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October 30, 2012

(BN) #Congo Government Wants 35% of #Mining Projects in Code Revis

Resource Nationalism continues unabated. 

(BN) Congo Government Wants 35% of Mining Projects in Code Revisions
2012-10-30 12:53:31.562 GMT

By Michael J. Kavanagh
    Oct. 30 (Bloomberg) -- The Democratic Republic of Congo may increase state participation in mining projects to 35 percent from 5 percent and raise royalties on mineral exports, according to a preparatory report obtained by the country's business association.
    The 35 percent stake would be acquired for free and could not be diluted, according to the report, which was prepared for an inter-ministerial commission charged with updating Congo's 10-year-old mining code. The Mines Ministry declined to comment on the proposals, while the country's business association, known by its French acronym FEC, criticized them.
    "We feel abandoned and we were not consulted" on the proposed revisions, Simon Tuma-Waku, the national vice president in charge of mines for the FEC, said in a phone interview yesterday. "What's important for investors is the fiscal regime and stability and we think this shouldn't be modified because right now it's very attractive for investors."
    Congo is the world's largest cobalt producer and was the tenth-largest exporter of copper last year, according to CRU Group, a London-based research company. The Central African nation, which is nearly the size of Western Europe, also has deposits of gold, iron, diamonds, tin and coltan.
    Freeport McMoRan Copper & Gold Inc. of the U.S., Baar, Switzerland-based Glencore International Plc, and Minmetals Resources Ltd., based in Hong Kong, have copper and cobalt projects in the country. Randgold Resources Ltd., AngloGold Ashanti Ltd. and Banro Corp. are investing in gold mines.

                     'Unequal Advantages'

    Valery Mukasa, chief of staff for Mines Minister Martin Kabwelulu, said in an Oct. 25 e-mail that all changes to the mining code would be discussed with interested parties at an upcoming conference and that any revisions would be consensual.
Mukasa confirmed that the ministry has prepared recommendations for the inter-ministerial commission, though he declined to comment on the preparatory report, which was given to Bloomberg by a member of the FEC and whose contents were confirmed by Tuma-Waku.
    The modifications were proposed "to resolve the unequal advantages given by the mining code to investors compared to those of the state," according to the 30-page report. "The rise in the mining tax rate will lead to substantial growth in revenue for the state coming from the mining sector."
    The report also calls for a royalty increase to 4 percent from 2 percent for non-ferrous metals, which include copper and cobalt; to 6 percent from 2.5 percent for "strategic" and precious metals, such as gold; and to 6 percent from 4 percent for precious stones.
    The government hasn't officially presented the suggested changes to miners, though companies have "managed to obtain"
the draft report and are concerned about the proposals, Tuma- Waku said.

For Related News and Information:
On Congo's Mining Industry: TNI CONGO MNG <GO> Top Regional Stories: AFTO <GO> Most-Read Africa News: MNI AFRICA <GO>

--Editors: Paul Richardson, Antony Sguazzin

To contact the reporter on this story:
Michael J. Kavanagh in Kinshasa at +243-81-715-2746 or

To contact the editor responsible for this story:
Antony Sguazzin at +27-11-286-1934 or

#Silver producers in Latin America set for M&A action - #Fortuna -

Silver producers in Latin America set for M&A action - Fortuna

Jorge Ganoza Durant, CEO of Fortuna Silver Mines, expects a wave of mergers and acquisitions among its Latin American peers as companies combine to increase their growth prospects.

Author: Thomas Biesheuvel
Posted: Tuesday , 30 Oct 2012

LONDON (Bloomberg) - 

Fortuna Silver Mines Inc., which produces the metal in Mexico and Peru, expects a wave of takeovers and mergers among its Latin American peers as companies combine to increase their growth prospects.

"There will be a natural phase of consolidation, you need a certain critical mass to face the challenges of the future," Jorge Ganoza Durant, chief executive officer of Fortuna, said in an interview in London today. "There is a small universe of emerging producers with which we could potentially join forces through a merger. I believe growth is imperative."

Silver deals have totaled $2.2 billion so far this year, headed for the highest annual total since 2008, according to data compiled by Bloomberg. Pan American Silver Corp. bought Minefinders Corp. for about $1.1 billion in this year's biggest deal to boost its output of the metal in Mexico.

Producers are seeking to benefit from silver prices that have almost doubled since the end of 2009. The metal averaged about $34.5 an ounce in the third quarter compared with $29.9 a year earlier. Fortuna advanced 1.4 percent to C$5.11 in Toronto trading on Oct. 26, valuing the company at about C$640 million ($640 million).

Fortuna expects production of about 4 million ounces of silver this year and 20,000 ounces of gold, exceeding the Vancouver-based company's output targets, Ganoza said.

The San Jose mine in Mexico is expanding to produce 3.5 million ounces a year, taking total output to about 4.5 million ounces in 2013 and 5.5 million ounces in 2014, Ganoza said. The company will make a decision on a further increase at the Mexican mine next year.

"There could be opportunities to support higher production," he said. "We will be likely looking at an increment of in the range of 15 to 20 percent."

--Editors: John Viljoen, Tony Barrett

To contact the reporter on this story: Thomas Biesheuvel in London at

To contact the editor responsible for this story: John Viljoen at

©2012 Bloomberg News

October 29, 2012

U.S. Sees Oil Boom Create Millions of Jobs, Could Become No. 1 Global Producer, an Industrial Info News Alert

U.S. Sees Oil Boom Create Millions of Jobs, Could Become No. 1 Global Producer, an Industrial Info News Alert

SUGAR LAND, TX--(Marketwire - Oct 29, 2012) - Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas) -- High prices and new drilling methods are driving a sustained boom in U.S. hydrocarbon production, which could see the U.S. overtake Saudi Arabia and Russia and return to the No. 1 global oil producer spot for the first time since 2002. U.S. oil production is set to rise 7% in 2013 to reach an average of 10.9 million barrels per day. This will be the fourth straight year of crude increases and the biggest single-year gain since 1951.

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Has #gold already bottomed? -

The level of uncertainty that is now very high worldwide is set to persist because of it, through year end at the very least. Uncertainty is not simply a Spanish debt factor, nor an E.U. one, but the sight of politics clashing with finance is a developed world phenomenon and one that is deeply structural. As long as it persists it is positive for gold and silver. The developed world is allowing the situation to persist and face the danger of rupture by doing so, as central banks carry the burden of softening the risks through further monetary stimulation. The result is an economic and monetary backdrop that ensures a positive environment for precious metals.

Has gold already bottomed? - INDEPENDENT VIEWPOINT

Has gold already bottomed?

With gold continuing to bounce off $1,700 and the dollar showing slight strength, the question facing investors today is if it continues to fall, where will the fall stop and a turn happen?

Author: Julian Philips
Posted: Monday , 29 Oct 2012

JOHANNESBURG (Gold Forecaster) - 

Gold Today -New York closed at $1,712.00 down 70 cents. This morning, Asia and London dealers are pull it back through $1,714 area. From there it hovered around $1,712 in line with the euro's moves and then Fixed at $1,712.00 up $8 on Friday and in the euro at €1,326.720 up €10 while the euro was at €1: $1.29.04 weaker than Friday's over €1: $1.30+. Ahead of New York's opening gold stood at $1,712.31 and in the euro at €1,326.75.

Silver Today - Silver closed higher at $32.06 down 6 cents in New York on Friday. It then dropped to $31.93 in London as it battled to stay above $32, ahead of New York's opening.

Gold (very short-term)

Gold will consolidate with a neutral bias, in New York today.

Silver (very short-term)

Silver will consolidate with a neutral bias, in c today.

Price Drivers

Gold & Silver - It is becoming clearer that with Spain's success at raising 95% of its loan requirements that its need for a bailout is not as pressing as markets were led to believe. If it does turn to the E.U. for a bailout it may only do so in December. This is in the face of a worsening economy in Spain.

But that is not bad news for gold. The level of uncertainty that is now very high worldwide is set to persist because of it, through year end at the very least. Uncertainty is not simply a Spanish debt factor, nor an E.U. one, but the sight of politics clashing with finance is a developed world phenomenon and one that is deeply structural. As long as it persists it is positive for gold and silver. The developed world is allowing the situation to persist and face the danger of rupture by doing so, as central banks carry the burden of softening the risks through further monetary stimulation. The result is an economic and monetary backdrop that ensures a positive environment for precious metals.

With gold continuing to bounce off $1,700 and the dollar showing slight strength today the question facing investors is if it continues to fall, where will the fall stop and a turn happen? Or has it already bottomed and is about to turn? [To follow our weekly commentary, please subscribe to our newsletters at  and].

Silver - Silver has become slightly weaker than gold struggling to hold above $32.

Julian D.W. Phillips for the Gold & Silver Forecasters

Global Gold Price (1 ounce)



3 days ago














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October 25, 2012

Platts Top 250 #Oil Companies Rankings

Platts Top 250 Global Energy Companies Rankings

See the full rankings here:  Platts Top 250 Rankings

October 24, 2012

What #Caterpillar Inc’s Financial Results Tell Us About the #Mining Industry

Bottom Line: It will be interesting to see if the ongoing weakness in the mining sector undermines sales further than anticipated. With little likely to lift metals prices or raise demand, the risk for further capex weakness is likely on the downside more than the up.

Caterpillar’s Results and the Mining Sector

What do Cat’s results tell us about global mining? Well, sales are up 9 percent in the US as the housing market is believed to have bottomed and construction activity has finally picked up. Sales to the mining sector overseas, though, continue to look weak as capital expenditure is postponed.
Both extensions and greenfield mining projects are being delayed and cancelled as miners find it tougher to justify the financial conditions following steep falls in commodity prices. The outlook for most metals-based mining projects, with the possible exception of copper, looks much less certain today than it did twelve months ago and many major projects have been put back as a result.
Caterpillar’s numbers reflect this hesitancy and the understanding this will translate into lower sales in 2013. The firm is suggesting 2013 numbers will be much the same as 2012, with some construction growth in the US offsetting slower emerging market growth and Europe continuing to flat line as it has done this year.
It will be interesting to see if Caterpillar has this right, or if the ongoing weakness in the mining sector undermines sales further than anticipated. With little likely to lift metals prices or raise demand, the risk for further capex weakness is likely on the downside more than the up.
A repeat of this record year therefore seems like a Big Ask, even for a firm like Caterpillar.

See the whole story online here: What Caterpillar Inc’s Financial Results Tell Us About the Mining Industry

October 23, 2012

#Bolivia faces struggle to revitalise image among #mining community

If Evo Morales continues like this, there won't be anyone left mining in Bolivia.

Bolivia faces struggle to revitalise image among mining community

In recent months, Bolivia has witnessed a spate of mining disputes, moves to nationalise and renationalise projects, and violence among protesting miners. Populist sloganeering and radical language has often been used to excuse instability and mask deeper-rooted problems.
The first significant incident occurred on June 22, when Bolivia cancelled commodities trader Glencore’s operational rights to the Colquiri tin mine, the second-largest in the country. Unsurprisingly, the company opposed the decision. “[Glencore] reserves its rights to seek fair compensation pursuant to all available domestic and international remedies,” the company said.
“The action taken by the government of Bolivia will pose a number of serious questions relating to the government’s future policy towards foreign investment in the mining sector,” it added.
On July 17, Jindal Steel & Power also hit the Bolivian buffers. The group announced the withdrawal of its interest in the El Mutún iron-ore project, arguing that difficulties surrounding legal issues, land rights and power supply had proven insurmountable. In response, Bolivia accused Jindal of failing to make necessary investments.
In September, Colquiri was back in the news; workers from Bolivia’s State mining company Comibol and miners who belong to cooperatives struggled against each other over ownership rights. When they clashed, protestors from both sides threw sticks of dynamite and hurled rocks at one another. At least one man was reported killed.
On October 2, an agreement, under government auspices, was reached between the opposing camps. On October 8, Reuters reported that workers had returned to Colquiri and were bringing the property fully back on stream. Military units and police squads were on hand to ensure security.
“I don’t think this agreement will last that long; I’m sure there will be more disputes,” Apogee Minerals Bolivia country manager Gustavo Miranda Pinaya told Mining Weekly Online. “The government has been using band aids to solve problems that have been ongoing for years.”
Pinaya underlined the central paradox faced by the Bolivian government, led by President Evo Morales. It has to appease both State mine workers and cooperative miners, as each are vital government supporters. However, any perceived sign of favouritism for one side over the other holds the potential for violent reaction. “The government is trying to make two masters happy, but that’s impossible,” Pinaya said.
The pressure is undoubtedly set to rise as the number of cooperative miners grows and their expectations of Morales’ government increases. Current levels are estimated at 120 000, the Financial Times reported on September 25.
From a junior or midtier mining perspective, perhaps the most worrying events surround the Malku Khota silver and pollymetallic project that, until recently, was being developed by South American Silver (SAS).
The company’s exploratory work on the project started in 2007, with millions of dollars subsequently spent delineating the property.
Malku Khota has a National Instrument 43-101-compliant indicated resource comprising 230.3-million ounces of silver, 1 481 t of indium and 1 082 t of gallium grading 28.7 g/t silver, 5.8 g/t indium and 4.3 g/t gallium. Inferred resources contained 140-million ounces of silver, 935 t of indium and 1 001 t gallium, grading 18.9 g/t silver, 4.1 g/t indium and 4.3 g/t gallium.
“We’d [also] negotiated with the area’s communities, signing agreements that allowed us to explore their lands,” SAS’s CEO Philip Brodie-Hall told Mining Weekly Online. “In return, local people secured jobs with us and benefited from education, community and livestock enhancement programmes. There was other social support as well.”

Yet the company met some resistance, most notably from illegal artisan miners. “But they were a small group [and] we had the support of 43 out of 46 communities in the surrounding area,” Brodie-Hall said.

Matters became increasingly worrying in early May, when police officers were taken hostage by the project’s opponents.

“The government realised there was a problem and a meeting was called on May 9 to resolve the issue,” Brodie-Hall said. “Both supporters and opponents attended. After a lengthy debate, it was decided further discussions would have to take place.”

“The Minister of Mines then concluded [the first meeting] by signing a resolution to say that the company’s leases were valid; that the company was entitled to explore; and that the company should be left free to explore. The second part of the resolution ruled that the illegal miners should leave the property,” he said.

The second meeting took place on May 18, but quickly became unruly. “There were 1 000 or so people attending, with the project’s opponents bringing in paid-for supporters. The end result was chaos and our supporters were chased out,” Brodie-Hall said.

“The situation then deteriorated further in the space of a few weeks… The project site was occupied in early June and access was blocked,” he added.

The opposition again resorted to kidnapping. “Two of our local employees were taken hostage towards the end of June. They were badly mistreated, but thankfully were able to get out after 11 days of detention,” Brodie-Hall said.

“The hostage takers demanded Evo Morales meet with them. They called for SAS’s leases to be revoked and for the company to leave Bolivia,” he added. 
Morales proved sympathetic to their views.

“The president persuaded our supporters that [the opposition’s demands] were in the best interests of the Bolivian people… A resolution was collectively signed on July 10 that there would be a presidential and supreme decree issued to take away our leases and concessions. This became law on August 1,” Brodie-Hall said.

Brodie-Hall believes the seeds of discontent were first sown when SAS announced its preliminary economic assessment in 2011. “When our opponents realised the value of the project, that’s when they wanted it back. But they were perfectly happy for us to spend all the risk money, of course.”

The company is now carefully considering its options, including international arbitration.

Fortunately, SAS has another property to now centre its attentions on: the Escalones copper/gold/silver project in Chile.
Many commentators now wonder how the Bolivian government can resuscitate its reputation with the international mining community. The country needs to attract foreign investment and know-how to continue developing a vibrant, modern mining sector.
One of the solutions will be the passing of revised mining legislation to codify and clarify the law, according to Pinaya.
“The government acknowledges the need for foreign mining investment. I believe that once the new mining legislation is finally approved, then the rules will become clearer and attract investors,” he said. “Knowing the rules will mean investors feel more secure when risking capital.”
But progress has been sluggish so far. “Work on the latest draft for the new mining law has been under way for about a year now… The draft needs to be passed by congress and then signed into law by the Morales government. We believed the draft would have been finished by end-September, but with the confusion it’s been delayed,” he said.
“Although this cannot be assured, I’m hoping that the new mining draft will come into law by the end of the year,” he added.
Taxation levels might prove a stumbling block with the new legislation.
Away from legislation, Pinaya underlined the importance of dealing carefully with all elements of the Bolivian mining equation: the government, Comibol and the cooperatives. This is the only model that will ensure stability, he argued.
Over the longer-term, Pinaya is bullish and he highlighted the enormous resource opportunities that still lie untapped in Bolivia. “Most of the country remains unexplored and many of the operational mines are old… the government needs fresh capital. [In this situation], there is excellent first-mover advantage,” he said.
No doubt, Bolivia will also want to convey this optimistic message, although given recent events, it will undoubtedly face an uphill struggle. However, there is still time for the government to revisit and rectify previous mistakes. The danger is that nothing is done and Bolivia continues on its current path, setting its current reputation in stone.

Read the article online here: Bolivia faces struggle to revitalise image among mining community

October 22, 2012

Batista`s AUX moves on juniors in California gold district in Colombia - CENTRAL SOUTH AMERICA - Mineweb

Batista's AUX moves on juniors in California gold district in Colombia

A billionaire's gold company goes after two juniors next door to its gold projects in the California gold district.
Author: Kip Keen
Posted: Friday , 19 Oct 2012 
It was a matter of speculation earlier this week but now it is a fact. Billionaire Eike Batista's private gold company, AUX, wants to consolidate its hold on precious metals projects in the California gold district in Colombia. Today it proposed not one but two takeovers of juniors operating in the area: Galway Resources and Calvista Gold.
The move on the two juniors on the same day answers a question posed in these pages earlier this week about whether the time for AUX to consolidate in Colombia was at hand.
In Galway and Calvista AUX gets a string of projects in the California district including Calvista's 450,000 ounces gold indicated, and about as much again in inferred resources, and Galway's 424,000 ounces gold indicated and 666,000 ounces gold inferred, all within two kilometres of AUX's larger La Bodega and La Mascota projects.
Calvista's chief resources are in the Callejon Blanco zone about a kilometre southwest of AUX tenements while Galway's California project lies sandwiched between Calvista and AUX concessions. As noted earlier this week that sandwich includes wedges of tenements cutting into key AUX land positions and resources, a fact which has led analysts to include a takeover was inevitable.
No surprise, shares in two other juniors with land packages in the area, Eco Oro (formerly Greystar) and CB Gold, also experienced strong price movement on Friday, both up about 10 percent as of presstime.

As for details about the takeover at hand: a quarter of Calvista shareholders have entered into lock-up agreements with AUX. The junior said the AUX offer represented a 100-percent premium to its 10-day volume weighted average shareprice. As for Galway, it said it was getting a 47 percent premium to its 20-day average. Meanwhile Galway, as part of the deal, will spin out its other projects into separate gold and tungsten companies.    

About Kip Keen

Based in Halifax, Nova Scotia, Kip is Mineweb's North American junior mining specialist. Before joining Mineweb he worked for Canada's top mining publication, the Northern Miner covering the junior sector out of Vancouver.

Batista`s AUX moves on juniors in California gold district in Colombia - CENTRAL SOUTH AMERICA - Mineweb

#Gold held in #ETFs see first reduction in three months |

ETF investors followed futures traders in reducing their holdings in gold last week. The reduction of just 3.2 percent was the first reduction in 12 weeks and occurred as gold increasingly fell victim to buyers' fatigue as US economic data improved, thereby reducing one of the recent drivers for gold. Leveraged speculators in futures reduced their net-long exposure for the first time in eight weeks by 7.3 percent which all in all led to a combined reduction of 62 metric tonnes to 3,280.

See the rest of the article here: Gold held in ETFs see first reduction in three months |

The MasterMetals Blog

What is China really doing in the gold markets? -

Is #China building its #gold reserves surreptitiously? The balance of probabilities suggests it is - and perhaps at a faster rate than many would contemplate.

What is China really doing in the gold markets?

Author: Lawrence Williams
Posted: Monday , 22 Oct 2012
LONDON (Mineweb) - 

Perhaps the biggest conundrum facing gold investors is China.  What is it really doing?  Is it building gold reserves surreptitiously?  Is it buying gold on the dips thus creating a floor price?  The answer is that we don't know for sure as the giant Asian economy plays its cards pretty close to its chest.  So all we are left with is informed speculation gleaned through trying to pick up guidance from public utterances by senior Chinese officials and, in trying to make sense of the gold import statistics via Hong Kong, believed to be the primary route for gold coming into China.  However, one does not know for sure if perhaps there are other channels through which gold is imported as well.  We are reliant wholly on what China actually tells us, but Chinese data is not exactly reckoned to be transparent and the general belief is that the statistics only tell the outside world what China's powers-that-be want us to believe.
So, what are the ‘facts' as we know them?  First and foremost, China is believed to be the world's largest gold producer, but here again we do not know for sure whether the announced gold production statistics includes those from a host of small mines which fall outside the general reporting framework, or whether it includes the byproduct gold from concentrate imports for the country's huge smelting and refining sector.  On gold imports we really don't know how much of this, if any, goes into government warehouses and how much is actually bought by individuals.  There is plenty of anecdotal evidence of strong demand from the Chinese public, but actual figures setting out the total amount purchased by this sector are somewhat lacking.  Likewise, we do not know how much of China's own gold production is taken up by government and how much enters the general markets, if any.  All we know is that China does not export gold - it only imports it thus soaking up a significant element of global gold output like a sponge.  What comes in doesn't come out again!
If we take Chinese statistics at face value, then all this imported and home produced gold is taken up by individuals as the country's official gold reserves, as reported, have not risen at all since 2009 and total only 1,054 tonnes - less than 2% of China's foreign reserves, a minuscule amount in relation to the gold holdings of the world's biggest global economies like the U.S. and Germany both of which hold over 70% of their reserves in gold.  But, and this is indeed a big but, in April 2009 China raised its official reserve figure by over 450 tonnes (by transferring it from a non-reportable pot into its official reserve) - is it doing the same again and raising its reserves without reporting any increase to the outside world?  The likelihood is that it is, and it is possible that the increase in the reserve is substantial.
So what would be the reason for China not reporting any increase in its official reserve figure?  The Chinese hold a huge amount of U.S. dollar related paper in its total forex reserve - estimated at around $3 trillion.  If one follows the occasional statements from senior Chinese officials they feel that these dollars are devaluing through the U.S. Quantitative Easing programmes and will continue to do so, so are keen to diversify out of dollar holdings into ‘currencies' that, as they see it, maintain their value - like gold.  If China announces a big gold reserve increase, the price of gold would likely rise sharply on the news, which would mean it would cost China more and more to increase its gold reserve.  It thus makes sense for it to build its gold reserves at reasonable prices rather than have to buy at far higher price levels which would prevail if it was officially announced that its gold reserves had doubled, trebled, or even more.
If this is indeed the case, what level of gold in its reserve is China seeking to reach, and how quickly can it get there?  There have been pointers to this in various statements by senior officials and it is thought there could be an initial target of around 5,000 tonnes - which would still only bring them up to around 8% of its forex holdings.  And, perhaps a long term target of double this which would at least bring the figure up to around the same level as a country like Switzerland as a percentage of forex reserves.  With its own annual gold output at around 350 tonnes, assuming all this is taken into reserves, it would take ten years or more to achieve the initial target alone.  But there is a feeling that its gold reserves may, in fact, be growing faster than that by taking in some of the imported gold as well.  But how much?
Another factor which demonstrates China's gold thirst is the number of Chinese companies moving into buying offshore gold producers - and given that, in effect, all these companies are state-owned or controlled (as is virtually any significant  company) it does also demonstrate  the overall official policy on gold.  Some feel that China is building its reserves far faster than many think with a long term aim to allow the yuan eventually become the world's reserve currency replacing the U.S. dollar, with all the trade advantages such a change would bring.  And to do this, so the pundits argue, it feels that its currency needs a strong gold backing.  This day may be some years ahead but China, with its autocratic political system plans for the long term, while Western democracies seem mostly to only plan for the time until the next election.

Lawrence (Lawrie) Williams has been involved with both the technical and the financial end of the mining sector for over 40 years, formerly CEO of top mining industry business publisher, Mining Journal Limited, he is Mineweb's General Manager and Editorial Director.

 Read the article online at Mineweb here: What is China really doing in the gold markets? - POLITICAL ECONOMY - Mineweb

October 20, 2012

Canada blocks $5.2 billion #Petronas bid for #Progress Energy | Reuters

Canada has blocked Malaysian state oil firm Petronas's C$5.17 billion (3.2 billion pounds) bid for gas producer Progress Energy Resources (PRQ.TO: Quote, Profile, Research), throwing the country's energy sector into turmoil.

Canada blocks $5.2 billion Petronas bid for Progress Energy

1:07pm BST
TORONTO/KUALA LUMPUR (Reuters) - Canada has blocked Malaysian state oil firm Petronas's C$5.17 billion (3.2 billion pounds) bid for gas producer Progress Energy Resources (PRQ.TO: QuoteProfileResearch), throwing the country's energy sector into turmoil.
The surprise move could signal problems for Chinese oil group CNOOC's (0883.HK: QuoteProfileResearch) C$15.1 billion offer for oil producer Nexen (NXY.TO: QuoteProfileResearch) and, longer term, weigh on other Canadian firms hoping for foreign investment to tap their vast energy reserves.
Also, any rejection of the CNOOC bid would likely damage trade ties Canada has been trying to build with China, and would underline political sensitivity to Chinese corporate expansion in North America.
The government, which has said C$630 billion investment is needed over the next decade, has been trying to balance concerns over the deals with a need for foreign investment.
Canada's announcement late on Friday, minutes before a deadline, was a blow to Petronas PETR.UL whose domestic oil supplies are shrinking and which has been seeking to boost its resources beyond Malaysia and volatile areas such as Sudan.
The bid for Progress had not been expected to run into hurdles in a review process that asks whether a deal is of "net benefit" to Canada.
Petronas, which said on Saturday it was not ready to comment, has 30 days to make its offer more palatable. It was not clear what it could put on the table.
"I have sent a notice letter to Petronas indicating that I am not satisfied that the proposed investment is likely to be of net benefit to Canada," industry minister Christian Paradis said in a statement.
The Petronas deal attracted scrutiny after CNOOC made its bid for Nexen. Some members of Canada's governing Conservative Party are wary of the CNOOC offer, in part because of what they say are unfair Chinese business practices.
Earlier this month, Prime Minister Stephen Harper said China's "very different" political and economic systems were a concern. A CNOOC spokeswoman in Beijing would not comment.
Last month, China's ambassador to Canada said the government should not allow domestic politics to affect its decision on whether to approve CNOOC's bid.
South of Canada's border, Chinese firms have had difficulty doing business. The United States House of Representatives' Intelligence Committee issued a report earlier this month saying companies should stop doing business with Chinese groups Huawei and ZTE (000063.SZ: QuoteProfileResearch) (0763.HK: QuoteProfileResearch) over security concerns.
On Thursday, the chief executive of U.S. aircraft maker Hawker Beechcraft, whose $1.79 billion sale to a Chinese firm fell through, said China-bashing by U.S. presidential candidates may have contributed to failure of the talks.
The United States has long been the largest market for Canadian energy exports. But with growing U.S. oil output from unconventional sources and the rejection this year of an initial application on the controversial Keystone XL pipeline project, Canada has been forced to try to build bridges with Asian markets that would welcome its energy supplies.
CNOOC, which has won approval from Nexen shareholders, has said it will retain all Nexen employees and make Calgary the headquarters for its Americas operations.
Petronas had also attempted to highlight the benefit its deal offered to Canada, saying it would combine its Canadian business with that of Progress and retain all staff.
"Maybe Canada is using this to attach more conditions to the Nexen deal," said Gordon Kwan, head of energy research at Mirae Asset Securities in Hong Kong. He thinks CNOOC will get the go-ahead.
Progress's share price had doubled since talk of the possible Petronas bid emerged in April, closing at C$21.65 on Friday. Nexen stock has also surged since CNOOC announced its bid in July, rising 48 percent to C$25.15.
Canada last blocked a foreign takeover in 2010, when it stunned markets by rejecting BHP Billiton's (BHP.AX: QuoteProfileResearch) (BLT.L: QuoteProfileResearch) $39 billion bid for Potash Corp (POT.TO:QuoteProfileResearch), the world's largest fertiliser maker.
BHP also had a 30-day period to come back with additional undertakings but withdrew its offer, sensing the bid was unlikely to be approved in the face of political opposition.
Canada is grappling with concerns that approval of the deals could spark a flurry of takeovers of energy companies - the country is home to the world's third-largest proven oil reserves, most of them in the western province of Alberta.
Petronas, Malaysia's only Fortune 500 company, made a big push into Canada's shale gas sector last year when it bought a $1.1 billion stake in a field from Progress.
Petronas first bid for Progress in June to gain control of its 800,000 acres holdings in the Montney shale-gas region of northeastern British Columbia, reserves that could feed a planned liquefied natural gas facility on the Pacific coast.
It raised its initial offer of C$20.45 per share to C$22 in July after a rival bid from an unnamed suitor.
As its domestic supplies start to dwindle, Petronas has been expanding abroad, investing in Sudanese oil, South African petrol stations and European liquefied natural gas.
It had seen the Progress deal as a crucial step to increase its presence in a more stable country after clashes on the border between South Sudan and Sudan this year all but shut its pipelines there.
On Thursday, Canada's broadcast regulator blocked BCE's C$3 billion bid for Astral Media (ACMa.TO: QuoteProfileResearch), saying the deal would give too much power to BCE, Canada's biggest telecoms company and the owner of numerous TV and radio assets.
(Additional reporting by Charlie Zhu in Hong Kong; Editing by dan Lalor and Raju Gopalakrishnan)
© Thomson Reuters 2011. All rights reserved. 

Read the article online here:  Canada blocks $5.2 billion Petronas bid for Progress Energy | Reuters

October 15, 2012

`You can print money as much as you like but you can`t print #gold` -

'You can print money as much as you like but you can't print gold'

A quote from a Swiss gold refiner/trader puts the case for gold as sound money very succinctly and coupled with the suggestion that it is a Giffen good, bodes well for further price rises.
Author: Lawrence Williams
Posted: Monday , 15 Oct 2012 
LONDON (Mineweb) -
The title of this article is very much a truism which says much about the position gold has held as an international standard for many centuries and why, ultimately, it will hold its position as the monetary yardstick against which all global currencies in this fiat money world will ultimately be measured, and fail to pass muster.  Indeed if some far cleverer analysts and economists than I are to be listened to, these currencies will collapse into a morass of hyperinflation unless the money printing can somehow be brought under control.  With QE to infinity policies currently in place in most of the world's key financial blocs, the likelihood of such controls coming into place before at least one major currency does collapse is becoming more and more remote.  And if one does collapse the dominoes could rapidly start to fall plunging the world into financial Armageddon where the middle classes in particular will have their wealth totally destroyed.  One sincerely hopes that somehow this doomsday scenario can be avoided, but it's as well to be prepared just in case.
I am indebted to an article on Swiss dominance in global gold refining on website  for the quote used in the title - (from Frédéric Panizzutti, spokesman for MKS (Switzerland) SA, a Swiss company, which specialises in gold trading and which owns the Pamp gold refinery).  Interestingly, Switzerland is a nation which is not amongst the principal money printing areas of the world, although by recently tying its currency to the Euro it is increasingly losing control over its financial destiny, potentially eroding many years of Swiss financial propriety.  It has been finding that the strength of the Swiss Franc from these years has been a limiting factor on its exports, but many feel that its attempts to keep its currency parity stable (or debasing it as some would say) to aid its competitiveness in its biggest export market will prove impossible to maintain long term.
So, while it is possible to continue churning out additional paper money, seemingly ad infinitum, the global gold stock can only grow by a few small percentage points a year which, in  the days when currencies were tied to gold, gave them a huge degree of stability.  Nowadays, continual expansion of the money supply, with no backing, has ultimately to be inflationary - and the more the money supply is expanded, by whatever means, the more likely is it that this inflation will turn into hyperinflation.
What the commentators who call that gold is in a bubble and is hugely overpriced do not take into account is that gold may not really have risen much in value at all - but is primarily reflecting the debasement of all the major currencies - even the Swiss Franc now it has been tied to the Euro.  As noted above, gold is the ultimate monetary yardstick, which is why governments and central banks don't like it as it shows up their policies for what they really are.  For years, institutions like the U.S. Fed and most central bankers have publicly stated that gold is effectively an irrelevance - yet conversely they continue to hold huge amounts of it.  The odds are that they also massage the price to keep it from surging, in the same way that governments try to manipulate anything which can show them up in a bad light.
That Britain's Gordon Brown sold off 60% of the UK's gold reserves back in 1999-2002 when the gold price was at rock bottom was that this self-styled statesman and ‘saviour of the world' from a Scottish backwater  - or perhaps rather a misguided historian who obviously learned little from his historical studies - was, as a relatively raw Chancellor of the Exchequer (Finance Minister), totally misled by the world's central banking elite into ordering this sale at a price (forever to be known as the Brown Bottom) in what in retrospect was a disastrous decision from the U.K.'s economic point of view.  OK, it is easy to be wise after the event, but perhaps Brown was actually the patsy in a global scheme to downplay the role of gold, and led into doing this by central bankers who had no wish to put their own gold reserves on the auction block.
Now central bankers are again buying gold - particularly those from nations in areas which, for the most part, have historically regarded gold as the ultimate store of wealth.  Indeed with China notably circumspect about what it is actually prepared to announce regarding its gold holdings, central bank purchases could well be far higher than official figures would appear to show.
What this all means for the gold price at the moment is that it is pretty much underpinned with some big buying coming in on dips in price, while each recent upwards surge has seen consolidation at higher levels (involving a small drift backwards) followed by a further surge.  On this basis one would anticipate the $1800 level being attacked again on the next vaguely pro-gold piece of news to surface and the current fallback being fairly short-lived.
In his latest Thunder Road Report, Paul Mylchreest, who is always worth reading, poses the question Is gold a Giffen good? - the definition of such being "one which people paradoxically consume more of as the price rises, violating the law of demand. In normal situations, as the price of a good rises, the substitution effect causes consumers to purchase less of it and more of substitute goods. In the Giffen good situation, the income effect dominates, leading people to buy more of the good, even as its price rises" - Wikipedia.  The pattern of gold ETF holdings, and now Central Bank purchases, suggests that gold should nowadays be so classified and, if this is the case, as the price rises demand may well continue to increase, thus driving the price ever higher given the tiny increase in global supply each successive year.  We shall see.

About Lawrence (Lawrie) Williams

Lawrence (Lawrie) Williams has been involved with both the technical and the financial end of the mining sector for over 40 years, formerly CEO of top mining industry business publisher, Mining Journal Limited, he is Mineweb's General Manager and Editorial Director.

`You can print money as much as you like but you can`t print gold` - WHATS NEW - Mineweb

October 12, 2012

Vale`s major challenges go beyond iron ore - #IRON -

Costs are soaring, new mines are running behind schedule and growth in China, Vale's largest market, is slowing.

Vale's major challenges go beyond iron ore

Author: Jeb Blount
Posted: Friday , 12 Oct 2012
RIO DE JANEIRO (Reuters)  - 

Roger Agnelli, who was forced out as chief executive of Brazil's Vale in May 2011, may have been lucky to leave the world's second-largest mining company when he did.
Since Murilo Ferreira replaced him as CEO, a series of setbacks have raised questions about Vale's ability to increase sales and profit and maintain its place as the world's top producer of iron ore, the main ingredient in steel.
Costs are soaring, new mines are behind schedule and growth in China, Vale's largest market, is slowing. The price of iron ore, responsible for nearly three-quarters of the Rio de Janeiro-based company's sales, recently sank to three-year lows.
Making matters worse, Brazilian laws and government interference threaten to hobble Vale, the country's biggest exporter. Vale shipped $42 billion of raw materials in 2011, 16 percent of exports from the world's sixth-largest economy.
"What the government is doing to Vale won't kill the proverbial golden goose, but it could make the goose sick," said Mauricio Canedo, an economist specializing in industrial policy and commodities at the Getulio Vargas Foundation (FGV), a Rio de Janeiro economic research institute. "Vale's future looks less promising now than it has for some time."
Government influence has been most obvious in efforts to get Vale to build steel mills and invest in fertilizer production. while a new mining code threatens to triple royalties.
Agnelli and Ferreira declined to comment. Vale is well-positioned to weather a downturn and will announce a revised investment plan in December, the company said in an email.
At about 36.20 reais a share, Vale's main stock trades at close to where it did when Ferreira took over, 36.80 reais. In a decade under Agnelli it rose nearly 12-fold.
Vale's predicament stems from its 1997 privatization for $3.3 billion, which still rankles with many Brazilians, including members of President Dilma Rousseff's Workers' Party-led government.
For them, Vale's success doesn't ease the sting, even with Brazil getting more than ever in royalties and taxes from the company. Vale's profit soared more than 17-fold to $22.9 billion in 2011 from $1.29 billion in 2001, bolstered by Chinese demand.
In Brazil, only oil giant Petrobras is bigger and more revered by nationalists. Petrobras has private investors, but the government has a majority of voting stock.
Still, Rousseff expects Vale to support government industrial policy even if Brazil only has an indirect minority stake in a holding company that controls Vale with partners Brazil's Banco Bradesco and Japan's Mitsui.
When Agnelli laid off 1,300 workers in 2008, Rousseff's mentor and predecessor Luiz Inacio Lula da Silva demanded an explanation. Agnelli's refusal to build a fleet of ships in new, untested, high-cost Brazilian shipyards annoyed Lula further.
To create jobs and turn mine output into higher-value goods, the government pushed Vale to build steel mills in Brazil. It also pushed Vale to invest more in fertilizers.
Brazil, a major producer of coffee, beef, sugar, orange juice and soybeans, imports most of its fertilizer. Vale has the biggest railway and port system in a country where high transport costs choke growth.
"The government is increasingly interested in what Vale is doing," said Leonardo Alves, a mining company analyst with Banco Safra in Sao Paulo. "This is not good for the company."
Brazil's mining ministry declined to comment. Previ, through which the government exercises its indirect stake in Vale, did not respond to questions. Previ is the employee pension fund of state-led Banco do Brasil SA, Brazil's largest bank.
When it comes to interference, steel has caused the most problems. Vale has long invested in mills, but usually as a non-operational minority investor. In return, Vale got a long-term iron ore contract and avoided competing with its own clients.
Yet, in the 16 months since Ferreira took over, Vale has spent more than $658 million on four steel projects. That's 13 percent more than it spent for steel projects in Agnelli's last three years.
ThyssenKrupp's Cia. Siderurgica do Atlantico, a Rio de Janeiro mill, is in crisis. Financial, currency and environmental setbacks forced Vale to more than double its stake to 27 percent. Two years after start-up, ThyssenKrupp is selling out of the 7 billion euro ($8.8 billion) plant.
Acos Laminados do Para SA (ALPA), totally owned by Vale and one of the projects Agnelli resisted, has now been halted, Reuters reported on September 28.
The reason? The government, which lobbied hard for the plant, dropped plans to improve navigation on the Tocantins River. Without those improvements, ALPA can't ship coal in or steel out.
ALPA is planned for Marabá, a city far from a major ocean port in an Amazon region with no major customers for its steel.
But even if steel investments pay off, steel is less profitable than iron ore. World steel capacity outstrips demand by a third, according to Brazil's state development bank BNDES. CSN, the No. 3 Brazilian steelmaker and No. 2 iron ore exporter, is boosting mining as steel margins fall.
Other Vale efforts to diversify have also stalled. The $11 billion spent on nickel, used to make steel rust resistant, has failed to make Vale the world's No. 1 supplier of the metal.
Vale's Goro mine in New Caledonia, potentially the world's largest, barely produces. It is about four years behind schedule. Canadian mines have been hit by strikes, and Vale's Onça Puma mine in Brazil is also missing targets.
"That's $11 billion down a rat hole," said John Tumazos, mining analyst with U.S.-based Very Independent Research LLC.
But steel troubles could pale next to the challenge of new legislation. Proposed mining code changes could triple mining royalties to about 6 percent from 2 percent, Canedo said, citing mining ministry studies published this year. It could also force Vale to buy more equipment from higher-cost local providers.
Meanwhile, Brazilian states have passed royalty-like charges that could add $500 million a year to Vale's tax bill.
Vale declined to comment on the mining code. Mines minister Edison Lobão, a critic of Vale's 1997 sale, has said mineral exports without local processing could "de-industrialize" Brazil by boosting its currency and choking manufacturers.
Similar reforms to Brazil's oil laws have choked off the sale of new exploration areas for four years, and minimum national content rules are driving up costs and pushing back oil project completion targets for Petrobras, sometimes by years.
Many of the problems facing Ferreira, whose reserved personality contrasts sharply with Agnelli's flashy, high-profile corporate style, are beyond his control.
China's move to cool its superheated economy has put the company's main business, iron ore, into crisis.
Essential to everything from cars and stoves to bridges and skyscrapers, iron ore accounts for about 90 percent of Vale profit. Vale produces more than a quarter of the world's high-grade iron ore exports, down from a third a decade ago.
Every $1 drop in the ore price cuts about $300 million a year from Vale revenue. With the spot price for iron ore .IO62-CNI=SI at $115.80 a tonne, Vale will earn about $8.6 billion a year less than it would have at the 3-year average of $144.60.
In September ore fell to a three year low of $86.90 a tonne. Few expect iron ore to regain a record high of $191.90.
"Those who invest in iron ore should do so in the full knowledge that supply will meet demand in due course," said Marius Kloppers, CEO of BHP Billiton Plc, on a conference call August 22. "Scarcity pricing that we have seen over the last 10 years is unlikely to be repeated."
As some see Vale's good times ending, costs are rising. The cost of goods sold, a category that includes salaries, equipment and distribution, jumped 15 percent in the 12 months ending June 30 compared with the 12 months ending March 31. Second-quarter profit was the worst in 2-1/2 years.
One of Vale's main cost-cutting efforts, a fleet of giant ore ships built to narrow Australian rivals' transport advantage to China, is banned from Chinese ports.
Not everyone is bearish on Vale. The company's iron ore chief, Jose Carlos Martins, and analysts such as Leonardo Correa with Barclays in Sao Paulo said in August that iron ore would return to about $120 a tonne soon. They were right, halving Ferreira-era stock losses in the last month.
Vale mines have ores with iron content close to the 62 percent needed by steelmakers. This probably keeps costs below $50 a tonne. Chinese and U.S. ores can have iron content of 8 to 13 percent and costs that are double -- or more -- those of Vale.
Even Vale, though, admits times are rough.
"Vale is facing a challenging moment in basic metals," the company said in an emailed response to questions.
Whether Brazil's "golden goose" will rise to that challenge is no longer Agnelli's problem. He's formed his own iron ore venture, AGN Participações, and seeks to compete with Vale.
(Additional reporting by Sabrina Lorenzi; Editing by Todd Benson and Phil Berlowitz)

Vale`s major challenges go beyond iron ore - IRON AND STEEL - Mineweb

October 10, 2012

Swiss Target #Commodities Secrets Risking $21 Billion Hegemony - Bloomberg

Now that they have seriously damaged the banking industry, they are going after the commodity traders!!  Incredible how they continue to inflict this pain on themselves!

Swiss Target Commodities Secrets Risking $21 Billion Hegemony

Vitol SA, one of the world’s biggest oil traders, is being enticed from its Geneva base by Dubai and Singapore as Switzerland considers scrapping policies that made the country a global center for commodities.
“I’m concerned for the future both in Switzerland and elsewhere,” said David Fransen, chief executive officer of Vitol Group’s trading arm, citing the threat of over-regulation and higher taxes. “Other jurisdictions are actively courting us,” he said, including Malaysia and the Caribbean.

While Vitol, Glencore International Plc and Trafigura Beheer BV surpass Nestle SA as the biggest Swiss companies by sales, politicians are concerned a lack of industry regulation may hurt a nation struggling to find a response to a global crackdown on tax evasion. Photographer: Gianluca Colla/Bloomberg
The Swiss government, which has been probing the commodities industry since May, said the Alpine nation is “exposed to risks to its reputation” by being an oil, grain and coffee trading hub. The review, due later this year, follows Switzerland’s decision in March 2009 to meet international standards to avoid being listed as a tax haven and attempts to settle a U.S. investigation of 11 banks that allegedly helped American clients hide money from the Internal Revenue Service.
While Vitol, Glencore International Plc (GLEN) and Trafigura Beheer BV surpass Nestle SA as the biggest Swiss companies by sales, politicians are concerned a lack of industry regulation may hurt a nation struggling to find a response to a global crackdown on tax evasion.

October 5, 2012

Gold does help...#Paulson further pared falls in #Gold and Advantage funds last month - Mineweb

Paulson further pared falls in Gold and Advantage funds last month

According to sources, Paulson told clients his firm decreased its hedges, after the Fed outlined additional steps to boost the economy and the ECB took measures to guard against a sovereign default.
Author: By Kelly Bit
Posted: Friday , 05 Oct 2012 
NEW YORK (Bloomberg) - 
John Paulson, the billionaire hedge- fund manager coming off record losses in 2011, further pared declines in his Gold and Advantage funds last month, according to two people familiar with the matter.
Paulson's Gold Fund, which can buy derivatives and other gold-related investments, rose 13 percent in September as bullion rallied, cutting losses this year to 3.9 percent, said the people, who asked not to be named because the information is private. The Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, gained 3.6 percent last month, reducing losses since the start of the year to 14 percent.
Bullion and companies that mine for it, which had been the main drivers of losses in the Gold and Advantage funds this year, rallied last month as the U.S. Federal Reserve announced a third round of monetary stimulus, boosting demand for the precious metal as a store of value.
Paulson, 56, who became a billionaire by betting against the U.S. subprime-mortgage market, told clients in February that gold was his best long-term bet, serving as protection against currency debasement, rising inflation and a possible breakup of the euro currency.
Armel Leslie, a spokesman for $20 billion Paulson & Co., declined to comment.
The Advantage Plus fund's gold share class rose 6.8 percent in September and fell 5.2 percent for the year. Investors can choose between gold- and dollar-denominated versions for most of New York-based Paulson & Co.'s funds.
Reduced Hedges
Paulson's Advantage Fund, which employs a similar strategy to Advantage Plus, gained 2.6 percent in September, reducing its 2012 decline to 11 percent. Its gold shares climbed 6 percent last month and 0.8 percent this year.
Paulson told clients in a letter sent yesterday that his firm decreased its hedges, or offsetting trades, after the Fed outlined additional steps to boost the economy and the European Central Bank took measures to guard against a sovereign default, according to one of the people who saw the memo. Paulson told investors in April that he was shorting, or betting against, European sovereign bonds and buying credit-default swaps on the region's debt as protection. In February, he said the euro was "structurally flawed," and would eventually fall apart.
Paulson's credit and recovery funds fell in September, primarily because of hedges, he said in the letter, according to the people. The Credit Opportunities Fund dropped 1.5 percent last month and rose 2 percent year-to-date. Its gold shares gained 1.9 percent in September and 10 percent this year. The fund jumped almost sevenfold in 2007, largely because of Paulson's bets against the U.S. subprime-mortgage market.
Recovery Fund
The Recovery Fund, which bets on assets Paulson believes will benefit from a long-term economic advance, it declined 1.2 percent last month and rose 0.5 percent in 2012, the people said. The gold share class climbed 2.8 percent in September and 10 percent this year.
Paulson's Enhanced fund, which invests in shares of companies that are involved in mergers, didn't make or lose money in September. This year, it's up 9.1 percent. The gold share class rose 3.7 percent last month and 16 percent in 2012.
To contact the reporter on this story: Kelly Bit in New York at
To contact the editor responsible for this story: Christian Baumgaertel at

Paulson further pared falls in Gold and Advantage funds last month - FAST NEWS - Mineweb

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