April 8, 2015 – Republic of Mining

Australia treasurer would block a Glencore-Rio Tinto merger – by Sonali Paul (Reuters U.S. – April 8, 2015)

April 8, 2015

http://www.reuters.com/

(Reuters) – Australia’s treasurer has told business representatives he would not allow Glencore Plc to merge with Rio Tinto due to concerns about losing tax revenue, a person familiar with his comments said on Wednesday.

Treasurer Joe Hockey said based on the tax implications he had seen from the treasury, he would not allow a Glencore takeover of Rio, Australia’s second biggest miner and one of its biggest taxpayers, the person said. He declined to be identified due to the sensitivity of the issue.

Treasurer Joe Hockey’s office declined to confirm the comments. Four people said Hockey had spoken at a private meeting on March 30 organized by the Business Council of Australia and including members of the Minerals Council of Australia, but three would not give details.

Glencore approached Rio Tinto about a merger last July that would have created a $160 billion mining and commodities trading giant. Rio revealed in October it had rebuffed the approach, but under UK takeover rules, Glencore is now free to make a new bid, following a six-month breather.

“Any takeover would have to go through the normal processes at FIRB (Foreign Investment Review Board),” a spokesman for Hockey said.

Taking a closer look at mining’s economic impact in Elko, Nevada (Barrick Beyond Borders – April 08, 2015)

April 8, 2015

http://barrickbeyondborders.com/

There are 670 mining vendors in Elko County alone, according to the Nevada Mining Association. At 53,000, the county’s population has climbed 7.5 percent since 2010 and 15 percent since 2002. Between 2003 and 2013, the gold-mining industry added 3,600 jobs across Elko, Lander, White Pine and Eureka Counties. Another 1,360 mine industry support jobs were added during the same period.

According to the U.S. Bureau of Labor Statistics, Nevada’s unemployment rate is 7.1 percent as of October 2014. According to the same source, Elko County’s unemployment rate is 4.4 percent as of September 2014, down from 6.3 percent in February of 2014.

Below are a few vignettes that offer snapshots of mining’s impact in this Nevada community.

A carnival-like atmosphere

A new store opening isn’t a major event in big cities, but it is in rural America. So when a Jo-Ann Fabrics opened in Elko in late 2011, the local radio and television stations were both on hand to cover the event and so, it seemed, was half the population of northeast Nevada. That may be a slight exaggeration. But the new Jo-Ann’s in the Elko Junction Shopping Center did enjoy the largest grand opening in the history of the company. Within two months, a Rue21 and Famous Footwear had opened at Elko Junction and also reported record grand openings.

Province to renew mineral development strategy – by Jonathan Migneault (Northern Ontario Business – April 8, 2015)

April 8, 2015

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.

The province’s decision to renew its mineral development strategy – first established in 2006 – comes at a time when the sector is in a downturn, says the executive director of the Ontario Prospectors Association.

When the strategy was developed nine years ago, Ontario’s mining sector was on an upturn, but the timing for the renewed strategy will give the province a very different picture, said Garry Clark.

“They have to understand – and they are coming to grips with the fact – that the only way we stay as a vibrant mining province is to have lots of things in the pipeline coming up from prospectors and junior companies to look at and put into production,” he said.

While Ontario’s mining sector has been in a downturn for two years, Clark said the province has only taken notice over the last six months.

Their statistics, he said, are usually a year behind. In a discussion paper meant to inform the renewed mineral development strategy, the province admits “Ontario could face many challenges in the years ahead.”

Lower coking coal contract price shows downward pressure – by Clyde Russell (Reuters U.S. – April 8, 2015)

April 8, 2015

http://www.reuters.com/

LAUNCESTON, AUSTRALIA – (Reuters) – – Coking coal prices are yet to show signs of bottoming with bearish signals from both contract talks between Australian producers and Japanese buyers as well as Chinese demand.

Hard coking coal for second quarter delivery was settled at $109.50 a tonne free-on-board between producer BHP Billiton and buyer Nippon Steel, Morgan Stanley said in a research noted on April 6.

This was down 6 percent from the previous quarter’s contract and represented a 7 percent premium to the spot price at the time the deal was concluded. The premium to the spot price is in line with prior settlements, with Japanese buyers willing to pay above spot in order to guarantee supplies.

Coking coal, also known as metallurgical coal, is used in steel-making and is traditionally a higher value product than thermal coal used in power generation because it has a higher energy value and fewer impurities.

However, coking coal prices are now down two-thirds from their peak around $300 a tonne in 2011, while benchmark thermal coal prices at Australia’s Newcastle Port have dropped about 55 percent over the same period.

Primero Mining CEO Sees Black Fox Fix Clearing Way for Expansion – by Christopher DonvilleLiezel Hill (Bloomberg News – April 2, 2015)

April 8, 2015

http://www.bloomberg.com/

Primero Mining Corp. says a fix of its troublesome Black Fox gold mine in Canada is within reach, restoring the miner’s credibility for investors while clearing the way for future expansion through acquisitions.

The Toronto-based company, which has fallen 45 percent in the past year, expects to show signs of improved performance at the northern Ontario mine this year, Chief Executive Officer Joe Conway said. In July, the company cut its gold-reserve estimate at Black Fox, which it acquired in a takeover last year to add to output from its flagship San Dimas gold and silver mine in Mexico.

“The reality is we’re very much focused on demonstrating to the investment community that we’ve turned Black Fox to account,” Conway, 57, said in a phone interview.

Analysts, at least, are giving the former CEO of Iamgold Corp. the benefit of the doubt. With 15 buy, one sell and two hold ratings on Primero, they project the share price will rise at least 50 percent in the next 12 months, based on target prices compiled by Bloomberg. They also estimate the company’s per-share cash flow will expand faster than most of its Canadian peers, according to data compiled by Bloomberg.

“Black Fox really drives the bus” in terms of expectations for the share price, Joe Fazzini, a Toronto-based analyst at Dundee Capital Markets, said by phone.

Gina Rinehart’s Roy Hill mine not relying on China – by David Stringer (Sydney Morning Herald – April 9, 2015)

April 8, 2015

http://www.smh.com.au/

Asia-Pacific’s richest woman is gearing up to start shipments from her $10 billion iron ore project in Australia. Even with prices at 10-year lows, she’s displaying no lack of confidence in the mine’s success.

Billionaire Gina Rinehart’s ace? Her mine isn’t relying solely on sales to China, the biggest iron ore buyer. This limits the project’s exposure to a market where steel demand is judged to be peaking. Instead, she’s locked in supply contracts with three of the largest iron ore consuming Asian nations outside of China.

“They feel very confident. Roy Hill has a massive advantage in that it has diversified its markets,” Philip Kirchlechner, Perth-based director of Iron Ore Research Pty. said by phone. “They have buyers from three of the other major iron ore importing markets.”

Roy Hill, Australia’s largest single iron ore mine, is on track to commence exports from September, adding 55 million tons a year of output to a market already saturated by a growing surplus. It’s even accelerating the mine’s schedule, seeking to hit its planned capacity at the fastest pace of any project built in Western Australia’s iron-rich Pilbara region.

Quebec announces $1.3-billion Plan Nord revival – by Bertrand Marotte (Globe and Mail – April 8, 2015)

April 8, 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.

Montreal — Quebec Premier Philippe Couillard unveiled a scaled-down version of the Plan Nord to tap into the mineral bounty in the remote northern reaches of the province.

Despite a deep slump in global metal prices, the plan calls for the province to invest about $1.3-billion in infrastructure and other projects over the next 5 years in hopes of attracting $22-billion in private-sector investment.

By 2035, the Liberal government anticipates a total of $50-billion in private and public investments, of which at least $2.5-billion will be public money.

The previous Plan Nord, announced by then-premier Jean Charest in 2011, projected $80-billion in investments over a 25-year period.

That ambitious project was shelved by the Parti Québécois government in 2012, but revived by the Couillard government when it returned to power last year.

What the end of the commodity supercycle means for Canada – by Glen Hodgson (Globe and Mail – April 8, 2015)

April 8, 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.

Glen Hodgson is senior vice-president and chief economist of the Conference Board of Canada.

It appears more and more likely that the global commodity supercycle has come to an end. While the recent collapse in oil prices has attracted much of the focus, prices for many commodities across the board have softened. These commodities include energy, metals and agricultural products, all of which are important to Canada. No one has a crystal ball but if the commodity supercycle is indeed winding down, Canada will surely be affected.

As The Economist magazine has regularly reminded us, aggregate commodity prices fell in real terms (with the impact of inflation removed) for most of the 20th century. Prices then took off in 2002-03 with China’s growing integration into the global economy. Robust Chinese economic growth and infrastructure development essentially added a one-time boost to demand for resources of all types, and prices responded accordingly.

Between 2003 and 2008, many commodity prices effectively doubled or more in real terms. Turbulence and instability in commodity prices also grew during that period; financial markets increasingly saw commodities as an instrument for speculative investment, not just a product to be bought and sold to meet end demand.

Global supply glut threatens British Columbia’s LNG projects – by Brent Jang (Globe and Mail – April 8, 2015)

April 8, 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.

Most liquefied natural gas export projects are at risk of being cancelled in North America as a result of a looming global glut of LNG, putting a damper on British Columbia’s energy dreams.

Moody’s Investors Service Inc. issued a stark outlook for the fledgling North American LNG industry, arguing it doesn’t make economic sense to invest billions of dollars on each venture especially as Asian buyers slow down their LNG orders for new LNG supplies.

Moody’s said the “vast majority” of North American proposals face outright cancellation. “Many sponsors – including those in the U.S., Canada and Mozambique that have missed that window of opportunity as oil prices have declined – will face a harder time inking the final contracts, most likely resulting in a delay or a cancellation of their projects.”,” the credit rating agency said.

There are 19 B.C. LNG projects vying to export to Asia. They include 10 export licences that have been approved by the National Energy Board

In the global LNG industry, most contracts have maintained their historic link to crude oil prices, and that has meant declining revenue for LNG suppliers amid the slump in oil markets.

Cliffs to put mines, rails, ports up for sale in Quebec, N.L. (CBC News Business – April 7, 2015)

April 8, 2015

http://www.cbc.ca/news/business

Mine company under bankruptcy court protection as it completes its exit from Eastern Canada

The Canadian Press – Idled Quebec iron ore mines, railways and port facilities, are about to be put up for sale as part of a court-supervised exit from eastern Canada by Cliffs Natural Resources.

The Cleveland-based mining company’s subsidiaries, which filed for creditor protection in January, are seeking a Quebec court’s permission to solicit interest next month in the Bloom Lake mine, the Wabush Mine, and related port and rail assets in Quebec and Labrador, according to a motion filed by monitor FTI Consulting Canada.

Bloom Lake General Partner Ltd. and affiliates such as Cliffs Quebec Iron Mining filed for protection under the Companies’ Creditors Arrangement Act amid falling iron ore prices.

Excluded from the sale process are Cliffs’ chromite assets in Ontario’s Ring of Fire that are in the process of being sold to Noront Resources for $20 million US.

Norilsk Sees Africa Cutting Platinum Output on Spending – by Yuliya Fedorinova (Bloomberg News – April 7, 2015)

April 8, 2015

http://www.bloomberg.com/

OAO GMK Norilsk Nickel sees South African output of platinum-group metals declining in the next several years as the Russian mining company leads investors in creating a $2 billion palladium fund.

“Investments in a vast amount of projects in South Africa were delayed and it’s hard to expect an increase in output in the region,” Anton Berlin, head of strategic marketing at Norilsk, said in an interview on Monday. “Most likely, it will even fall.”

This year, South African output will recover to match its 2013 level of 4.4 million ounces of platinum and 2.4 million ounces of palladium following a sharp decline caused by five months of strikes in 2014, he said.

Production of platinum and palladium, which are mined from the same deposits and used in automobile catalytic converters, has been lower than demand since at least 2012. Opaque stockpiles held by hedge funds have contributed to price volatility, according to Norilsk.

More than 1 million ounces of potential output were lost during strikes in South Africa that ended in June, according to research by Johnson Matthey Plc. The platinum market had a deficit of almost 1 million ounces last year, which should narrow to 500,000 ounces this year, according to Norilsk’s estimates.

Hollinger open pit taking shape – by Len Gillis (Timmins Daily Press – April 4, 2015)

April 8, 2015

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – Goldcorp has asked for, and has received permission, from Timmins city hall to extend the deadline for the Subsequent Land Use Plan — that’s the land reclamation plan on what will be created to replace the Hollinger open pit, once the mining has ended. City council recently approved the request, to allow Goldcorp Porcupine Gold Mines (PGM) push the deadline back from March 31, 2015 to Dec. 31, 2015.

This also means that the deadline for the final plan is being pushed back to the end of 2017. This is the second time the company has asked for an extension. Originally, the plan was to have been submitted by Nov. 11, 2014. Last fall, Goldcorp requested the first deadline extension to have a plan submitted March 31, 2015.

PGM was back at the council table just a couple of weeks ago to explain that things were not going along as quickly as anticipated. PGM general mines manager Brendan Zuidema told council the company has faced some delays and challenges.

“We have experienced several unexpected delays since signing the original agreement on Nov. 12, 2012, along with many other operational challenges caused by the worst weather we have experienced in many years,” said Zuidema. “Last year and this year, it has been pretty tough in the pit.

Steel ‘dumping’ blamed for Iron Range layoffs – Jon Collins (Minnesota Public Radio – April 1, 2015)

April 8, 2015

http://www.mprnews.org/

Politicians and mining company officials are blaming unfair foreign competition for more than a thousand recent layoffs in the state’s iron ore industry.

U.S. Steel announced Tuesday that it would idle part of its taconite plant in Mountain Iron, Minn., starting on June 1. Earlier last month U.S. Steel announced plans to idle a plant in Keewatin, which will result in more than 400 layoffs. Magnetation also recently announced that it was closing an Iron Range plant and laying off more than 40 people.

The closing of plants and mills comes from a glut of steel supplies and the steady decline of prices over the last few months.

Following news of the most recent plant closing, Rep. Jason Metsa, DFL-Virginia, blamed the low prices on “foreign countries for dumping state-sibsidized steel on American shores.” U.S. Steel officials have also pointed to illegal trade practices by Chinese companies.

Dumping is a frowned upon international trade practice, said Tony Barrett, a professor of economics at the College of St. Scholastica. It’s when a company sells steel abroad for cheaper than the cost to produce it because they don’t need to make the same level of profits as American steel companies.

Mining firms in Sudbury benefit from energy program – by Carol Mulligan (Sudbury Star – April 8, 2015)

April 8, 2015

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

Making the Northern Industrial Electricity Rate Program permanent will help Sudbury’s two largest mining companies lower their costs and remain competitive globally, say their executives.

Sudbury Liberal MPP Glenn Thibeault announced Tuesday that the Government of Ontario will keep funding the program, which was to conclude in 2016, to the tune of about $120 million a year.

Twenty-three companies in Northern Ontario — including forestry companies and stainless steel producers — will benefit from the program.

Vale Ltd. will receive about $20 million annually to offset the cost of energy and Glencore’s Sudbury Integrated Nickel Operations will receive about $13 million.

Marc Boissonneault, Glencore vice-president of Sudbury Integrated Nickel Operations, said the program is one of the pieces of a puzzle that will allow his company to continue to mine beyond 2020.

Glencore has said its resources will run out in five years unless it develops two new mines, the Onaping Depth at its Levack complex and an extension of Nickel Rim Mine called the Nickel Rim Depth.

Barrick open to sell-offs and joint ventures in debt drive – by James Wilson (Financial Times – April 5, 2015)

April 8, 2015

http://www.ft.com/intl/companies/mining

Barrick Gold is open to a wide range of asset sales and joint ventures as it tries to cut debt by $3bn and rebuild its reputation with investors, its chairman has told the Financial Times.

In his first interview since taking over as chairman almost 12 months ago, John Thornton, pictured below, said he could imagine Barrick ceding operational control of some assets — for example to Mick Davis, the former Xstrata chief executive who plans to re-enter the mining sector at the head of a private equity vehicle.

Barrick would also bring long-term investors into a group of its mines as minority partners, Mr Thornton said.

“There is a lot of incoming inquiries . . . of all kinds of stripes and sizes. We feel confident about hitting the $3bn number,” he said.

Mr Thornton’s comments show the range of options being considered to turn round Barrick, still the world’s largest gold miner by volume but one of the worst-performing large miners of the past two years. Barrick, which has a $13bn market capitalisation, has been hit by steep falls in the price of the precious metal and has suffered billions of dollars of writedowns since 2012 on poor acquisitions and stalled projects.