Mining Industry Update

Impala Platinum, the world's No 2 miner of platinum group metals (PGMs), is to offer ZAR 21bn (US$2.47 bn) to acquire all of Tier II PGM miner Northam, 62 percent held by Mvelaphanda Resources. Impala is also bidding to acquire the balance of Mvelaphanda Resources.

Impala is proposing to settle 70 percent of the purchase of Northam in new Impala shares, and the 30 percent balance in cash. Impala has structured a similar mix of shares and cash in the offer to acquire the balance of Mvelaphanda Resources.

One of the most desirable assets in the overall story is Booysendal, recently acquired by Northam. Northam ranks as the only PGM miner with smelters, outside of the Big Three. Booysendal has boosted Northam's PGM ounces-in-the-ground, massively, to a total of 120m, ranking fourth only to Anglo Platinum, with 725m, Impala, with 415m, and Lonmin with 166m.

African Eagle Resources (AIM:AFE, ALTX:AEA) believes its nickel discovery at Dutwa, in the eastern Lake Victoria Goldfields in Tanzania is significant enough to put the rest of its development projects in Africa on the back-burner.

Managing director Mark Parker said recently the company believed its Dutwa nickel deposit was shaping up to be the "most exciting base metals discovery" in Africa in the last 50 years.

African Eagle has only completed drilling 50 of 150 drill holes but believes the yet undefined resource will yield a nickel mine within excess of 30mt that could mine 1mt of ore and 20,000-30,000t of contained nickel a year.

African Eagle was now setting out to define a nickel and cobalt resource by the end of the year and has cash of ₤3m in the bank to finance this endeavor and other projects.

The company planned to bring in a partner to undertake mining activities once it had more certainty on the Dutwa resource, while it has already received a number of phone calls from interested parties, "including the world's largest miner".

Reliance Natural Resources Limited, Mumbai, part of the Reliance Anil Dhirubhai Ambani Group (ADAG), has obtained prospecting licenses for four limestone mines in Satna, Madhya Pradesh. The limestone mines will play a crucial role in ADAG's proposed expansion of its cement manufacturing capacities. According to RNRL estimates, the combined reserves of the four limestone mines will be sufficient to feed a 10 million-ton-per-year cement plant for the next 40 years.

RNRL, ADAG's steel, cement and shipping arm, is spearheading the group's move to set up four new cement plants, each with a capacity of 5 million tons per year. The company plans to set up the plants in the state of Madhya Pradesh to ensure uninterrupted supply of coal, limestone, fly ash and power. The plan will transform the state into an integrated strategic hub for ADAG since the cement factory will deploy power and fly ash from the group's proposed 4,000-megawatt ultra-mega-power project at Sasan. The use of fly ash, a byproduct of coal-fired power plants, for cement production not only reduces manufacturing costs, but also provides an effective method of recycling a material which is considered to be an environmentally unfriendly waste. RNRL's first cement plant, being set up at Satna at a cost of $2.1 billion, is expected to start production in 2012. The 20-million-ton-per-year plant will be the biggest in India in terms of capacity. The cement will primarily cater to the central Indian states and to neighboring countries like Sri Lanka.

ADAG has applied for coal linkages from Madhya Pradesh and neighboring states. The company has already obtained the Moher, Moher-Amlohri extension and Chhatrasal coal blocks for its Sasan power project. The government may also allot Coal India's Semaria block to the project. Coal linkages are of special significance for RNRL, since it is engaged in a legal conflict with Reliance Industries Limited over the supply of gas from the Krishna Godavari basin. Reliance Power Limited, another ADAG subsidiary, has acquired three coal mines--Srivijaya Bintangtiga Energy, Bryayan Bintangtiga Energy and Sugico Pendragon Energy--in the Sumatran region of Indonesia for about $525 million. The company is exploring more sources of coal in Indonesia, Australia and South Africa.

China's Largest Copper Mine to Begin Operation
The Yulong Copper Mine, which contains the largest copper reserves in China, is expected to begin operation in Tibet's Changdu region and produce 2,000 tons of electrolytic copper this year. The mine has 6.5 million tons of proven reserves and 10 million tons of forecast reserves.

The Western Mining Group Company Limited (Xining City, Qinghai province) has set up Tibet Yulong Copper Industry Company Limited to manage the mine's construction, which started in May 2006. Phase I cost $260.9 million. So far, a 10,000-ton electrolytic copper workshop has been completed, along with associated power transmission lines and the installation of electronic equipment.

After Phase I construction is finished in 2010, the mine is expected to produce 30,000 tons of copper annually. Phase II could boost production by an additional 100,000 tons per year, but further details have not been released.

China has had a shortage in copper for the past few years. Data show that China imported 460,000 tons of copper concentrate in July, 24.5 percent higher than last July. In the first seven months of this year, imports totaled 3.14 million tons, up 19.1 percent year over year.

Western Mining is a major mining firm in western China and the only large-scale metal mining, dressing and smelting corporation on the Qinghai-Tibetan Plateau.

Australia Looks to Record Year in 2009 for Metals & Minerals
The Australian Metals & Minerals resource sector maintained an overall bullish position at the beginning of October. While taking notice of the fallout from the financial turmoil in world markets it is believed that the horizon for Australian production driven by exports has not changed in any significant way. Adjustments had been made and were being made to tailor production to demand downturns in some markets, but mining and resource majors BHP Billiton, Melbourne, Australia and Rio Tinto, London, felt that despite any temporary rate adjustments in growth, China would remain the long-term driver of positive Australian resource production development.

The year ending in June 2009 is forecast to see the country's commodity exports rise by 44 percent year over year to total $165 billion from $115 billion. This forecast was up 4 percent from the estimate made in June by the Australian Bureau of Agricultural and Resource Economics (ABARE). Mineral exports will rise by 53 percent in 2008-09 to $138 billion, topping the previously estimated 48 percent growth.

Driven by steelmaking demand in China and Asia, coking coal export earnings are forecast to reach $34 billion in 2009 with export volumes increasing by 7 percent. Earnings from iron ore, coal oil and liquefied natural gas are forecast to account for almost 98 percent of the growth in total energy and mineral export earnings. Iron ore and concentrate production is forecast to rise by 4 percent to 387 million tons. Export earnings for energy commodities are forecast to increase 98 percent to $70 billion in the fiscal year.

ABARE forecasts a rise in refined copper output of 19 percent to 526,000 tons and in the same period ending in June 2009, copper mine ore output is also expected to rise by 19 percent to total about 1.03 million tons as new mine capacity becomes operational. Although copper prices could weaken by 8 percent as global supply exceeds growth, stocks will remain low by historical standards at 2.8 weeks' consumption.

Alumina output could grow by 5 percent to 16.5 million tons but aluminum output will remain stable. Following the release of ABARE's forecast in the last week of September, the bureau reduced its annual estimate for zinc output by 12 percent to 1.49 million tons from 1.69 million tons, down from 1.57 million tons in the previous fiscal year. The falling price of zinc has caused some mine closures and output reductions in others.

The nickel production forecast was cut by 7.8 percent to 236,000 tons, but the target is 46,000 tons up from the previous year. As new projects come into commercial production, gold is expected to rise by 4 percent to 236 tons.

Metso Minerals will supply minerals processing equipment to China Metallurgical Group Corp (MCC) for Sino Iron, one of the largest mining projects in Western Australia. The order is worth approximately €53 million.

Metso will deliver 28 VPA pressure filters with complete automatic control systems and compressed air systems and 52 slurry pumps. According to Metso, the order is the largest VPA pressure filter order received by the company. The plant is estimated to be the largest mineral concentrate filtration facility in the world.

Metso Minerals has inaugurated a new research center in Tampere, Finland. The new center includes a state-of-the-art test facility with a fully equipped rock laboratory for analyzing rock samples. Testing routines will enable Metso Minerals to design crushing and screening processes that are a precise match for customer needs. The new center, which will eventually employ 20 people, also will shorten new-product development lead times.

The North American Metals & Minerals Industry is experiencing 45.81 percent growth based on the value of projects that have already begun construction or are scheduled to begin construction during 2008, Industrial Info Resources reports. About $42 billion worth of projects fall into this category in 2008 compared with $29 billion in 2007.

This growth can be attributed predominantly to the large amount of mining projects that have begun construction this year in Canada. The metals & minerals industry in Canada is experiencing growth of 271.36 percent this year with about $22 billion worth of project work. Canada's growth is outpacing declines in the U.S. where growth has declined 9.17 percent in 2008 as well as in Mexico, which is experiencing a 41.45 percent decline in project starts, according to Industrial Info Resources’ Metals & Minerals Spending Index.

Some of the mining projects under way this year include diamonds, oil sands, and potash. Potash Corporation of Saskatchewan (NYSE:POT) (Saskatoon, Saskatchewan) began site work on a $1 billion potash mine expansion in Cory, Saskatchewan. AMEC Americas Limited (Saskatoon, Saskatchewan) is providing engineering and construction services for the project. Diavik Diamond Mines Incorporated (Yellowknife, Northwest Territories), which is 60 percent owned by Rio Tinto (NYSE:RTP) (London), has started site work for the $787 million second-phase underground expansion of mining near Lac de Gras. Other projects getting under way this year include a couple of multibillion-dollar oil sands mines in Alberta.

Essar Steel Holdings Ltd, a part of Essar Global Ltd, recently held a groundbreaking ceremony for the first steelmaking facility in Minnesota's famous Iron Range.

The USD 1.6 billion facility will be North America's first mine-based steel plant and the single largest investment made in the Mesabi Range in recent times.

The ceremony also marked the unveiling of Essar Steel Minnesota, LLC, the new name for the steelmaking project that was earlier known as Minnesota Steel.

ln 2007, Essar Steel Holdings acquired Minnesota Steel, which has more than 1.4 billion tonnes of iron ore resources in the Mesabi range.

Besides iron ore mining and production, the project will include a concentration plant, a pellet plant, a Direct-Reduced Iron (DRI) plant and steelmaking facilities. At full production Essar Steel Minnesota will employ nearly 500 people, and up to 2,000 construction workers over the course of the project. Iron ore pellets will be produced within about two years from the start of construction. Production of DRI pellets and steel slabs is expected to begin the fifth and the sixth year onwards, respectively.

The production from this facility will also support the Essar Steel Algoma plant in Sault Ste Marie, Ontario, Canada. Essar acquired the Algoma plant in 2007 and has committed a capex of USD 500 million in the next five years. Following the acquisition, Essar Steel Algoma increased its capacity from 2.4 MTPA to 4 MTPA in less than a year. The synergies between the Minnesota and Algoma facilities will strengthen Essar's presence as an integrated steelmaker, with high value-added products, in the North American market.

The Iron Range project will be located at the site of the former Butler Taconite operation.

Cleveland-Cliffs Inc. plans to expand its ore output at the Empire and Tilden Mines in Michigan’s Upper Peninsula. The estimated $290-million capital investment will increase mining capability at the two properties by 5 million tons/year (3 million tons/year at Empire, 2 million tons/year at Tilden.) The additional capacity will bring Cliffs’ North American Iron Ore unit to a total capability of 23 million tons/year.

Separately, Cliffs’ agreed to buy out its minority partner in the United Taconite mining and pelletizing operation in Eveleth, MN, in a deal estimated at $267.4 million. Cliffs will pay $100 million in cash, plus 1,529,619 of its own common shares and 1.2 million tons of pellets at no cost over the next 15 months to United Mining Co. for the 30 percent stake.

Cleveland-Cliffs Inc (NYSE: CLF) and Alpha Natural Resources, Inc. (NYSE: ANR) recently announced that each company's Board of Directors has approved a definitive merger agreement under which Cleveland-Cliffs will acquire all outstanding shares of Alpha in a cash and stock transaction valued at approximately $10 billion.

The combined company, which will be renamed Cliffs Natural Resources, will become one of the largest U.S. mining companies and be positioned as a leading diversified mining and natural resources company. Cliffs Natural Resources' mine portfolio will include nine iron ore facilities and more than 60 coal mines located across North America, South America and Australia. The company's significant position in both iron ore and metallurgical coal will make it a major supplier to the global steel industry, as well as provide a platform for further diversification both geographically and in terms of the mineral and resource products it sells.

Upon the transaction's close, Cliffs Natural Resources would have estimated combined pro forma 2008 revenue of nearly $6.5 billion and EBITDA of $1.9 billion. The company's estimated 2009 revenue would reach $10 billion with estimated EBITDA of $4.7 billion.

Cliffs Natural Resources will have a reserve base of approximately one billion tons of iron ore and approximately one billion tons of metallurgical and thermal coal. The company anticipates having an annual sales volume in excess of 30 million tons of iron ore and nearly 18 million tons of metallurgical coal, making it one of the largest suppliers to the world's steel industry.

The combined company will have a more diverse revenue stream and will be well-positioned to continue its aggressive growth. In addition to leading positions in iron ore and metallurgical coal, the company will also ship approximately 17 million tons of thermal coal, which is used primarily for electricity generation by utility companies.

Cliffs Natural Resources expects to realize annual synergies of at least $200 million beginning in 2010, with the majority being achieved through enhanced coal processing and blending efficiencies along with elimination of duplicative administrative expenses associated with two public companies.

The aggregate consideration comprises $1.7 billion in cash and approximately 71 million new shares of Cleveland-Cliffs common stock. JPMorgan Chase Bank, N.A. is providing an underwriting commitment for up to $1.9 billion which will be used to finance the transaction. The combined company expects to generate strong operating cash flow which it will use to pay down debt. Upon completion of the transaction, Alpha stockholders would own approximately 40% of the combined company and Cleveland-Cliffs shareholders would own approximately 60%.

Following the close of the transaction, Cleveland-Cliffs' Board of Directors will be expanded by two seats to be filled by two current Alpha Natural Resources directors, Michael Quillen and Glenn Eisenberg. Joseph Carrabba will serve as Chairman and Chief Executive Officer of the combined company, and Michael Quillen will serve as non-executive Vice Chairman.

Cliffs Natural Resources will have two operating divisions—Iron Ore and Coal. Kevin Crutchfield, currently president of Alpha Natural Resources, will become president of the combined company's coal businesses. Donald Gallagher, currently Cleveland-Cliffs' president, North American Business Unit, will become president of the combined company's iron ore businesses. Cleveland-Cliffs' executive vice president and chief financial officer, Laurie Brlas, will remain chief financial officer of the combined company.

Cliffs Natural Resources' world headquarters will be located in Cleveland. The iron ore business will operate from Cleveland and the coal business from Abingdon, Va.

The transaction is subject to approval by Cleveland-Cliffs and Alpha shareholders, as well as the satisfaction of customary closing conditions and regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is expected to close by the end of 2008.

J.P. Morgan Securities Inc. acted as financial advisor to Cleveland-Cliffs Inc and Jones Day acted as legal counsel. Citi acted as financial advisor to Alpha Natural Resources, and Cleary Gottlieb Steen & Hamilton LLP acted as legal counsel.

Record prices for uranium, gold and other metals are sparking a surge in mining claims near the Colorado River. Mining claims within 10 miles of the Colorado, which winds through 5 states on its 1,450-mile course from the Rocky Mountains to the Gulf of California in northwestern Mexico, increased from 2,568 in January 2003 to 5,545 in January 2008, according to Bureau of Land Management (BLM) records. (EWG 2008) In that period, mining claims within 5 miles of the river nearly tripled, from 395 to 1,195.

Four of the ten largest claimholders within 10 miles of the river are uranium interests.

Rank	Claimholder	Location	Number of claims within 10 miles of the Colorado River
1	Glamis Imperial Corp	Vancouver, BC	611
2	Energy Fuels Resources Corp	Vancouver, BC	346
3	Kee Nez Resources Llc	Price, UT	308
4	Augustus Ventures LLC	Nederland, CO	271
5	Clyde L Smith	Point Roberts, WA	244
6	David S Smith	Seattle, WA	244
7	Erin Smith Bloom	Shoreline, WA	244
8	Nancy J Smith	Point Roberts, WA	244
9	Desert Shadow	Reno, NV	244
10	Patrick Hillard	Kanab, UT	223

Companhia Vale do Rio Doce (Vale) announces that its Board of Directors has approved the construction of a new alumina refinery, Companhia de Alumina do Pará (CAP), and the expansion of our Paragominas bauxite mine (Paragominas III), both located at the Brazilian state of Pará.

CAP will be responsible for the implementation and operation of an alumina refinery, located in Barcarena, 5 km away from the alumina refinery of our subsidiary Alunorte. CAP will be 80 percent owned by Vale, and 20 percent by Hydro Aluminium (Hydro). Hydro, a company based in Norway, is one of the largest global producers of aluminum and aluminum products.

The initial production capacity of the refinery will be 1.86 million metric tons per year (Mtpy) of alumina, through two lines of 930,000 tons per year. The new refinery has potential for future capacity expansions to reach up to 7.4 Mtpy.

The estimated total capex for the first phase of CAP is US$ 2.2 billion. The project implementation will begin in October 2008 and the operation start-up is expected for the first half of 2011.

Paragominas III will supply the bauxite to be consumed by the CAP refinery. The estimated total capex is US $487 million and it will increase the capacity of our Paragominas mine to 14.85 Mtpy from the current 9.9 Mtpy. Paragominas III is expected to start up its operations simultaneously with the first stage of CAP, in 1H 2011.

These projects are consistent with our strategy for the aluminum business, in which the focus is organic growth in the upstream portion of the aluminum production chain, through the development of its high quality bauxite reserves and competitive low-cost expansion of alumina production capacity.

ITT Chosen to Move Filtered Sea Water at Chilean Mine
ITT Corp has received a multi-million dollar contract to provide filtered seawater to a large new copper-gold mining project in Chile's Atacama Desert. The Esperanza mine will be the first large-scale mine in Chile to make use of seawater in the mining process.

As part of the project, ITT will help move treated seawater from the ocean to an elevation of 7,550 ft above sea level over a distance of 91 miles. The ITT system will employ 16 pumps to service four pumping stations, each comprising four horizontal multi-stage pumps driven by 2400 and 1800 horsepower motors.