which has championed the pipeline for years and did everything by the book to get it approved, only to be led down the garden path, through a maze of roadblocks and traps, by its supposed best friend and ally.

“I think you should take this personally,” said Matt Koch, vice-president at the U.S. Chamber of Commerce’s Institute for 21st Century Energy.