Category Archives: economic impact

Activist shareholders push against Jansen potash project

Funds to Go for BHP’s Jugular If Miner Doesn’t Deliver Goods

By  David Stringer

August 20, 2017, 1:00 PM CST August 20, 2017, 9:46 PM CST

  • Market to weigh returns, strategy as company reports Tuesday
  • Challenges remain on board renewal, potash spending: Tribeca


BHP Billiton Ltd.’s truce with activist investors led by billionaire Paul Singer won’t last long if the world’s biggest mining company doesn’t pump up returns and deliver on strategic reform in the wake of its expected bumper profit report this week.


The naming in June of BHP’s youngest director Ken MacKenzie, 53, as chairman from next month has helped soothe disgruntled shareholders including Singer’s Elliott Management Corp., while continued demand growth in China for iron ore to coal is boosting prices, swelling earnings’ forecasts and raising expectations for higher payouts.

“They’ve got the most breathing space they’ve had in a long time,” Peter O’Connor, a Sydney-based analyst with Shaw and Partners Ltd., said by phone. “But if they mess up, the activists are going to be back on their jugular.”

After raising its stake in BHP’s London-traded shares to 5 percent, Elliott on Wednesday expressed confidence MacKenzie will heed investors’ calls to exit U.S. shale and tighten the producer’s approach on capital allocation. The increased holding, which under U.K. law allows the fund to call a company meeting, means it can “monitor BHP’s progress and hold it accountable for delivering results,” the fund said.

BHP is forecast to almost triple dividend payments as it reports an expected profit rebound Tuesday, following Rio Tinto Group and Fortescue Metals Group Ltd. in boosting returns. Perth-based Fortescue on Monday boosted dividend payments and said it may raise returns further this year amid higher prices.

Elliott, which manages more than $33 billion of assets, is regarded as one of the world’s most prolific activist investors, and is currently tussling with Warren Buffett’s Berkshire Hathaway Inc. over the firm’s offer for Texas’s largest power distributor. The fund has also shown it can be an enduring critic — battling Argentina for 15 years over its debt default.

BHP rebound forecast Aug 2017

MacKenzie met investors globally in recent weeks to listen to concerns over the company’s performance that gathered pace after Elliott launched its campaign in April. Elliott and BHP declined to confirm whether he held talks with Singer’s New York-based fund.

Elliott argues BHP’s leadership has destroyed about $40 billion in value and wants it to enhance returns, refresh the board, simplify its corporate structure and overhaul its oil and gas unit. The company on Thursday approved a $2.5 billion copper mine expansion in Chile and the new chairman will lead deliberations on pending investments in growth projects from potash to oil.

“He’s taken views on board on his listening tour and he’s been well received,” said Andy Forster, senior investment officer at Argo Investments Ltd., which manages more than A$5 billion ($4 billion) and holds BHP’s Sydney-listed shares. “It’s amazing how quickly things can turn around. With a higher iron ore price, the mining company balance sheets are in a much better position.” Argo was represented in a meeting with MacKenzie, he said.

BHP’s underlying earnings in fiscal 2017 are forecast to jump sixfold to $7.3 billion, according to the average of 18 analysts’ forecasts surveyed by Bloomberg, after plunging last year to a 15-year low. The full-year dividend will rise to 88 cents a share, from 30 cents, according to the forecasts. BHP’s consensus estimated payout of about 60 percent of earnings, above its 50 percent minimum threshold, compares with Rio Tinto’s first-half, total returns of 75 percent, according to Macquarie Group Ltd.

To read a preview of BHP’s full-year earnings, click here

The producer could use the profit bonanza to announce a modest buy-back alongside a higher dividend and additional debt repayments, according to UBS Group AG. While BHP may be tempted to follow Rio in boosting returns, it’s unlikely to do so before MacKenzie’s arrival in his post next month, Credit Suisse Group AG said in a note Wednesday.

BHP advanced 1 percent to A$25.63 at 1:43 p.m. in Sydney trading Monday.

BHP activist threats Aug 2017

Shareholders are looking to MacKenzie to begin to outline plans for improvements when he makes a first scheduled public address at an annual meeting in London in October, according to Tribeca Investments Partners Pty. BHP continues to need to carry out a wider overhaul of its board and should defer plans to enter the potash market, according to the fund, which also met with the incoming chairman.

“We’re pretty bullish on the company, but bullish because of the prospect of change,” said Craig Evans, a Sydney-based portfolio manager at Tribeca, which in May called on BHP to sell the shale assets and overhaul its leadership. “One of the things that worries us is what their intentions are with potash — we are not of the belief that they should be throwing money at it right now.”

The most important market news of the day.

The $12.8 billion Jansen potash project in Canada should be mothballed, according to a Deutsche Bank AG note Thursday. The company also should think twice about approving a $5 billion expansion of its Olympic Dam mine in Australia, Deutsche analysts including Sydney-based Paul Young wrote. The bank endorses BHP’s strategy on conventional oil — though not shale — and the longer-dated Resolution and Antamina copper projects in the U.S. and Peru.

“We want to see where the company is headed under the new leadership,” Tribeca’s Evans said. “They have an opportunity now to do a bit of self-help.”




Get ready for the oil price spike—in 2020


Get ready for the oil price spike—in 2020: Yager

By David Yager

Aug. 18, 2017, 2:05 p.m.


oil pump jack

A remarkable consensus has emerged among the world’s oil price crystal ball gazers. Demand continues to grow. Global spending cutbacks are setting up a supply shortage. It’s just a matter of time.

Despite the relentless hype about oil demand destruction caused by electric vehicles, renewables and petroleum-driven climate change, there is no end in sight for oil being the world’s number one transportation fuel. Prices are going to rise.

And the tall foreheads who study these things have calculated the price spike will take place in exactly three years. Call it 20/20 foresight. This level of forecasting precision has always been wrong in the past. Here’s the information. You decide.

Demand continues to grow. The International Energy Agency (IEA) reports consumption increased in the second quarter at an annualized rate of 1.5 million bbls/d while the U.S. Energy Information Administration (EIA) predicted global demand will reach 100 million bbls/d next year. According to the 2017 BP Statistical Review of World Energy, this is nearly 14 million bbls/d higher than 2008 meaning average growth is 1.4 million bbls/d per year.

Meanwhile, capital investment in new supplies has plummeted sharply since the price collapse. The IEA reported in its July 2017 annual global investment review from 2014 to 2016 reserve replacement CAPEX fell 44 per cent. This has recovered in 2017 but is not consistent.

While U.S. spending is up 53 per cent from last year the global average is only three per cent. As recently as March, the IEA warned that “global oil supply could struggle to keep pace with demand after 2020, risking a sharp increase in prices unless new projects are approved soon.” The IEA sees demand at 104 million bbls/d by 2022, 7.5 million bbls/d higher than the first quarter of 2017.

Continued demand growth combined with lower investment—plus ongoing continued decline rates from existing reservoirs—ensure the supply demand curves will cross and oil prices will rise. What we see today is not what we’re going to get in the future.

So why 2020?

One factor is inventories. An article on on July 19 noted that while Saudi Arabia did indeed join the rest of OPEC in cutting back production on January 1, that didn’t mean it couldn’t sell oil out of inventory. According to a Reuters news report, Saudi inventories were down 71 million barrels since a peak in October of 2015 to the lowest level since 2012. The Saudis are actually selling more oil than they are producing, which doesn’t help.

A CIBC Investment Research note on July 19 reported as of mid-July U.S. inventories were coming down but only recently returned to 2016 levels and remain on the high end of the five-year average. The Organization for Economic Cooperation and Development (OECD) inventories for the same period are finally within five-year averages and below 2016 levels.

Inventories matter to commodity traders because this data from U.S. and western OECD numbers is the only information they can trust to determine if there is actually less oil around thanks to OPEC supply cutbacks. Because even when OPEC reports total output it uses some western data because accurate figures from its members are either unreliable or non-existent.

The other factor is increased production from long-term projects like deepwater offshore and oilsands coming on stream for the first time in 2017 and 2018. According to CIBC, new production from Brazil, Canada, the U.S., Russia and other countries will contribute two million incremental bbls/d this year and another 1.3 million next year. The EIA reports U.S. production growth thanks to the Gulf of Mexico and the Permian Basin continues with output in that country up one million bbls/d on July 17 compared to the recent low in October of 2016.

The good news is there are no meaningful big projects slated for 2019 and beyond. The bad news is this output greatly reduces the impact of the OPEC et al production cuts.

Therefore, based on what everyone knows today, the better days for oil prices are 2019 and beyond which is 2020. At the recent World Petroleum Conference in Istanbul in early July, this view was shared by Total SA, Weatherford International, Baker Hughes and Halliburton.

However, at the same conference Saudi Arabian Oil Company chief executive officer Amin Nasser warned he is increasingly worried about where the oil will come from next decade after US$1 trillion in investments have been postponed since the price collapse.

Historically, most oil price forecasts have been wrong. Supply will decline because of spending cuts and demand continues to grow. Prices will indeed rise but sooner than everyone thinks.



Pipeline-constrained shale play sees new life as Dakota Access comes on line

As Dakota Access comes online, America’s most pipeline-constrained shale play sees new life

The completion of the Dakota Access pipeline in June has upended the region’s dependence on rail — good news for Calgary’s Enerplus

Jess Snyder

August 17, 2017

Financial Post


Ian Dundas is the president and CEO of Enerplus in Calgary, Alberta.

Ian Dundas expects to see far fewer oil trains rumbling across the sprawling farmlands of North Dakota in coming years.

Dundas is the chief executive of Calgary-based Enerplus Corp., one of the first companies to enter the Bakken, an oilfield spanning southern Saskatchewan, North Dakota and Montana. In the absence of available pipeline capacity, companies operating in the region had for years moved oil on an existing rail network in Canada and the United States. As production boomed, producers began investing more in oil-by-rail terminals, paying a premium to get their product to market.

But the completion of the highly contentious Dakota Access pipeline in June, a major oil conduit carrying some 570,000 barrels per day of crude from North Dakota to Illinois, has upended the region’s dependence on rail.

The pipeline has dramatically reduced shipping costs for Bakken companies, bringing overall costs in line with other U.S. shale producers, like those in the highly prolific Permian Basin in Texas and New Mexico.

“It’s going to be a pretty powerful advantage that we haven’t had for the past six or seven years,” Dundas said in an interview Thursday.

Production in the Bakken began to rocket upward around 2009, growing from roughly 200,000 barrels per day to more than one million bpd in less than five years. The rapid growth did not come alongside an equally fast expansion of pipelines, however, and the pipeline system in the region quickly became congested. By 2014, Bakken producers were shipping around 500,000 barrels per day of crude by rail car, nearly half of the 1.2 million bpd total production.

Before Dakota Access, about 25 per cent of the oil shipped out of the state travelled by rail. Now that figure is closer to seven per cent, according to recent data.

The higher availability of pipeline capacity has translated into much lower shipping costs for producers, giving companies more value for every barrel of oil.

In early 2014, for example, Enerplus was receiving a US$13 per-barrel discount for its oil compared to West Texas Intermediate, a benchmark price for U.S. crude traded in Cushing, Okla. Most of this was tied to higher shipping costs (moving crude by rail costs around US$10-14 per barrel, compared with about US$5-6 on Dakota Access).


By last year, that total discount had shrunk to US$7, and it’s expected to fall to low as US$3.50 in the second half of 2017, Dundas said.

“These are pretty dramatic moves when you talk about the lower margins that everyone is struggling with in a $50 oil world,” Dundas said.

The Dakota Access pipeline, owned by a consortium of companies led by Dallas-based Energy Transfer Partners, was loudly opposed by environmental groups and First Nations groups living along the proposed route.

The Sioux First Nation in Standing Rock, a reservation that straddles the North and South Dakota borders, protested the pipeline in a standoff that lasted for months. People were eventually forcibly removed from a site they had used as a staging ground for the protest.

Although the pipeline has been in service for months, the same opposition groups are now trying to get the pipeline shut down due to allegations the consortium had removed too many trees and improperly handled some soil during construction.

In June, a federal judge seemed to question the validity of Dakota Access’s approval based on the alleged infractions, saying the consortium’s study didn’t fully address environmental risks caused by potential spills. U.S. Army Corps of Engineers, who carried out the initial environmental review, has been asked to compile a new report.

Observers don’t expect the project will be shut down due to the decision.

“I think that would be very, very unlikely,” said Patrick O’Rourke, an analyst with AltaCorp Capital in Calgary. “I can’t think of a situation has come online, started flowing, and then had to cease operations.”

On Thursday, the North Dakota Public Service Commission delayed hearings on whether the company violated state rules.

Bakken producers are nonetheless relieved to improve their margins amid persistently low oil prices. Analysts say Bakken producers tend to have slightly higher break-even prices than Permian producers, though Dakota Access will make many producers competitive in the low US$40-range.

“A lot of us are thinking you have to live in this kind of range-bound world, and that means you have to keep your costs low,” Dundas said.

“Oil-by-rail as a concept is unique. It’s really quite inefficient, but it has definitely served a role during more robust oil prices, where you are able to layer on that extra cost. And that is what propelled all of this extra growth in North Dakota.”

Financial Post




Technology set to unleash mining innovation – Anglo’s O’Neill

Technology set to unleash mining innovation – Anglo’s O’Neill

16th August 2017 BY: MARTIN CREAMER

Tony O'Neill Anglo mining

JOHANNESBURG ( – In the next ten years, technology is set to unleash a wave of mining innovation, with the sweet spot centred on changing the thinking around orebodies and processing plants rather than much-spoken-about automation.

“Our focus has changed from hunting technologies to hunting value,” Anglo American technical director Tony O’Neill told Creamer Media’s Mining Weekly Online in an exclusive interview.

Three-dimensional metal printing, nonexplosive breakage of rock and microwave preconditioning of rock, as well as medical imaging equipment, are finding rapid application in mineral mining and processing.

The word in the industry is that mining companies that embrace the new era will be successful and the ones that do not will ultimately not survive. Anticipated are mines with footprints that can more readily coexist alongside a community in much the same way as farming.

The good news is that pathways are already starting to develop that change the current mining and processing paradigm.

Technologies are being reconfigured to make mining and processing far more precise, which offers massive potential reward.

Currently, much larger volumes of waste are brought to surface, compared with the scenario more than a century ago. This is because, outside of safety improvements, old methods are still being used today. For instance, in 1900, to obtain 40 kg of copper, 2 t of material had to be mined using 3 m3 of water and 10 kWh of energy, compared with currently having to mine 16 times more material, using 16 times more energy and drawing on double the volume of water.

“It’s risen at such a rate that it’s becoming unsustainable,” O’Neill commented to Mining Weekly Online.

While mining was, in the past, content to be a research and development laggard, other industries were not – and they shot ahead on the technological front, proving up technology that is now available off the shelf for mining to implement.

A successful pilot plant is already pointing the way for the more widespread introduction of coarse-particle recovery, which brings considerably larger-sized particles to surface and slashes water use.

Moreover, with the maturing of robotics technology, research is also being conducted into the introduction of swarm robotic mining, involving the use of small robots that will bring ultra-precision to a hugely wasteful industry.

As more precise mining methods gather momentum, those 40 kg of copper used to illustrate mining’s deteriorating position may one day be mined without any waste at all.

Coarse-particle recovery and advanced fragmentation (using smart blasting technologies) are good examples of putting existing technologies into new configurations to deliver value right now.

None of the technologies used is unproven, but what Anglo has managed to do is configure them in a way that adds immense value, with minimal additional capital investment.

While technology will have to be honed specifically for mining at some stage, a surfeit of technologies is ready for instant application.

“It’s more about a mindset change than having to make massive investments,” Anglo American technology development head Donovan Waller added to Mining Weekly Online.

Much of the improvement is being driven by data science and the modern world’s ability to analyse increasing volumes of data to a very high degree.

Virtually all the technologies needed have come of age; one of the biggest being the stabilisation of information technology, in which other industries have tended to advance much faster than the mining industry. These other industries include consumer electronics, manufacturing, automotive engineering and the pharmaceutical sector.


The coarse-particle recovery process captures coarse particles that are not recoverable using conventional flotation.

By needing to grind to only 500 micron instead of 170 micron, capacity is increased. Less energy is required in the crushing and grinding and water is more easily extracted from the larger particles and then recycled, significantly reducing the need for fresh water. The extraction of interstitial water results in a dry product, which can be dry-stacked, ultimately eliminating the need for tailings dams.

In copper, coarse-particle flotation has the potential to change the cost curve of the industry by allowing for 30% to 40% more throughput at a recovery loss of 2% to 3%, a 20% energy saving and 30% to 40% less water.

This is already a significant achievement for Anglo American in copper, and the company is hopeful of migrating it to other commodities, including platinum in South Africa, where testwork is still at an early stage.

If, for example, platinum ore can be pre-sorted in advance and be presented at a grade of 10 g/t instead of 4 g/t, output can be increased by two-and-a-half times from the exact same capital invested.


Swarm robotic mining descales mining to make it much more precise, mimicking the actions of a swarm of locusts devouring a field or an army of ants working independently to execute tasks.

The technology envisages highly selective mining of ore types linked to real-time algorithms across a broad spectrum that includes constraints in energy, prices and associated issues.

As many people as possible are taken out of harm’s way in a remotely controlled environment.

Small operational teams will communicate with each other, without the need for a big-brother view from the surface that controls each of those small operational elements independently in self-learning operations.


Currently, the industry spends a lot of time adding water to its processes and even more time trying to get the water out afterwards.

A pathway has been developed to end up with a waterless mine through the adoption of a closed loop, using only a fixed amount of water that is then recycled time and again. Anglo already recycles or re-uses more than 60% of its water requirements.

Ultimately, the aim is to arrive at potentially chemical means that allow for the liberation of particles without having to add water to them, to arrive at a waterless process.


In terms of energy, the focus is on using renewables for energy self-sufficiency.

The solutions will be a combination of sun and wind. As the sun does not shine at night and the wind does not always blow, other energy forms, including gravity, will take advantage of the mining sector having depth as one of those solutions.

Ultimately, nuclear may be incorporated should it become “greener”, smaller and more modular, as is expected.


Instead of spending billions to build one big plant, small modular plants will be built and scaled up quickly, with the lifespan of the modules being influenced by the next step up in technology.

Mines will move away from using the same technology for long periods of time and outlaying large capital expenditure on plants that last for 50 years and more.

Smaller, modular, cheaper units will allow for technology upgrades every five years, providing scalability as well as the opportunity to ramp up on new technology that has arisen.

Although mining is not an industry that has been used to technological change, there is no reason why it should not, from now on, accelerate advancing technology quickly, as other industries do.

“Our FutureSmart Mining programme is about far more than technologies alone. It is end-to-end innovation, in its broadest sense, addressing all aspects of sustainability for the business – safety, health, the environment, the needs of our communities and host governments, and the reliable delivery of our products to customers. Those that innovate and are agile will thrive in this industry. That is mining’s new future.” O’Neill concluded.




Venezuela’s U.S. Refineries Turn to Canada for Oil

Venezuela’s U.S. Refineries Turn to Canada for Oil

By  Lucia Kassai  and  Robert Tuttle

August 10, 2017, 5:33 PM CST August 11, 2017, 2:00 AM CST


  • Refiner is said to seek Canadian oil for Gulf Coast plants
  • Country directs more oil to China, India to pay back debts

Venezuela’s oil-supply woes are so dire that its U.S. refineries are turning to Canada for help.

Citgo Petroleum Corp., the largest U.S. importer of Venezuelan oil and a unit of state-owned Petroleos de Venezuela SA, has started to make quiet inquiries to buy Canadian crude for its refineries in Texas and Louisiana, according to people familiar with the situation. The imports would be used to replace dwindling shipments from Venezuela, where output dropped to a 14-year low in July.

Venezuela, the country with the world’s largest crude reserves, is shipping less to Citgo as it redirects more of its shrinking supply to China and India to repay loans. Canadian crude, equally heavy and high in sulfur as Venezuelan oil, is a natural replacement, said Dinara Millington, vice president of research at the Canadian Energy Research Institute in Calgary.

“Canada would be in the best position because that volume would be more or less guaranteed,” Millington said.

Venezuala oil into USA

This would be the first time Citgo imports Canadian oil for its Lake Charles, Louisiana, and Corpus Christi, Texas, refineries in more than two years. Although Canada is the largest supplier of oil to the U.S., more than half of that is absorbed by plants in the Midwest. Limited pipeline connections and expensive rail make it hard for Canadian oil to reach buyers along the U.S. Gulf Coast, home to the world’s largest cluster of refineries.

Last week, U.S. imports from Venezuela fell to 507,000 barrels a day, the lowest level in five months, according to data from the U.S. Energy Information Administration. The latest monthly data show that Citgo’s Gulf refineries took 176,000 barrels a day from Venezuela in May, the least since December.

Spokesmen at PDVSA and Citgo didn’t return emails seeking comment.

Other Refiners

Citgo’s not the only company looking north. U.S. refiners have also been on the hunt for alternative supplies amid concern that U.S. sanctions, currently aimed at Venezuelan nationals, may expand and target oil imports from the South American country. One Gulf refiner has started to test fuel oil from Russia and the Middle East and diluted bitumen from Canada as potential replacements, according to a person familiar with the matter.

Citgo is starting to feel the effects of falling oil output in Venezuela, exacerbated by 20 years of cash-for-oil deals signed with China, Japan, India and, most recently, Russia. Rosneft PJSC, which signed two long-term oil and oil product supply agreements, said it has made total prepayments for future oil supplies of about $6 billion. That leaves less oil to be processed by the refineries controlled by PDVSA.

The Venezuelan crisis isn’t only affecting the Citgo refineries. Venezuelan refineries are operating at less than half of their capacity. In Curacao, PDVSA’s Isla refinery has been importing light U.S. oil since last year to make up for lower domestic production of light grades.

Canadian Producers

While Venezuela hurts, Canadian producers seem to be finally out to catch a break. A reduction in Venezuelan imports may bolster the case for the Keystone XL pipeline, which would carry western Canadian crude directly to the Gulf of Mexico, Millington said.

Heavy crudes from Canada, Mexico and elsewhere have increased in value after OPEC and other producers capped output, reducing primarily supplies of less-expensive heavy crude. Western Canadian Select was $10.05 a barrel below benchmark U.S. West Texas Intermediate on Thursday, from a $16.15 discount at the end of 2016, according to data compiled by Bloomberg.

Higher prices for Canadian heavy crude would come at a welcome time for the industry, said Trevor McLeod, director of the Natural Resources Centre at the Canada West Foundation.

“The energy sector in Alberta is struggling a bit right now,” McLeod said in an interview. “They’d absolutely welcome a price increase.”

— With assistance by Sheela Tobben, Kevin Orland, Stephen Bierman, and Dina Khrennikova




Energy sector loses an ally with Brad Wall’s departure

Yedlin: Energy sector loses an ally with Brad Wall’s departure


Published on: August 11, 2017 | Last Updated: August 11, 2017 6:05 AM MDT

FILE PHOTO: Premier Brad Wall speaks with members of the media following the 2017 budget speech at the Legislative Building in Regina Wednesday, March 22, 2017. THE CANADIAN PRESS 

The energy sector is one year away from losing a passionate and articulate advocate.

Saskatchewan Premier Brad Wall took the political world by surprise on Thursday, announcing he will be retiring from politics.

The reaction from Canada’s energy sector could only be described as one of collective disappointment, though many expressed views that he will continue to be active and effective in a different role, once he determines what that should be.

Wall was the outspoken advocate — the guy who wasn’t afraid to link economic growth driven by natural resource development, talk of its importance not just to the province of Saskatchewan but to the entire country.

He got competitiveness. He understood the challenges faced by the oilpatch and the need for gaining access to new markets. He didn’t care for a carbon tax — and was very outspoken on what the implications were for trade-exposed industries.

His pronouncements on the subject of a carbon tax were received as positive by some, but not all; there was a sense that Wall was out of step with what was taking place on carbon pricing — not just in Canada but around the world.

That said, there is no denying he was — and is — passionate about his province and his country.

“He understood the economic pillars of Alberta, Saskatchewan and British Columbia in an unusually experienced way … if it made sense, he’d stand up for the economic interests of Western Canada,” said Ken Hughes, former Alberta natural resources minister.

That’s why, when he was honoured by the Fraser Institute last November at a dinner in Calgary, he was welcomed and thanked with two standing ovations.

The master of ceremonies, Andrew Judson, went as far as proposing a trade of sorts that evening: Wall in exchange for a number of Calgary-based but Saskatchewan-born business leaders, including Murray Edwards, Brett Wilson and Grant Fagerheim.

“He was the only credible politician in my mind, in Canada, defending logic and reason on issues around climate change, on issues around the economy, around energy, around pipelines around competing with that other nation to the south,” said Wilson on Thursday. “He was the sole voice of reason in office.”

The news hit the same day as the B.C. government said it was seeking intervener status on the Trans Mountain Expansion project and it dramatically underscored the differences between the governments of B.C. and Saskatchewan.

Where one province thinks about the impact on the country, the other does not.

There is more than a wee bit of irony in the fact that the steel being used in the construction of the TME project will be coming from a mill in Regina.

In other words, energy development is not province-specific, neither when it comes to benefit nor when it comes to risk.

“I don’t think we have had a better advocate, across jurisdictions, that’s been able to build bridges for the betterment of the country since Peter Lougheed,” said Don Chynoweth, president of SNC Lavalin O&M Logistics.

On a provincial level, Wall has taken the approach — not unlike Lougheed — of the province coming first and the party second; if the government looked after the electorate during its mandate, it would be re-elected.

The current president and chief executive of the Canadian Association of Petroleum Producers, Tim McMillan, served as the minister for energy and resources under Wall.

“I had the pleasure to work with him for seven years,” said McMillan. “He was a very disciplined politician. He was clear it was your job to serve the citizens of Saskatchewan from whom you would be asking for support in the next election. He was unabashed in his belief that growth was important — not for growth’s sake but that growth allowed governments, his government, to invest in health care, social programs and in the people who needed it most.”

He was very good at tying the growth to the ability to provide services to the citizens of Saskatchewan.

“As premier, he represented everyone,” said McMillan.

And that included the energy sector when it needed a strong voice on the national stage.

McMillan said Wall was proud of Saskatchewan’s contribution to Canada’s energy sector and that he wanted to see it grow.

The fact Wall was unambiguous in wanting to see Saskatchewan as a place for energy companies to invest, meant there was certainty at a time when other provinces, such as Alberta, were changing policies.

For Scott Saxberg, president and CEO of Crescent Point Energy, the certainty provided by the investment climate in Saskatchewan — because the rules didn’t change — has been very important to his company through the years.

Equally important, said Saxberg, is the fact the province is willing to deal with industry — and companies — directly, as issues have surfaced; it’s an approach, he said, that’s not necessarily followed in other jurisdictions.

But it was during his first term as premier that Wall faced a big test: that would have been the hostile takeover bid for Potash Corp. by Australia’s BHP.

After much consultation — that included significant time with former Alberta premier Peter Lougheed — Wall came out against the bid, making a strong case for leaving Potash as a Canadian-owned company.

“That was a turning point for Saskatchewan because the province did not lose an important industry to a foreign player,” said Chynoweth, who has known Wall since 1989 when he worked for Chynoweth as a summer student in Saskatchewan.

Wall’s work on behalf of Canadian companies — mostly natural resources and agriculture —  has extended south of the border, where he has played an important role in maintaining and expanding trading relationships through the complexity of changing administrations.

But there is one area, however, where the nationalism goes out the window and it becomes all about Saskatchewan: football.

Nothing comes between Wall and a Saskatchewan Roughriders game. So in that context, it’s a good thing he has a year before he steps down. By then, the Riders might have figured out how to play a decent game.


Miners Built on Wildcat Culture Now Looking For Partners

Miners Built on Wildcat Culture Now Want to Share the Risk

By  Thomas Biesheuvel

August 10, 2017, 5:00 PM CST August 11, 2017, 2:07 AM CST

  • Chastened by metals slump, new projects idle awaiting partners
  • Industry made by swashbuckling gamblers ‘has lost its nerve’

Swashbuckling gamblers abound in the mining business, where billions are spent searching for mother lodes in some of the most inhospitable places on the planet. But a prolonged slump in metals and big losses on earlier solo projects are turning top producers into risk-avoiding wallflowers.

“The mining industry has lost its nerve,” said Mark Bristow, chief executive officer of Randgold Resource Ltd., a London-listed producer of gold in Africa. “The new fad in town is joint ventures. It’s very strange if you’re a major miner. They should be comfortable in their ability.”

At a time when prices are recovering — helping to make new projects viable again — metals producers including Anglo American PlcBHP Billiton Ltd. and Rio Tinto Groupare seeking partners to share the investment risk rather than going it alone as they have in the past. While the more-cautious approach is a consequence of the near-death experience of the 2015 commodity crash, it could limit the payoff for shareholders during a metals rally.

Mining spending Aug 2017

The shift to more conservative financing comes as the industry confronts a core dilemma: the richest mines in the safest or most-accessible places have mostly been found and built. That means companies are increasingly looking to develop ore bodies that are of lesser quality and may be in higher-risk countries.

“They have to spend more to mine less,” said Rob Crayford, a fund manager at CQS Asset Management Ltd.’s New City Investment Managers in London. “A lot of the projects out there aren’t that great.”

Expansion Partners

Still, while prices remain well below their post-recession peaks, they’re up enough in the past year or so for companies to consider dusting off expansion plans they shelved during the glut. The London Metal Exchange index of six base metals, including copper and aluminum, has rallied almost 50 percent from a low in January 2016. Gold is heading for the biggest annual gain since 2010, and iron ore has almost doubled from the all-time lows reached in 2015.

S&P Global Market Intelligence estimates that exploration drilling for metals has risen for five straight quarters, off to its fastest start to a year since 2009, and there are signs the pace is accelerating.

Anglo American, a London-based producer that has been mining metal for more than a century, says its No. 1 new project is the giant Quellaveco copper deposit in Peru. But the company wants a partner before development starts, and says it will seek joint ventures for all future new mines, known as greenfield developments.

Melbourne-based BHP, the world’s largest mining company, is set to commit to the $13 billion Jansen potash mine in Canada after years of study, but says it wants to bring in a partner to help share the risk. London-based Rio Tinto also is seeking partners for future developments, while Glencore Plc says it won’t build any new mines at all.

“I’m not excited about greenfield,” said Chief Executive Officer Ivan Glasenberg, noting that over-development in years past created the oversupply and low prices that led to huge losses for the industry. “Unless something changes in the world, I don’t see Glencore doing greenfield for awhile.”

Acquisitions are more likely, Glasenberg said, because it doesn’t make sense to “bring new tons into the market which cannibalizes your existing production.”

The industry is still smarting from the self-inflicted wounds. Anglo’s giant Minas Rio iron-ore mine in Brazil cost $14 billion to buy and build, but it became an expensive mistake as prices plunged by more than half. Barrick Gold Corp., the largest bullion producer, spent $8.5 billion on the Pascua Lama project high in the Andes that has been stalled since 2013. The company recently signed a deal with China’s Handong Gold Group that may lead to a joint venture on the project.

It’s not just new mines that are making the industry more cautious. Some companies made investment mistakes that compounded the losses when prices fell. BHP has said its $20 billion spending on shale deposits was a mistake, while Glencore took a $7.7 billion writedown on its Xstrata Plc takeover. Rio Tinto bought coal assets in Mozambique for $3.1 billion that it later sold for $50 million.

To be sure, joint ventures aren’t a new idea. The giant Escondida copper mine in Chile is operated by BHP but also owned by Rio Tinto and Japanese companies including Mitsubishi Corp. But the push to share more of the risk is a marked contrast to the expansion during the previous bull market.

Still, the more swashbuckling method of going solo on projects may be the most beneficial for shareholders, according to Randgold’s Bristow, whose company built all of its three mines from scratch, including a joint venture with Johannesburg-based AngloGold Ashanti Ltd.

“Greenfield is absolutely where you should put all your money,” Bristow said. “But a lot of these companies are still dealing with their over-exuberant growth during the super cycle.”


Saskatchewan Premier Brad Wall retiring from politics

REGINA — The Canadian Press

Brad Wall says he is retiring from politics after a decade as premier of Saskatchewan.

He made the announcement in an online video this morning saying it’s time for renewal for the Saskatchewan party and the province.

Wall says he will stay on until his successor is chosen.

Wall and his Saskatchewan Party have won three consecutive provincial elections, the last in 2016.

The 51-year-old routinely places high in opinion polls ranking the country’s most popular premiers and his knack for the zinger soundbite has made him a national political figure.

But he’s faced headwinds in recent months, especially after his government tabled an austerity budget this spring that boosted the provincial sales tax and made deep cuts to social services.

He’s also waged war with Prime Minister Justin Trudeau over the federal government’s plan to force provinces to put a price on carbon.

Lots of questions at wind turbine regulation meeting – RM of Rocanville, SK

August 9, 2017 • Saskatchewan

Lots of questions at wind turbine regulation meeting

Credit:  By Kevin Weedmark, The World-Spectator

wind turbines

There were lots of questions at an RM [rural municapility] of Rocanville public meeting Thursday regarding the regulation of wind farms.

The RM held the meeting to gauge public opinion on the bylaw regarding siting of wind farms. With a proposal for a new wind farm in the early stages, two RM residents asked the RM to hold a public meeting to discuss the current bylaw regarding the siting of wind farms.

The current bylaw limits the height of wind turbines to 100 metres, while new turbines are up to 200 metres high. Council members intended the bylaw to restrict wind turbines within 1.6 miles of a residence, although the wording of the bylaw is unclear on that point.

A subsidiary of NextEra Energy Canada is investigating the possibility of developing the Tantallon Wind Energy Centre in the RM.

In a statement to the World-Spectator, Tera Tyson of NextEra said, “We are committed to meeting or exceeding all the regulatory requirements and working with the community to ensure we select the most appropriate sites for generating wind energy.

“We are currently in the beginning stages of development and still working on our siting process, including meteorological testing, which will determine approximately where the project will be located and the number of turbines it will include.

“We are not working on a specific deadline to develop the Tantallon Wind Energy Centre, but I can tell you that we will not be submitting this project into SaskPower’s Wind RFP that is currently pending.”

NextEra wants to install a tower to test wind speeds in the area of the proposed wind farm.

NextEra had been expected to send a representative to the Thursday meeting, but didn’t. In a letter to Reeve Murray Reid on Monday, NextEra wrote that no one would be available for the meeting, but the company could send representatives to a future meeting.

The company suggested in the letter some changes to the RM’s bylaw on wind turbines. “Restricting turbines to 100 metres from the ground to blade tip would make siting wind turbines in the RM essentially impossible,” according to the letter. The company suggested including both a hub height and a maximum tip height in the bylaw to add clarity.

“To provide a frame of reference, the current industry standards for turbine hub heights range up to about 120 metres and typical rotor diameters are approximately 130 metres,” the company wrote. “Given that turbine technology continues to advance and evolve over time, we suggest the maximum height of the turbines be 200 metres, rather than the 100 metres stated in the bylaw. Otherwise, it is unlikely that any utility scale project would be built in the RM.”

SaskPower plans a series of requests for proposals (RFPs) to ramp up wind energy generation over the next few years.

Daryl Williamson and Rene Poelzer were the two ratepayers who first approached the RM about the need for a public meeting, and were the first to speak at the meeting.

“I’ve been looking into windmills and the distance from valleys and lake bodies. In this case the three bigger landowners who want to do this, their homes won’t be affected anyway—too close to the valley. Mine probably won’t be affected—too close to the creeks,” Williamson said at the meeting.

“The way this outfit went about doing this is a little fishy. I thought if they came and approached the RM to begin with, then held a meeting to say what their proposal was, instead of coming in and trying to sign up landowners.

“I had them come to my place. They were very pushy and they didn’t tell the truth more than once. I had more concerns of environmental impact. I think this RM has had enough between power lines, potash, seismographic. I’m not sure we have to do more in this RM in terms of impact. I’m sure there are other RMs that need money more than we do.

“As far as money for the RM, I don’t think we’re really hurting. I don’t think that should be a priority anyway. No matter how many tax dollars are coming in, if you divide them by the quarters in the RM, it’s not going to amount to a lot.

“I just found that the outfit that was going around was very pushy. They weren’t the company, they were just an outfit paid to sign up leases.”

Rene Poelzer provided the other side of the argument.

“I look at it totally differently,” said Poelzer. “If you are a progressive community, you don’t want to restrict possible income. This is a $300 million project, which will bring more tax income than all of our land taxes in the RM.

“The government of Saskatchewan wants 1.6 million megawatts by 2030, so it’s going to be done someplace. It’s green energy. We’re all comparing ourselves to Moosomin. The new technology is much better. Once you start putting in bylaws and restrictions, you also restrict other innovations and creativity.”

He said the 100 metre height bylaw isn’t realistic, and suggested that the reference to 1.6 km in the bylaw isn’t worded properly to actually prevent wind turbines from being that distance from a home.

“This country’s built on innovation and creativity. You can’t stifle that,” he said.

“I used to work in oil and gas for 10 years. I had to deal on the regulatory side, dealing with regulations,” Kyla Poelzer said at the meeting.

“When I read the bylaw it wasn’t clear. Kudos to the council for actually putting a bylaw in place. It’s very important. But it doesn’t address issues of noise, light, and decomissioning. And that’s something I’d like council to consider, to do a little more research. You want to have the regulations in place to deal with any issues.

“If you have really clear regulations, it can go a long way, because they absolutely have to follow them. I’m glad that there is a bylaw, but I would like to see a little more clarification on noise, light, and specifically decomissioning.”

One ratepayer asked why the RM would have a limit of 1.6 km from a house, suggesting the restriction could kill the project.

Another ratepayer pointed out that the restriction protects people who own an acreage or farm and do not want a wind turbine ruining their view.

Reeve Murray Reid pointed out that the bylaw as currently written doesn’t actually provide the protection as intended.

Council member Monica Ruhland said the financial impact of the wind turbines could be helpful for many farm families.

“Speaking personally, and not as a member of council, but as a landowner and a young farmer in the area, agriculture is very important in our RM and it can be difficult at times,” she said.

“We had hail that came through on July 21. If you had a turbine on one of your quarters that guaranteed you revenue of $47 to $95 an acre every year, if that was something you could count on, that would be a very important asset to any operation, which is a business. It is a consideration for everyone to think about, especially as a young farmer hopefully with a long future of farming in the area.”

Reeve Murray Reid said following the meeting that he was happy with how the meeting went.

“There are people with strong feelings on both sides of the issue, and I’m happy that people were able to express their opinions and they let us know we have some work to do on that bylaw.”

He said he’s personally in favor of the wind farm proposal, as he believes it would have a huge impact on the area, as well as helping the RM in the long term.

“We’ve seen the impact that a megaproject can have in this area,” he said. “I’ve seen it three times since I was in school. It helps everybody.”

Rene Poelzer said following the meeting that he is personally in favor of the wind farm, but he wants to make sure that whatever happens is fair to everyone.

“We’re probably the largest landholder in the RM. The land they want is near the power lines, and the power lines run right through the middle of our land.

“The idea of wind energy is very good, and Brad Wall and the Saskatchewan Party is pushing this.

“I like the idea of wind power. I’m not in it for money, I’m in it for the betterment of the people.

“We’re negotiating with them, but I still haven’t signed, because I don’t think it’s necessarily fair to everybody. I think it needs to be fair to everybody.

“Financially it’s a no-brainer. There are guys thinking ‘I can put two or three windmills on my property and that’s my retirement income—I can retire on that and I don’t have to sell my land to my kids—I can give it to them.’ There are a lot of benefits to it, and there are a lot of drawbacks. We have to look at both sides and come up with a total solution.”

Daryl Williamson said following the meeting that he still has concerns.

“They knocked on my door in June,” he said. “My first thought was I don’t want them, but I let him come in and give his speech. I found that the lease outfit was very pushy and telling me that people had signed up who I knew hadn’t signed up.”

He said his main objection is the aesthetics of the wind turbines. “My family has lived in the same place for 100 years,” he said. “There aren’t too many pretty places in southeast Saskatchewan, but we happen to live in one,” he said. “I can’t see ruining it with wind towers.

“We’ve got enough impact here. We’ve got potash mines, we’ve got power poles, we’ve got oil, we’ve got seismograph. I don’t know how much more impact we need on the environment.”

He said he would like to see the RM keep the restriction of wind towers being sited one mile away from any household, unless the homeowner agrees to the wind tower being there.

“Keep some regulations, so if people don’t want them, they don’t have to look at them. There are a lot of acreages in our area, and the guys with the acreages aren’t going to get any income from them.”

Shore Gold to move its “registered office” to Alberta

Shore Gold proposes name change to Shore Diamond Corp.


Published on: August 9, 2017 | Last Updated: August 9, 2017 5:31 PM CST


Shore Gold FALC aerial

An aerial view of Shore Gold Inc.’s Star-Orion South diamond project east of Prince Albert. 

A Saskatoon-based diamond exploration and development company that has spent the last two decades working to build a mine in the Fort à la Corne forest east of Prince Albert wants to change its name and move its “registered office” to Alberta.

Shore Gold Inc. shareholders are expected to vote on two resolutions — including one that would change the company’s name to Shore Diamond Corp. — at its annual meeting, which was scheduled for June 30 but postponed to Sept. 6.

The company’s executives and directors recommended in their management information circular — a document all public firms must publish ahead of their annual meetings — that shareholders cast their ballots in favour of both resolutions.

“The name Shore Gold Inc., while a connection to the history of the corporation, no longer reflects the current focus of the business (and) rebranding will ensure that investors and stakeholders will better understand the … core business,” the circular states.

The second resolution, which would amend Shore Gold’s articles of incorporation to state that its registered office is in Alberta, does not provide a reason for the proposed change or a more specific location in the western province.

Shore Gold representatives did not immediately respond to a request for comment on Wednesday.

At Shore Gold’s last annual meeting, a group of shareholders concerned about communication from the company’s board and executives came close to unseating three of its directors in a move the firm’s chairman deemed illegal.

Two months ago, Shore Gold consolidated ownership of its Star-Orion South property before signing an option agreement with a Rio Tinto Group subsidiary worth up to $75 million over the next seven and a half years.

If Rio Tinto Exploration Canada Ltd. chooses to exercise all four phases of the option agreement, it is expected to end up with a 60 per cent ownership stake in the project.

Independent diamond industry analyst Paul Zimnisky told the Saskatoon StarPhoenix last month that the world’s second-largest mining company got a good deal, as Shore Gold likely needed a major partner to bring the project into production.


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