September 4, 2015 – Republic of Mining

Africa: Mining Is Still Africa’s Future – by Ibilola (All Africa.com – September 4, 2015)

September 4, 2015

One of the most prominent Australian miners in Africa said this week global equity markets should not under-estimate the economic powerhouse that mining can deliver to the continent.

Addressing the Paydirt 2015 Africa Down Under Conference in Perth, Australia, Resolute Mining CEO, John Welborn, told delegates that the business juggernaut that is now China, had to be contrasted to 1978 when it was one of the poorest countries in the world.

“Take that same scenario to Africa and by 2040, Africa is projected to have more than one point one billion people of working age,” Welborn said.

“The challenges that poses specifically for Africa are energy, skilled workers, infrastructure, access to capital, political stability, social licence to operate and productivity issues.

“What the mining industry can do to deliver a better Africa is to attract capital and international finance, ensure transparent negotiations and mining agreements, create jobs and skills, support local industry, build and transfer infrastructure, pay taxes and support a framework for economic advancement.”

Vale CEO still upbeat on China, iron ore market -paper (Reuters U.S. – September 4, 2015)

September 4, 2015

http://www.reuters.com/

SAO PAULO – China’s stock market crash and currency devaluation have not dampened the optimism of mining giant Vale’s chief executive, who said he is most upbeat on the iron ore market in two years, according to a newspaper interview published Friday.

China’s stock markets have little relation to its real economy and a new foreign exchange policy has been misinterpreted as stimulus for exports, Vale CEO Murilo Ferreira told newspaper Valor Economico.

“The outlook for iron ore in recent weeks is much better than we saw four months ago. Of the last 24 months, I’m most upbeat right now,” said Ferreira.

The sharp Chinese sell-off in recent weeks rattled global markets, but Ferreira played down those fears and said the devaluation of the yuan was a step toward making the currency convertible.

Rio Tinto shows Glencore’s Ivan Glasenberg who knows China best – by James Thomson (Australian Financial Review – September 4, 2015)

September 4, 2015

http://www.afr.com/

Finally, a little relief for Glencore chief Ivan Glasenberg, who watched the miner’s stock climb 6.6 per cent on Thursday night after two horror days of trading that saw it fall 6.7 per cent and then 8.4 per cent.

Glencore stock has hit record low after record low since Glasenberg delivered the company’s results on August 19. Obviously this has been a period of extreme volatility for global markets, and a global commodities trader with a debt pile of $42.7 billion won’t win any awards for defensive stock of the month. But a 26 per cent fall in 12 days isn’t pretty.

Thursday night’s jump came despite Standard & Poor’s revising its outlook on Glencore to “negative” from “stable” after lowering its price assumptions for aluminium, copper, and other metals, “reflecting a change in market conditions and uncertainties about China’s economic outlook.”

But it did take a little financial show of strength to get the shares moving in the right direction again. On Wednesday Glencore said it would pay back $US350 million ($500 million) of perpetual bonds next month, at the earliest possible date. It was a clever way of showing the company has cash to pay debt as it battles the commodity price slump.

Zambia’s Copper Mining Boom Is Under Pressure – by Nicholas Bariyo (Wall Street Journal – September 4, 2015)

September 4, 2015

http://www.wsj.com/

Weaker Chinese demand and power supply problems darken the outlook

For much of the past decade, Zambia’s vast copper mines have posted bumper profits, spurred by a steady electricity supply and surging Chinese demand. Now both those growth engines are sputtering, plunging Zambia’s once-golden copper sector into its most challenging business environment for a decade.

“Most operations are in distress” Jackson Sikamo, a board member of Zambia Chamber of Mines, said on Thursday. “Low prices are putting more pressure on the already stretched margins.”

A steady climb in copper prices since the mid-2000s and until recently one of Africa’s most reliable electricity supplies helped power the dramatic expansion of Zambia’s mining sector from 7% of gross domestic product in 2008 to 12% in 2015, according to the finance ministry.

But this year, a toxic combination of factors conspired to reverse the outlook: Severe drought lowered water levels at the main hydro power plants this year, cutting electricity output in half. The freak weather impact was aggravated by tumbling prices; an increasingly stifling fiscal environment has put additional pressure on balance sheets.

Greenpeace India Says It Will Continue Environmental Campaign – by Nida Najar (New York Times – September 4, 2015)

September 4, 2015

http://www.nytimes.com/

NEW DELHI — Greenpeace India said on Friday that it would continue campaigning for clean air and against coal mining in protected forests in the country despite the government’s revoking its permission to receive foreign donations.

In an order canceling the group’s registration under the Foreign Contribution Regulation Act, the Ministry of Home Affairs said that Greenpeace had “prejudicially affected the economic interest of the state.” Greenpeace India learned of the cancellation on Thursday.

The government, led by Prime Minister Narendra Modi, has declared economic development a priority and has been cracking down on nongovernmental organizations like Greenpeace, whose work often runs counter to its aims.

“I think all along this is not about Greenpeace alone; this is about what’s happening to the space for dissent in India,” said Vinuta Gopal, the interim co-executive director of Greenpeace India. “The clampdown has not been just against us. It’s been against a number of NGOs.”

In April, the government suspended Greenpeace India’s registration for foreign funding and froze its bank accounts.

Canadian miner Nevsun defends operations in Eritrea as locals flee to Europe – by Ian Bickis (Canadian Press/Canadian Business Magazine – September 4, 2015)

September 4, 2015

http://www.canadianbusiness.com/business-news/

CALGARY – Canadian mining company Nevsun Resources is defending its operations in Eritrea following a damning report by the United Nations that accused the miner of using forced labour in the North African country.

Nevsun released an updated independent human rights report this week that found no evidence of forced labour or human rights violations at its 60-per-cent-owned Bisha mine in Eritrea, where thousands of people are fleeing on perilous treks to Europe.

The report by LKL International Consulting is in contrast to June’s UN report, which said Nevsun used forced labour at the Bisha mine after the company was required to hire government-owned contractors that included Segen Construction.

The UN commissioners spoke with former Segen workers who said they were forced to work at the mine while in the compulsory national service. “Even though Segen tried to conceal their status, the majority of Segen’s ‘workers’ were in fact conscripts performing their national service,” wrote the commissioners.

Low nickel price ‘not sustainable’ – by Jim Moodie (Sudbury Star – September 4, 2015)

September 4, 2015

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

Bring on the monsoon.

It may seem like a strange wish to make from a part of the world that is more likely to get a freak autumn snowfall than a drenching from rain-laden ocean winds, but it could help a domestic mining industry that has been rocked of late by low nickel prices.

“Right now we’re about two-thirds of the way through the peak shipping season for laterite nickel ore from the Phillipines, which is the primary exporter to China,” said Mark Selby, a former Inco executive now heading up Royal Nickel, a Toronto-based junior mining company.

Laterite ore — which Selby describes as “basically soggy dirt sitting at the surface” — is cheaper to mine than the sulphide ore in Sudbury, but complicated to process.

China, which converts it to so-called pig iron once coke is added to it in a furnace, does a brisk trade with laterite providers from the Phillipines and (before an export ban was imposed) Indonesia.

Fission’s uranium price – by Kip Keen (Mineweb.com – September 4, 2015)

September 4, 2015

http://www.mineweb.com/

There is a big gap between the company’s assumptions and reality.

HALIFAX – First let me say Canadian-junior Fission Uranium has its hands on a delightful discovery with the Triple R deposit. It’s already pretty big, high grade, and set to grow.

It and predecessor companies made the find a few years back in the Athabasca Basin, where the cream of the world’s uranium resides – at least in terms of grade. They recently calculated a 79.6 million pound uranium resource, indicated, at 1.58% U3O8. That’s quite sizeable and high grade by the industry’s standards.

Fission has released an early stage economic analysis (preliminary economic assessment or PEA in Canadian parlance) that puts the price tag at $1.1 billion to get it into production, with a 14-year mine life. It also anticipates pretty low operating costs per tonne – in the mid-teens per pound uranium.

But here’s my beef on the PEA and I’m not alone in having it. Fission (and RPA as the consultant) use $65/lb uranium as the base case in the PEA, giving it a catchy 35% IRR, post-tax. Yet current uranium prices are a lot lower in spot and contract markets and have been so for years.

KGHM, Metis Nation strike Victoria Mine agreement – by Staff (Sudbury Star – September 4, 2015)

September 4, 2015

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

The Metis Nation of Ontario and KGHM International Ltd. announced Thursday a deal covering development of the Victoria Mine project in Sudbury.

The memorandum of understanding will guide their working relationship as the mine is being prepared for a 2017 opening.

“This agreement is very important to the Metis people because it guarantees that Metis rights will be protected and the Metis way of life in the Sudbury area is being respected,” Metis Nation of Ontario chair France Picotte said in a release.

“We are pleased to continue working with KGHM. Agreements like this one are another benefit that we see coming from the MNO-Ontario Framework Agreement, which was first signed in 2008 and renewed this past year.”

In 2012, KGHM announced plans to spend $750-million to redevelop Victoria Mine near Worthington. One of Sudbury’s oldest and most prolific mines, Victoria would employ more than 200 full-time workers by the time it goes back into full production in 2017. It would produce copper and nickel.

Rio Tinto Expects Solid Demand for Iron Ore – by Rhiannon Hoyle (Wall Street Journal – September 3, 2015)

September 4, 2015

http://www.wsj.com/

Mining company stays confident in China’s steel market, despite country’s slowdown

SYDNEY— Rio Tinto PLC told investors it expects world-wide demand for iron ore to keep growing despite China’s economic slowdown, as the company projected a rising appetite for steel in coming years.

On Thursday, Rio Tinto forecast 2.5% average annual growth in global steel demand for the next 15 years. Emerging markets are expected to take on an expanded role, with the mining company predicting that non-Chinese steel demand will rise 65% by 2030.

While Chinese steel output has waned recently, Rio Tinto said it remained confident in the country’s steel market. It stuck with an earlier projection that Chinese crude steel production will reach about one billion metric tons by the end of next decade. China produces roughly half the world’s steel, and its annual production is currently at roughly 800 million tons.

A global glut of steel and concerns over China’s economic prospects, have hurt prices for iron ore, the biggest ingredient in steelmaking.

‘Window of opportunity’ for new LNG projects is gone because of supply glut, consultancy says – by Yadullah Hussain (National Post – September 4, 2015)

September 4, 2015

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

The window to build liquefied natural gas projects in Canada and elsewhere has closed amid a global supply glut, says global energy consultancy Wood Mackenzie.

“There is a clear reluctance by companies to stand down, but the reality is that the window of opportunity closed over six months ago for everyone, not just for Canada,” Noel Tomnay, vice-president global gas and LNG research for Wood Mackenzie said in an interview.

Qatar and Australia led the first two waves of LNG development with the U.S. spearheading the third wave, even as Canadian and East African proposals were stalled.

“Canada’s biggest competitor is not the U.S. — it is probably Mozambique,” Tomnay said, noting that these two regions would probably the play the role of niche, “strategic resources” for investors in the next wave of development that will cater to demand after 2022.

No union coal mines remain in Kentucky – by Dylan Lovan (Associated Press/Salt Lake City Tribune – September 3, 2015)

September 4, 2015

http://www.sltrib.com/

Harlan, Ky. – Kentucky coal miners bled and died to unionize.

Their workplaces became war zones, and gun battles once punctuated union protests. In past decades, organizers have been beaten, stabbed and shot while seeking better pay and safer conditions deep underground.

But more recently the United Mine Workers in Kentucky have been in retreat, dwindling like the black seams of coal in the Appalachian mountains. And now the last union mine in Kentucky has been shut down.

“A lot of people right now who don’t know what the [union] stands for is getting good wages and benefits because of the sacrifice that we made,” said Kenny Johnson, a retired union miner who was arrested during the Brookside strike in Harlan County in the 1970s. “Because when we went on those long strikes, it wasn’t because we wanted to be out of work.”

Hard-fought gains are taken for granted by younger workers who earn high wages now, leading the coal industry to argue that the union ultimately rendered itself obsolete.

[Zimbabwe Diamonds] The tragic saga of Marange (Zimbabwe Independent – September 4, 2015)

November 3, 2015September 4, 2015

http://www.theindependent.co.zw/

In 2000, a small geological survey team from De Beers Ltd, the largest diamond mining company in the world and a global top 500 enterprise, moved into a camp on the banks of the Save river. They secured an Exclusive Prospecting Order (EPO) over a large area and began to probe for raw diamonds. They found ample evidence of diamonds and sent loads of soil to Johannesburg, South Africa, for analysis but after six years decided that the qualities of the stones on site were not good enough to warrant commercial exploitation.

Eddie Cross

In London another company, African Consolidated Resources (ACR), formed by a group of Zimbabweans, watched the developments very carefully. When De Beers failed to renew their EPO over the area, they moved very quickly to take up the EPO and registered claims over 3 800 hectares of land that they identified as having the most potential.

Under the guidance of an experienced Australian geologist, the company cut deep trenches across the site and in a matter of weeks discovered gem quality stones. Although less than 20% of all the stones recovered were in this category, they felt that it was commercially viable because of the low cost of extraction.