A mining and exploration retrospect for October 13 to 19, 2012
by Greg Klein
Unhappy birthday. Many unhappy returns
With Friday marking Black Monday’s 25th anniversary, pundits around the world reflected on the calamity, its causes and whether it helped set off the financial crises that followed. Among the not-reassuring news for the future was this headline from Thursday’s Der Spiegel: “Euro Exit by Southern Nations Could Cost 17 Trillion Euros.”
Referring to a study by an economic research group called Prognos, the German weekly stated, “The researchers arrived at a particularly bleak assessment because they didn’t just calculate the losses of creditors who had lent money to the crisis-hit nations. They also analysed the possible impact of a euro collapse on economic growth in the 42 most important industrial and emerging economies that make up more than 90% of the world economy.”
Prognos predicated that result on a chain reaction set off by Greece reverting to the drachma. But keeping Greece also has its costs, as another headline from Thursday’s Der Spiegel stated: “Corruption Continues Virtually Unchecked in Greece.”
Chinese companies bring Canada investment, skills, controversy
Revelations continued this week about a plan by Chinese interests to import Chinese workers to staff four proposed British Columbia coal mines. The first 200 are expected to arrive any time now, with possibly 2,000 more to come.
On Monday Mark Olsen, President of the Bargaining Council of B.C. Building Trade Unions, called the plan “simply a strategy to employ lower-paid workers who are compliant with the culture of coal mining in China … a culture which leads them to accept the possibility of death as a cost of having a job.”
Also on Monday, Vancouver Sun columnist Daphne Bramham noted that the workers will be “indentured” to one employer, “dependent on staying in the company’s good graces in order to hold their jobs [and] in a remote area fully reliant on [their employer] for help in getting housing, health care and ensuring their safety.”
The companies’ rationale was partly based on insufficient response to job ads posted in Canada. But another story in Monday’s Vancouver Sun stated that the ads offered wages far below Canadian standards. “Chances are they won’t find an underground miner (in Canada) who will work for $25 an hour,” said the manager of one mining personnel agency. “I mean, they’re putting their lives at risk.”
Additionally, Olsen stated that neither the federal nor provincial government “has a mechanism in place to verify the wages these foreign workers actually receive.”
More news hit the fan on Tuesday when the United Steelworkers revealed that at least four of those Canadian job ads, for approximately 70 positions, required applicants to speak Mandarin.
According to a Tuesday Vancouver Province column by Michael Smyth, B.C. Minister of Jobs, Tourism and Skills Training Pat Bell claimed, “This is a unique situation for the next six to eight months. Once those mines go into full production, I expect those jobs will be filled by British Columbians first and Canadians second.”
On October 11, however, HD Mining International spokesperson Jody Shimkus told ResourceClips that the first of the four proposals, the Murray River Project, will probably rely on Chinese underground workers for 10 years after its projected 2015 start date.
On Thursday a labour-sponsored online journal called the Tyee stated that two companies recruiting miners in China were charging exorbitant fees. A reporter who responded to ads on a Chinese Web site was told applicants pay about $4,700 in advance, approximately two and a half years’ salary for a Chinese miner. Once working in Canada, the miner would pay another $7,800 in $400 monthly instalments.
The fees are illegal in B.C. The wages offered by the recruiter were $22 to $25 an hour, the Tyee stated, below the minimum $25 that the company claimed in Canadian job ads.
But two solid weeks of wide-ranging controversy haven’t stopped Canadian Dehua International Mining Inc from picking up another acquisition. On Friday Lions Gate Metals TSXV:LGM announced a $15-million LOI in which Canadian Dehua may option 100% of the 77,705-hectare Poplar Copper-Gold-Silver Project in west-central B.C. The agreement is subject to shareholder and regulatory approval.
A big-time B.C. operator Canadian Dehua may be, but its Web site reads like a parody of broken English. Here’s just one example, about the Murray River Project:
Proved and inferred reserves the coal seam area is 17 square kilometers.
That would be an especially interesting use of NI 43-101-ish terminology were the Vancouver-headquartered company a reporting issuer in any Canadian jurisdiction. B.C. Securities Commission spokesperson Richard Gilhooley would only tell ResourceClips that Canadian Dehua is “not currently listed on SEDAR, which is where issuers typically are.”
Plan Nord not dead, just modified
Following dismissive comments by her mining minister, Quebec Premier Pauline Marois saw fit to reassure French investors that Plan Nord will go ahead after all. Prior to the province’s September 4 election, Marois had spoken of altering the former government’s proposed $2.1-billion in public funding for an infrastructure program. On October 1 La Press reported that Quebec Natural Resources Minister Martine Ouellet said Plan Nord was merely a “marketing” strategy for projects that were already underway or in planning. But on Wednesday the Nunatsiaq News reported that a modified Plan Nord “could involve companies chipping in financially or giving Quebec shares if Quebec built a road or a port in northern Quebec, and the company benefitted from this infrastructure. These changes will be made ‘in the coming months,’ Marois said. ‘But we remain focused on the development of the North.’”
Iron ore an indulgence or a strategic asset?
In a Thursday story picked up by media including the Globe and Mail, the Financial Times reported that the world’s largest steelmaker is considering selling a chunk of its Canadian assets. Sources told the FT that ArcelorMittal might put 30% of its Canadian operations, which total some $8 billion to $10 billion, up for grabs.
ArcelorMittal Mines Canada produces about 15 million tonnes of iron ore concentrate and 9 million tonnes of iron oxide pellets annually, accounting for approximately 60% of Canada’s total production. The company’s Mont-Wright and Fire Lake mines in Quebec’s Labrador Trough region were slated for $2.1 billion in upgrades by 2013. But according to the FT, “One sector specialist described ownership of iron ore assets as an ‘indulgence’ in the current environment.”
Iron ore prices plummeted in August due to a situation in China variously described as over-supply, slumping demand or a buyers’ strike. China is the world’s largest importer of iron ore.
In July 2011 Forbes reported China’s intention to “break the grip” of its three main suppliers, Vale, Rio Tinto and BHP Billiton, which together provide 62% of China’s imports. Li Xinchuang, Deputy Secretary-General of the China Iron & Steel Association, told media his country should get more than half its supply from Chinese-invested mines overseas.
The FT stated that “Chinese companies and commodities trading houses had expressed an interest” in ArcelorMittal’s Canadian operations.
South Africa updates
Junk status looms for AngloGold Ashanti and Gold Fields as Standard & Poor’s considers lowering the companies’ debt ratings, Bloomberg reported on Thursday.
On Friday Kitco.com provided another weekly update of 12 major companies operating in South Africa.
[The plan to staff Canadian mines with Chinese workers is] simply a strategy to employ lower-paid workers who are compliant with the culture of coal mining in China … a culture which leads them to accept the possibility of death as a cost of having a job.—Mark Olsen, President of the Bargaining Council of B.C. Building Trade Unions
E-Caddy shows EV commitment
The bankruptcy of an e-car battery manufacturer reported on Tuesday might have reflected negatively on prospects for graphite and lithium, not to mention the environment. But the same day General Motors got a jolt of publicity for its 2013 electric Cadillac.
Battery builder A123 Systems filed for bankruptcy protection after a US$249.1-million government grant failed to save the company. In a Tuesday press release A123 stated that Johnson Controls plans to acquire A123’s automotive business assets in a $125-million transaction.
GM’s new model shows an EV commitment despite disappointing sales for its better-known Chevy Volt. Sales never lived up to the company’s initial expectations, although steep discounts have more recently given it the middling distinction of “outselling about half of all cars marketed in the U.S.”
American projections are just part of a much bigger market. According to a TechSci research report published in August, the “global electric vehicle industry clocked a turnover close to US$54 billion in 2011, while electric two-wheelers became the dominating vehicle category for the whole segment.” The study predicts “phenomenal” EV demand worldwide due to “overall consumer spending, growth in population, increasing demand for environment-friendly vehicles and growing government support.”
They seek safe haven
“Forget gold: Here’s where die-hard skeptics are stashing their wealth,” declared Tuesday’s Financial Post. High yellow metal prices have pushed some discerning pessimists into a range of commodities, collectibles and other presumably secure assets.
Scandinavian and Canadian bonds are proving popular, as are rare coins, stamps and watches. Farmland offers obvious practical value. The finer things in life, from art to liquor, might also bring security. The same might be said, with far more chilling connotations, for guns and ammo. But the FP conceded that its list isn’t exhaustive. That might explain why it didn’t include canned food.