Category Archives: other minerals

BHP presents united front against activist Elliott at AGM

 

BHP presents united front against activist Elliott

Reuters Staff

OCTOBER 19, 2017 / 11:23 AM / UPDATED AN HOUR AGO

By Barbara Lewis and Zandi Shabalala

LONDON, Oct 19 (Reuters) – The new chairman of BHP , the world’s biggest miner, threw his weight behind his CEO on Thursday after attacks from activist investor Elliott Advisers prompted speculation that the end of Andrew Mackenzie’s tenure was imminent.

Pressure has mounted on BHP and its chief executive since Elliott went public in April with its criticisms of the miner’s strategy.

“Any suggestion there is a set timeline around Andrew’s tenure is simply false and without merit,” Chairman Ken MacKenzie told reporters after his first AGM since taking office at the start of September.

Asked by a shareholder whether it was Elliott or the BHP board that was running the company, the chairman replied that “MacKenzie and Mackenzie” were running BHP, though he did not specify the order of the pair who share the same names but with slightly different spelling.

At least five representatives from Elliott Advisors, which holds 5 percent of BHP, attended the London meeting but did not ask questions from the floor.

Elliott declined to comment on Thursday, though it has welcomed the new chairman’s appointment.

Chairman MacKenzie said he had met more than 100 shareholders across eight countries, which he said gave him confidence, though he added that there are areas where the company needs to sharpen its focus.

He reiterated that work is in progress to sell shale assets, which is one of Elliott’s main demands, and that further action would take place to refresh the board of directors.

SKILLS REVIEW

“We recognise that the board needs to continue to evolve to take into account the rapidly changing environment in which we operate. So we will undertake a review of the board’s skills and experience requirements during this financial year,” he said.

BHP’s London share price has risen nearly 7 percent since the start of the year, about half as much as that of its main rival Rio Tinto.

Both the chairman and the CEO said they were striving to maximise shareholder value and that meant that shale assets would be sold only at the right price.

“We will be both urgent and patient as we examine all the options,” CEO Mackenzie said. “We have to get the timing right to maximise shareholder value.”

BHP’s big rival Rio Tinto suffered a setback this week when the U.S. Securities and Exchange Commission (SEC) charged the company and two of its former executives with inflating the value of coal assets in Mozambique and concealing critical information. The company said it would defend itself vigorously against the allegations.

Chris LaFemina, a mining specialist at Jefferies bank, said he had preferred Rio over BHP for the past two years.

“While our preference has not changed, BHP’s competitive position has modestly improved,” he said in a note.

“New chairman Ken MacKenzie seems willing to push for significant strategic changes at BHP … after years of unacceptable underperformance of its share price versus Rio‘s.” (Editing by Elaine Hardcastle and David Goodman)

Infographic: China vs. the U.S. vs. Canada on energy use and production

Infographic: China vs. the U.S. vs. Canada on energy

Aug 24, 2017

http://www.jwnenergy.com/article/2017/8/infographic-china-vs-us-vs-canada-energy/

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.

Energy infographic USA China Canada

 

 

 

BHP’s New Chairman Heralds Era of Tougher Focus on Spending

BHP’s New Chairman Heralds Era of Tougher Focus on Spending

By  David Stringer

August 22, 2017, 6:02 PM CST August 23, 2017, 2:43 AM CST

Bloomberg

BHP Billiton Ltd.’s moves to ditch its U.S. shale assets and halt a rush into the potash market signal an era of more disciplined spending under the top miner’s incoming chairman.

Montreal-born Kenneth MacKenzie, 53, who takes up the post next month, is viewed by investors and analysts as more likely to focus on investment returns, after influencing BHP’s decisions to exit shale and delay proceeding on the $4.7 billion first phase of the Jansen project in Canada.

“They are talking more now about prioritizing projects based on return on capital,” according to Craig Evans, a Sydney-based portfolio manager at Tribeca Investments Partners Pty., a BHP shareholder and one of the miner’s more vocal critics in recent months. “I’d like to think this is the emergence of a bit more rigor on capex — and that’s coming from the new chairman.”

MacKenzie, appointed to BHP’s board last September and credited for doubling the market value of Australia’s largest packaging company, Amcor Ltd., in a decade-long spell as chief executive officer that ended in 2015, has met in recent weeks with more than 100 investors on a global tour that’s taken in Australia, the U.S. and the U.K.

A willingness to listen to shareholders was again apparent in board changes announced Wednesday. Grant King, the ex-Origin Energy Ltd. CEO appointed as a director in March, decided not to stand for election later this year “owing to concerns expressed by some investors,” according to a BHP statement. Fellow director Malcolm Brinded also opted to step down from October.

The producer’s strategy shift shows “an emergence of the rhetoric we’re going to see from Ken, in terms of where things are going to need to sit on the priority scale to have capital allocated to them,” Tribeca’s Evans said in an interview Tuesday. Melbourne-based BHP declined to comment.

BHP’s shares added 0.2 percent to A$26.04 in Sydney on Wednesday. Its bonds also climbed, with the 750 million euros of hybrid notes rising almost 1 cent on the euro to 119 cents, the highest since they were sold in 2015, according to data compiled by Bloomberg. The company’s 3 percent bonds due in May 2024 climbed almost 1 cent to 116 cents, the biggest gain in more than a year.

BHP’s CEO Andrew Mackenzie set out plans to improve returns and capital allocation in a speech in May 2016 and insisted Tuesday in an interview with Bloomberg Television that the decisions on shale and potash had been under consideration for several years, and weren’t a response to investor activism.

Paul Singer’s Elliott Management Corp., which began a public campaign in April urging BHP to overhaul its portfolio and boost payouts, last week backed MacKenzie as a chairman likely to heed shareholders’ calls for improvements. Elliott didn’t respond to a request for comment.

While BHP forecasts capital expenditure will rise about a third to $6.9 billion in the 12 months through June 2018, it has pledged to hold project spending to less than $8 billion annually through 2020, a fraction of the $23 billion total it deployed at its peak in 2013.

Show Caution

The producer should toughen its spending criteria and only develop projects that will deliver returns above 15 percent, Sydney-based Deutsche Bank AG analyst Paul Young said in a report last week. Aside from mothballing Jansen, BHP should also show caution on a potential $5 billion expansion of the Olympic Dam copper mine in Australia, according to Young.

BHP wants to improve the company’s average return on capital employed to about 20 percent by fiscal 2022 from 10 percent in the year ended in June, Chief Financial Officer Peter Beaven said Tuesday in a presentation. “There is still much more to be done, and this is where we’re focusing our efforts,” he told analysts on a conference call.

 BHP capital returns Aug 2017

MacKenzie’s appointment to replace Jacques Nasser, who has led the miner’s board since 2010, shows “a radical shift in strategy,” Sanford C. Bernstein Ltd.’s London-based analyst Paul Gait wrote in a note last month.

“It’s difficult not to see that in some of these changes,” Gait said by phone on Tuesday. “A focus on returns, on better capital allocation and tighter investment criteria are going to play a huge role on his watch.”

“That’s what he is known for — his reputation is predicated on maximizing returns on capital, and holding management teams to account,” said Gait.

Wesfarmers Ltd.’s outgoing finance director Terry Bowen and ex-BP Plc executive John Mogford will be appointed to BHP’s board from October, the producer said in its statement Wednesday. Bowen’s tenure at Wesfarmers has been noted for “a focus on improved cashflow and cost efficiency,” BHP said.

Ex-Royal Dutch Shell Plc exploration chief Brinded, a BHP director since 2014, chose to stand down as a result of “ongoing legal proceedings in Italy relating to his prior employment,” BHP said. Shell and Eni SpA are the subject of scrutiny over the acquisition of an offshore oil field in the Gulf of Guinea.

 

 

 

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.”

 

 

 

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
CREAMER MEDIA EDITOR

Tony O'Neill Anglo mining

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.

COARSE-PARTICLE RECOVERY

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.

WATERLESS MINES

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.

MODULAR CONCEPT

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 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

https://www.bloomberg.com/news/articles/2017-08-10/mining-companies-built-on-wildcat-culture-now-want-to-share-risk

  • 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.”

 

Cash-rich Newmont Mining mulls boosting dividend as peers pursue debt reduction

Cash-rich Newmont Mining mulls boosting dividend as peers pursue debt reduction

SUSAN TAYLOR

TORONTO — Reuters

Published Wednesday, Aug. 09, 2017 4:29PM EDT

Last updated Wednesday, Aug. 09, 2017 5:11PM EDT

With a plump $3.1-billion (U.S.) pile of cash, Newmont Mining Corp. is mulling a sweeter dividend to attract a broader shareholder base, a move that makes it an outlier in the still recovering gold sector.

Although miners are no longer crippled by expansion-fuelled debt loads, the priority for their cash is building and expanding mines to replace depleting gold reserves, and further reducing debt.

Dividend increases are not on their immediate horizon, making Newmont, which has said it was considering doing so, stand out.

Like other producers, Newmont is also investing in expansion projects, but with the fattest purse among gold producers and no debt due until 2019, the Colorado-based miner may have excess cash to return to shareholders.

Newmont, the world’s second-biggest gold producer, has cut net debt by more than 70 per cent since 2013 to $1.5-billion, and will mull dividend payout options at its October board meeting.

“One of the things we’ll be looking at is what’s an appropriate level of dividend that might attract new investors,” chief executive Gary Goldberg told Reuters.

Newmont is nipping at the heels of Barrick Gold Corp. for the title of world’s largest gold miner, with plans to produce between 5 million to 5.4 million ounces of gold this year, against Barrick’s forecast of 5.3 million to 5.6 million ounce output.

The two miners are also wrestling for top valuation, with Newmont’s market capitalization of $19.3-billion just behind Barrick’s $19.4-billion.

Among Newmont’s potential options to boost its dividend is issuing a one-time special payment, said Chris Mancini, an analyst at Gabelli Gold Fund.

The company could also boost its gold price-linked dividend again, as it did last year, analysts said.

“The market does want them to reinvest in projects which have high rates of return and relatively low risk,” said Mancini.

“To the degree that there is excess cash on their balance sheet, the market would like to see that returned to them, in the form of a dividend.”

At a $1,250 per ounce gold price, Newmont would pay 30 cents a share for its 2017 dividend, a yield of about 0.8 per cent, TD Securities analyst Greg Barnes said in a note to clients.

That is broadly in line with current industry yields, but an increased payout could potentially put Newmont ahead of its peers.

For now, richer dividends are not compelling for producers including Barrick, Kinross Gold Corp., Goldcorp Inc. and Agnico Eagle Mines Ltd., which are focused on reducing debt or investing in projects.

But as gold miners gain firmer footing, there is potential to mirror global diversified miners, which are hiking dividends as commodity prices and profits surge, Clarksons Platou global mining analyst Jeremy Sussman said.

Rio Tinto, the world’s second-largest miner, last week promised a record-setting $2-billion interim dividend, for example.

“If we were to see this on the gold side from one of the majors, especially in a meaningful way, I think the others would probably feel some pressure to follow suit, because at this stage, the vast majority of balance sheets are in very good shape,” Sussman said.

 

 

 

Mining industry can now predict opposition to projects before it’s too late

Mining industry can now predict opposition to projects before it’s too late

Cecilia Jamasmie

August 7, 2017

Mining.com

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
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:

    • The Tsilhqot’in National Government and Taseko Mines (TSX:TKO) are scheduled to face off in a Canadian court Monday, marking the latest stage in a long-running battle over a proposed open-pit mine the company wants to build near Fish Lake, also known as Teztan Biny.
    • Latin America-focused Tahoe Resources (TSX:THO)(NYSE:TAHO ) saw its shares collapse in July after Guatemala revoked the mining licence for its flagship Escobal mine, due to a long-running dispute with local groups.
    • Also in July, Canada’s Gabriel Resources (TSX:GBU) decided to sue Romania for $4.4 billion in alleged losses over its long-stalled Rosia Montana gold and silver project, which the government of that country refused to approve following relentless protests.
    • A few days before, Canada’s Gran Colombia Gold (TSX:GCM) decided to take the Colombian government to court for forcing the company to halt operations at its Marmato project until further consultation with locals has been conducted.

 

Australia’s green energy initiatives cost BHP $135-million this past year

BHP presses for cheaper power ahead of Olympic Dam mine expansion

Reuters

August 4, 2017

BHP facility

(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)

 

 

Rio Tinto declared its biggest interim dividend in the company’s 144-year history

Rio Tinto’s first-half profit soars 93%, investors getting $3bn back

Shareholders will receive $2bn on the dividend side and $1bn of share buybacks.

Cecilia Jamasmie

Aug 2, 2017

Mining.com

RIO TINTO IRON ORE

The company’s iron ore business delivered 80% of the group’s underlying earnings. (Image of the Paraburdoo operation, in the Pilbara, courtesy of Rio Tinto)

 

Rio Tinto (ASX, LON:RIO), the world’s second largest miner, gave its shareholders an early Christmas present Wednesday as it declared its biggest interim dividend in the company’s 144-year history, thanks to climbing commodity prices that made first-half profit jump an impressive 93%.

The Anglo-Australian company also said it will increase its share buy-back program this year, as net profit for the first six months of the year came in at $4.14 billion, more than double the $2.13 billion it logged in 2016, yet slightly short of market expectations.

Rio will return a total of $3 billion to shareholders: $2 billion on the dividend side and $1 billion of share buybacks.

Further payouts could come “down the track” after Rio closes its $2.45 billion sale of Coal & Allied to Yancoal, expected to happen in the third quarter of 2017.

Chief executive Jean-Sebastien Jacques said the results unveiled today show the firm’s “very simple strategy” was working. “But we believe there is more we can do,” he noted, adding that further payouts could come “down the track” after Rio closes its $2.45 billion sale of Coal & Allied to Yancoal (ASX:YAL), estimated for the third quarter of 2017.

The London-based miner’s performance is a clear reflection of a reverse in the mining industry’s fortunes, as companies big and small are now benefiting from a recovery in prices of commodities including iron ore, which is Rio’s key commodity, as well as aluminum and even coal.

Should that rally fade, however, there’ll be no more cash flow from coal for Rio Tinto to fall back on, warned Wednesday Bloomberg analyst David Fickling. “And its copper-mine stakes — hit by strikes this year at Escondida in Chile and Grasberg in Indonesia, plus the vast cost of reaching full production at Oyu Tolgoi in Mongolia — aren’t producing enough earnings to make up the difference,” he wrote.

Fickling’s comments are based on the fact that the company’s shareholders receive dividends based on a policy set up in February 2016, which ensures between 40% and 60% of underlying earnings are paid out to investors as a dividend every six months. The old approach saw them receive guaranteed dividend payments, but Rio had to re-evaluate it to better reflect volatile commodity cycles, such as the one that took the whole industry down in 2015.

RIO TINTO AUG 2017 RESULTS

“These are strong results: operating cash flow was $6.3 billion and we met our $2 billion cash cost reduction target six months early,” said chief executive Jean-Sebastien Jacques.

The company’s iron ore division contributed 80% of Rio Tinto’s underlying earnings. The miner, the world’s second largest producer of the commodity, generated almost 130 million tonnes of the steelmaking ingredient during and received an average price of $67.80 a tonne in the period, 26% more than just a year ago.

 

 

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