Category Archives: miscellaneous
Infographic: China vs. the U.S. vs. Canada on energy
Aug 24, 2017
China and the United States are the world’s two biggest energy markets.
They’re also the two biggest carbon dioxide producing regions on the globe.
Understanding international energy systems means understanding what’s going on in these two key nations. And Canada too, for good measure.
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.
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.
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.
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.”
Technology set to unleash mining innovation – Anglo’s O’Neill
16th August 2017 BY: MARTIN CREAMER
CREAMER MEDIA EDITOR
JOHANNESBURG (miningweekly.com) – 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
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.
SUN, WIND, GRAVITY AND SMALL, GREEN NUCLEAR
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.
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 Plc, BHP 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.
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.”
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.”
August 9, 2017 • Saskatchewan
Lots of questions at wind turbine regulation meeting
Credit: By Kevin Weedmark, The World-Spectator
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.”
August 8, 2017
After decades of being called “gold” while exploring and developing the world’s largest “diamond” deposit just east of Prince Albert, SK in Fort a la Corne, Shore Gold will become Shore Diamonds.
Management and the Board believe that the name Shore Gold Inc., while a connection to the history of the Corporation, no longer reflects the current focus of the business. Management and the Board of Shore Gold Inc. believe that rebranding will ensure that investors and stakeholders will better understand the Corporation’s core business. As a result, the Corporation is proposing to changes its name to Shore Diamond Corporation.
Also, given Shore’s recent agreement with Rio Tinto, it is worth noting that Shore’s Board of Directors is proposed to include Peter Ravenscroft. According to the Circular on page 8:
He previously was Head of Global Exploration for Cliffs Natural Resources Inc. as well as Managing Director, Technical Evaluation Group at Rio Tinto based in London, with global accountability for internal technical reviews of all major capital projects going before the Rio Tinto board. Also group accountability for the compliance of all Rio Tinto companies’ mineral resource and ore reserve reporting. Mr. Ravenscroft was with Rio Tinto for seventeen years, in a variety of roles in the UK, Australia and Canada, with particular involvement in diamond projects and operations. Before joining Rio Tinto, Mr. Ravenscroft was involved in the southern African mining industry, with De Beers, Anglo American and Gencor, and as a geostatistical consultant.
Mining industry can now predict opposition to projects before it’s too late
August 7, 2017
It’s sounds too good to be true, but a new company is proving miners they can foresee opposition or any other form of social conflict related to their projects, before they even attempt going through a licencing process.
Chalkstone, a UK-based company founded by Donald Bray, a political anthropologist and academic at the University of Cambridge, bases its success in a very unique method, applying what’s known as “granular social intelligence.”
“We take a systemic approach and mix methodologies, combining big data and quantitative analysis with ethnography, qualitative interviews and focus groups, all of which help us dig deep into particular issues and accurately define the social stance of a target group,” Bray explains on the phone from his home in Paris.
“We are not interested if the community is, in any way, being taken advantage of” — Donald Bray.
Before going further, he’s quick to note that the goal of his company is not just to help mining companies get what they want, but to assist them in building mutual trust with the groups living in the areas in which they operate.
“We are not interested if the community is, in any way, being taken advantage of,” he says. “Our due diligence runs in a number of different directions.”
The expert, with more than 15 years of experience working across the globe, particularly in conflict zones, is not saying mining companies are the “bad guys” in the story.
“It’s not that firms don’t care about CSR [corporate social responsibility] or don’t want to invest in it. The problem is that most tools currently available don’t really help them grasp the human aspect of their projects,” he says.
Donald Bray, Chalkstone founder.
Half of all risks faced by extractives companies are non-technical ones, which in turn account for nearly 75% of all projects delays. “For a mid to large sized mining company, the costs of these delays (socio-political and community risks) can add up to some $20 million a week,” says Bray. “This is huge and it deserves far more attention than mere box-ticking or forms of corporate philanthropy.”
Chalkstone already has a known success story under its belt. After an intensive study on a ruby mine and a copper deposit in Afghanistan, applying counter-insurgency tactics used by deployed troops, Bray was hired in 2015 by Gemfields (LON:GEM), the world’s largest emerald and ruby miner. At the time, the precious gems firm had committed to building an emerald mine in Colombia.
Part of Chalkstone’s work to help Gemfields enter the market was the creation of a communications platform based in text messaging, which allowed the mining company and local communities to talk freely to one another.
Named by the community as “Suna Verde” (meaning “Green Pathway” in the Muisca aboriginal language), the system kept locals updated on everything from job-training initiatives to when the “health brigade” (a team of doctors and nurses that travel around the countryside) would be in each village. Soon, says Bray, Suna Verde was rivalling the radio as the region’s main source of news and other information.
“The experience showed us that communities want jobs, roads, hospitals and clinics, schools, and any other benefit offered by mining companies, but they want to be actively involved in their decisions. They don’t want to be just beneficiaries of someone else’s goodwill,” says Bray. “This is one of the most important lessons I’ve learned and which is transferrable to almost any community in the world.”
During the first months of work for Gemfields in Colombia, Chalkstone warned the company there was opposition brewing for another international mining firm in the region. Only four months later, that miner was hit by protests and even armed attacks.
“When you invite thousands of voices into a conversation, you need to be prepared for dissenting opinions (…) By listening to all of them, you’re able to get in front of the risks. That’s what happened in Colombia… we were able to see things that you wouldn’t normally see and we told Gemfields about it.”
While Gemfields decided in May to leave Colombia and Sri Lanka to focus on its African projects, the fact the company didn’t face hostility from community members is a testament to Chalkstone’s work, says Bray.
The company, currently involved in mining and oil and gas projects in East Africa, as well as a new venture in Colombia, believes its novel approach could also be useful to investors.
“Given that nearly 66% of shareholder value in a junior miner is linked directly to socio-political and community risks, according to some calculations, investing in understanding the social environment in which a miner will operate shouldn’t be an afterthought or something people turn their minds to only when times get tough,” Bray warns. “Trust is valuable,” he concludes.
These are a few examples of conflicts an approach such as Chalkstone’s could have prevented:
BHP presses for cheaper power ahead of Olympic Dam mine expansion
August 4, 2017
(Image courtesy of BHP Billiton)
BHP Billiton is looking for ways to shore up power supply and bring down power costs at its Olympic Dam copper mine in Australia, as it plans to expand following a string of electrical outages, the mine’s head said on Friday.
The mine has been badly hit by an energy crisis in Australia stoked by the rapid rise of wind power and closure of coal-fired power plants. This has destabilised the national grid and soaring natural gas prices have driven up power tariffs.
A blackout last year forced Olympic Dam to shut for two weeks, costing the company $105 million. Over the past year, rising power bills have added around $30 million to its costs.
Olympic Dam President Jacqui McGill said security of supply, price and system reliability are all challenges for the mine.
“Cheaper power – that’s the key for me,” she said at an American Chamber of Commerce event in the South Australian capital of Adelaide. Power prices need to drop 25 percent to make Olympic Dam copper more competitive globally, she said.
While the state of South Australia has taken steps, such as lining up 129 megawatt hours of battery capacity from Tesla Inc , to help avert power outages from next summer, more needs to be done, McGill said.
Olympic Dam, South Australia’s biggest power user, draws about 125 MW alone, around 8 percent of the state’s demand.
“We’ve currently got a nationwide study underway to look at our options for power,” she said.
Batteries would not help much, she said. “When you draw the amount of power that we do, options like that don’t provide us with a lot of confidence.”
BHP will need more power and cheaper prices to justify going ahead with plans to expand output from 218,000 tonnes this year to 280,000 tonnes by 2022. It plans eventually to more than double output using low-cost heap leach technology that the company is trialling in Adelaide.
McGill said tests to smelt material produced from the heap leach process have been successful, with “significant progress” made toward producing uranium and copper cathode. The trial is due to be completed in the 2019 financial year.
Heap leaching involves stacking crushed ore over a pad, pouring on acid and water and blowing air up through the pad to leach out metals.
(Reporting by Sonali Paul; Editing by Tom Hogue)
Aug 4, 2017
If you go to https://www.gasbuddy.com/Charts you can create charts on average fuel prices by city, province, etc., over any duration you want.
Alberta introduced a carbon tax on January 1st, 2017.
If you look at the average Alberta vs. Saskatchewan fuel price for the past year, the Alberta price went above Saskatchewan for the first time in decades with the introduction of the tax.
Here is the past year’s chart:
Here is the past 8-years’ chart:
Further study reveals that Alberta went from being on average about 6-10 cents per litre cheaper than Saskatchewan, to 6-10 cents per litre more than Saskatchewan. So, about a 12-20 cent per litre change in fuel price.
The cost of producing a barrel of oil and gas varies widely across the world, setting up winners and losers as the price of crude fluctuates at historically low levels.
By WSJ News Graphics
Last updated April 15, 2016 at 2:30 p.m. ET
The world has changed for oil producers. When crude-oil prices were more than $100 a barrel just two years ago, the ensuing profits were huge, filling government coffers and swelling company earnings. Now prices barely cover the average cost to get the oil out of the ground in places like the U.K. Additional expenses, like taxes on profits, mean that the actual breakeven price for many projects is higher, and newer and more complex projects generally fall well above the average cash cost of production. Oil-producing nations from Saudi Arabia to Norway are reining in spending while big energy firms like Royal Dutch Shell PLC and Chevron Corp. have made deep spending cuts and laid off thousands of workers. Here’s a look at the average cost of producing one barrel of oil—42 gallons—in a dozen nations.
Capital spending: 64.6% of barrel cost
Much of Norway’s remaining resources lie in remote waters and are more difficult to extract or are further from existing infrastructure and markets, resulting in higher development and transportation costs. However, the region hasn’t been in production for as long as oil and gas fields in neighboring U.K. waters, so there are still substantial resources left to extract.
Capital spending: 45.2% of barrel cost
Nigeria is Africa’s largest oil producer, but frequent incidents of sabotage and oil theft have hindered the sector onshore. Many newer projects are focused offshore, where production is more secure but the capital investment required is higher. Earlier this year Royal Dutch Shell PLC said it would delay a decision to progress a deep water project.
Capital spending: 51.1% of barrel cost
The U.K. has some of the highest production costs in the world as the oil and gas is offshore in deep stormy waters. The region has been in production since the 1970s and remaining resources require more costly technology to extract, while aging infrastructure such as pipelines, production hubs and terminals require constant maintenance and upgrades.
Production costs: 43.4% of barrel cost
Most production growth in Canada comes from oil sands deposits in the remote boreal forests of northern Alberta, which have some of the industry’s highest capital costs and longest development timelines. Canada’s oil sands represent the third largest reserves in the world after Saudi Arabia and Venezuela, but its crude trades at a substantial discount to other North American grades due to its low quality and limited pipeline access to market. Canada also produces declining amounts of crude oil from conventional, shale and deepwater Atlantic wells.
Production costs: 34.9% of barrel cost
Twenty-five years ago Indonesia produced close to 2 million barrels of oil a day, but production has fallen and many of its aging fields require investment to enhance recovery. New opportunities are generally more technically challenging and costlier. Tough government policies have also discouraged investment, though more recently the government has sought to introduce more generous terms.
Production costs: 24.5% of barrel cost
Drilling in the U.S. Gulf of Mexico has migrated from shallower depths to deep water, sending production costs surging as companies plumb reservoirs thousands of feet below the water’s surface. Oil production in the region peaked in 2009 at 1.56 million barrels a day, before declining for several years. However, output surged last year to 1.54 million barrels a day as several long-awaited projects came online.
Administrative/transportation costs: 27.7% of barrel cost
Saudi Arabian crude is some of the cheapest in the world to extract because of its location near the surface of the desert and the size of the fields. That makes transporting those barrels an outsized piece of its costs, on a percentage basis, compared with countries where production costs are 10 to 20 times as high.
Administrative/transportation costs: 29.4% of barrel cost
Iran is trying to revive its oil industry after more than three years of sanctions crippled its ability to export, and the country has a big advantage over many of its peers: Its oil is very cheap to produce. The Islamic Republic’s output jumped 310,000 barrels a day in February compared with two months earlier after restarting exports to the European Union, according to the International Energy Agency.
Administrative/transportation costs: 23.4% of barrel cost
Extraction of oil in Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries, is in theory also very cheap but there are political and security challenges that add to its transportation and administrative costs. The country is fighting a war with Islamic State on its western flank, and has lost some oil fields to the militant group. Iraq has still managed to ramp up production to record levels last year.
Cost of producing a barrel of oil
Source: Rystad Energy UCube
Gross taxes: 37.9% of barrel cost
Despite holding the world’s largest oil reserves with 298 billion barrels, Venezuela’s output has been declining in the past two years because of lower investment in its costly heavy crude reservoirs. The Latin American nation produced 2.37 million barrels a day in February, a drop of 90,000 barrels a day compared to its 2014 average, according to the International Energy Agency. Taxes in Venezuela remain among the highest in the world at 50% of profits for foreign companies, though they have fallen from 95% when oil prices were above $100 a barrel.
Gross taxes: 43.9% of barrel cost
Russian oil is among the cheapest in the world to pump thanks to plentiful onshore resources, cheap labor and a well-developed network of pipelines, processing plants and other infrastructure. But the government tax take is levied at the wellhead and on exports, pushing up the costs of producing a barrel.
Gross taxes: 19.0% of barrel cost
Brazil’s oil production fell in January by 180,000 barrels after investments in its costly deep offshore basin were hit by low oil prices and a corruption scandal. In January, the country’s state oil giant Petrobras cut its five-year investment plans through 2020 by $32 billion to $98.3 billion. The South American powerhouse has opted for a fiscal middle ground with a corporate income tax at 34% for producers, lower than Venezuela but higher than Colombia’s 25%.
Gross taxes: 27.5% of barrel cost
After years of declining output, the U.S. oil and gas industry was revived by the shale boom, which kicked off amid the Great Recession and gained steam after 2008. Advances in technology—notably, the combination of horizontal drilling and a technique known as hydraulic fracturing—allowed companies to tap vast amounts of oil and gas trapped in dense rock formations. Oil and gas taxes vary by state in the U.S., with many imposing a production or extraction tax, or otherwise using the market price of oil or gas to tax output on a specific well. Some levy impact fees or charge companies as they drill new wells.
Note: An earlier version of this graphic displayed incorrect labels for the cost to produce a barrel of oil when hovering over the bars on each chart. This version has been corrected. (April 15, 2016)
Source: Rystad Energy UCube