February 2013

Industry at a glance

By Zoë Macintosh and Herb Mathisen

ArcelorMittal has agreed to sell a 15 per cent stake of ArcelorMittal Mines Canada, which includes the Mont-Wright iron ore mine in Quebec, to a group of Asian companiesCourtesy of ArcelorMittal

ArcelorMittal sells 15 per cent of Canadian subsidiary

Led by South Korean steelmaker Posco and Taiwan’s China Steel Corporation (CSC), a group of companies has agreed to purchase 15 per cent of ArcelorMittal Mines Canada for $1.1 billion. The deal includes iron ore offtake agreements for the new partners, relative to the companies’ stakes in the ArcelorMittal subsidiary. ArcelorMittal Mines Canada owns the Mont-Wright and Fire Lake iron ore mines in the Labrador Trough and a pellet plant and port facilities in Port-Cartier, Quebec.

ArcelorMittal, which will retain 85 per cent of its subsidiary, would not comment on the deal’s specifics, but the Luxembourg-based company has indicated that it plans to continue pursuing joint venture partnerships with key customers. It expects the deal to be finalized by the second quarter of 2013, since the Taiwanese government, which owns 20 per cent of CSC, must approve the acquisition. – Herb Mathisen

Japanese firm to explore red mud for rare earths in Jamaica

Nippon Light Metals will construct a US$3-million pilot plant and will run a commercial feasibility study on extracting rare earths from alumina waste known as red mud. The company has won approval from Jamaica’s National Environment and Planning Agency for the project.

Nippon has also applied for exclusive rights to explore for rare earths in three red mud ponds produced by alumina plants owned by Windalco, a joint venture of UC Rusal and the Government of Jamaica. Two are located in St. Catherine and the other is in Manchester, said Clinton Thompson, commissioner of mines in Jamaica.

The company is the first in the world to apply for a rare earth exploration licence in Jamaica, Thompson added. Under a September 2012 memorandum of understanding, any volume of rare earth elements produced during the pilot would be shared jointly between Nippon Light Metals and the Jamaican Bauxite Institute. – Zoë Macintosh

Greenland legalizes temporary foreign workers

Greenland’s Large Scale Act, passed last December, permits companies to import workers for construction projects that exceed labour market availability and cost more than $900 million.

A deficiency in skilled construction workers, not mining workers, called for the legislation, said Ove Karl Berthelsen, Greenland’s minister for industry and mineral resources. He estimated that up to 3,000 workers a year would be required for the “construction phase alone” of the Isua iron mine near Nuuk. “If the project goes ahead, these workers may be sourced from international construction companies that would submit competitive bids for specific and specialized components that local construction companies would be unable to provide,” said Xiaogang Hu, director of London Mining, the company behind the iron mine.

According to Berthelsen, around 700 Greenlandic nationals will be available for work as miners once the mine is built.

While construction wages must not drop below Greenland’s minimum of about $14.50 per hour, employers may deduct up to $3 per hour for meals and accommodation, he added.

Collective bargaining agreements in Greenland currently ensure construction workers much higher wages than this “political” minimum, said Catrine Søndergaard Byrne, senior associate with the Eversheds law firm in Copenhagen. However, for the temporary foreign workers, wages will be tied to collective bargaining agreements in the workers’ countries of origin, enabling employers to pay less than they would pay Greenlandic nationals.

As Greenland is within the Kingdom of Denmark, the act awaits a March vote by the Danish Parliament before coming into effect. – Z.M.

Holdout state approves Keystone XL

The government of Nebraska recently approved the rerouting of TransCanada’s Keystone pipeline, re­moving the last state-level obstacle to construction. TransCanada now only needs the U.S. Department of State to determine whether the cross-border pipeline would be in the United States’s interest.

The company spent a year working with Nebraskan officials and with landowners, conducting air and ground surveys to provide an alternative to the originally planned passage through the state’s Sand Hill region.

In November 2011, the U.S. Department of State ordered the company to revise plans in this area, due to the high concentration of wetlands and shallow groundwater.

Last August, TransCanada submitted its application for the new route to the Nebraska Department of Environmental Quality, which submitted its final report and approval to Governor Dave Heineman in early January of this year.

Shawn Howard, a spokesperson for TransCanada, said over 9,000 workers can begin construction “within weeks,” if the company gets approval from the Department of State. “The only really new information that has to be looked at is the information added in Nebraska,” he said. “Everything in other states has been done.” – Z.M.

The Keystone XL pipeline’s new route (red) requires about 30 additional miles of pipeline compared to the old one (black) | Courtesy of Nebraska Department of Environmental Quality

Baffinland puts off full-scale construction

Citing difficulties associated with financing large projects, Baffinland is shelving plans to construct a railway connecting its proposed open pit mine on Baffin Island with a yet-to-be-built year-round port.

The company asked the Nunavut Impact Review Board (NIRB) to amend its recently approved project certificate to allow a phased approach for developing the Mary River iron ore mine. ArcelorMittal and Iron Ore Holdings – each 50 per cent owners of Baffinland – want to move ahead with an initial “early revenue phase.” During that period, 3.5 million tonnes of ore per year would be stored and shipped using the existing Milne Inlet port during the 90-day ice-free season. The company still intends to eventually construct a 150-kilometre railway south to a Steensby Inlet port, from which it expects to ship at least 18 million tonnes per year.

NIRB executive director Ryan Barry said the board requested public comment on the proposed amendments, which include expansions to the Milne Inlet port and road, until February 4. Barry said it is likely the board will decide that the project certificate needs to be re-opened, given the significant changes suggested by Baffinland. Re-openening of a certificate requires a public hearing and a technical review, with project approval again required from both the board and Canada’s Aboriginal affairs minister. – H.M.

New life for N.W.T.’s diamond cutting industry

An agreement between the Northwest Territories’ government and Deepak International Ltd. gives the company access to rough diamonds from N.W.T. mines and exclusive rights to the government-certified Canadian diamond trademark.

Deepak Kumar, the company’s CEO, said the trademark is very important because consumers want to know where their diamonds come from to ensure they were mined responsibly. Through a monitoring arrangement, the territorial government can certify that diamonds were indeed mined, cut and polished in the Northwest ­Territories.

Kumar said his family has been involved in diamond processing for generations, himself having run factories in India before immigrating to Canada. “If I did not have the experience, knowledge and the technical know-how, I would not put everything at stake, like I have,” he said.

Kumar is finalizing the purchase of two government leases to house his operations, which he said could start up this spring. He also said his ­company would employ 50 workers in Yellowknife, adding he intends to hire locally and to provide paid training opportunities to 15 northerners each year.

Since 1999, five factories have processed diamonds in the Northwest Territories and, at its peak, the industry employed 155 workers. Today, HRA’s Crossworks Manufacturing Ltd., in operation since 2008, is the territory’s lone diamond processor.
– H.M.

Colombian militants kidnap Braeval prospectors

Political insurgents abducted five workers, including one Canadian, hired by Toronto-based Braeval, in a January 18 ambush at the junior’s Snow Mine exploration project in northern Colombia.

Between 20 and 25 members of the National Liberation Army (ELN) conducted the kidnappings just days after Braeval released its 2013 exploration plan for the site.

Of those kidnapped, one Canadian and two Colombians worked as employees and two were Peruvian consultants, said Chris Eby, a Braeval spokesperson. On the day of the kidnappings, a helicopter evacuated all 22 other Braeval staff from the Snow Mine property, he said.

In a January 21 post on their website, ELN claimed responsibility for the incident and stated that 99 per cent of mining in Serrania de San Lucas goes to foreign companies. Colombian authorities have captured three of the ELN members involved, but the hostages remained missing at press time. “The foremost concern of the company is the security and the well-being of its employees, and we are cooperating fully with the authorities in Colombia and with the Canadian government as well, in the hopes of bringing this situation to a safe conclusion for [all] involved,” said Eby, who declined to name the individuals.

The project is currently abandoned. – Z.M.

Uranium One goes private

Russian state-owned Armz, a subsidiary of Rosatom, has agreed to purchase all of the remaining shares of Uranium One, a publicly traded Canadian uranium producer, for $1.3 billion. Minority shareholders were offered $2.86 per share in a price Armz estimated to be 32 per cent higher than market value, as determined based on a 20-day period on the Toronto Stock Exchange prior to the January 14 announcement.

Ken Williamson, chairman of a committee of independent Uranium One directors, called the premium “significant” and urged minority shareholders to approve the deal in a vote in March.

Armz first gained a controlling stake in Uranium One in 2010, when it bought 51.4 per cent of the company’s common shares. All of Uranium One’s uranium mining projects are located outside of Canada.

Armz and Uranium One already shared six uranium mining projects in Kazakhstan prior to the deal. If the March vote allows, Armz will acquire control of Uranium One’s wholly owned Willow Creek mine in Wyoming and the Honeymoon Uranium project in Australia.

“Despite the uranium industry’s currently challenging outlook, Armz will continue with its strategy of developing Uranium One into the leading global uranium producer,” said Vadim Jivov, Armz’s chairman of the board. “The current market environment has changed, making a private vehicle more effective for achieving [this].” – Z.M.

$1.25M for open pit research announced

An endowment of $1.25 million to Laurentian University from Iamgold will create the nation’s first industry-funded research chair in open pit mining. ­“[Hiring the chair] is going to be a monumental task because this is going to be an international search,” said Ramesh Subramanian, director of Laurentian University’s Bharti School of Engineering. He aspires to select a person experienced in both academia and industry by July 1.

The five-year, $250,000-a-year position will jump-start research in cost-reducing techniques in surface mining life cycles, open pit design, mineral economics, resource estimation, optimization of drilling and blasting, and optimization of rock ­segmentation.

While not directly involved in the hiring decision, Iamgold will have “first say” on intellectual property that results from the initiative. The company will likely grant researchers access to its operations worldwide, said Subramanian. – Z.M.

Two workers killed at Escobal mine in Guatemala

Shortly after midnight on January 12, two contract security guards were killed in an attack at Tahoe Resources Inc.’s Escobal silver mine in Guatemala. Local media reported that power lines were severed and trees were cut down to block road access to the mine.

Protests have briefly delayed work at Tahoe’s flagship mine in the last six months, but Ira Gostin, vice-president of investor relations, said this latest tragedy was much different. “Protests don’t occur in the wee hours of the morning with automatic weapons,” he said, adding that nothing suggested the attacks were related to previous protests. Tahoe is cooperating with a government-led investigation into who was behind the attack.

Security has been beefed up on site, and work at the mine has not been affected. “We are dealing with some morale issues, but everybody is focused on building a mine,” Gostin said, adding that construction at Escobal is 70 per cent complete. Tahoe Resources is awaiting a final exploitation licence for the mine, which was expected in 2012. According to Ron Clayton, Tahoe’s COO, the company received assurances from both the Guatemalan president and the minister of mines that the licence would be forthcoming. The mine is scheduled to start commercial production in early 2014. “We’re still on budget and on schedule,” said Gostin. – H.M.

Tom Albanese out as Rio Tinto CEO

Following a US$14-billion write-down of recently acquired assets, Rio Tinto’s Tom Albanese resigned from his position as CEO. Albanese had led the company since May 1, 2007. During his tenure, Rio Tinto acquired aluminum giant Alcan for US$38.1 billion in 2007 and later Riversdale Mining Ltd., with coal assets in Mozambique, in 2011. However, in recent years, Rio Tinto has had to take writedowns associated with these deals, which include an estimated US$10.5 billion devaluation of Rio Tinto Alcan and US$3 billion devaluation of its Rio Tinto Coal Mozambique business, an­nounced last month.

Sam Walsh, Rio Tinto’s iron ore and Australia chief executive, was appoin­ted as Albanese’s replacement, effective January 17, 2013. Doug Ritchie, who led the acquisition of the Mozambique coal transaction, also stepped down. – H.M.

Albertan coal properties change hands

Australia’s Riversdale Resources Limited has purchased 35,000 acres of coal assets in southern Alberta from Consol Energy and Devon Energy for US$49.5 million. Included among the leases is the Grassy Mountain project near Coleman, Alberta, which has a coal resource of 192 million tonnes and a reserve of 55 million tonnes, according to Riversdale.

Riversdale will look to upgrade a previously completed study examining the feasibility of a two million tonnes-per-annum operation at the primarily metallurgical Grassy Mountain project to determine if there is potential for a four million tonnes-per-annum mine. Riversdale managing director Steve Mallyon said the company would begin community engagement work in early February. While it would be difficult to predict a project timeline for Grassy Mountain before environmental and social impact studies are completed, Mallyon said, “Based on recent precedents in Canada, such as Coalspur’s Vista project, our best guess is that a mine could be in early commissioning by 2017.”

The acquisition by Riversdale Resources closely follows Consol Energy’s US$105-million sale of the non-producing Scurry Ram and Ram River metallurgical coal properties to Forbes & Manhattan Inc.’s Ram River Coal Corp. – H.M.

Post a comment


PDF Version