August 17, 2015 – Republic of Mining

COLUMN-Chinese gold demand limbers up for bull-bear tussle – by Clyde Russell (Reuters U.S. – August 17, 2015)

August 17, 2015

http://www.reuters.com/article

LAUNCESTON, Australia, Aug 17 (Reuters) – Gold investors are trying to work out whether the yuan’s depreciation and the recent turmoil in Chinese equity markets is good, bad or indifferent for demand for the precious metal in the world’s biggest buyer.

It’s possible to construct plausible-sounding arguments why the recent drama in China’s financial markets could be both bullish and bearish for gold.

At the heart of most of the arguments is a view on how Chinese consumers will respond to the recent developments but it seems this is largely guesswork on the part of analysts, as there are few precedents to serve as a guide to future behaviour.

One big question is whether the yuan’s sudden 3 percent decline against the U.S. dollar last week and the swings in equity valuations are likely to be important drivers of Chinese gold demand, or whether other factors with a lower media profile are at work.

Looking at the yuan depreciation first, and the important thing seems to be that the authorities are signalling the drop last week was a one-off move, not part of any sustained weakening.

Colorado Spill Heightens Debate Over Future of Old Mines – by Julie Turkewitz (New York Times – August 16, 2015)

August 17, 2015

http://www.nytimes.com/

SILVERTON, Colo. — When the mine here opened in the early 1890s amid a frenzy of frontier gold exploration, its founders gave it a lofty name: the Gold King, reflecting their great hopes for finding riches in its depths. Over the next decade, the Gold King went on to become one of the most productive mines in Colorado’s San Juan County, with three shifts of men working 24 hours a day in its dark corridors.

But the mine’s prosperity proved short-lived. When the economy hit a recession in the early 1920s, its operators abandoned it, with open tunnels that filled with snowmelt and rainwater that eventually turned to acid, leaving behind a toxic legacy that this region has struggled to clean up for decades.

Then, on Aug. 5, the Gold King split open while a team contracted by the Environmental Protection Agency was investigating the source of a leak. The accident sent a yellow plume south into the Animas River and turned Western waterways into a mustard ribbon, causing three states and the Navajo Nation to declare states of emergency.

The accident heightened a debate here over the future of this region’s old mines, and served as a reminder, some critics say, that the Gold King’s toxic demise could be repeated at any of thousands of abandoned mines around the country.

[U.S. Coal] ET TU, TRIBE? – by Andrew Rice (New York Magazine – July 28, 2015)

August 17, 2015

http://nymag.com/

LAURENCE TRIBE, the president’s longtime confidant, is fighting the White House climate plan on behalf of Big Coal. His friends are furious at him, which breaks his heart.

Just after noon on June 18, Laurence H. Tribe, the nation’s foremost scholar of constitutional law, fired off an angry and anguished self-defense. “I just finished my roughly half-hour interview on WNYC with Brian Lehrer,” he wrote in an email to the publishers of his most recent book about the Supreme Court, Uncertain Justice. “I suppose I did well enough, but the interview was a complete disaster. Please let the Brian Lehrer Show know that I felt totally sandbagged.”

The appearance had begun innocuously, with a discussion of the most recent Supreme Court decisions — what the Harvard Law professor later called June’s “series of thunderclaps.” Tribe’s credentials as a liberal legal activist are the stuff of legend — counsel in Bush v. Gore, slayer of archconservative Supreme Court nominee Robert Bork — and he is as informed about the Court’s opaque inner workings as any outsider can be.

He taught Elena Kagan and John Roberts at Harvard and played an unusually involved role in Barack Obama’s education in the law; for a brief time during Obama’s first term, he served at the Justice Department.

Polish Black-Hole Mining Risks Labor Unrest Before Election – by Maciej Martewicz and Dorota Bartyzel (Bloomberg News – August 16, 2015)

August 17, 2015

http://www.bloomberg.com/

Poland’s struggle to help Kompania Weglowa SA, the European Union’s biggest coal producer, return to profitability risks unleashing union-led protests before October’s general election.

A threatened eruption of street demonstrations next month may seal Prime Minister Ewa Kopacz’s fate, with the ruling party already trailing the opposition in opinion polls. The cabinet extinguished demonstrations in January by scaling back its plans to shut unprofitable mines and agreeing to revamp Kompania with the aid of state-controlled utilities.

The government has missed two self-imposed deadlines for the overhaul and has a third looming on Aug. 31 as it seeks to stem the coal industry’s 1.4 billion-zloty ($372 million) loss in the first half of 2015.

Power producers are reluctant to invest in an industry they regard as a black hole, especially as this month’s heatwave triggered electricity supply curbs which, according to UBS AG analyst Michal Potyra, may raise calls for further investment in infrastructure by utilities.

South African nuclear power plan stirs fears of secrecy and graft – by Joe Brock (Reuters U.S. – August 14, 2015)

August 17, 2015

http://www.reuters.com/

JOHANNESBURG, Aug 14 (Reuters) – Fears are growing in South Africa that agreements to build nuclear power plants that could be the most expensive procurement in the country’s history will be made behind closed doors, without the necessary public scrutiny.

Among those voicing concern, two government sources say the Treasury is not being included in procurement discussions, despite the massive budgetary implications of a project that experts say may cost as much as $100 billion.

Construction on the first plant is due to start next year, breakneck speed compared with the years of regulatory and environmental checks for nuclear projects in countries such as Britain and the United States.

The Democratic Alliance, the main opposition party, believes the pace of the deal will prevent proper analysis before contracts are signed and huge sums of money change hands.

African trade partners feel the bite of China’s yuan devaluation – by Geoffrey York (Globe and Mail – August 15, 2015)

August 17, 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.

JOHANNESBURG — For African countries that have bet heavily on China as their economic saviour, the sudden devaluation of the Chinese currency is a painful reminder of the risks of over-dependence on the Asian giant.

The devaluation of the yuan, coupled with a broader slowdown of the Chinese economy, is likely to weaken demand for the commodities that have spearheaded Africa’s booming trade with Beijing. It could also help Chinese manufacturers to compete even more ruthlessly against African producers as Beijing’s exports become cheaper.

China, hungry for minerals and oil, has rapidly gained dominance in African markets over the past decade. Its trade with Africa last year was more than $220-billion (U.S.), three times greater than U.S. trade with Africa. It’s the biggest trading partner of most African nations. But while this has helped spur African growth, it also leaves the region vulnerable to a slowdown or a devaluation.

Alberta and Norway: Two oil powers, worlds apart – by Brian Milner and Jeff Lewis (Globe and Mail – August 15, 2015)

August 17, 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.

OSLO AND CALGARY — s world oil production outstrips demand, China’s outlook darkens and prices plumb levels not seen since the Great Recession, energy-exporting countries around the world face a prolonged period of thinner revenues and deepening economic woes.

The chill winds have now reached Norway, long regarded as the world’s most prudent manager of an economy heavily exposed to the ups and downs of commodity prices.

Faced with the steepest decline in oil and gas spending in a decade and a half and the biggest job losses since the global financial meltdown, the centre-right Norwegian government is pledging to tap more of the country’s accumulated resource wealth in an effort to stanch the bleeding.

The sudden decline in its fortunes has put a spotlight on Norway’s unusual handling of its gusher of resource cash over the years, parking 100 per cent of the government’s revenue from royalties and dividends in a fund that is barred from investing a krone in the domestic economy.

The Gold Bull of the Great White North Is Ready to Mine More – by Danielle Bochove (Bloomberg News – August 17, 2015)

August 17, 2015

http://www.bloomberg.com/

Ian Telfer is the proud father of a spanking new $2 billion gold mine named Eleonore. Perched near the rocky shore of James Bay, 500 miles north of Montreal, Eleonore might seem like a problem child given the collapse in world gold prices.

But in this unhappy season for gold bugs, Telfer, chairman of Goldcorp Inc., scoffs at suggestions that gold is somehow falling out of fashion. “Yeah right. Just like Tiffany’s,” he says. “For thousands of years people have wanted to own gold.”

For the moment, the market is far less enthusiastic. Since 2011, gold has generally headed in one direction: down. The price has fallen from a high of more than $1,900 an ounce to around $1,100 and, in the process, lost at least some of its vaunted status as the ultimate safe haven investment.

On an inaugural visit to Eleonore, Telfer is unbowed. While other miners respond to the downturn by selling assets and seeking partners to offset risk, Goldcorp is presiding over a major expansion that includes this mine north of Canada’s 52nd parallel, another in Mexico and one in Argentina — three multibillion-dollar projects in five years.

Barrick Gold Corp shakes up management structure, drops co-president model- by Peter Koven (National Post – August 17, 2015)

August 17, 2015

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

Barrick Gold Corp. is scrapping its unusual “co-president” management structure less than a year after it went into effect.

Co-president Kelvin Dushnisky has been appointed Barrick’s sole president, the company said Monday morning. Until now, Dushnisky was sharing the president duties with Jim Gowans. Barrick announced that Gowans will retire at the end of this year, which was a surprise.

A couple of other management appointments were made in conjunction with these moves. Chief of staff Richard Williams has been named chief operating officer and will report directly to Dushnisky. Williams is a very unconventional choice for a COO, as he has a military background rather than a technical mining background. However, he will be assisted by Basie Maree, a mining veteran who was promoted to chief technical officer.

“As we work to accelerate Barrick’s return to the lean, decentralized model that drove the company’s early success, the time is right to put a structure in place that supports this vision,” chairman John Thornton said in a statement.

Alaskans concerned with Canadian mining plans – by Becky Bohrer (Associated Press/Durango Herald – August 16, 2015)

August 17, 2015

http://www.durangoherald.com/

JUNEAU, Alaska – A provincial map showing the planned or potential mining activity in British Columbia is so pocked that Alaska Lt. Gov. Byron Mallott says it looks like it has the measles. It’s the cluster of dots in northwest British Columbia – including a prospect billed as one of the largest undeveloped gold projects in the world – that has many residents across the border in southeast Alaska on edge.

While it’s not clear how many of the projects ultimately may become mines – many are only in exploration – last year’s failure of a mine-waste storage facility in another part of British Columbia heightened fears about how development near Alaska’s shared border with the province could impact salmon-bearing rivers and streams that flow into southeast Alaska.

Currently seven major projects have potential trans-boundary implications. One is the Red Chris copper and gold mine, upstream from the Alaska towns of Wrangell and Petersburg, which received final permits in June.

It’s owned by Imperial Metals, which also owns Mount Polley Mine, the site of last August’s tailings dam breach that sent water and mine-related materials into waters near the mine. Activists in Alaska said the incident showed that dams can fail.

US activist builds Glencore stake – by John Ficenec (The Telegraph – August 16, 2015)

August 17, 2015

http://www.telegraph.co.uk/

Activist investor Harris Associates builds stake in FTSE 100 commodity and mining giant Glencore as it grapples with commodity rout and tumbling profits

One of America’s most influential activist investors has secretly amassed a stake in FTSE 100 mining giant Glencore as it attempts to wrestle with the dramatic fallout from tumbling commodity prices.

Harris Associates has built a £250m position in the world’s largest commodities trader in a move likely to pile further pressure on Glencore chief Ivan Glasenberg who faces a barrage of problems.

David Herro, the investment chief at the Chigaco based fund with $135bn under management, has an impressive track record against ambitious bosses, and could prove a formidable taskmaster for the combatitive Mr Glasenberg as he formulates a plan to turn around Glencore’s declining fortunes.

Saving mining giant requires real superpowers – by Ben Marlow (The Telegraph – August 15, 2015)

August 17, 2015

http://www.telegraph.co.uk/

Glencore has found itself in a world of pain as China cools and commodity prices tumble

From genius to mere mortal soul. To be fair, it took something as seismic as the end of the commodities supercycle to prove his fallibility, but apparently Ivan Glasenberg isn’t superhuman or from another dimension, after all.

It wasn’t long ago that the founder of mining giant Glencore was widely lauded as a dealmaking genius when he floated the company on the London Stock Exchange.

It was 2011, a time of huge global uncertainty, when most other business figures were focused on little more than simple self-preservation.

Yet the suave South African chose this moment to push the button on the largest listing the City had ever seen. In one fell swoop, the commodities trader was catapulted into the upper ranks of the FTSE 100, Glasenberg joined the ranks of the super-rich thanks to a 15pc stake that saw him become a dollar-billionaire 10 times over, and its army of nearly 500 traders all made just over $100m (£64m) each.

Essar has been to the Sault everything that U.S. Steel has not to Hamilton – by Steve Arnold (Hamilton Spectator – August 14, 2015)

August 17, 2015

http://www.thespec.com/

Call it a tale of two steel companies. One has a record of broken promises, shuttered plants and labour relations based on confrontation. The other has a legacy of investment in a struggling company, expansion and a deep commitment to its community.

The contrasts between Essar Steel, of India, and U.S. Steel, of Pittsburgh — the foreign owners of the Algoma and Stelco mills, respectively — are stark. Small wonder then that news this week Essar is a likely bidder for the Stelco plants has caused such excitement in a mill that has endured little but bad news for the last eight years.

Both companies came to Canada in 2007 — Essar bought Algoma in April and U.S. Steel acquired Stelco in August. The prices of both deals were about the same — $1.9 billion in cash and assumed debt for Stelco and $1.8 billion in cash for Algoma in Sault Ste. Marie.

That’s where the similarities end, however. Stelco was just out of a tortured two-year restructuring under creditor protection and was owned by three hedge funds anxious to take their profits and move on to the next deal.