TABLE OF CONTENTS
Glencore Buys R900m Stake in Unlisted South African Coal Firm
Nearly Half of MDM Engineering Projects Now Chinese Funded
Vale Iron Ore Head Sees Asia Driving Steel
Vale to Start Philippines Iron Ore Trans-Shipment Centre Early Next Year
Ivanhoe Mines to Build Oyu Tolgoi Power Plant by 2017
L&L Enters Into a Joint Sale Agreement with China Chengtong Metal Corporation
Large U.S. Land Sale Targeted For Mining, Geothermal Exploration
Westmoreland Announces Substantial Coal Acquisition
Western Copper and Gold Provides Project Update on Casino
BASF Invests in Intelligent Chemistry for Mining in Australia
Whitehaven Coal Takes Over Aston Resources in a $2.5bn Deal
Minmetals to Develop New Australia Zinc Mine
Commodities giant Glencore said recently it has completed the acquisition of a 43.66% stake in an unlisted South African coal mining business for R900-million.
Glencore said in a statement that the stake in Umcebo Mining gives it access to South Africa's principal coal field in the northeastern Mpumalanga province.
"In addition the transaction also secures access to an eventual 1.5-million metric tons of export allocation in Phase V of the Richards Bay Coal Terminal," it said.
Umcebo has three thermal coal mines in operation and a stand-alone wash plant, with a total annual production capacity of 7.2-million run-of-mine metric tons.
Glencore has also been trying to gain control of South African coal miner Optimum as part of its strategy to become a major force in all top coal exporting regions.
Nearly Half of MDM Engineering Projects Now Chinese Funded
The London Aim-listed Africa-focused mining project company MDM Engineering, which is back in the black, reports that 40% of its projects are Chinese funded in some form, a far cry from 2008 when MDM was not delivering a single project that was Chinese linked.
“I think Chinese funding’s going to continue, which is why I’m not as concerned as some people are about the effect on our projects of the European debt crisis.
“If Europe gets worse, I don’t think that we’re going to see any of our projects pulled like we saw in 2008,” MDM executive director George Bennett tells Mining Weekly Online.
MDM, which has $600-million worth of active project execution work under way on the African continent, is continuing to experience increased demand for tenders, feasibility studies and projects going into execution.
The company has seven execution projects in process and a project pipeline of between $1.5-billion to $2-billion.
MDM anticipates being in simultaneous execution of a minimum of eight projects next year and its 18-month target is to get up to ten execution projects at any one time.
While MDM perceives project house DRA as being by far the busiest in the process plant design and construction field, it sees itself as being busier than Bateman, TWP and GRD Minproc.
“The real comparisons for us are in Australia, where there are about 20 listed mining services companies and we compete with quite a few of them,” Bennett says.
Last year, MDM forged a strategic alliance with the ASX-listed GR Engineering and the two companies have bid jointly for the Chalice gold project in Eritrea.
Through the alliance MDM is seeking to access some 180 Australian companies that control more than 400 mining projects in Africa.
MDM’s projects are contracted on both engineering, procurement and construction management (EPCM) and EPC models to balance risk.
Currently of the $600-million under execution, $160-million of that is fixed-price EPC, which is more staff intensive.
Next year MDM expects to win contracts that will take the company to a 50:50 EPC/EPCM split. To further supplement the workload, MDM is currently undertaking five bankable feasibility studies (BFSs) and a number of prefeasibility studies (PFSs).
One of the more significant BFSs is for African Barrick Gold on a brownfield 2.4-million tons-a-year gold tailings retreatment plant at Bulyanhulu in Tanzania. If successful, an EPC execution contract will begin in the first quarter of 2012.
A combination of ten BFSs and PFSs and a steady flow of new requests are expected to result in smaller projects in the next 12 months.
MDM recently completed tailings retreatment process plants for TSX- and JSE-listed First Uranium’s Mine Waste Solutions project.
The company is constructing a manganese plant in the Northern Cape in which steelmaker Arcelor Mittal has 50%, Kalahari Resources 40% and South Africa’s State-owned Industrial Development Corporation 10%.
Site construction on a concentrator plant for Tharisa Minerals has begun and a nickel atomiser integrated with a 3 MW direct current arc-furnace for the State-owned Mintek minerals research organisation is under way.
It is in the construction phase of a gold ore crushing plant for Gold Fields at Tarkwa, in Ghana, and has begun earthworks for dense medium separators to process copper and cobalt ore for ENRC Camrose in the Democratic Republic of Congo.
Currently small infrastructure works are being supervised on site at a copper concentrator for the JSE-listed Metorex, and project set-up is under way for a gold heap leach plant for Banro.
Iron ore will continue to sell in the range of $120 to $180 per tonne in the near term, while China, a driver of Asian steel consumption, constrains its economy in the face of inflationary threats, a senior executive of Brazilian mining giant Vale said.
But the market for the key ingredient for steel manufacture is expected to grow as Asia builds up its infrastructure and Western steelmakers stagnate, Jose Carlos Martins, Vale's executive director for iron ore and strategy told Reuters.
"For the bigger part of this year, the price was around $180," he said. "I don't believe in the next year the price will go above 180 or below 120. The scenario is moderate to good."
During an interview at the New York Stock Exchange, Martins said , "In Europe and America, in the western world, the market has kind of stagnated. Steel production in the western world is 15% to 20% below pre-crisis levels. So the western world has never recovered," Martins said, noting there was a new round of financial restraint, "which is not good for steel consumption because it's very much related to construction and infrastructure.
He said China was the main factor behind steel consumption growth in Asia.
"China is facing an inflationary environment, so they put a lot of constraints in the economy to prevent inflation going up. The whole scenario is not that good as far as steel production is concerned, or iron ore."
But on the other hand, when the price reaches that low level of $120, many high-cost Chinese mines cannot keep operating, so steelmakers will buy iron ore from abroad.
"I believe $180 is the limit on the upside, but I believe the price will move more in the downside area than the upside," said Martins. "But it's very difficult to say, as China is very unpredictable."
The difference between China and the West, is that China has a lot of room for maneuver.
Top iron ore miner Vale may start operating its iron ore transshipment centre in the Philippines' Subic Bay Freeport in late January or early February. Mineweb reported a source with knowledge of the plan said this recently.
Vale will be putting a large floating storage vessel in the Subic port, located in the main Luzon island, where iron ore from its massive 400,000-tonne carriers can be stored and transferred to smaller vessels that would bring the raw material to Asian buyers such as China, the source told Reuters.
Brazil's Vale is spending more than $2 billion on the fleet of giant vessels to cut its cost of shipping iron ore to top market China.
"We are just waiting for the arrival of their floating storage vessel right now and we are in contact with Vale Singapore regarding the project," said the source.
"We expect it to start in late January or early February," the source said, referring to Vale's planned iron ore distribution center in Subic Bay.
The iron ore transshipment center in Subic is one of at least two that Vale is planning to set up in the region.
The Brazilian company in October broke ground for its $1.3 billion iron ore distribution center in Malaysia's northern Perak state. The Malaysian project would only be ready by 2014.
Vale's Subic transshipment centre was previously scheduled to start in October following a memorandum of agreement signed between the firm and the Subic Bay Metropolitan Authority earlier in the year.
"There was a delay because the floating storage vessel that will be stationed in Subic had to be retrofitted," the source said. "We had to upgrade it."
Ivanhoe Mines Ltd will need to build a new power plant by the summer of 2017 as part of its agreement with the Mongolian government to develop the country's massive Oyu Tolgoi copper-and-gold deposit.
Peter Meredith, deputy chairman of Canada-based Ivanhoe Mines, which owns a 66% stake in Oyu Tolgoi, told the Terrapinn Mongolia Investment Summit that: "We are required to build a power plant within four years of first production."
Oyu Tolgoi is due to begin first commercial production by mid-2013.
The requirement is part of an investment agreement that Ivanhoe signed with the Mongolian government in 2009. The Mongolian government owns the remaining 34% stake in the project.
Meredith said Oyu Tolgoi will need a 325 megawatt power plant for safety purposes, given the number of people that will be working underground. Ivanhoe, however, is considering building a 600MW power plant, with a view to selling some of that power back to the grid, Meredith said.
He said that the project has access to enough power to meet its needs until August or September 2012. After that it will need to use diesel power generation to meet any additional needs.
Continuing with diesel power generators would be very expensive, he noted, and as a result Ivanhoe is in negotiations to secure a three- to four-year contract to import electricity from neighboring China. Ivanhoe could potentially build a power plant now, Meredith said, but it would require an investment of $1 billion and require a work force of 7,000 people, Meredith said.
Ivanhoe is already spending several billion dollars to get Oyu Tolgoi into production. It already employs 14,000 people and Oyu Tolgoi is now the third largest city in Mongolia, a country with 3.1 million people, according to Meredith.
L & L Energy, Inc. (Nasdaq: LLEN), a U.S. based company since 1995 with coal mining and distribution businesses in southwest China, announced today that its subsidiary has entered into a long term joint sales agreement with China Chengtong Metal Corporation ("CCMC") to jointly market/sell one million tons of coal in China during calendar 2012, starting in February.
DaXing- L&L (Guizhou) Coal Inc., a new L&L wholly owned coal subsidiary based at L&L's Hong Gou office, entered the joint sales agreement with China Chengtong Metal Tianjin Company, a wholly owned subsidiary of CCMC, a large China state owned enterprise specializing in coal and metal trading throughout the north China and inner Mongolia markets. The Tianjin company is a market oriented sales unit with strong existing coal customers and recently demonstrated substantial sales growth. The joint sales agreement will synergize both companies’ resources, sales network, and share geological market information forming an integrated coal supply chain to service additional customers in the growing China coal market.
The parties will work collaboratively to source and sell/market one million tons of coal (both coking and thermal coal), in calendar 2012. The sales agreement will generate approximately $150 million in revenues if fully executed, using a $150 per ton coal price.
Dickson Lee, Chairman and CEO of L&L commented, "We are very pleased to secure a strategic partner of CCMC's caliber. Their strong existing sales channels will help expand our coal business outside the Yunnan and Guizhou provinces to the rest of China. Going forward this is a strong start for our new subsidiary. We expect this agreement to result in selling 1 million tons of coal in calendar 2012, with similar revenue impact in the subsequent years to come."
A privately owned investment company has bought the mineral rights of 1.2 million acres of "sizable mineral estate" in Nevada, which once belonged to Newmont Mining, according to Mineweb.
The announcement that Fountain Investments of Miramar Beach, Florida, has acquired the mineral rights of 1.2 million acres of northern Nevada for the bargain price of $31 million has made news across the country, primarily because it is one of largest land sales (in terms of total acreage sold) in U.S. history.
The land-which had been a part of insurance company portfolios since 1997-stretches from Reno to the Utah border along Interstate 80, encompassing 483,000 acres or 750 square miles of fee-simple land, along with mineral rights for the other 800,000 acres.
New Nevada Land is the entity that will manage the fee-simple lands while Dan Pattalock, a geologist, will serve as the president of New Nevada Resources, the entity that will manage the mineral rights.
Westmoreland Coal Company (NasdaqGM:WLB) recently announced that it has leased over 8,800 acres of private coal, representing an estimated 158 million tons of Rosebud McKay coal resources adjacent to its Absaloka Mine in Hardin, Montana. Westmoreland controlled an estimated 389.9 million tons of proven and probable coal reserves across all of its operations as of December 31, 2010.
“This is a significant acquisition for Westmoreland Coal Company, more than tripling the available coal resource at our Absaloka mine,” said Keith E. Alessi, President and Chief Executive Officer. “This lease solidifies our position as a key operator in the Northern Powder River Basin, extends the mine life at Absaloka, allows for increased production as demand warrants and enables greater mine optimization.”
Westmoreland Coal Company is the oldest independent coal company in the United States. The Company’s coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. For more information, visit www.westmoreland.com.
Western Copper and Gold Corporation (TSX:WRN; NYSE Amex:WRN) is pleased to provide an update on the activities underway to bring the Casino project closer to production.
Initial engineering activities required before starting the feasibility study are currently underway. It is expected that the feasibility study will commence in early 2012 and is on track to be completed by the end of 2012.
One of the major feasibility study focus areas is defining the liquefied natural gas ("LNG"), supply for the Casino project. Western has partnered with Yukon Energy Corporation ("YEC"), Yukon's crown energy utility, to evaluate alternative strategies to supply LNG to the Yukon and the Casino project.
Berger-ABAM and Breamar-Wavespec, have been engaged as lead consultants to evaluate LNG supply chain options. The study has established that the best-value supply chain alternative is to construct a fit-for-purpose LNG liquefaction facility in the vicinity of Fort Nelson, BC and to truck LNG to the Yukon from this facility. The estimated cost of LNG delivered to Casino, as determined by this recent study, is consistent with the cost of fuel used as the basis for the pre-feasibility study update issued in 2011.
Western and YEC have held encouraging, exploratory discussions with potential natural gas and LNG providers interested in establishing facilities to supply LNG to meet the project requirements. The opportunity to out-source the supply of LNG will continue to be explored through the first quarter of 2012.
A comprehensive geotechnical field program to support the feasibility study was completed by Knight Piesold over the past summer. The program included geotechnical site investigations for the mine site facilities (plant site, tailings management facility, heap leach facility), open pit, air strip and access road. A total of approximately 3,300 metres of drilling, about 180 test pits, and a geophysics program were carried out as part of this work.
A metallurgical test program commenced at the beginning of November at G&T Metallurgical under the direction of International Metallurgical and Environmental Inc. and FLSmidth, Inc. and is on track to be completed by Q1 2012. The goal of the metallurgical program is to provide engineering data to support preparation of the feasibility study, optimize the process design, and reduce the project capital and operating costs.
Western is pleased to announce that it has retained Knight Piesold, Ltd. to lead the final preparation of an application to the Yukon Environmental and Socioeconomic Assessment Board ("YESAB"), the first step in Yukon's environmental assessment process. Knight Piesold will direct the team of consultants that have been with the project since 2008 that have been collecting baseline environmental data and developing the project description, closure plans, and other key information that will form the basis of the YESAB application.
"I am extremely pleased that the Casino project is on track to have a complete feasibility study by the end of 2012", said Dale Corman, Chairman and CEO of Western, "The Casino project is a World Class copper and gold deposit in an excellent location, and we are excited about bringing this project closer to production."
BASF has signed a long-term agreement with the Commonwealth Scientific and Industrial Research Organisation (CSIRO) to lease laboratory and office space at the Australian Minerals Research Centre in Perth. Starting in January 2012, BASF will build a global R&D and technology centre, employing six researchers and developers by the end of 2012.
In first projects, scientists will be studying mineral processing specific innovation needs such as advanced rheology modifiers for the improvement of the thickening process for valuables and tailings or modification of the crystallization process in alumina production.
BASF also agreed to sponsor research undertaken by the Parker Centre starting from July 2012. For five years, BASF will make a substantial financial contribution to participate in collaborative research in the areas of breakthrough technologies and process fundamentals primarily focused on alumina, base metals (particularly cobalt, copper, nickel and zinc), gold and uranium.
The Parker Centre is a collaborative research organization focused on hydrometallurgy R&D, involving three research institutions (CSIRO, Curtin University and Murdoch University) and strongly supported by 20 mineral processing companies.
“Our vision is to become the leading chemical solutions provider to the mining industry by investing in existing and innovative technologies for mineral processing and metal production of ores. To be successful, we are increasing our R&D spending and strengthening our market focused organization. The agreement with CSIRO is an important step towards building technology and innovation leadership and demonstrates our global commitment to the mining industry,” said Steffen Kudis, Head of BASF’s Oilfield and Mining Chemicals business.
With the participation at the Parker Centre in Perth and the agreement with CSIRO, BASF intends to strengthen its R&D capabilities in proximity to industrial research centers and key customers. This creates the opportunity to connect BASF technologies and research and development platforms with opinion leaders in academia and industry and thereby jointly address new developments for mineral processing. “Our research will greatly benefit from the intellectual property generated from the Parker Centre and from our interactions with the participant research groups,” explained Gregor Brodt, Global Development, Oilfield and Mining Chemicals.
“Mining has become a central focus for BASF globally, and particularly in Australia and New Zealand,” said Neil Fitzmaurice, Head of the recently established Asia Pacific Industry Target Group Mining. “We have built relationships with leading mining houses and industry-recognized academia, a sound market understanding, an attractive portfolio and the capability to translate market needs into chemical solutions. Our Asia Pacific Industry Target Group Mining looks to develop an even more comprehensive offering with the overall portfolio of BASF, also for market segments beyond mineral processing, metal production and construction. In this way we want to continue to provide major operational, environmental and economic benefits for the mining industry.”
BASF Mining Chemicals offers an extensive range of mineral processing reagents. www.basf.com/miningchemicals .
Australia's Whitehaven Coal agreed a $2.5 billion takeover of Aston Resources and a local coal explorer recently, creating the nation's biggest independent coal miner which could become a target for global predators.
The tie-up, designed to tap into booming Asian coal demand, is the latest in Australia's hottest deal sector and involves one of the country's most colourful rags-to-riches mining magnates, former electrician Nathan Tinkler.
Tinkler's Aston owns 75 percent of the Maules Creek project, which lies close to Whitehaven's mines in New South Wales state. With Aston's assets, Whitehaven production will soar from 6 million tonnes a year in 2012 to 25 million tonnes by 2016 when about 60 percent of output will be coking coal for steel mills.
Investors said the deal made sense as there should be attractive savings from merging Whitehaven and Aston assets.
"It could make them a juicier target," said Peter Chilton, an analyst at Constellation Capital Management. "It's very logical to combine all the assets, because they're all next door to each other."
Whitehaven Managing Director Tony Haggarty, who will lead the combined group, estimated the combination would yield "several hundred" millions of dollars in benefits, mostly from better utilisation of port and rail facilities and marketing opportunities from blending Whitehaven and Aston coals.
Aston shareholders will receive 1.89 Whitehaven shares for each Aston share. After existing Whitehaven shareholders receive a special dividend of A$0.50 a share, the deal values Aston at A$2 billion ($2 billion), or A$10.05 a share.
Whitehaven has also agreed to buy unlisted coal explorer Boardwalk Resources, also partly owned by Tinkler, Aston's founder and chairman. It is offering 85.88 million Whitehaven shares, worth around A$500 million, plus up to 34 million more shares if Boardwalk wins mining leases on two projects.
The combined group will overtake New Hope Coal as Australia's top listed coal company. Worth A$4.9 billion, New Hope itself is on the block.
The boards of Aston and Whitehaven backed the deal unanimously, and Whitehaven said it had already secured support for the deal, expected to close in April 2012, from shareholders representing about 43 percent of Whitehaven shares.
Whitehaven is being advised by Goldman Sachs and Grant Samuel. Aston is being advised by UBS and Credit Suisse, while Morgan Stanley and Queen Street Capital are advising Boardwalk.
China-based Minmetals said recently operations could start at its Dugald River zinc mine in Australia in 2014, a year before its massive Century mine closes permanently with the loss of a half-a-million tonnes of metal per year.
It said its board had approved A$157 million in pre-development work for the new mine ahead of making a final investment decision.
Minmetals expects the lode to yield 200,000 tonnes of zinc in concentrate annually over a 22-year operating life.
"If the project continues to move through the stages as planned, Dugald River could commence zinc production and be cash-flow accretive in 2014," Minmetals said.
The Century mine, the world's second largest behind the Red Dog mine in Alaska operated by Teck Resources, yields around 500,000 tonnes of zinc in concentrate annually.
The Century mine is located near the Dugald River site in northeastern Australia and is scheduled to run dry by around the middle of the decade unless fresh reserves can be found and exploited.
The global zinc market was in surplus by 275,000 tonnes in the first nine months of 2011, according to the International Lead and Zinc Study Group.
McIlvaine Company
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