Teck announced that it will leave coal in the ground this year to match production with market conditions | Courtesy of Teck Resources
Teck to take conservative tack
Following record copper production in 2012, and an increase in overall coal- producing capacity, Teck Resource’s outlook for 2013 is optimistic but
cautious. In a February conference call to discuss year-end financial results with investors, CEO Don Lindsay confirmed the company would leave some coal
in the ground in 2013 due to current prices. “Coal production guidance is in the range of 24 to 25 million tonnes, and this is lower than our current
productive capacity of 27 million tonnes, as we continue to match our production to market conditions,” he said. Coal prices were down 37 per cent in the
fourth quarter of 2012 from that same period in 2011. Teck also produced a record 373,000 tonnes of copper last year – with 103,000 tonnes in the last
quarter – but will see a decrease in production due primarily to declining ore grades.
While Lindsay said the company preferred to stay the course, he did not close the door on a possible acquisition, particularly in either the copper or iron
ore areas. With a healthy $3 billion in Teck’s coffers, Lindsay hinted that a few assets had recently become available and a deal could be made if the
price was right. “Copper obviously is a priority for us and, with declining production for the next couple of years, it’s something that might fill the gap
there,” he said.
Attention and apprehension at PDAC
Despite the doom and gloom surrounding the mineral exploration sector, the Prospectors & Developers Association of Canada’s (PDAC) annual convention
attracted more than 30,000 delegates from around the world to Toronto from March 3 to 6.
The event, attended by international government representatives, mining executives, students, geologists and investors, included more than 20 technical
sessions and a variety of programs ranging from aboriginal engagement and consultation presentations to corporate social responsibility discussions and
“Although a lot of people were smiling, and I did talk to quite a few people who did deals over the week – and I think that is a focal point for the
convention – for the juniors sector and the grassroots exploration side of things, these are tough times in terms of raising capital,” said Ross Gallinger,
PDAC executive director.
During the current slowdown, Gallinger said PDAC will focus on helping companies retain highly qualified professionals in the exploration field and will
work on ways for companies to access capital and reduce costs in order to stay afloat. The association, for instance, will devote concerted lobbying
efforts to get the government to renew and extend the mineral exploration tax credit.
As for next year’s convention, to be held in Toronto from March 2 to 5, 2014, Gallinger said broad pieces of the agenda are already being lined up, but
planning is still in the early phase. “We haven’t looked that far ahead,” he said. “Of course, we have to revisit where the industry is in six months’
Stricter mine rehabilitation rules expected in Quebec
Making good on the Parti Québécois’ election promises, Quebec’s natural resources minister Martine Ouellet announced the government’s intention to
increase the financial guarantees required from mining companies early on to remediate the full mine site upon closure. Currently, companies are required
to provide guarantees for 70 per cent of the clean-up costs for accumulation areas like tailings and waste rock piles over a 15-year period. However, that
will soon change to 100 per cent of all rehabilitation costs within the first three years of operation, with 50 per cent due within 90 days of a site
closure plan submission, and 25 per cent due each of the next two years.
“What it means for a mining operation is it’s going to tie up capital earlier on in the process,” said Charles Kazaz, an environmental law specialist with
Blake, Cassels & Graydon LLP. The regulations are not part of Quebec’s pending draft mining act, as the new closure rules require cabinet and not
national assembly approval. Kazaz added these changes bring Quebec in line with other Canadian jurisdictions.
BHP Billiton CEO Marius Kloppers retires
The game of musical chairs continues. This time it was BHP Billiton boss Marius Kloppers who announced on February 20 that he would step down as CEO of the
world’s biggest mining company, effective May 10. Andrew Mackenzie, chief executive of BHP’s non-ferrous division, was named his successor. Mackenzie, 56,
said Kloppers had persuaded him to join BHP five years ago.
Kloppers has been with BHP for nearly 20 years and became the company’s CEO in October 2007, just before the onset of the global recession in 2008. “He
drove new investments into next generation opportunities, including U.S. onshore gas and liquids, and created one of the most valuable companies in the
world,” said chairman Jac Nasser in a statement. “He leaves BHP Billiton a safer and stronger company.”
Kloppers recently set out to simplify BHP’s portfolio, divesting of non-core projects and focusing on long-life and low-cost assets, which included selling
its diamond business to Harry Winston Diamond Corporation. BHP posted a US$4.23-billion profit in the second half of 2012, down 57.8 per cent year-on-year,
citing lower commodity prices as a factor. Mackenzie has stated his intention to continue BHP’s focus on capital discipline.
Coal mine blast kills 18 in Russia
A methane explosion at Severstal’s Vorkutinskaya coal mine in Russia killed 18 miners on the morning of February 11. According to the company, three other
workers were injured in the blast – with one requiring medical evacuation to Moscow. The Russian government’s department of emergencies announced that 241
workers were successfully evacuated from the mine, located north of the Arctic Circle near the town of Vorkuta.
The mine reopened on February 15, but operations at the affected mine face in the south section were suspended with its tunnels sealed to allow the
government to investigate the cause of the blast. “We cannot tell what may have caused the blast right now because the investigation of the explosion
circumstances is not over yet,” said Anastasia Mishanina, a Severstal spokesperson. “It will take some time.” Severstal has pledged roughly $1.33 million
to compensate the miners’ bereaved families.
Gravelle back as Ontario mining minister
Michael Gravelle is once again Ontario’s minister of northern development and mines, after Premier Kathleen Wynne tapped him to replace the retiring Rick
Bartolucci. Gravelle, a Thunder Bay member of the provincial parliament, who held the cabinet post from 2007 to 2011, said the implementation of Ontario’s
mine modernization act will be one of his main focuses early on. The act mandates early consultation between First Nations and mining companies, and
Gravelle said it provides clear and progressive guidance on aboriginal consultation.
One of the first calls Gravelle made after his appointment was to Joseph Carrabba, CEO of Cliffs Natural Resources, in which they discussed infrastructure
initiatives related to Cliffs’ proposed Ring of Fire chromite project. Cliffs has called for cooperation from various levels of government to develop
access to the area. “There is, I think, a role for us to play, but may I say there is a very important role for the federal government to play as well,”
Gravelle said, adding he is encouraged that the Harper government has assigned Tony Clement to provide leadership on the Ring of Fire file.
Bécancour plant project axed
Citing weak market conditions for titanium, along with its need to curb costs, Rio Tinto Iron and Titanium (RTIT) announced in early February that it would
halt a prefeasibility study looking at, among other things, building a multi-billion-dollar processing plant in Bécancour, Quebec.
The proposed plant was part of RTIT’s TiO4 project, designed to grow the company’s global titanium mining and processing operations. While prefeasibility
studies related to TiO4 were suspended for operations in Canada and Madagascar, a planned mine expansion in South Africa will proceed, as will exploration
work in Mozambique.
Bryan Tucker, spokesperson for Rio Tinto, said the decision will not affect the company’s TiO2050 project. This $800-million investment over five years in
Quebec, announced in 2011, will expand the capacity of RTIT’s metallurgical plant at Sorel-Tracy and extend the ilmenite mine life at Havre-Saint-Pierre to
2050. “It is important to note that the decision has nothing to do with the recent organizational changes,” added Tucker. Former CEO Tom Albanese was
replaced by Sam Walsh in January.