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Posts tagged ‘Huiyong Holdings (BC) Ltd’

Year in review: Part II

December 29th, 2012

A mining and exploration retrospect for 2012

by Greg Klein

Read Part I of Year in Review.

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Graphite boom, bust and echo

One of the commodities that excited the 2012 market, graphite began stirring interest in 2011 and really gained momentum early this year. But the precipitous fall, right around April Fool’s Day, let cynics bask in schadenfreude. It was a bubble all along, they insisted.

Well, not quite. Despite reduced share values, work continued as the front-runners advanced their projects and earlier-stage companies competed for position in graphite’s second wave of potential producers. By autumn some of the advanced-stage outfits, far from humbled by last spring’s events, boldly indulged themselves in a blatant bragging contest.

Old king coal to regain its throne

If clean carbon doesn’t excite investors like it used to, plain old dirty carbon might. By 2017 coal’s share of the global energy market will rival that of oil. So says the International Energy Agency, which issued its Medium-Term Coal Market Report in December.

A mining and exploration retrospect for 2012

The forecast sees China consuming over half the world’s production by 2017. “Even if Chinese GDP growth were to slow to a 4.6% average over the period, coal demand would still increase both globally and in China,” the report stated. India, with the world’s “largest pocket of energy poverty,” will take second place for consumption.

Coal’s growth in demand is slowing, however. But its share of the energy mix continues to increase even though Europe’s “coal renaissance” (sic) appears to be temporary.

Bringing coal miners to new hassle

Chinese provide much of the market and often the investment. So why shouldn’t they provide the workers too? That seems to be the rationale of Chinese interests behind four British Columbia coal projects.

The proponents plan to use Chinese underground workers exclusively at the most advanced project, HD Mining International’s Murray River, for 30 months of construction and two additional years of mining. Only then would Canadians be initiated into the mysteries of Chinese longwall mining. But with only 10% of the workforce to be replaced by Canadians each year, Chinese “temporary” workers would staff the mine until about 2026. The B.C. government has known about these intentions since at least 2007.

The HD Mining saga has seen new developments almost every week since the United Steelworkers broke the story on October 9.

As Greenland’s example suggests, the scheme might represent another facet of China’s growing power.

Geopolitical geology

Resource imperialism aside, resource nationalism and other aspects of country risk continued throughout 2012. South American Silver TSX:SAC continues to seek compensation after spending over $16 million on a silver-polymetallic project that the Bolivian government then snatched as a freebie. Centerra Gold TSX:CG escaped nationalization in Kyrgyzstan but works its way through somewhat Byzantine political and regulatory intrigue, as does Stans Energy TSXV:HRE. In November the latter claimed a court victory over a hostile parliamentary committee.

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Week in review

December 21st, 2012

A mining and exploration retrospect for December 15 to 21, 2012

by Greg Klein

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Algorithmic short-sellers could drive juniors to ASX

“The world’s number one stock exchange for mining companies”—that’s the consensus about Toronto, even from companies with operations and headquarters in other countries. But John Kaiser fears TSXV traders will drive juniors to the Australian Securities Exchange. In a Business News Network interview posted by Equedia on Sunday, the editor of Kaiser Research Online explained why.

Monitoring systems now in use can immediately spot significant buying, allowing traders to “intercept the capital that’s flowing in from real investors who are betting on fundamental outcomes, and they sell into this. Then, when that inflow is exhausted, they can simply lean into the order book and continue selling stock that they don’t have, selling short on a down-tick, creating a cascade of buyer’s regret and discouraging the longs, and actually facilitating being able to cover by the end of the day. So their intent to deliver the borrowed stock never has to be materialized. This sort of culture now lurks on top of a system where trading value has been in steep decline since April and May of last year.”

A mining and exploration retrospect for December 15 to 21, 2012

That’s especially troubling, he emphasized, because he believes the sector is moving back to a “discovery/exploration cycle” as prevailed during the 1980s and ’90s, “after a decade of resource feasibility demonstration.” Early-stage exploration companies are especially vulnerable, he said.

But Down Under has its downside too. “I don’t like the Australian stock exchange system because they don’t have a proper reporting system on a scale of technical detail that we in Canada have,” Kaiser added. “I think the Canadian system is fabulous for the entire resource exploration and development cycle. And I think it’s a shame that they allow this type of algorithmic hook-up that basically victimizes real speculators, as opposed to those simply trying to harvest the volatility that they’re literally manufacturing in this sector.”

Credit-card-sized gold bars as a crisis currency

A new product might make physical gold a more practical response to economic fears, according to a Friday Reuters story. The size of a credit card, the CombiBar is made up of 50 one-gram gold squares that can be broken off to use as currency. It’s selling well in Switzerland, Austria and especially Germany, where memories linger of post-WWI hyperinflation. The CombiBar is produced by the Swiss refinery Valcambi, which wants to introduce it to the American and Indian markets next year, while producing platinum and palladium CombiBars for Japan. Valcambi, by the way, is owned 60.6% by Newmont Mining TSX:NMC.

European demand “is rising every week,” Reuters quoted Andreas Habluetzel, head of the Swiss gold trading company Degussa. “Particularly in Germany, people buying gold fear that the euro will break apart or that banks will run into problems.”

Another company, Ex Oriente Lux, has sold 21 million euros of gold through its 17 vending machines in the United States, Europe and United Arab Emirates, Reuters added. “Sales rise according to the temperature of the crisis,” CEO Thomas Geissler told the news agency.

Former Solid Gold CEO accuses natives of slander

Darryl Stretch, the former CEO of Solid Gold Resources TSXV:SLD, has accused two native chiefs of “slanderous and defamatory remarks,” the Sudbury Star and Timmins Daily Press reported this week. He’s demanding public apologies from Wahgoshig chief Dave Babin and Nishnawbe Aski chief Harvey Yesno, who called him a “racist” at a Sudbury press conference in November, the Daily Press stated on Wednesday.

Stretch’s letter to the chiefs warned, “In the event that you do not respond to this notice I will take whatever action is available to me.”

Monday’s Star said Babin has no plans to respond and Yesno couldn’t be reached for comment.

Solid Gold replaced Stretch on December 3 after ongoing controversy between the outspoken CEO and native bands.

Rhodes redux in Zimbabwe

Zimbabwe’s policy of “indigenisation and empowerment” requires foreign miners to divest 51% of their operations to Zimbabwean companies and community groups, as these examples show. Monday’s Harare Herald quoted Defence Minister Emmerson Mnangagwa explaining that the country was willing to work with foreign companies as long as Zimbabweans were the major beneficiaries.

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Week in review

December 14th, 2012

A mining and exploration retrospect for December 8 to 14, 2012

by Greg Klein

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U.S. politicians ponder windfall royalties

The United States has joined the list of countries considering additional ways to mine miners, according to a Wednesday Reuters story. Some American politicians are talking about royalties as high as 12.5%, the same benchmark applied to certain other resources, including oil and gas.

Reuters said the proposal would get about $700 million during the lifespan of Freeport-McMoRan’s copper-molybdenum operations in Colorado, Arizona and New Mexico. Last year alone, the royalty could have taken $150 million from Barrick’s TSX:ABX Goldstrike mine in Nevada, according to Reuters’ figures. Barrick told the news agency the company’s taxes have already jumped four-fold over five years.

Democrat Representative Raul Grijalva, a proponent of the 12.5% levy, sees it differently. “As we face these fiscal challenges, these are the pennies that we should pinch,” Reuters quoted him. Along with some other U.S. federal politicians, Grijalva also wants to review miners’ tax breaks.

Previous attempts to raise miners’ taxes have failed, Reuters stated, “as the industry has strong political allies.” The story added that “state and local governments often catch a windfall from mining revenue.”

Ivory Coast hikes taxes but overestimates profits, miner says

A mining and exploration retrospect

A new tax on Ivory Coast gold extraction underestimates cash costs by nearly 50%, according to at least one source. New legislation that applies to 2012 production assumes cash costs of $615 an ounce, Reuters stated on Friday. The tax on “profits” above that amount will fluctuate with the yellow metal’s price. At $1,600, that comes to 17%. The rate will be lower for companies that pay the country a corporate tax, the news agency added. Randgold Resources CEO Mark Bristow called the new levy, expected to raise $79.8 million, a “punitive tax,” Reuters said.

In a December 7 Bloomberg report, Endeavour Mining TSX:EDV spokesperson Nouho Kone said Ivory Coast gold production can actually cost between $1,000 and $1,200 an ounce. “The worst-case scenario would be to see companies shut down their mines in the short term,” he told Bloomberg. Reuters stated that Perseus Mining TSX:PRU put its $160-million Sissingue project on hold last September “pending clarification of the fiscal regime applicable to the project.”

Maybe Ghana too

Ghanaian President John Dramani Mahama’s re-election brings to mind his previous effort to impose a 10% tax on windfall profits, Monday’s Financial Post reported.

The government had already raised miners’ corporate taxes from 25% to 35% and imposed “a uniform regime for capital allowance of 20% for five years of mining,” the FP stated. But the government’s intended windfall tax had been shelved due to industry pressure, according to a Wednesday Reuters dispatch.

Reuters added that government discussions with gold miners are underway “to loosen up so-called ‘stability agreements’ held by some firms that lock in royalty and tax rates.” This year Ghana raised gold royalties from 3% to 5%, but the stability agreement exempted companies like AngloGold Ashanti and Newmont Mining TSX:NMC, the news agency stated.

Unions lose bid to block foreign workers from staffing B.C. mine

HD Mining International called it a “massive victory,” the Globe and Mail reported Friday. A federal court judge has allowed the company to import Chinese workers for its proposed Murray River coal mine in British Columbia. Two unions had applied for an injunction blocking the work permits after learning that HD Mining planned to staff its underground operation exclusively with Chinese workers—which would total over 400 at full production.

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Out of China

October 11th, 2012

Chinese interests will import Chinese miners for their Canadian projects

by Greg Klein

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Canadians run mines all over the world using local miners. But that principle won’t apply to Chinese interests who want to open four coal mines in British Columbia. Instead, the mines will employ workers from China. That fact has raised concerns about the loss of Canadian jobs and a question regarding which safety standards will prevail—Canada’s or China’s.

Within weeks 200 Chinese will arrive at the Murray River coal project in northwestern B.C. to begin a 100,000-tonne underground bulk sampling. Should permits and approvals fall into place, the mine will begin production in 2015, employing approximately 600 workers. Between 400 and 480 will be Chinese nationals on two-year visas. The mine is slated to rely on Chinese underground workers until about 2025, one-third of its projected 30-year lifespan. The rationale is that Canadians don’t know longwall mining.

Murray River is one of four Chinese-staffed B.C. coal mines proposed by Canadian Dehua International Mines Group. Its hiring policy has the support of Canada’s federal government, which has already approved temporary visas, and the provincial government, which sets regulations regarding mine operation and safety. Safety, along with jobs, was an issue emphasized when the United Steelworkers union broke the story in an October 9 press release.

Chinese interests will import Chinese workers for Canadian mines

Two hundred Chinese miners will soon begin bulk sampling at British Columbia’s Murray River coal project. Hundreds more are expected to follow.

“The Chinese coal mine industry is probably one of the most dangerous in the world,” USW Communications Officer Brad West tells ResourceClips. “The U.S. Mine Rescue Association’s numbers indicate that between 2001 and 2011, 50,000 coal miners have died in Chinese mines. Is that the type of expertise the provincial government believes we need?”

The USMRA attributes those numbers to China’s State Administration of Work Safety. “That’s only the ones that were reported,” West says. “We believe there are many more that go unreported.”

He says health and safety regulations for B.C. miners come under the jurisdiction of the Ministry of Energy, Mines and Natural Gas, not the Workers’ Compensation Board. “The Ministry of Mines is part and parcel of the same government that made the arrangement for [the Chinese miners] to come over. The government’s then left in charge of their health and safety…. Based on our experience dealing with safety issues in mines in British Columbia, we don’t have a great deal of confidence that the ministry is going to either be interested in, or successful in, enforcing health and safety regulations in these mines.”

West points to the Northwest Territories’ Mine Training Society as an example for other jurisdictions to follow. Funded by federal and territorial governments and by industry, the program “trains people in the territories, and people who want to come to the territories, to take on these mining jobs,” he says.

“Despite the government’s contention, our experience tells us there are lots of people who are interested in the security, stability, good pay and benefits that jobs in the mining industry can offer. We should be training these people to take on those positions.”

The Murray River Project is being developed by HD Mining International, a partnership in which Huiyong Holdings has a 55% interest and Canadian Dehua International Mines Group 40%, with an unnamed party holding the remaining 5%. Huiyong is a coal miner in China.

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