Showing posts with label minerals. Show all posts
Showing posts with label minerals. Show all posts

Wednesday, January 30, 2013

Global outlook is positive for US coal and minerals mining, says NMA CEO

The following points were made today by National Mining Association (NMA) President & CEO Hal Quinn at a press briefing held at NMA's Washington, D.C., headquarters:

"The outlook for U.S. coal and minerals mining in 2013 is positive due to clear improvements in key sectors of the U.S. economy and the global demand for mined products, particularly in developing economies. While we see continued slow growth in the overall U.S. GDP and another slight contraction in Europe, projected increases in domestic new-home construction and automobile sales forecast to reach 15.3 million in 2013 are buoying demand for copper, palladium, molybdenum and other metals that are vital to these sectors. U.S. copper production, alone, is expected to be up by more than 10 percent in 2013, according to mineral commodity specialists at the U.S. Geological Survey (USGS).

"Iron ore production will benefit from infrastructure projects and stimulus spending in China, the world's biggest buyer and the purchaser of 40 percent of worldwide production of all base metals.

"Gold demand is expected to remain relatively strong, according to GFMS and USGS analyses, driven by continued financial uncertainty, central bank purchases of gold to diversify reserve assets and the continuation of current monetary policies here and abroad. At this point, the USGS expects a slight uptick in 2013 U.S. gold production. Silver tends to run in tandem with gold, based on investor demand, but has a variety of industrial applications that will be strong in China, in particular.

"Coal is on track to become the world's primary energy source—surpassing oil—by 2015, according to Wood McKenzie, two years ahead of the International Energy Agency's current estimate. Here at home, coal's contribution to meeting electricity demand will increase by nearly 45 million tons over 2012 levels, and total domestic consumption will rise by 50 million tons due to slight improvements in the U.S. economy; cooler weather; and natural gas prices that are expected to increase by 22 percent, according to the Energy Information Administration (EIA).

"Demand for coal in Europe has increased—particularly in Germany and Britain—in response to higher gas prices. Demand for coal throughout Asia for electricity and steel production contributes to a robust U.S. coal export forecast of 111 million tons in 2013.

"With these improved conditions for coal production and demand in 2013, NMA expects total U.S. coal production to come in at 1.016 billion tons in 2013—slightly more optimistic than EIA's January short-term forecast.

"Longer-term, NMA expects U.S. coal to benefit from recent and planned construction of higher efficiency coal-based power plants with higher output rates and lower emissions. The remaining coal fleet will, on average, be larger, more efficient and run at higher capacity—recovering at least 100 million tons of U.S. coal production lost to retirements of older plants.

"We continue to see improvements in U.S. mine safety and health. We finished 2012 with the second safest year on record for mine fatalities. Nonetheless, we are well short of our goal of eliminating fatalities and reducing our injury rate by 50 percent by 2015. We believe NMA's CORESafety® safety and health management system gives our operations and the people who work there the tools to reach that goal.

"Public policy challenges continue to limit the potential of U.S. mining to provide reliable materials and affordable energy vital to our economy and way of life. Inefficient and unpredictable permitting processes thwart investments that provide high-paying jobs and added value throughout the chain of production. Regulations that needlessly limit our energy options by halting the construction in the U.S. of new advanced coal plants that can serve as the platforms for cleaner coal technologies worldwide are a failure of ambition and policy. If the U.S. wants to compete with the world's fastest growing economies and remain in the forefront of technological innovations, we must address these critical shortcomings."

Note: NMA's outlook for the U.S. and global economy is drawn from a variety of economic forecasts, including the International Monetary Fund's forecasts of last week. Similarly, NMA's outlook for metals demand and U.S. production relies on a variety of public forecasts, mineral commodity specialists at the U.S. Geological Survey and leading U.S. and international producers. NMA's coal outlook is developed annually by NMA's Economics Committee and is reviewed and updated every six months.

The National Mining Association (NMA) is the voice of the American mining industry in Washington, D.C. Membership includes more than 325 corporations involved in all aspects of coal and solid minerals production including coal, metal and industrial mineral producers, mineral processors, equipment manufacturers, state mining associations, bulk transporters, engineering firms, consultants, financial institutions and other companies that supply goods and services to the mining industry.

Thursday, January 3, 2013

Base or Precious metals: Is it time to choose a side?

If you believe the global economy could collapse any day now, stick to gold says Haywood's Stefan Ioannou, if you are looking for a slow, if steady recovery, turn to base metals. An interview with the Gold Report.

Author: Brian Sylvester

The Gold Report: Stefan, what is your 2013 outlook for copper?

Stefan Ioannou: Strong fundamentals underpin the copper price going into 2013. Despite a tough copper equity market in 2012, the metal price itself has been pretty solid, averaging around $3.60 per pound ($3.60/lb). Improving automobile numbers out of the U.S. and stronger manufacturing numbers out of China will both have a positive near-term impact on the copper price. We expect copper prices to move a bit higher in 2013.

TGR: How far off is a return to $4/lb copper?

SI: I think 2013 is too soon for a sustained $4/lb price, but it will likely test that mark a few times in the coming year. There is a stronger argument for a long-term $4/lb copper price.

TGR: Many of the copper companies you cover also have a zinc component. Zinc started 2012 near $2,200 per metric ton ($2,200/mt), dipped to $1,750/mt at midyear and now hovers around $2,000/mt. What is behind the volatility?

SI: Primarily negative sentiment. London Metal Exchange inventories remain near an all-time high of ~1.2 mt and there is continued concern that China could flood the market at any time. Hence, the near-term outlook on zinc has been weak. However, there is an interesting dynamic taking place: As we move toward 2014, the market will be faced with a potential longer-term supply deficit.

A number of large zinc mines, which combined account for ~10% of global zinc supply, are scheduled to shut down within the next two to three years when their reserves become depleted. There are very few large, advance-stage zinc projects available to fill in the supply gap. When the big mines close down, the squeeze on the supply side will move the zinc price higher.

TGR: In light of the impending supply squeeze, what is your predicted zinc price average for 2013?

SI: We expect 2013 to be a transitional year, so near-term pricing will likely remain in the $0.90–$1/lb range. As for stock prices, we anticipate people will start paying attention to the zinc space as the supply/demand dynamic becomes more apparent, probably in the latter half of 2013. Looking further down the road into 2014–2015, we could easily see prices jump up to $1.25/lb pretty quickly. From there, the sky is the limit.

TGR: What is the industry average in terms of cash costs of per payable pound of zinc?

SI: That is another important consideration. With a copper price at $3.50/lb, hypothetically almost every copper project on the planet could or should make money, even the very low-grade ones. Even high-cost copper producers have costs on the order of $2.00–2.50/lb, which generates a solid margin at today's prices.

Margins are a lot tighter in the zinc space. Most zinc projects carry total cash costs north of $0.50/lb net of byproduct credits, and a number are even higher at $0.70–0.80/lb. If zinc were to drop below $0.75–0.80/lb, we would likely see a number of higher-cost mines shut down because they would not be economic.

There is one wild card at play in the zinc space: China. The country is able to bring a lot of new supply into the market quickly. However, exact numbers are difficult to forecast. That said, a lot of the Chinese production comes from smaller, "mom-and-pop" mines, which carry higher costs. Thus, even though there is potential Chinese production out there, it will likely take a zinc price north of $1.00/lb to get it out of the ground profitably. At a $0.90/lb price, most of this Chinese production is arguably marginally economic at best.

TGR: Should investors avoid zinc plays until the latter half of 2013, when they can start to position themselves for the shutdowns in 2014, or are there opportunities in the near term?

SI: This is the time to do your homework and figure out where you want to be when the zinc price starts gaining momentum. I am telling clients to be aware of the zinc stories out there; know now where you might want to put your money. You do not have to buy them today or tomorrow, but be prepared to invest when the market turns, because in the case of zinc it could turn quickly.

TGR: You mentioned earlier the high margins on copper. What are the cash costs per payable pound of copper?

SI: There is definitely a range. The low-cost producers—especially those with a big gold or other byproduct credits—are under $1/lb, net of credits. My guess is that the average is closer to $1.25–1.75/lb. High-cost producers would be on the order of $2–2.50/lb.

TGR: If a company's management, jurisdiction and net asset value are for the most part equal, why should an investor choose a base metals play rather than a precious metals play trading at similar prices?

SI: The answer to that question depends on your outlook on the global economy. Growth in Asia, namely China, and recovery in the U.S. will require a lot of materials. If you believe that will happen, a portfolio slanted toward base metals stands to gain a lot.

But if you are more worried about the economic situation in the U.S. and Europe, then there is an argument to be more focused on gold, primarily as a hedge against inflation. Investors need to ask themselves which story they are positioning themselves for and tailor their portfolios appropriately.

Of course, historically, precious metals—namely gold stocks—do trade at higher multiples relative to base metals. Over the last 10 years, established base metal producers have, on average, typically traded around 5 times cash flow, whereas gold stocks have traded at over 12 times cash flow. That said, gold multiples have contracted more than those of base metal over the last year or so.

TGR: What is Haywood's prediction for gold's trading range in the first half of 2013?

SI: We expect levels will stay stable in the $1,700–1,800 per ounce ($1,700–1,800/oz) range. Taking a longer-term perspective, we see costs creeping up across the board for base metal and gold projects. Five years ago if you talked about a gold mine that had a cash cost on the order of $800-900/oz, people would have been shocked. Today, that is not uncommon. Higher costs will only drive the gold price higher over the long term.

TGR: How are companies coping with the cost problem?

SI: Majors are focusing efforts on cutting costs at existing operations, which has prompted them to shelve large, longer-term development projects that have been plagued by capital cost overruns and, in some cases, political challenges. There's a greater focus on what is in production today. However, if anything, this type of action will only lead to a supply issue in the future—which bodes well for higher long-term metal prices.

TGR: Can you give our readers the essentials of your thesis for the base metals plays you cover?

SI: In the short-term, the most relevant base metal to watch is copper. It is the most widely used metal and is the best indicator of the overall sector. With stronger auto sales in the U.S. and stronger manufacturing in China, I see no reason why copper would not trade north of $3.50/lb in early 2013. At that price, copper producers will make a lot of money.

Of course, if a company is in production and is generating good cash flow, investors will start to ask what management is going to do with that money. I think the stage is set for a significant amount of merger and acquisition (M&A) activity in the base metals space, especially copper. Producing copper companies will establish strong balance sheets pretty quickly. People do not invest in mining companies so management can sit on cash. Investors want to see cash redeployed for growth or delivered to shareholders as a dividend.

TGR: Why do we hear so little about the geological and mining potential in Eritrea?

SI: People are not familiar with Eritrea, and red flags typically go up when anything related to Northeast Africa is mentioned. Along the way skeptics pointed to the risk of the government taking more than its fair share of projects.

I give the Eritrean government a lot of credit. It has been very pragmatic. The government recognized early on that it had to work with foreign investment to make a mining industry a reality. The last time I checked there were about 15 exploration companies active in Eritrea. I have been to Eritrea twice now and had very good experiences both times. The common sentiment among visitors is that it was safer than they expected.

TGR: To finish, what should our readers look forward to in 2013?

SI: Improved sentiment. This was a tough year, underpinned by a presidential election and economic uncertainty in the U.S., the European debt crisis and mixed economic signals coming out of China. At least now the direction is a little clearer and the numbers coming out of China are improving.

That said, look at what copper did even in a tough year. It managed to average around $3.60/lb—a pretty robust price in the grand scheme of things. With a bit of improved sentiment, I think you will see the prices move higher. With any luck, that will take the equities along for a ride as well.

TGR: Stefan, thanks for your time and your insights.

Stefan Ioannou has spent the last seven years as a mining analyst covering mid-cap base metal companies at Haywood Securities. Prior to joining Haywood, he worked with a number of exploration and mining companies, as well as government agencies as a field geologist in Nevada and throughout the Canadian Shield in both the gold and base metal sectors.

This article is an edited version of the original and is published here courtesy of The Gold Report

Sunday, November 25, 2012

China's Oct moly ores, concentrate imports plunge 73.6% to 377 mt

China's October imports of molybdenum ores and concentrates plunged 73.6% on year to 377 mt, the latest figures from the General Administration of Customs of China showed Friday.

Of the total imported, 307 mt consisted of roasted moly ores and concentrates, and 70 mt were those other than roasted.

China also exported a total 692 mt of moly ores and concentrates in October, down 25.4% year on year. All were roasted ores.

There were no non-roasted ores exported for the month.

In January-October, imports of molybdenum ores and concentrates totaled 8,121 mt, down 38.3% from a year ago, while total moly ores and concentrates exports amounted to 10,412 mt, down 36.9% from last year.

Meanwhile, China recorded no imports of ferromolybdenum in October.

Imports stood at 10,000 kg in the same month last year, and at 20,001 kg in September 2012.

Ferromoly exports in October reached 20,000 kg. There were no exports of ferromoly recorded for the same month last year. Exports in the previous month of September was 14,000 kg.

Imports of ferromoly in the first 10 months of 2012 totaled 188,346 kg, down 27.6% year on year, while exports stood at 216,000 kg, down 15.2% from 2011.

Monday, November 5, 2012

Great expectations fill Greenland as China eyes minerals

Whether in iron, zinc or rare earth minerals, China is eyeing investments in the Danish-ruled country whose own, increasingly autonomous, national government is looking further afield for investors

Author: Alistair Scrutton

By a remote fjord where icebergs float in silence and hunters stalk reindeer, plans are being drawn up for a huge iron ore mine that would lift Greenland's population by four percent at a stroke - by hiring Chinese workers.

The $2.3-billion project by the small, British company London Mining Plc would also bring diesel power plants, a road and a port near Greenland's capital Nuuk. It would supply China with much needed iron for the steel its economy.

With global warming thawing its Arctic sea lanes, and global industry eyeing minerals under this barren island a quarter the size of the United States, the 57,000 Greenlanders are wrestling with opportunities that offer rich rewards but risk harming a pristine environment and a traditional society that is trying to make its own way in the world after centuries of European rule.

Great expectations could lead to greater disappointments, for locals and investors. Yet a scramble for Greenland already may be under way, in which some see China trying to exploit the icebound territory as a staging ground in a global battle for Arctic resources and strategic control of new shipping routes.

Whether in iron, zinc or rare earth minerals vital for 21st-century technology like smartphones, China, the emerging economic superpower is eyeing investments in the Danish-ruled country whose own, increasingly autonomous, national government is looking further afield for investors.

"This is not just a region of ice and polar bears," Prime Minister Kuupik Kleist told Reuters in the capital Nuuk, formerly known by its Danish name Godthab. "Developing countries are interested in a more political role in opening up of the Arctic. Greenland could serve as a stepping stone."

Talk in Europe or North America of a Chinese grand design to take over the Arctic is mocked as overblown by many in Greenland - an recent exhibition of cartoons recently in Nuuk featured one drawing of an iceberg, Greenland-shaped above the water line, and in the form of China below. Its caption: "Polar Paranoia".

Compared to its investments in Africa or Latin America, Beijing has a light footprint in the Arctic. In Greenland, not one mining or oil project has yet got off the ground. Appetite for exploration is tempered by political polarisation, as Greenland's leaders square off over how to regulate and tax new wealth under a self-government regime just three years old.

"There are great expectations in Greenland, but no results," said Rasmus Ole Rasmussen, a senior researcher specialising in Arctic affairs at the Nordregio institute in Stockholm.

Nonetheless, transformation is approaching rapidly for a land still mostly inhabited by indigenous Inuits engaged in an economy dominated by fishing. And China may play a larger role in this than Europeans and North Americans find comfortable.

"It's fair to say countries like China and South Korea are far more active than Americans and Europeans in showing their interest in investing," said Kleist, who adds that the West, for which Greenland remains part of its Cold War-era NATO defence pact, can appear complacent, despite new geopolitical currents.

In Nuuk, home to 16,000 people on the southwestern coast, 1,000 sea miles north of Newfoundland, there are just two traffic lights. But new construction is everywhere: gleaming office buildings that house foreign companies and even a new mall where one can buy olives and French cheeses - for a price.

Greenland's Bureau of Minerals and Petroleum (BMP) has now awarded overall some 150 licences for mineral exploration compared with only a handful in existence a decade ago, with around $100 million spent by companies last year alone. Oil companies have spent more than $1 billion in exploring offshore.

That includes exploration of rare earth minerals, used in products from wind turbines to hybrid-powered cars. China currently accounts for the vast majority of the world's supply.

UNFROZEN NORTH

Greenland can look like ground zero for global warming. This summer many scientists were shocked as nearly all its massive ice sheet thawed. Hunters no longer prowl offshore ice that has grown too thin to support their dog sleds. A walrus was the talk of Nuuk this year, found drifting far south of its normal range.

But there also benefits from warmer weather - and it is not just dreams of growing strawberries and broccoli in the south.

With ice receding, some estimates suggest the polar ice cap may by 2040 be disappearing entirely during summer. Melting sea ice may open passages north of Canada and Russia and cut sailing distances by up to 40 percent between Shanghai and New York.

"Greenland used to be a big, white blob on the world map," said Aleqa Hammond, an opposition leader and former foreign minister of Greenland. "Now we have a global role."

But she criticised the government for keeping people in the dark about Chinese plans: "We see Chinese delegations everywhere and even the parliament does not know who they are," she said. "We seen them in our hotels, in our fjords and on our streets."

London Mining plans construction at the Isua iron ore deposit next year if Greenland gives the go-ahead. The project, which aims for finance from China, would ship some 15 million tonnes of iron ore annually from fjords near Nuuk to China.

CHINA'S GHOST

An icebreaker completed China's first crossing of the Arctic Ocean this past summer, and diplomacy earlier in the year has also underlined China's interests in the north Atlantic.

Premier Wen Jiabao began a tour of Europe in April with a visit to Iceland, population 320,000, where there has been much talk of a Chinese developer's bid to lease a vast tract of land.

And it was little surprise when President Hu Jintao, leader of the world's most populous nation, paid a three-day visit in June to Denmark, home to just six million people. Many assumed Greenland's riches were on his mind, despite official denials.

Just days before, EU Industry Commissioner Antonio Tajani had flown to Nuuk to sign a letter of intent to cooperate with Greenland on its raw materials: "The letter of intent," said one senior Greenland official, "Was a political message that we would not lock ourselves into to supplying China with minerals."

In Greenland, Kleist spoke of European pressure, saying one EU politician had suggested he limit Chinese mining. The prime minister, whose nation is not part of Denmark's membership of the European Union, refused, saying modern trading rules would not allow it: "Could the EU do that?" he asked. "Of course not."

When U.S. Secretary of State Hillary Clinton visited last year, her bodyguards worried at the near absence of security measures in Greenland. But she had other things on her mind: "One of her first questions was, 'What is happening about rare earths?'" said another Greenland government official.

One deposit alone, in southern Greenland, being explored by Australia's Greenland Minerals and Energy, could contain more than 10 percent of the world's deposits of rare earths.

Oil could have an even greater impact.

Energy consultancy Wood Mackenzie says Greenland may have reserves of 20 billion barrels of oil. The BMP says reserves may be equivalent to as much half of the entire North Sea.

Greenland has approved a sovereign wealth fund on oil-rich Norway's model that would allow it to invest new earnings.

GREENLAND'S "HOLY GRAIL"

Yet a big question is whether such a tiny population can cope, and there are signs of local political unease that may hinder investment, whether Asian or Western.

Four hours north from Nuuk by ship, through melting icebergs and passing whales, lies Maniitsoq, a symbol both of the hope foreigners bring and a reality check for Greenland's ambitions.

U.S. giant Alcoa Inc is considering building an aluminium smelter there, strategically sited between European and North American markets. It would entail the import of thousands of workers, possibly from China.

The smelter would be fed from mines as far apart as Brazil and Australia and shipped out as aluminium to the world market. Alcoa has not decided to go ahead. Among several pending issues, it wants to see whether cheaper foreign labour will be allowed.

After it won greater self-rule in 2009, an annual grant from Denmark which has covered more than half of Greenland's public spending was effectively frozen at around 3.5 billion Danish crowns ($600 million) and will shrink in real value over time.

"There is a need to become independent economically," said Naaja Nathanielsen, a Greenland lawmaker. "Most people see it not as opportunity, but as necessity."

Villages like Maniitsoq are dotted along Greenland's western coast, relying on state subsidies for heating and communications. Unemployment is high and alcoholism rife.

Much of the Maniitsoq fisheries industry has vanished. Locals say shrimp have moved north as southern waters warm. The town is huddled on an outcrop of windswept rocks with Soviet-style housing blocks, empty streets and a few downtrodden bars.

"We need a Big Bang here," said Karl Lyberth, deputy major in Maniitsoq. "Alcoa is the only project that can help us.

The town's population, now 2,715, has fallen by around 200 in a decade. Few will speak against Alcoa, though a local hotel owner made headlines that were uncomfortable for some by saying the town would need a brothel for workers building the smelter.

"It was only half a joke," said Soren Lyberth of the Heilmann Lyberth Hotel. "But people don't want to talk about it."

He touched a sore point in Greenland - some fear that the country cannot absorb so many dollars and foreign workers, and that untrained and poorly educated Greenlanders will lose out.

"They think the holy grail is Alcoa, but it's not true," said Jens Moller, head of a community training project in Maniitsoq. "It could bring a lot of problems."

ENVIRONMENTAL HESITATION

Locals also debate bringing in 2,000 Chinese workers to Nuuk for London Mining, and whether Greenland should let foreign employers undercut local wages. Such arguments stall projects.

To the dismay of investors, a consensus behind foreign companies has frayed. The opposition is calling for more taxes on miners. Environmentalists demand more consultations.

"We need more royalties," said opposition leader Hammond. "The polluter should be paying."

The leftist, pro-independence coalition led by Kleist has more technocratic ministers than a previous government criticised by opponents as nepotistic and inward-looking.

But Kleist, born to an Inuit mother and Danish father in a now abandoned mining village, is aware of communities' problems and his coalition is split on whether to let in low-paid foreign labour. Several mining executives and Greenland officials expressed frustration at the slow pace of projects.

"Our dream is about to come true," said one senior Greenland official, who spoke on condition of anonymity. "But people are getting nervous, asking whether they are ready for this."

Take rare earths. Because they are massed with uranium, neither could be mined without ending Greenland's prohibition on extracting radioactive materials - a policy inherited from Denmark. Greenland's politicians are split on the issue.

"The policy of zero tolerance is the main issue for us," said Ib Laursen, operations manager at Greenland Minerals and Energy. Only by ditching the ban could his project be feasible.

Today there is only one operational mine in Greenland, a gold deposit, which opened in 2004. Oil drilling in 2010 and 2011 has failed to yield any discoveries despite a $1.2 billion campaign led by Britain's Cairn Energy [ID:nL5E8CN0BI].

While Greenlanders wait for any bonanza to start, the notion that it may bring Chinese dominion seems far-fetched to many in a country whose European links stretch back a thousand years to Viking colonists and whose ties to the Americas include the Cold War-era U.S. Thule Air Base, deep inside the Arctic Circle.

Some analysts say China's role in Greenland is exaggerated - and that its ambitions are more economic than geopolitical:

"Many non-Arctic countries, like in Europe, are seeing ghosts and troubles ahead," said Rasmussen at Nordregio, describing such fears as having "little to do with reality".

Greenland's prime minister also stresses the limits to his ambitions for the pace of development: "Our situation is uncertain," said Kleist. "I would say five projects in 10 to 15 years are realistic in terms of the global economic situation and the capacity of Greenland society."

Among capacity constraints are concerns over its ability to protect an ecosystem which, global warming aside, is largely unsoiled by human industry. Some big oil executives say it is simply not worth the risk of a spill to drill in a region where its effects could be devastating and clean-up facilities scarce.

For Mikkel Myrup, chairman of local environmental group AvataQ, the country is unready for industrial development: "Greenland simply does not have the regulatory capacity to take responsibility for monitoring the industry," he said.

Standing on a cliff in Maniitsoq, hotelier Lyberth has put off building a new hotel with a view of snow capped mountains. Alcoa and its foreign executives, for the moment, seem far away.

"This is my dream," he said, smiling as he pointed to a barren piece of flat rock where the hotel would be.

"But so far it's only a dream."

Sunday, October 14, 2012

USGS - Minerals Yearbook - Latin America

Listed below are chapters from the Minerals Yearbook (Volume III. -- Area Reports: International). These annual reviews are designed to provide timely statistical data on mineral commodities in various countries. Each report includes sections on government policies and programs, environmental issues, trade and production data, industry structure and ownership, commodity sector developments, infrastructure, and a summary outlook.

Read Reports:

The Mineral Industries of Latin America and Canada – 2010

Argentina

Bolivia

Brazil

Central America

Chile

Colombia

Ecuador

French Guiana

Guyana

Mexico

Paraguay

Peru

Suriname

Uruguay

Venezuela

Source: U.S. Geological Survey - USGS

MINERAL COMMODITY SUMMARIES 2012

Each chapter of the 2012 edition of the U.S. Geological Survey (USGS) Mineral Commodity Summaries (MCS) includes information on events, trends, and issues for each mineral commodity as well as discussions and tabular presentations on domestic industry structure, Government programs, tariffs, 5-year salient statistics, and world production and resources. The MCS is the earliest comprehensive source of 2011 mineral production data for the
world. More than 90 individual minerals and materials are covered by 2-page synopses.

For mineral commodities for which there is a Government stockpile, detailed information concerning the stockpile status is included in the two-page synopsis.

Abbreviations and units of measure, and definitions of selected terms used in the report, are in Appendix A and Appendix B, respectively. “Appendix C—Reserves and Resources” includes “Part A—Resource/Reserve Classification for Minerals” and “Part B—Sources of Reserves Data.” A directory of USGS minerals information country specialists and their responsibilities is Appendix D. The USGS continually strives to improve the value of its publications to users. Constructive comments and suggestions by readers of the MCS 2012 are welcomed.

Source: U.S. Geological Survey

Download Report

Wednesday, September 19, 2012

China displays continued appetite for Australian minerals with Western Desert bid

China's Meijin Energy Group has launched a USD$457 million bid for Australia's Western Desert Resources (ASX:WDR).

"This offer from a major Chinese corporation represents excellent value for shareholders" said Western Desert chairman Rick Allert in a statement.

The bid of AUD$1.08 per share at a 26% premium to Western's last closing price demonstrates that the Asian economic giant still retains considerable appetite for minerals despite recent signs to the contrary.

The Australian branch chief for China's biggest bank announced earlier this week that it would be winding down lending to Australia's resource sector in anticipation of troubled times for miners.

Speculation has also been rife in the Australian media of late that the peak period for the resources sector has passed, triggered by resource minister Martin Ferguson's impromptu announcement of the end of the mining boom in an ABC interview at the end of August.

Western Desert is a diversified miner with interests encompassing iron ore, gold, base metals and uranium. It has 321.1 million outstanding shares and is due to issue a further 19.6 million share as part of a rights offer, which alongside 61.5 million in unlisted options brings total outstanding shares to 402.23 million.

Shenzhen-listed Meijin Energy is based in the inland Chinese coal cradle of Shanxi province, and engages in coal mining, coke production and steel making.

Meijin has already made inroads into the Australia resource industry with a 4.2 billion tonne coal project in Queensland's Galilee basin.

Thursday, April 26, 2012

Newmont Announces First Quarter Net Income from Continuing Operations Up 9% to $1.13 per Share

DENVER, April 26, 2012 /PRNewswire/ – Newmont Mining Corporation (NEM) (“Newmont” or the “Company”) today reported attributable net income from continuing operations of $561 million or $1.13 per basic share ($1.11 per share on a fully diluted basis), up 9% from $514 million, or $1.04 per basic share in the first quarter 2011. Adjusted net income[1] was $578 million or $1.17 per basic share in first quarter 2012, compared with $513 million, or $1.04 per share for the prior year quarter.
First Quarter Highlights:
  • Consolidated revenue of $2.7 billion, an increase of 9% from the prior year quarter;
  • Average realized gold and copper price of $1,684 per ounce and $4.01 per pound, up 22% and no change, respectively, from the prior year quarter;
  • Attributable gold and copper production of 1.3 million ounces and 35 million pounds, down 2% and 35%, respectively, from the prior year quarter;
  • Gold and copper costs applicable to sales (“CAS”) of $620 per ounce and $1.98 per pound, up 11% and up 78%, respectively, from the prior year quarter;
  • Cash flow from continuing operations of $613 million, down 38% from the prior year quarter;
  • Second quarter gold price-linked dividend of $0.35 per share, an increase of 75% from the prior year quarter; and
  • Maintaining 2012 Company-wide outlook for production, CAS and capital expenditures.
“We are pleased to announce another quarterly increase in our net income from continuing operations, up 9% over the prior year quarter to $561 million, or $1.13 per share. We also saw gold operating margin expansion of 29%, which outpaced the 22% increase in the average realized gold price from the prior year,” said Richard O’Brien, President and CEO. “During the first quarter, we continued to invest in the development of our Akyem project in Ghana, which remains on schedule for initial production in 2014. Regarding Conga in Peru, the project continues to be suspended pending further analysis of the economic and technical impacts from the recently released report from the independent panel,” added Mr. O’Brien.
[1] Non-GAAP measure. See page 10 for reconciliation.
Newmont is maintaining its previously announced 2012 outlook for attributable gold and copper production of 5.0 to 5.2 million ounces and 150 to 170 million pounds at CAS of between $625 and $675 per ounce (on a co-product basis) and $1.80 and $2.20 per pound, respectively.
Newmont is also maintaining its 2012 attributable capital expenditure outlook of $3.0 to $3.3 billion, or $4.0 to $4.3 billion on a consolidated basis. However, this estimate assumes the development of the Conga project in Peru proceeds as anticipated in connection with our original 2012 outlook provided in January 2012. As previously disclosed, development of the Conga project was temporarily suspended in November 2011 and recommencement and future development remains subject to certain risks, including political and social risks, and uncertainties, including those relating to the Environmental Impact Assessment (“EIA”) review. The Conga project’s EIA, which was previously approved by the central government of Peru in October 2010 after an extensive public engagement process, was subject to a review by independent experts during the first quarter at the request of the central government. The results of the independent review were released last week and confirmed that the reviewed sections of the EIA met Peruvian and international standards. The Company is currently in the process of evaluating the recommendations contained in the independent report, and additional recommendations from the central government related to the report, to assess the impact on the project economics. The Company will reevaluate its capital expenditure outlook after completing that evaluation process and when the development schedule of Conga is more clearly defined. Should the Company be unable to continue with the development of Conga, the Company may reprioritize and reallocate capital to other development alternatives in Nevada, Australia, Ghana and Indonesia.

As previously announced, Newmont’s Board of Directors approved a second quarter 2012 gold price-linked dividend of $0.35 per share[2] based on the Company’s average realized gold price of $1,684 per ounce for the first quarter of 2012, an increase of 75% over the $0.20 per share dividend paid in the second quarter of 2011.
Operations

North America
Nevada – Attributable gold production in Nevada was 435,000 ounces at CAS of $617 per ounce during the first quarter. Gold production was consistent with the prior year quarter due to higher grade ore mined as Gold Quarry resumed production, offset by lower underground ore grade mined at Leeville and Midas.
Costs applicable to sales per ounce decreased 4% as higher underground mining and milling costs were more than offset by an inventory build in 2012 compared to a drawdown of inventory in 2011.
The Company continues to expect 2012 attributable gold production from Nevada of approximately 1.725 to 1.8 million ounces at CAS of between $575 and $625 per ounce.
La Herradura – Attributable gold production at La Herradura in Mexico was 54,000 ounces at CAS of $581 per ounce during the first quarter. Gold production increased 10% due to higher leach placement at Soledad-Dipolos and first production from the Noche Buena pit. CAS increased 49% from the prior year quarter due to higher employee profit sharing costs and Noche Buena commencing production.
The Company continues to expect 2012 attributable gold production from La Herradura of approximately 200,000 to 240,000 ounces at CAS of between $460 and $510 per ounce.

South America
Yanacocha – Attributable gold production at Yanacocha in Peru was 188,000 ounces at CAS of $458 per ounce during the first quarter. Gold production increased 27% from the prior year quarter due to higher mill throughput, recovery and grade, partly offset by lower leach production from La Quinua, Carachugo and Yanacocha. CAS per ounce decreased 21% from the prior year quarter due to higher production, partially offset by higher labor, diesel, and workers’ participation and lower by-product credits.
[2] Payable on June 28, 2012 to shareholders of record as of June 12, 2012.
The Company continues to expect 2012 attributable gold production from Yanacocha of approximately 650,000 to 700,000 ounces at CAS of between $480 and $530 per ounce.
La Zanja – Attributable gold production during the first quarter at La Zanja in Peru was approximately 13,000 ounces.
The Company continues to expect 2012 attributable gold production from La Zanja of approximately 40,000 to 50,000 ounces.

Asia Pacific
Boddington – Attributable gold and copper production during the first quarter at Boddington in Australia was 162,000 ounces and 14 million pounds, respectively, at CAS of $782 per ounce and $1.94 per pound, respectively. Gold ounces and copper pounds produced were consistent with the prior year quarter as 17% higher throughput was offset by 15% lower grade and 2% lower recovery. Gold CAS increased 31% due to processing lower grade ore, higher milling and mining costs, a higher proportion of costs allocated to gold, and a stronger Australian dollar. Costs applicable to sales per pound decreased 11% mainly due to lower costs allocated to copper.
The Company continues to expect 2012 attributable gold production of approximately 750,000 to 800,000 ounces at CAS of between $800 and $850 per ounce and attributable copper production of 70 to 80 million pounds at CAS of between $2.00 and $2.25 per pound.
Batu Hijau – Attributable gold ounces and copper pounds produced during the first quarter at Batu Hijau in Indonesia were 11,000 ounces and 21 million pounds, respectively, at costs applicable to sales of $913 per ounce and $2.00 per pound, respectively. Gold and copper production decreased 76% and 49%, respectively, due to lower throughput, grade and recovery as a result of processing lower grade stockpiled material as Phase 6 waste stripping continues. Costs applicable to sales per ounce and per pound increased 184% and 108%, respectively, due to lower production, higher labor and diesel costs, and increased waste stripping costs.
 The Company continues to expect 2012 attributable gold production of approximately 45,000 to 55,000 ounces at CAS of between $800 and $850 per ounce and attributable copper production to be approximately 80 to 90 million pounds at CAS of between $1.80 and $2.20 per pound.
Other Australia/New Zealand – Attributable gold production during the first quarter was 265,000 ounces at costs applicable to sales of $757 per ounce. Attributable gold ounces produced decreased 11% due to a planned mill shutdown at Waihi, mill maintenance at Kalgoorlie and a build-up of in-process inventory at Jundee and Kalgoorlie, partly offset by higher grade at Tanami. Costs applicable to sales per ounce increased 35% primarily due to lower production, a stronger Australian dollar, lower by-product credits, and higher diesel and royalty costs.
The Company continues to expect 2012 attributable gold production of approximately 980 to 1.03 million ounces at CAS of between $810 and $860 per ounce.

Africa
Ahafo – Attributable gold production during the first quarter at Ahafo in Ghana was 175,000 ounces at CAS of $568 per ounce. Gold production decreased 6% from the prior year quarter due to lower mill throughput and grade, partially offset by a reduction of in-process inventory and higher recovery. CAS per ounce increased 26% from the prior year quarter due to lower production and higher labor, diesel, and royalty costs.
The Company continues to expect 2012 attributable gold production of approximately 570,000 to 600,000 ounces at CAS of between $500 and $550 per ounce.

Capital Update
Consolidated capital expenditures were $720 million during the first quarter. Newmont is maintaining its 2012 attributable capital expenditure outlook of $3.0 to $3.3 billion, or $4.0 to $4.3 billion on a consolidated basis. Capital spending through the first quarter of 2012 has been lower than expected across the portfolio, due to temporary suspension of development at Conga, but is expected to increase throughout the year. For the remainder of the year, 60% of 2012 consolidated capital expenditures are expected to be associated with major project initiatives, assuming the development of the Conga project in Peru proceeds as originally anticipated, while the remaining 40% is expected to be sustaining capital.

Sunday, March 4, 2012

Brazil's mining output to rise 5% to 8% in 2012/13

The country's mining industry association Ibram says it expects mining output to rise 5% to 8% in 2012/13, pushed by rising production volumes rather than higher metals and mineral prices

BRASILIA (Reuters) - Brazilian mining output should rise 5 to 8 percent in value in 2012 and again in 2013, pushed by rising production volumes rather than higher metals and mineral prices, an official at the country's mining industry association Ibram told Reuters.

Brazil is the world's No. 2 exporter of iron ore, the main steelmaking ingredient. Iron ore, gold and copper production are expected to soar in coming years as a result of $65.8 billion of planned mining-industry investment for the 2011-2015 period, the association said.

Ibram estimates that mining output in 2011 was worth about $50 billion, said Cinthia de Paiva Rodrigues, the association's research and development manager.

BHP to suspend TEMCO ops

BHP Billiton has announced its intention to temporarily suspend production at TEMCO, its manganese alloy production facility located in George Town, Tasmania, by early to mid March 2012.

BHP Billiton manganese president, Tom Schutte, said: “TEMCO is a processing business that competes globally with similar facilities in other parts of the world. Recently, there has been further erosion of its international competitiveness due to the strong Australian dollar and steady increases in input costs, including in reductants and electricity.

"At the same time, manganese alloy markets in Europe and North America have been weak and global prices remain low.

“While measures have been taken to make the operation as cost effective as possible, these have not been sufficient to counter shifts in the market, increased costs of production, or operating losses,” he said.

BHP Billiton manganese Australia president, Bryan Quinn, said the company will review the long term future of the operation over a three month period, which will include extensive stakeholder consultation and review of all options.

TEMCO is part of the manganese joint venture between BHP Billiton (60%) and Anglo American (40%) and produces approximately 65kt of SiMn and 240kt of High Carbon Ferro Manganese.

BHP Billiton is the manager and operator of the facility.

Saturday, March 3, 2012

Peruvian Mining production in January

Peru's mineral production fell 0.02% in January year-on-year, according to national statistics and information bureau INEI.
Zinc output fell 15.7%, tin was down 7.87%, molybdenum dropped 5.07%, iron ore declined 3.31% and copper production decreased 3.07%, INEI said.

Gold production was up 13.2%, silver rose 4.94% and lead increased 3.69%.

Peru is the world's second largest silver producer after Mexico and the second largest copper producer. It is the top gold producer in Latin America and sixth globally. The country is also the second biggest zinc producer in the world.

Minerals represent nearly 60% of the country's total exports.

First Quantum closes Congo claims agreement with ENRC

Canada's First Quantum Minerals said it has settled its agreement in Congo regarding a claim dispute with Kazakh miner Eurasian Natural Resources Corp (ENRC) .

The agreement, announced in January, under which ENRC will pay $1.25 billion to First Quantum, closes the chapter on a long-running dispute over ownership of the Kolwezi project in the Democratic Reupublic of Congo.

First Quantum said all disputes between it, ENRC, the DR Congo government, the International Finance Corp and the Industrial Development Corp have been settled.

The Canadian miner has also disposed of claims and assets of the Kolwezi project, the Frontier and Lonshi mines and related exploration interests located in the Katanga province of the DR Congo.

The dispute began with ENRC's controversial acquisition of the disputed Kolwezi project, a move that led to repeated reports of internal disagreements and prompted several directors to quit.

First Quantum launched legal claims against ENRC after it bought the expropriated asset in 2010. The dispute had been expected to go to trial after a court upheld First Quantum's $2 billion damage claim in September.

Edited by: Reuters

Friday, March 2, 2012

Resource rents will render South African mining uncompetitive – Solomon

JOHANNESBURG  – The imposition of resource rents in South Africa would render the South African mining industry uncompetitive, mining industry executive Michael Solomon said on Friday.

Solomon was commenting, at a mining law seminar hosted by law firm Bell Dewar, on the State intervention mining study (SIMS) of the ruling African National Congress (ANC), which in rejecting the nationalisation of mines, proposed that South Africa introduce a mineral rent, in which mining companies and the government would share post-profit upside on a 50:50 basis.

Defining resource rent as the surplus between the revenue and the directly productive costs, Solomon a real financial model to prove that South African was currently as competitive as any, but the moment a minerals rent was introduced, the model showed that South Africa was rendered completely uncompetitive.

He took an actual polymetallic deposit in South Africa and theoretically placed it in countries including the US, Canada, Australia, Chile and Brazil to determine the impact on the South African mining industry of a rents imposition.

“While each of the regimes have different components that go into their tax and royalty regimes, one way or another they balance out at the end of the day and the only one that is not is South Africa if you add the resource rent,” said Solomon, who has 30 years experience as a mining engineer and who is currently group executive mining for J&J Group.

“It sounds like a good idea to be able to share in mining’s upside, but it really messes up our competitiveness and we will see less and less investment coming to South Africa if it is introduced,” Solomon warned.

The former Wesizwe Platinum CEO said that the ANC’s 600-page SIMS document contained many positives in terms of constructive State participation, but the resource rents would be debilitating.

Much rent would arise from mines that had low costs and very little rent would arise from mines with high costs.

The rents would follow social licence costs, fiscal flows, which averaged 23%, and “reasonable” investor returns, which might range from 5% in Canada and 10% in Australia and to 25% in the Democratic Republic of Congo.

Lower commodity prices would squeeze rents, which would in turn result in decisions to mine higher grades and sterilise lower grade ore.

As South Africa already had a mature industry and was mining at greater depth, productive capacity would be reduced, which would lower labour absorption capacity.

While SIMS and the ANC Youth League saw State intervention as creating more jobs, it would thus actually work in reverse.

As inefficiencies in the system were increased and cut-off grades rose, mines would close sooner, curtailing jobs still further not only in mining, but also in the secondary and tertiary sectors of the economy, which in South Africa’s case were well developed.

In the exploitation of the polymetallic deposit chosen as an example, rent absorbed a third of the project’s 39% internal rate of return (IRR).

The SIMS document advocates that rent be shared 50:50 over-and-above a 22% IRR, with the difference between 22% IRR and 39% IRR split equally between government and the mining company.

In the example, the project’s net present value (NPV) of R1.1-billion net present was reduced to R675-million, knocking R435-million off the IRR, which was taken down seven points from 39% to 32%.

“The government may argue that the mining company is still doing well by getting an IRR of 32%, but we are not in isolation from the rest of the global minerals economy.

“There seems to be a perception that investors are falling over one another to get to the South African mineral sector, but they are not.

“What is happening is that investors are falling over themselves to get in to Latin America, the rest of Africa, Indonesia and Malaysia and we’ve got Australia and Canada to compete with,” Solomon said.

Moreover, the weighted average cost of capital (WACC) defined the NPV and the cost of capital defined the profitability.

The two most important factors within the WACC were the risk-free rate, which in South Africa was 7.78%, Australia 4.09%, US 1.97%, Spain 4.88%, Canada 2%, Brazil 8.5%, Chile 2.5% and Indonesia 5.75%.

The other component was the country risk premium and the long bond reflected the state of the political economy, which was high for unstable countries and low for stable ones.

Then there was also the discretionary risk premium that investors themselves put into the WACC.

South Africa’s risk premium was 6.3%, Australia’s 5.8%, US’s 5.5%, Spain’s 5.9%, Canada’s 5.9%, Brazil’s 7.7%, Chile’s 5.7% and Italy’s 4.5%.

Putting the South African project used as an example in Australia gave Australia a R550-million NPV advantage over South Africa – 40% versus 32% – making it a no-brainer to opt for Australia as a better investment destination.


He guessed that if the major mining companies opted to leave South Africa, other investors would take their place, but he questioned whether they would be of the same quality.

If they were of a lower quality, as was likely, it was likely that the frustration of near-mine communities would be exacerbated.

South African mining companies had gone through decades of mining companies getting its act together in terms of social licence and environment and it was unlikely that the new foreign companies would have the same level of empathy with the philanthropic aspects of mining.

“Unless you have a reasonable investor return, you will not have an industry,” Solomon believed.

“Mining creates money. Every time a miner mines something, it creates real money and real value,” said John Meyer of London mining analyst company Fairfax in a note on Friday.

Meyer added that the economic value of mining was substantial and created a multiplier impact on economies that went for downstream processing.

Smelting and refining captured value while manufacturing was the key to maximising value from national resources.

Thursday, March 1, 2012

Japanese company to start rare earths production in India

KOLKATA  - Japan’s Toyota Tsusho Corporation was set to start rare earths production in India by April, from monazite sand mined in the country.

Toyotsu Rare Earths India Private, a wholly owned subsidiary of Toyota Tsusho would use monazite sand classified as mine waste, and supplied by Indian Rare Earths Limited (IREL), which extracted uranium and thorium, to produce rare earths like neodymium, lanthanum and cerium.

The establishment of an Indian rare earths production base marked the gains from a series of Indo-Japanese strategic dialogues last year, for joint collaboration on development of rare earths and reducing overdependence on sourcing of the critical resource from China. As part of this bilateral dialogue, Japan removed seven Indian companies from its Foreign End-users List, which included Indian Rare Earths Limited (IREL), owned and managed by India’s Department of Atomic Energy (DAE).

The Japanese initiative to remove IREL from its negative list of entities paved the way for supply of waste monazite sand to Toyota Tsusho to set up smelting facilities for extraction of rare earths in India.

Toyota Tsusho was making preparations to start production in April this year, and assuming the project progressed according to plan, the company expected the Indian plant to produce 4 000 t of rare earths from the first year of production, a company spokesperson said.

The participation of a foreign company in exploitation of beach sand minerals was also made possible by modification of the exploration policy of the DAE. The latter, by virtue of being the sole custodian for production of nuclear fuel like uranium and thorium, enjoyed a monopoly over beach sand because of its thorium content.

Such a policy resulted in underexploitation of resources, with India controlling 17% of total world beach sand mineral resources but production accounting for a mere 6% of global production.

However, the monopoly of the DAE has been eased, allowing foreign and Indian private companies to invest in extraction and smelting of rare earths from these beach sand resources, while the DAE retained the monopoly on nuclear fuel production.

“Of the 21-million tons of rare-earth element reserves in India, monazite alone constituted 10.21-million tons, with the province of Andhra Pradesh topping the list with reserves of 3.73-million ton,” head of geology at Andhra University C Kasipathy said.

Toyota Tsusho previously sourced its entire production of neodymium, lanthanum and cerium from China, however, in recent years, depending on the country for these resources has become exceedingly problematic, with Toyota Tsusho forced to look for new sources in Vietnam, the US, Indonesia and Australia, apart from its new facility in India.

Sunday, February 26, 2012

Rare Earth Investment Update

Jeff Clark, Senior Precious Metals Analyst

We've received a number of inquiries from Casey Research subscribers about our opinion on the current rare earth metals market. We have covered this topic previously, but this article, we'll take a fresh look.
As a matter of a recap, rare earth elements (or REEs) is a generic name for 17 metals widely used mostly in high-technology devices, such as mobile phones, laptops, flat screen televisions, hybrid car batteries, lasers, optics, and military equipment. New uses for these metals are being constantly found, but more on that later.

Despite the name, these metals are not actually rare in nature. The name refers to the fact that they are rarely found in a pure form and are usually mixed with other minerals, which makes extraction complicated and costly. Further, mining and refining of rare earth metals is environmentally challenging, due to acidic and radioactive byproducts. This is why most countries don't produce REEs. This has led to a reduction in reserves of these metals and left the bulk of production to less environmentally conscious companies and jurisdictions. China has expanded its production and, at least on the surface, looks to have a near monopoly on the industry. According to the US Geological Survey, China possesses one-third of the world's reserves and produces 97% of global supply.

None of this was a problem until China started introducing trade limits. Dramatic changes took place in 2010, when Beijing officially decided to cut export quotas on rare earths by 72%, to 35,000 tonnes, far below the levels of world consumption. Quotas were further reduced by 35% in the first half of 2011. Steep export taxes were applied, too. As a result, REE prices skyrocketed.



Consumers lost some of their appetite for the now-expensive metals, and most REEs dropped in price – some of them by as much as two-thirds. Prices remain above historical norms, however, and were so lofty that exporters used only half of the Chinese quota allocations last year.
It's hard to miss the steep rise in prices from mid-2010 to April 2011. Should we expect similar price spikes in the future? And what's the long-term trend?

Analysts have opinions supporting both bullish and bearish outlooks. Some think another price rally is possible, since the industries using REEs are on the rise and also because there are, in the majority of cases, no substitutes for REEs. Neither is there an immediate solution to the market conditions caused by China's supply policy. Others believe that the REE market will face a surplus in 2012 and that prices will thus correct further.

The REE market is precarious because supply is artificially restricted. This imbalance can't be sustained for long, though, because industries and companies that use REEs need to have predictable and stable long-term supplies of the metals and hopefully at reasonable prices. It thus seems reasonable to assume that the market will find ways to decrease the effects of China's policy.
In fact, there are some adjustments already under way in this market…

New Mines Outside China
Given the high REE prices, some previously producing REE mines are going back into production. Molycorp Minerals, for instance, is reopening its Mountain Pass Mine, which was shut down in 2002 because of competition from China and environmental concerns. The company was recently permitted to resume its operation and is expected to start producing this year. Another recent example is Australian miner Lynas, which obtained a license to begin processing rare earths at a new facility it's putting the finishing touches on. The company says by the middle of the year the plant will be able to process 11,000 tonnes of rare earths per year (about one-third of current world demand excluding China), and will later double its capacity.

Recycling
Another solution to cope with supply shortages is recycling. Japanese companies have been studying the technology and costs of reusing neodymium and dysprosium from washing machines and air conditioners. Mitsubishi Electric has made some progress by creating a device that extracts rare earth elements from used household air conditioners. The machine "will be installed at a factory run by Green Cycle Systems Corp., a Mitsubishi Electric subsidiary in the city of Chiba and begin operations in April." Another Japanese company, Shin-Etsu Chemical, announced that it will spend 2 billion yen ($US25.8 million) to build a plant in Vietnam to process REEs from hybrid car motors and other products. The factory is expected to open in February 2013 and will produce 1,000 tonnes of rare earths per year.

If recycling technologies can manage to be cost effective, they will become another source of REE supply, albeit not as significant as new mine production.

Replacement
Another way for companies to be less dependent on China's policy decisions is through new technology that uses less REEs. A widely quoted example is a company called Showa Denko, which managed to decrease its consumption of cerium oxide by half in 2011 by reusing the material up to five times, among other technological improvements. Other breakthroughs are likely to follow.

Relocation
China officially mined 93,800 tonnes of REEs in 2011, only 5% more than in the previous year. Harsh export quotas and modest growth in mine supply are considered by some analysts as the incentive "to give priority of supply to domestic consumers and encourage foreign customers, mostly in high-tech strategic sectors, to move their operations to China." Whether or not they like it, the state of the current REE market may force some companies to relocate their production facilities to China. Japanese companies Showa Denko and Santoku, among others, have already done so.

Conclusion
It's clear that REEs have investment merit. These elements are crucial and irreplaceable for a lot of consumer uses.
However, the REE market is small, opaque, volatile, illiquid, and subject to manipulation. It's further complicated by a lack of reliable data, making it difficult to forecast and risky to play. It's also worth remembering that REEs are industrial metals, which are usually weak when the economy enters a recession – an outcome we think is more likely than not.

Wednesday, February 22, 2012

Musgrove Minerals Reports Results From 2011 Drill Program And Update On Empire Project

Feb 22, 2012 (ACCESSWIRE-TNW via COMTEX) -- Vancouver, B.C. - Musgrove Minerals Corp. ("Musgrove" or the "Company") (tsx.v:MGS) is pleased to report, it has completed 24 of the 32 planned In-fill RC-drill hole program with 14,265 feet (4348 meters) drilled in 2011 on the 100% owned Empire Mine Project located in the Alder Creek Mining District in Custer County, Idaho.

Results for the earlier released 14 holes predominately drilled in the northern mineralized zone are highlighted as follows; Highlights include: EM11-08 20ft of 1.24% Cu including 10ft of 34.90gm/T Ag, EM11-09 120ft of 0.60% Cu including 100ft of 26.63gm/T Ag and .0.64% Zn, EM11-02 90ft of 0.62% Cu.

The 32 hole drill program completes the original 65 hole drill program outlined in the Company's 43-101 technical report. In 2006 the Company drilled 33 holes (13,240ft), consisting of 5 NQ core and 28 RC at an incline of -45 degrees. The holes focused on the AP Pit area in the southern half of the mineralized body. The holes in the current infill drill program are -50 degrees which is approximately 85-87 degrees from the presumed attitude of the mineralization but the attitude of the mineralized zone is inconsistent and variable. True widths of the mineralized zones are variable and unknown.

The 32 hole drill program will complete the original 65 hole drill program outlined in the Company's

43-101 report. The highlights of the 2006 drill program include:

JDD05a - 77m (253ft) of 0.65% Cu and 25 gm/T Ag,

JRC 11 - 53m (174ft) of 1.37% CU and 29.7 gm/T Ag,(including 9m (30ft) of 4.64% Cu and 126.6 gm/T Ag),

JRC 15 - 98m (322ft) of .49% CU,

JRC 27 - 9m (30ft) grading 5.72gm/T Au (incl 1.5m (5ft) at 26.4 gm/T Au).

Results for the remaining 10 holes have been received from ALS Minerals Group. These holes were drilled predominately in the middle portion of the mineralized zone and highlights can be found at the bottom of the highlight table below, (EM11-15 to EM11-24).





Drilling will resume again in 2012 to complete the remaining drill holes of the infill drill program and several step out, exploratory holes to expand the mineralization to the east. These holes are to target the sulphide zone at depth. The past producing Empire Mine Project is a polymetallic skarn deposit containing copper, zinc, gold and silver located in the Alder Creek Mining District in Custer County, Idaho. The Property is on the east-facing slope of the White Knob Mountains approximately three miles west of Mackay, Idaho. It consists of 26 patented mining claims, six mill-site claims and 21 unpatented mining claims.

Historic production records indicate the Empire Mine produced 765,000 tons grading 3.64% copper, 0.048 oz/t gold and 1.57 oz/t silver from underground workings in the period 1901 to 1942 (694,000 Tonnes grading 3.64% Cu, 1.64 gm/T Au, and 53.8 gm/T Ag). Geologically, the mineralization is classified as a polymetallic copper-skarn. Mineralization has been encountered over a strike length of 1,200m, thickness of 6m to 73m, and a depth of more than 300m.

In 1997, Cambior Exploration USA Inc. reported a drill-indicated, near-surface, oxide copper resource of 18,230,000 tons grading 0.49% Cu, 0.19% Zn, 0.44 oz/t Ag (15.1 gm/t) and 0.014 oz/t Au (0.48 gm/t), with an additional 9,650,000 tons of material grading 0.29% Cu and 0.31% Zn (Cambior, 1997). A qualified person has not done sufficient work to classify the historical estimate as a current mineral resource; this issuer is not treating the historical estimate as a current mineral resource, and the historical estimate should not be relied upon.

Richard G.Walker,JR.,CPG is a qualified person by the standards of National Instrument 43-101, he is responsible for the above contents in this news release for the Empire Mine Project.

About Musgrove Minerals Corp.

Musgrove Minerals Corp. www.musgroveminerals.com is a mineral-exploration resource company trading on the TSX Venture Exchange (symbol:MGS). The Company is currently exploring advanced exploration-stage projects; the 100% interest "Empire Mine" Project; the 100% interest "Musgrove Creek" Gold Project, The Empire Mine Project is a polymetallic skarn deposit containing copper, zinc, gold and silver located in the Alder Creek Mining District in Custer County, Idaho. The mine is located on the east-facing slope of the White Knob Mountains approximately three miles west of Mackay, Idaho. The Property consists of 26 patented mining claims, six mill-site claims and 21 unpatented mining claims. The Musgrove Project, located in the Panther Creek drainage NNW of Challis, ID, is a prospect for a disseminated gold bulk-tonnage surface project similar to the Beartrack Mine, a nearby former gold producer.