June 25, 2015 – Republic of Mining

Canada’s Potash approaches German rival – by James Wilson (Financial Times – June 25, 2015)

June 25, 2015

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

London – The world’s largest potash producer has approached a rival about a possible takeover worth at least $7bn, a step that would be one of the largest transactions in the mining industry during the commodity price downturn of recent years.

PotashCorp of Saskatchewan, the Canadian miner of the fertiliser ingredient, said it had made a friendly “private proposal” to K+S, a German producer of the same commodity.

K+S was currently assessing its options after being told by PotashCorp of a possible takeover offer, the German company said in a statement. A PotashCorp statement said: “There is no certainty that any offer will ultimately be made or as to the terms on which such an offer might be made.”

Shares in K+S rose more than 30 per cent to €37.38. Shares in PotashCorp rose 4.3 per cent in Toronto to C$39.33. News of the approach was first reported by Handelsblatt.

Potash is a key ingredient in fertilisers and the market has been in a state of flux since 2013, when a Russian and a Byelorussian producer broke a longstanding partnership agreement that was aimed at supporting prices rather than a specific level of output.

Latin America: The loss of El Dorado (The Economist – June 27, 2015)

June 25, 2015

http://www.economist.com/

After the commodity boom, the region needs a new formula for growth

IT WAS wonderful while it lasted. For much of this century Latin America saw robust economic growth, a big fall in poverty and a swelling of the middle classes. Now the good times are over. Emerging markets everywhere are subsiding like a cooling soufflé.

But Latin America has gone stone cold. The IMF expects growth of just 0.9% in 2015, which would be the fifth successive year of deceleration. Many economists are talking of a new normal of growth of only 2% or so a year—less than half the region’s pace during the boom.

What has gone wrong? The short answer is that the great commodity supercycle triggered by the industrialisation of China is over. Rising exports of minerals, soya beans and fuels lifted many South American economies. Without that fillip the region has converged downwards to the 2.4% long-term growth rate of Mexico, which is not a big commodity exporter.

Worse, the commodity bonanza prompted distortions that may limit new sources of growth. Many Latin currencies became overvalued, wounding the competitiveness of non-commodity firms. Consumption soared; investment sagged. While Asia built factories, Latin America erected shopping centres.

Molycorp Files for Bankruptcy Protection – by John W. Miller and Anjie Zheng (Wall Street Journal – June 25, 2015)

June 25, 2015

http://www.wsj.com/

Rare-earths miner reaches agreement with major creditors to restructure its $1.7 billion debt load

Molycorp Inc. filed for bankruptcy protection on Thursday, becoming the biggest corporate failure in a bleak year for a mining industry hit by slumping commodity prices and waning demand from its biggest customer, China.

The Greenwood Village, Colo., company, the sole U.S. miner and producer of rare earth elements, said it had secured an agreement with creditors to restructure its $1.7 billion in debt, and obtained $225 million in new financing to continue operations. It expects to have a court-approved restructuring plan by the end of the year.

The filing marks a sharp reversal of fortunes for a company that rode a boom in rare earths, amid a broader surge in commodities prices. Fueled by restrictions on exports of rare earths by China, the world’s dominant supplier, Molycorp’s market value rocketed to over $6 billion five years ago.

But China then relaxed its rules, and battery and magnet makers found alternatives to rare earths, sending Molycorp into a long slide. It hasn’t turned a profit since 2011.

COLUMN-Adani walking away, or upping ante on Australian coal project? – by Clyde Russell (Reuters U.s. – June 25, 2015)

June 25, 2015

http://www.reuters.com/

LAUNCESTON, Australia, June 25 (Reuters) – Is India’s Adani Mining preparing to walk away from its A$10 billion ($7.7 billion) coal project in Australia’s Queensland state, or upping the ante in trying to speed up approvals for the huge project?

Adani surprised industry observers by confirming on Wednesday it had halted engineering work on its Carmichael coal project in the frontier Galilee basin in central Queensland.

The planned 40-million tonne per annum mine is supposed to start producing in 2017, with Adani intending to ship to India to meet the growing demand for power generation.

The explanation from Adani on why it stopped independent contractors from working on the mine, rail and port infrastructure was that it was rejigging the budget on the project as it faces delays in obtaining all the necessary government approvals.

Delays in getting approvals from the Queensland government meant that the previous project timelines were no longer achievable, Adani said in a statement.

GLOBE EDITORIAL: It’s not as if it’s the Iranians – let Australians mine our uranium (Globe and Mail – June 25, 2015)

June 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.

There’s no reason at all to object to the decision of Greg Rickford, the Minister of Natural Resources, to allow an Australian company, Paladin Energy Ltd., to develop a uranium mine in Newfoundland and Labrador, 140 kilometres northeast of Happy Valley-Goose Bay, with Australians holding the majority of the shares.

On the contrary, the odd thing is that Paladin had to seek permission to do so, as a foreign corporation – over and above the similarly unnecessary process of the foreign investment review under the Investment Canada Act, with its mysterious “net benefit” criterion. In the rejected takeover by BHP Billiton of Potash Corp. of Saskatchewan in 2010, Ottawa even more mysteriously declared Potash to be a “strategic asset,” not a term used in the ICA.

The federal government has had a “non-resident ownership policy in the uranium mining sector” since 1987. The policy allows for an exemption from the requirement of at least 51-per-cent Canadian ownership if there aren’t enough Canadians who want to build the prospective uranium mine in question.

NEWS RELEASE: Royal Nickel Receives Main Environmental Permit for Dumont Project

June 25, 2015

http://www.royalnickel.com/

Commencement of Mine Construction Targeted for Early 2016

TORONTO, June 25, 2015 /CNW/ – Royal Nickel Corporation (“RNC”) (TSX: RNX) announced today that it has received the Certificate of Authorization for the Dumont Nickel Project from the Quebec Ministry of Sustainable Development, Environment and the Fight Against Climate Change. This authorization is the most significant permit for mining projects in Quebec and positions Dumont to proceed to construction upon completion of financing.

Mark Selby, President and CEO, commented, “The Certificate of Authorization is the most important milestone achieved to date for the Dumont project. Following the appointment of Swedbank as advisors for our contemplated US$600 million senior bond financing, we expect to build on this positive momentum in the coming months. Our objective is to complete the capital raising phase of the project in a timely manner to allow us to begin construction activities by early 2016.”

Once constructed, Dumont will be one of Canada’s largest base metal mines and will make significant contributions to the Quebec economy as a long-term and low-cost producer of nickel concentrate. Dumont is expected to employ an average of over 500 people in the Abitibi region over a 33-year project life.

Uncertain future for global diamond trade as profits vanish – by Tova Cohen and Ari Rabinovitch (Reuters U.S. – June 24, 2015)

June 25, 2015

http://www.reuters.com/

TEL AVIV – The family businesses that make up the global diamond trade have seen their profits wiped out over the past five years, hit by shaky financing, increased costs and uncertain demand from customers who prefer hi-tech gadgets to bling.

Manufacturers who cut and polish diamonds have found themselves caught between giant mining companies charging high prices for rough stones, and big retail chains that demand gems at low margins to keep sales moving.

While the $80 billion overall spent on diamond jewelry last year was a record, the manufacturers are expected to share a profit of just $100 million in 2015. That is half last year’s total and down from $900 million in 2010, according to Chaim Even-Zohar of Tacy Ltd and Pranay Narvekar of Pharos Beam in Mumbai, two of the industry’s top consultants.

Even-Zohar estimated that 300,000 Chinese and Indian workers had been laid off out of nearly 1 million employed in gemcutting in those two countries, where most manufacturing takes place.

“The rule of supply and demand doesn’t necessarily apply to the diamond sector,” said Yoram Dvash, a high-end polisher in Israel who outsources his rough stones to smaller Israeli polishers.

Zambia Mine Revenue May Help Narrow Budget Gap, Moody’s Says – by David Malingha Doya (Bloomberg News – June 25, 2015)

June 25, 2015

http://www.bloomberg.com/

Zambia may keep its budget deficit below 6 percent this year because of increased revenue resulting from changes to the country’s mine-tax system, according to Moody’s Investors Service.

The International Monetary Fund last week forecast the fiscal gap in Africa’s second-biggest copper producer will climb to 7.7 percent of gross domestic product this year. That’s higher than the government’s projection of at least 6 percent, which it raised from 4.6 percent after an increase of mining royalties and scrapping of a profit tax in January disrupted revenue flows from the industry. The changes to those levies will be reversed from the start of next month.

“We don’t expect the deficit for the second half to be anywhere near as large, in fact it could be a surplus for that six-month period, ultimately resulting in a fiscal deficit somewhere in the vicinity of 5 to 6 percent of GDP,” Matt Robinson, credit manager at Moody’s, said in an interview Tuesday in the Kenyan capital, Nairobi.

The southern African nation plans on setting the royalty for underground miners at 6 percent, scrapping an earlier plan to charge the same 9 percent rate set for open-cast mines. A 30 percent profit tax will also be reintroduced for both types of operations.

RPT-COLUMN-Knives out for nickel despite bullish supply signals – by Andy Home (Reuters India – June 24, 2015)

June 25, 2015

http://in.reuters.com/

(Reuters) – The knives are out for nickel.

Analysts at some of the biggest commodity banks have been slashing their price forecasts for the stainless steel input over the last few days amid a welter of negative comment.

“We now see little prospect of a sustainable nickel price or stainless stocking upturn ahead of the July/August holiday period,” Citi said.

“Fundamentals of this small, high-value metal market are subdued for now: global inventories are high/rising (+25 percent of global supply); regional premia are soft; stainless steel prices are in decline,” Morgan Stanley chimed in.

JPMorgan is “more comfortable with $10,000 nickel” than it is with prices at $17,000 a tonne. Ouch!

In part, this collective price downgrade is a simple reflection of nickel’s underperformance so far this year. At a current $12,900 per tonne, three-month metal on the London Metal Exchange (LME) is down 13 percent since the start of January.

Junior mining firms turn to creativity in order to get ahead in sector – by Peter Koven (National Post – June 25, 2015)

June 25, 2015

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

A pair of junior mining firms are turning to innovation to try to thrive in a rough bear market. And everyone seems to think it’s about time.

“The mining industry is really prehistoric in the way we do business,” said George Salamis, chairman of Integra Gold Corp.

Indeed. As the junior resource market collapsed over the past several years, many companies have hoarded their cash and done almost nothing to create value for investors. Predictably, stock prices have languished.

But over the last few weeks, a couple of creative ideas have been put into action in this sector. If successful, they will likely inspire more.

Vancouver-based Integra announced a “crowd-sourcing gold rush challenge” this week to try to find gold on its Sigma-Lamaque project in northwest Quebec.

Integra’s management acquired the past-producing mine out of bankruptcy last year. When they went through the old mine office, they found hard drives holding an astounding six terabytes of mining records dating back to 1933. That included data from about 30,000 old drill holes on the property.

NEWS RELEASE: [British Columbia] Government appoints Mining Code Review Committee members

June 25, 2015

VICTORIA – Minister of Energy and Mines Bill Bennett today appointed a Code Review Committee pursuant to section 34 of the Mines Act that will determine how best to implement the seven recommendations stemming from an Independent Expert Engineering Panel’s investigation into the Aug. 4, 2014, tailings pond breach at the Mount Polley Mine in Northwest B.C.

The expert panel delivered a report in January on its investigation into the cause of the failure of the tailings storage facility at the Mount Polley Mine. The report also included the release of 35,000 pages of documentation related to the panel’s investigation. The panel concluded the dam failed because the strength and location of a layer of clay underneath the dam was not taken into account in its original design, and made seven recommendations to prevent such incidents in the future.

“Work is already underway to address four of the expert panel’s recommendations on improving corporate governance, expanding corporate design commitments, improving professional engineering practices and strengthening current regulatory operations,” said Bennett. “This is the next to step in the process to implement all of the expert panel’s seven recommendations.”

Addressing the independent panel recommendations on tailings storage facilities is the first priority of the code review and will focus on the following three areas:

[Ontario Mining] Schools engineer partnership – by Sandi Krasowski (Thunder Bay Chronicle-Journal – June 25, 2015)

June 25, 2015

Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

Lakehead University and Queen’s University are mining each other’s resources to serve engineering students.

The deans of the engineering programs at the two schools signed a memorandum of understanding Tuesday in a step toward making their engineering courses available to students on both campuses.

David Barnett, the dean of engineering with Lakehead University says they don’t offer a mining engineering program at Lakehead, but there is active research going on within the mining sector.

“Queens is a worldwide-known mining engineering school and (partnering) just seemed to make sense,” says Barnett. “Whether it’s chemical, civil, electrical, mechanical or software engineering, mining touches all the engineering programs that we have here.”

He says it’s very difficult to start a new mining engineering program, but since mining is such an important part of the Northern Ontario economy, it make sense to get their students that expertise.

Ontario clears framework for Noront to work with First Nations – by Jon Thompson (tbnewswatch.com – June 23, 2015)

June 25, 2015

http://www.tbnewswatch.com/

“I’d like to throw this out to industry: if you want to work with First nations,
resource them enough so that we work together. We’re not in opposition, we’re
pro-development. We want to make sure that when the mine is gone, we’re still
going to be there.” (Aroland First Nation Chief Sonny Gagnon)

Terms of reference are in place for how the first mining project in the Ring Of Fire will work with nearby communities on environmental assessment.

The Ministry of the Environment and Climate Change approved the plan for the Eagle’s Nest nickel mine on Friday, nearly three years after proponent, Noront made its first submission.

Noront continued social and technical work over that time, meeting with First Nations and operating with the best information available.

“We said, ‘we’re going to assume our terms of reference are right and we’re going to do the environmental work that supports those terms of reference,’ which we did over those three years,” said Noront CEO Alan Coutts, on Tuesday.

“If there were amendments, we’d deal with them when they came.” The final draft commits the company to supporting the collection of Aboriginal traditional knowledge and incorporating it into environmental planning.