BHP sells diamond business
The Harry Winston Diamond Corporation has agreed to purchase the Ekati mine, along with a sorting facility in Yellowknife, N.W.T. and marketing offices in
Antwerp, Belgium, from BHP Billiton for $500 million.
The Ekati diamond mine has been in operation since 1998 and, over the last five years, has produced an average of nearly US$750 million in rough diamonds
each year. Harry Winston announced it could push back the mine’s slated closing date of 2019 if diamond prices go up. The sale comes nearly one year after
BHP first announced it would review its diamond business.
“BHP Billiton’s focus is on large, long-life, low-cost, expandable upstream assets and has a global pursuit of a simpler business,” said Bronwyn Wilkinson,
a BHP spokesperson. “BHP Billiton’s investments in Ekati have created substantial value for shareholders and Northern Canada. However, in the absence of
opportunities to recreate this success elsewhere, BHP Billiton concluded that a continued presence in the diamonds industry would not be consistent with
Harry Winston is not new to the northern diamond mining game, owning a 40 per cent stake in Rio Tinto’s Diavik diamond mine. – Herb Mathisen
Mining M&As down in 2012
Economic uncertainty, renewed resource nationalism, rising operating costs and volatile markets have contributed to a decrease in the number of mining
mergers and acquisitions (M&As) so far this year, according to a report from Ernst & Young.
Between January and September 2012, 684 deals took place, down 16 per cent from 816 in the same period the year before. The total value of M&As fell by
43 per cent to $76.8 billion from $133.7 billion in the first nine months.
Bruce Sprague, Ernst & Young’s Canadian mining and metals leader, said with equity financing extremely tight for junior miners, executives are
patiently waiting for their companies’ valuations to improve. Meanwhile, intermediates and majors are becoming more methodical when it comes to growth,
leading to a potential disparity between how much juniors want to sell for and how much buyers want to spend.
“[Intermediates and majors] are not doing acquisitions just for the sake of doing them anymore,” he said.
The report is optimistic about M&A activity in 2013, although mostly with regard to smaller, strategic partnerships instead of blockbuster deals.
“I think there will be a focus by the acquirers on the internal rate of return and they will want to do things that are creative in the short term, because
I think investors are requiring that,” said Sprague. – H.M.
TransCanada joins Grand Rapids pipeline project
Commitment from TransCanada and heavy investment from Chinese-controlled Phoenix Energy Holdings Ltd. clinched plans for the first major oil pipeline to
service future oil sands west of Alberta’s Athabasca River. “It’s definitely safe to say that [Phoenix] is underpinning the entire project,” said
TransCanada media relations specialist Grady Semmens. “Their commitment to partner and move volumes on the project has made it feasible to proceed.”
The companies formed a 50:50 joint venture that doles operations and construction responsibilities to TransCanada and “primary user” privileges to
Phoenix, a PetroChina subsidiary.
Upon completion in 2017, the nearly 40-inch diameter, 500-kilometre pipe could move 900,000 barrels of diluted bitumen a day from a feeder west of Fort
McMurray to the Enbridge terminal in Edmonton.
“There is a lot of projected growth in the west Athabasca region and, at this time, very little pipeline infrastructure to move the product out of that
area,” Semmens said. “So there is quite a bottleneck and this project is one that will, we hope, be somewhat of a backbone system.”
An approval process beginning in 2013 could let construction commence in 2014. – Zoë Macintosh
Queensland lifts uranium mining ban
The government of Queensland, with support from the Australian Labour government, is re-opening uranium mining in the state after a 23-year ban. The
announcement closely followed a three-day trip Prime Minister Julia Gillard made to India to promote her country’s uranium resources.
“Uranium exports will earn Queensland tens of billions of dollars over the next two decades, providing thousands of jobs across rural and regional areas,”
Queensland Premier Campbell Newman said. “Global demand for this energy will create enormous opportunities in coming years.”
Queensland is the last of the Australian states with large uranium deposits to lift its ban.
A six-person Uranium Implementation Committee will submit a best practices framework to government by mid-March 2013.
According to Minister for Natural Resources and Mines Andrew Cripps, Queensland’s known uranium deposits are worth AUD$10 billion.
The Australian Uranium Association reported that around AUD$18 million was spent on uranium exploration in Queensland in 2011. – Z.M.
Canada and China to share coal health expertise
The Canadian International Development Agency’s (CIDA) Policy Options Project (POP) in China has commissioned the Foundation for International Training
(FIT) to conduct a knowledge transfer program between Canada and coal-rich Ningxia Autonomous Region, China.
POP was awarded the grant after it received a request for help from the Ningxia department of health, which plans to revamp its policies.
Seminars in Canada with occupational health and safety experts will educate Ningxia policymakers and regulatory officials on “strategies and standards in
vocational disease prevention, control and reduction,” said Michelle Sweet, communications and program director for FIT.
“Most of the training and knowledge exchange will take place in Canada,” Sweet said. The first of two study missions by Ningxia officials will commence in
A one-week tour in October already granted Nova Scotia mine inspector Pleman Woodland a chance to visit sites in China. Woodland toured facilities in
Ningxia to identify areas for improvement, according to Chrissy Matheson, a spokesperson for the Nova Scotia Labour and Workforce Development. She added
that exposure to Chinese operations helps “ensure that [Nova Scotia inspectors] maintain currency with developing technologies and procedures as they
relate to workplace health and safety. – Z.M.
Canada retools foreign investment rules
The Canadian government updated its policy concerning the sale of Canadian companies to foreign state-owned enterprises (SOEs), which could impact future
investment in Canada. The decision comes along with the approval of two major acquisitions by foreign SOEs. In early December, China National Offshore Oil
Corporation’s (CNOOC) US$15.1-billion acquisition of Calgary-based Nexen Inc. was approved, as was the $6-billion purchase of natural gas producer Progress
Energy Resources Corp. by Petronas of Malaysia.
Over the next four years, the threshold that will trigger an Investment Canada Act review of attempted acquisitions of Canadian firms by private foreign
enterprises will rise to $1 billion. But attempted takeovers by SOEs will be triggered by the existing $330-million standard.
Prime Minister Stephen Harper said future takeovers of Canadian oil sands companies by foreign SOEs would only be considered under “exceptional
circumstances,” adding that “further such foreign state control would not be of net benefit to Canada.”
A discussion paper released after the announcement by the Canadian business law firm Osler called the CNOOC deal a “tipping point” for foreign SOE
investment in Canada. The paper argued that Harper has clearly indicated a preference for minority ownership from SOEs in Canadian companies or for private
investment from outside Canada. – H.M.
Tantalum deal affects global prices
A supply agreement for tantalum was struck between Advanced Metallurgical Group’s (AMG) Mibra mine in Brazil and an undisclosed industrial manufacturer for
a substantial portion of the mine’s output. The Mibra mine is the world’s largest producer of tantalum. AMG stated it has the capacity to produce 300,000
tonnes per year of the specialty metal used to make superalloys and capacitors for smartphones and other electronics. Deliveries according to the new
agreement will begin in the second quarter of 2013.
The deal affected tantalum prices globally. “It re-set the market price,” said Dennis Zogbi, president of North Carolina-based market research firm
Paumanok Publications Inc. Prior to the October deal, the speciality metal sold for approximately US$140 per pound, Zogbi said. Afterwards it sold for
around 10 per cent higher, he estimated. This upswing comes on the heels of a surge that has seen tantalum prices nearly triple over the last two years,
according to the U.S. Geological Survey. – Z.M.
Oyu Tolgoi moves one step closer
Oyu Tolgoi LLC has signed a power supply agreement with a Chinese company for its US$6-billion project in southern Mongolia, meaning commercial production
could begin as early as the first half of 2013.
As part of the purchasing agreement with China’s Inner Mongolia Power Corp., the mine can source and subcontract power from suppliers outside Mongolia for
the first four years of production, but is committed to having Mongolia provide all of the mine’s power afterwards. Mongolia does not currently have the
capacity to provide the project’s power needs, according to an Oyu Tolgoi LLC press release.
The mine will initially start production as an open pit mine and develop underground block caving operations, with the mine’s overall lifespan estimated at
more than 50 years. – H.M.
First Nations oppose FIPA Treaty
A number of Aboriginal groups say new rights granted to Chinese investors by the Canada-China Foreign Investment Promotion and Protection Agreement (FIPA)
could jeopardize Canada’s constitutional duties to First Nations. The St’at’imc Chiefs Council, the Chiefs of Ontario and the Union of B.C. Indian Chiefs
all wrote open letters to Prime Minister Stephen Harper to that effect, and the Assembly of Manitoba Chiefs sent a similar letter to Chen Deming, the
Chinese minister of commerce.
These First Nations leaders broadly criticize the agreement, tabled last September, for providing better legal protection to Chinese investors’ interests
than to Aboriginal title, rights and treaty rights.
FIPA would introduce costly fees for measures perceived as expropriation, which some argue would make it difficult for the Canadian government to side with
Aboriginal groups in land claim disputes with Chinese companies. According to Jessica Clogg, executive director of environmental advocacy-focused legal
firm West Coast Environmental Law, “The threat of multi-million-dollar investor-state suits will create a profound disincentive for the Crown to negotiate
honourably regarding environmental and cultural protection measures in treaties or other legal agreements with First Nations.” – Z.M.
BP agrees to US$4.5B settlement
London-based BP has agreed to a US$4.5-billion settlement with the United States government and the Securities and Exchange Commission (SEC) for its
actions that led to the Deepwater Horizon oil spill in the Gulf of Mexico in 2010.
The company pled guilty to 11 counts of manslaughter and three additional charges pertaining to environmental violations and misleading the government as
to the severity of the spill. Two BP supervisors were charged with manslaughter and one senior executive was charged with obstruction of Congress. The
settlement – with US$4 billion to be paid to the U.S. government and US$525 million to SEC – is the country’s largest ever, and BP will pay in instalments
over six years.
On April 20, 2010, a blowout at the Macondo well, located 67 kilometres off the coast of Louisiana, killed 11 employees, injured 17 more and caused the
largest oil spill in American history. An estimated five million barrels of oil flowed into the Gulf of Mexico for three months until the well was finally
capped on July 15.
In a release, BP said it has paid out more than US$9 billion in claims to businesses, government departments and individuals affected by the spill and
expects to pay roughly US$7.8 billion in future settlements. The U.S. government intends to continue to pursue further civil action against BP. – H.M.
Mining academy opens in Flin Flon
Now up and running, the Northern Manitoba Mining Academy in Flin Flon aims to increase opportunities for residents to fill future jobs in the region’s
Executive director Rob Penner said the academy will adapt its courses to suit industry demands.
“We don’t have a set repertoire of programming that we deliver year after year,” he said. “Our curriculum and programming evolves all the time and
responds to the needs of industry.”
HudBay Minerals, for instance, expects its Reed copper mine near Flin Flon to begin production within a year and Penner said the company will need skilled
underground miners. The academy will partner with industry, which can sponsor students in programs and volunteer its own personnel to conduct training
courses. The academy will also work with universities to develop its curriculum.
Penner said exploration technician and diamond driller helper programs are already underway and that he hoped to soon offer the first year of the
University of Manitoba’s geological sciences program. The 3,500-square-foot academy, operating under the University College of the North, will provide
fall-arrest, all-terrain-vehicle certification and safety courses, along with a variety of other training programs.
The academy boasts an underground mining simulator, a wet lab and mineral analysis and microscopy equipment so research work can be conducted in the area. – H.M.
Ottawa sued for Quebec fracking ban
Lone Pine Resources, Inc. wants $250 million in federal compensation for oil and gas exploration permits revoked by the Quebec provincial government in
2011. A tribunal held by a World Bank organization will determine if assets were indeed expropriated from an American company, a violation of NAFTA’s
Chapter Eleven, which protects foreign investors.
“[Canada] is responsible under NAFTA for the responsibilities of the province, which it can’t control,” said Peter Kirby, a Montreal-based senior partner
with Fasken Martineau. He noted that if the tribunal sides with Lone Pine, Canada, and not Quebec, would be obligated to pay.
Although Lone Pine Resources Inc. is based in Delaware, it only has operations in Canada and is the parent company of Lone Pine Resources Canada Ltd.,
which is headquartered in Calgary. Those are factors which, said Kirby, will throw its status as a foreign investor into question.
Quebec’s Bill 18, the act suspending oil and gas mining permits in the St. Lawrence River, explicitly decreed no compensation would be awarded. – Z.M.