New projects in Peru to add $3.6 billion to overall mining investment for 2013

New mining projects in Peru will attract over $3.6 billion in investments this year, adding to the overall industry forecast of $10 billion, said Wednesday the president for the country’s National Society of Mining, Oil and Energy (SNMPE), Eva Arias.

The South American nation’s extractive sector, which accounts for some 60% of the economy, saw investments for $8.5 billion last year and is expected to bring $53 billion over the next decade, added Arias.

According to LPBnews (in Spanish), mining investment jumped 18% last year compared to 2011 despite large-scale protests against exploration and extraction activities that swept the country in 2012.

SNMPE warned in September last year that, as a result of non-stop anti-mining protests in different regions of the country, investors had started looking for greener pastures and so mining investment in the South American nation was expected to fall.

Although that didn’t happen, the body said Peru did fall to third place from second in the list of world’s top copper and silver producers.

Rio Tinto faces tough talks in Mongolia over giant mine

ULAN BATOR/MELBOURNE – Rio Tinto faces tough negotiations next week in Mongolia, where the government is under pressure to plug a budget deficit and increase its share of the wealth from the $6.2-billion Oyu Tolgoi copper and gold mine.

Oyu Tolgoi, 34% owned by Mongolia and controlled by Rio Tinto, produced its first concentrate this week and is on track to start supplying metal and paying royalties by June.

The success of the mine is crucial for both sides as, at full tilt, Oyu Tolgoi will account for nearly a third of Mongolia's economy, while Rio Tinto is depending on the mine to drive growth beyond its powerhouse iron-ore business.

Rio Tinto is not expected to have to give up a bigger share of the mine, but some analysts say it could end up agreeing to provide more funding in areas like infrastructure to remove uncertainty over a project that is expected to produce 425 000 t of copper and 460 000 oz of gold a year.

Rio Tinto and its subsidiary, Turquoise Hill Resources, last year fended off an attempt by Mongolia to renegotiate their 2009 investment agreement on Oyu Tolgoi.

The government is drafting a law that would require Mongolians to hold at least a 34% stake in mines, however talk that this would apply to Oyu Tolgoi has died down.

Instead, there is speculation the government may press Rio for more funding outside the agreement, which includes a 5% royalty on all sales, as Mongolia faces a revenue squeeze despite being touted as the world's fastest growing economy as recently as 2011.

"It looks as if the government of Mongolia will run a large budget deficit in 2013," said Nick Cousyn, COO at BDSec, an investment bank in Mongolia.

"How they will close this gap is anyone's guess, but we think unilaterally changing the OT agreement is off the table," he said.

UPPER HAND

In meetings scheduled for next week, the government could question why project costs have blown out, raising concern that Rio Tinto may want to slow development due to the steeper costs, as it has done with other major capital projects.

Rio Tinto executives in Ulan Bator and a spokesman declined to comment on the upcoming talks.

Turquoise Hill last year put the total project cost at $13.2-billion, including developing an underground mine and sustaining capital costs, up from a 2010 estimate of $9.55-billion.

A Bloomberg report this week said Rio was considering a temporarily halt of construction to protest against demands by the government for a bigger stake in the project and new royalty rates.

In response to the report that cited two unnamed sources, Rio Tinto said it remained on schedule to start selling ore from the mine in the first half of the year.

One analyst said the firm may be considering delaying the project's second stage to build an underground mine, but others said it was unlikely to hold up the expansion for too long.

"It's not going to kill the project off because it's a cracking asset," said Hayden Bairstow, an analyst at CLSA.

The feasibility study for the underground mine is due to be finished in the first half of 2013. Construction was estimated last year at $5.1-billion.

ANOTHER WRITEDOWN?

Rio Tinto's latest battle in Mongolia poses a challenge for its new CE, Sam Walsh, who replaced Tom Albanese in January after the firm reported $14-billion in writedowns in aluminium and coal.

Walsh may want to smooth relations with the government rather than play tough to ensure that the firm does not have to keep fighting off a clamour for greater Mongolian ownership, CLSA's Bairstow said.

"When it's effectively a third of GDP, getting the entire country offside isn't a go-forward position that's going to work," he said.

If the firm bowed to some of the government's demands and as a result had to take a small writedown, the market may be forgiving, as it would remove uncertainty, Bairstow said.

The talks with Rio Tinto are part of a wider effort by the government to squeeze more out of the mining industry.

At a meeting on Friday, Mongolian miners complained about the proposed new mining law that would impose taxes on exploration and step up local ownership of resources to as much as 51%.

Though one of the aims of the law is to make sure resources stay in Mongolian hands, some local miners are just as worried over the legislation as foreign counterparts.

The proposed law includes heavy fines and could even have a company's licensed land revoked by the government, said Enkhsaikhan Batmunk, director general of Magma Mines.

Another concern is that if the state owns 51% of a firm, it will be tough to raise money via a public listing.

But while Mongolians recognised the need for foreign investment, "What's under the ground belongs to them like the sky," said Namgar Algaa, executive director of the Mining Association.

Edited by: Creamer Media Reporter

Mining investment in Argentina grows 72% despite risky business climate

By Cecilia Jamasmie

Mining-related investments in Argentina increased a whopping 72% in 2012 compared to the previous year, said local consultancy firm IES Online on Tuesday.

Despite mounting government interventionism in the industry, foreign and local investors spent a total of $3.8 billion and the firm expects this trend to continue this year, with planned investments already amounting to more than $4 billion (or $20bn Argentine pesos).

Whether these investments will be actually carried out and whether the Argentine mining sector can attract more ventures in 2013 is something the consultants did not talk about it, especially considering the socio-political risks the country poses.

Since Argentina recovered from the 2001/2002 currency crisis, the country has relied on an export-based economic growth model, which has made it increasingly dependent on Asian demand for commodities such as soya or beef.

President Cristina Fernandez de Kirchner – who succeeded her late husband Nestor Kirchner – has become infamous for her unorthodox economic approach and monetary policy, inherited from her predecessor. Government intervention in the economy, explains the UK Trade and Investment office in a report published earlier this year, has become increasingly common and her administration has struggled to protect a shrinking trade surplus by implementing import restrictions.

Miners have been particularly affected by Fernandez’ measures. Vancouver-based Pan American Silver (TSX: PAA), for instance, had to halt investment in its Navidad project, the richest undeveloped silver deposit in the world, last year after local authorities submitted a draft law that would significantly increase the economic burden on mining companies.

And on Monday, after Brazil’s Vale (NYSE:VALE) announced it was temporarily suspending its $6 billion Rio Colorado potash project in the Argentine province of Mendoza, the provincial government reacted by sending Vale an ultimatum.  As reported by local newspaper Los Andes (in Spanish), the authorities told the Brazilian miner it had five working days to present a new timeline or the concession could be revoked.

Bolivia mining exports seen falling 20%

Bolivia’s mining exports will likely decline by 20% this year, partly as a result of reduced private investments amidst regulatory uncertainty, experts say.

“The value of Bolivian mining exports will probably fall around 20% in 2012,” says Henry Oporto, a leading expert on Bolivian mining and the co-author of a new book Los dilemas de la minería (The dilemmas of mining). The mining sector as a whole fell 6.7% during the first half of the year.

“The decrease is due to a fall in production by private mining companies, small mining companies and state mining companies,” Oporto says. The decrease in each sector ranges from 8% to 10%.

At the same time, the international prices of most of the mining products exported by Bolivia have declined, with gold being the exception.

Another worrisome trend is that the share of private companies is falling – from 60% of total mining exports in 2011 to 48.7% during the first half of the year and a further decline expected, Oporto says. “The prospects are bleak,” he says.

Apart from the falling prices on key minerals, the sector is seeing reduced investments owing to the constrictions imposed on the private mining companies through nationalisation and expropriation; occupation of mines; the unilateral cancellation of exploration and exploitation contracts and, the uncertainty and lack of guarantees for mining investors, Oporto argues.

Mining officials also complain about the tax system. “The actual tax regime in Bolivia is the highest in the region compared with Peru, Chile and Argentina,” Minera San Cristobal spokesperson Javier Diez de Medina said. Minera San Cristobal is the largest mining company in Bolivia and a unit of Japan-based Sumitomo Corporation.

“That takes out some competitiveness of the mining sector in Bolivia.”

The government of President Evo Morales is planning to implement a new mining law, which could improve the outlook for the sector if it can abolish the constitutional mandates such as the required transfer of concessions for contracts, the ban on listing awarded mining deposits on stock exchanges, the required prior consultation with local indigenous populations, the tax regime and other restrictions on the private sector, Oporto says.

However, the signals from the government are not positive, he points out. They include possible plans to increase taxes further, increasing royalty fees from today’s level of 6% and doubling the dividend tax from today’s level of 12.5%. All in all, the government takes a whopping 67%, according to estimates by Oporto.

“If taxes rise above this level, you put at risk the continuity of the mining operations and it will be very difficult to attract new investments for mining projects,” he says.

The new mining law and a separate one on investment that also will impact the mining sector are still under discussion and it is unclear how they will end up and when they will be implemented.  “Without the new rules, it’s difficult to be thinking about the future,” Diez de Medina says. “We expect a year of plenty of challenges.”

Edited by: Creamer Media Reporter

Mining investments in Brazil's Legal Amazon to hit US$26.9bn by 2016 - Ibram

Brazil's Legal Amazon region is set to receive about 56bn reais (US$26.9bn) in investments from the mining sector for development and expansion projects, including extraction and processing, according to national mining institute Ibram.

The new mining opportunities include the expansion of the Carajás mine, copper enterprises near the municipality of Parauapebas and the Alumina Rondon project, local press reported.

States that stand to benefit are Mato Grosso, Tocantins and Amazonas, where about 60 small mineral exploration companies scour the underground for gold deposits in the Tapajós river area, according to Ibram.

However, the main obstacle for a sustainable mining expansion in the Legal Amazon is the lack of infrastructure. Most projects will require mining companies to invest in rail networks, ports and highways, leading to increased project costs.

"The country's growth acceleration plan PAC forecasts the development of transport infrastructure in the Legal Amazon, including waterways, but there are projects that require more urgent action," Ibram CEO José Fernando Coura said, adding: "Besides the federal government, state and local authorities are important partners when contributing to local and regional development."

The lack of skilled manpower is another obstacle. To deal with this issue, some mining companies are seeking partnerships with professional associations such as the national industry confederation (CNI) and the national industrial training service, Senai, according to the institute.

Covering more than 5Mkm2 (59% of Brazil's territory), the Legal Amazon officially includes all seven states of the North Region (Acre, Amapá, Amazonas, Pará, Rondônia, Roraima and Tocantins), as well as mid-western Mato Grosso state and most of northeastern Maranhão state.

The role of mining in national economies

Mining’s contribution to sustainable development October 2012

The mining industry is a major force in the world economy, occupying a primary position at the start of the resource supply chain. However, its role in contributing to the national economies of different countries varies greatly and is neither well documented nor well understood.

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© 2011 International Council on Mining and Metals. The ICMM logo is a trade mark of the International Council on Mining and Metals. Registered in the United Kingdom, Australia and Japan.

Reproduction of this publication for educational or other non-commercial purposes is authorized without prior written permission from the copyright holders provided the source is fully acknowledged. Reproduction of this publication for resale or other commercial purposes is prohibited without prior written permission of the copyright holders

Mining: Partnerships for Development Toolkit

The toolkit responds to a clear need in different parts of the world for a more systematic and objective way to quantify and agree ways to enhance mining’s economic and social contribution.

It is currently being applied in a number of countries and can be used by mine managers and those interested in promoting economic and social development (host governments, development agencies and development-focused NGOs).

CONTENTS

The toolkit consists of eight modules. There are a number of worksheet and database templates to help you complete each of the modules in the toolkit. You can download the Tookit and the templates together or indivisually

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© 2011 International Council on Mining and Metals. The ICMM logo is a trade mark of the International Council on Mining and Metals. Registered in the United Kingdom, Australia and Japan.

Reproduction of this publication for educational or other non-commercial purposes is authorized without prior written permission from the copyright holders provided the source is fully acknowledged. Reproduction of this publication for resale or other commercial purposes is prohibited without prior written permission of the copyright holders

India facing acute shortage of mining engineers

The Indian mining industry is facing a shortage of between 2 500 to 3 000 engineers per year, which is set to worsen if the industry’s contribution to the country’s gross domestic product (GDP) increases, a human resources mapping study conducted by an industry association has found.

The shortage of trained engineers in the mining industry was also being aggravated by demand for mid-level mining professionals from countries like Australia, South Africa, Mauritania and Mozambique, the study said.

While demand for Indian mining engineers in these countries was increasing in tandem with more Indian companies establishing their footprint overseas, Indian mining professionals, particularly those with work experience of between 5 and 15 years, were preferring a variety of assignments abroad owing to the vastly superior compensation packages and the opportunity to work in best-practice environments, the study said, adding that by 2017 the industry would be faced with a shortage of about 8 000 trained mining engineers unless training capacity was urgently upgraded.

Apart from the demand for mining engineers working in domestic industry rising, Indian technical educational institutions were failing to provide the numbers of trained engineers for current and future growth of the mining sector.

According to the All India Council for Technical Education, the advisory and statutory body for the coordination and development of technical education in the country, for an important sector like mining, which had a strong demand for trained engineers, the total number of seats available for students across all training providers in India was just 654 per year.

Engineers fresh from colleges, including those trained in mining engineering, were preferring information technology companies during campus recruitment drives, largely because of the salary structure differential, which was often as high as 60% to 70%, the industry study said.

However, not all agreed that salary was the principal reason for these choices by graduate mining engineers.

“The choice of industry at the beginning of a career is a reflection of our times. Given the vast socioeconomic disparities in our country, it is normal for educated talent to seek urban centres, which the mining sector may not offer, at least in initial years,” said a professor associated with the Indian School of Mines, the leading Indian mining education institute, located at Dhanbad, in the state of Jharkhand, in eastern India.

The Indian mining industry currently contributed 2.3% to the country’s GDP and the government was targeting increasing it to 5% over the next five years. But with the rapid globalisation of Indian companies focusing on acquisition of mineral and energy assets overseas, technical mining education had failed to keep pace with the changing profile of the industry and resultant profile of trained expertise.

“The current mining education curriculum is very traditional and possibly outdated. With rapid developments in the global mineral and energy industries, a vast array of domain knowledge requirements are not being addressed in mining education,” according to an human resource professional at Steel Authority of India Limited.

“With increasing globalisation, cross-border investments, technology transfers and joint ventures in the mining sector, there exists an acute shortage of expertise in mining-related knowledge domains like mineral economics, laws relating to mineral concessions and contracts, financial analysis and forecasting and environmental sciences. These are yet to be mainstreamed in mining education,” he added.

Significantly, India’s second school of mines was being set up in the north-eastern region of the country in collaboration with the government of the state of Queensland, in Australia, which would provide curricula and trainers for the institution.

Edited by: Esmarie Swanepoel

India's Adani to begin coal mining in Australia by 2016

India's Adani Group announced the company has completed its exploration in Australia and says they will beging mining by 2016.

The company's Carmichael mine is located in the Galilee basin in Queensland, Australia.

The company is positive that miningwill begin in 2015-2016 and will reach its peak at approximately 60 million tonnes a year by 2022.

The Carmichael mine is estimated to hold approximately 10 billion tons of coal and could be the larges coal deposit in the world.

The company said in a press release "Our partnership with Australia and Queensland has been one of exceptional trust, transparency and understanding. Having seen the speed, and with the support received to undertake and complete the largest and most ambitious mining exploration programme in record time, I am now certain that Queensland has been the right choice. Australian industry and the Indian corporates like the Adani Group have some distinctive synergies, which will prove to be of mutual benefit to all in the long run,"

Peru’s copper, silver production up; gold, moly fall in Sept

Peru’s molybdenum production fell by half in September 2012 as lead and zinc output improved, says the country’s mining ministry.

Author: Dorothy Kosich

Peru’s Ministry of Energy and Mines reported copper production increased 9.58% in September while iron ore was up 81.55% and silver increased 8.65%.

The ministry reported copper production was up 5.46% during the period of January to September 2012 from 898,875 metric tons from January to September 2011 to 947,922 metric tons. For September 2012 copper production was 113,615 metric tons, up 9.58% from 103,680 tons metric for September 2011.

The increased copper output was attributed to higher production from Sociedad Minera El Brocal, Compania Minera Antamina and Compania Minera Milpo.

Iron ore production for September 2012 was reported at 892,478 long tons (906,799 metric tons), up 81.55% from 491,580 long tons (499,498 metric tons). For the period from January to September 2012, Peru’s iron ore production totaled 5,371,234 long tons (5,457,425 metric tons), up 2% from 5,266,475 long tons (5,350,985 metric tons) during the same period of January to September 2011.

Peru’s silver output increased by 3.65% in September 2012 from 282,348 kg fine (9,077,699 troy ounces) in September 2011 to 292,677 kg fine (9,409,784 ounces). Increased silver production for September of this year was reported at Minera Argentum, Cerro Manager and Compania Antamina.

For the period from January to September 2012, the mining ministry reported cumulative silver production of 2,588,775 kg (83,231,050 ounces), 2.55% higher than 2,524,488 kg (81,164,174 ounces) of silver output reporting during the same period of last year.

Gold production for September 2012 was reported at 12,822,724 grams (412,260 troy ounces), down 9.12% from the 14,108,776 grams (453,607 ounces) reported in September 2011. Gold production for September of this year declined at Minera Laytaruma and Minera La Zanja.

During the period from January to September 2012, Peru reported total gold production of 124,273,608 grams (3,995,489 ounces) up 0.17% than the same period of 2011 for total production of 124,068,705 grams (3,988,901 ounces).

The mining ministry reported zinc production of 108,810 metric tons for September of this year, up 15.69% from 94,058 metric tons of production for September 2011. Increased production at Minera Antamina, San Ignacio de Morococha and Ancash Nyrstar was reported in September 2012.

For the period from January to September 2012, Peru reported total zinc output of 974,924 metric tons, up 2.29% from 953,076 metric tons of zinc production reported during the same period of last year.

Peru’s lead production fell by 4.12% from 20,578 metric tons in September 2011 to 19,730 metric tons in September of this year. The decrease was attributed to lower production at Empresa Administradora Cerro, Minera Atacocha and Minera Santa Luisa.

From January to September of this year, Peru reported total lead output of 188,442 metric tons, up 10.88% from 169,951 metric tons of lead production reported during the same period of 2011.

The mining ministry reported molybdenum production plunged 50.6% from 2,167 metric tons in September 2011 to 1,071 metric tons in September 2012. Peruvian moly is mined by Southern Peru Copper.

For the period from January to September 2012, Peru’s moly output declined 7.19% from 13,644 metric tons from January to September 2011 to 12,663 metric tons.

The mining ministry reported that Peru’s sole tin producer, Minsur, reported a 21.26% decline in production in September 2012 from 2,707 metric tons in September 2011 to 1,071 metric tons.

For the first nine months of this year, Peru reported total tin production of 19,522 metric tons, down 9.92% from 21,672 metric tons during the same period of last year.

Source: Mineweb

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.

Venezuela mining outlook grim

The mining sector in Venezuela is expected to continue declining as a result of minimal private participation after the government nationalised gold mining and discouraged other private mining, industry officials say.

“There’s no major private mining company today,” says Luis Alejandro Rojas Machado, president of Venezuela’s mining chamber Camiven.

In 2010, Venezuelan mining accounted for 27% of the gross domestic product (GDP), according to the United Nations Economic Commission for Latin America and the Caribbean (Eclac). That was the highest rate in Latin America. However, it marked a decline from the 2005 level of 30.3%. Meanwhile, Venezuela’s GDP shrank in both 2009 and 2010.

Earlier this month, the government took over the nickel concession of Anglo American after it expired. Production at its Loma de Nickel mine stopped in September.

After the forced exit of several foreign mining companies, the only significant foreign company now active is CITIC, a state-owned Chinese conglomerate that will develop the Las Cristinas gold mine, one of the world’s largest gold deposits. “Las Cristinas will take between seven and ten years to develop,” Rojas estimates. “The Chinese might use their financial muscle to accelerate that, but you can’t develop a good mine in a day or two.”

Meanwhile, Rojas fears that the state dominance will result in inadequate investments for the development of the sector. “If we don’t see investments, there won’t be production,” he says.

Last year, the mining sector contracted – a trend expected this year as well, according to Rojas. “We have a legal environment that doesn’t permit development,” he says. “This will keep the local mining sector in recession.”

The Venezuelan government nationalised gold mining in August 2011, but by February it had expropriated Las Cristinas from Canadian miner Crystallex, which had tried to develop the mine since 2002, after it was confiscated from Canada-based Vanessa Ventures, in November 2001.

Crystallex has sued Venezuela at The World Bank's International Centre for Settlement of Investment Disputes (ICSID) for $4.3-billion. The ICSID hearing is scheduled a year from now – in November 2013 and the company has no further comments on the dispute.

“The company’s position is to not comment on the case or proceedings,” VP for investor relations Richard Marshall told Mining Weekly Online.

Another company that was affected was Canadian-Russian miner Rusoro Mining, which also saw its assets nationalised without compensation. In July it filed an arbitration claim at ICSID.

“The Venezuelan government's actions have resulted in significant loss to the company and its shareholders,” Rusoro President and CEO Andre Agapov said in a statement at the time. “In light of the government's apparent unwillingness to look for an amicable resolution, it became the company's sole recourse to commence international arbitration.”

Agapov did not respond to several interview requests from Mining Weekly Online, but according to Venezuelan newspaper El Mundo, the company is still hoping to reach a friendly solution with the Venezuelan government, which includes the right to develop mines in the country and recover its $1-billion investment.

Edited by: Henry Lazenby

Valley High Mining reports positive results from its Machacala Project

Valley High Mining Company today announced that it has received initial internal test results on the tailings pile at its Machacala Project located in the district of Carabamba, Julcan Province, La Libertad, Peru.

The average gold grade over the multiple tests on the tailings exceeded previous sampling in historical reports. The average silver grade of the multiple tests on the tailings came in less than findings in previous studies on the property.

Valley High CEO Andrew Telsey stated, "We were expecting a gold grade of around 1.2g/T, but the results came back with an average grade of 1.71g/T.

We were expecting a silver grade of around 2.44oz/T, but the results came back with an average grade of 1.84oz/T. Generally speaking, we were very pleased with these results."

The Company believes that the combination of all the sample results validated the premise that production of the tailings is economical and viable.

While no assurances can be provided, on the basis of the test results the Company believes it can recover approximately 85%+ of the gold and approximately 40--50% of the silver in the 210,000 tons of tailings with the plant it plans to put into operation.

Australia court to hear mine tax challenge in 2013

Australia's High Court agreed on Monday to hear a challenge against a tax on mining profits in early 2013, as the government stood by its revenue forecasts for the tax despite a drop in commodities prices due to slower growth in China.

Mining magnate Andrew Forrest and his Fortescue Metals Group are leading the High Court challenge against the 30% minerals resource rent tax (MRRT), which started on July 1 this year in the face of industry and political opposition.

Australia's third-largest iron ore miner believes the tax is unconstitutional as only state governments can impose royalties. The government has said it will strongly defend the tax, and was careful to ensure the tax was on mining profits and not On production.

In a directions hearing, High Court Chief Justice Robert French referred the issue to the court's full bench, with hearings expected to start in March, 2013.

The tax on iron ore and coal profits was designed by the government and global miners BHP Billiton, Rio Tinto and Xstrata after a brutal political campaign and warnings it would cripple Australia's resources sector.

In its mid-year budget update in October, the government forecast the tax would bring in A$2-billion ($2.07 billion) in the current financial year, down from the A$3-billion May budget forecast, and raise A$9.1-billion over four years.

But media reports said global miners reported no liability for the tax in its first three months, while private forecasters Deloitte Access Economics on Monday said the tax would fall well short of Treasury's revenue estimates due to lower world commodity prices and a strong Australian dollar.

"That mix means the MRRT will have a dog of a year -- when China sneezes, the MRRT was always going to get pneumonia," Deloitte Access economist Chris Richardson said.

He said any drop in mining tax revenue would threaten the government's target of delivering a A$1.1-billion budget surplus for the financial year to June 30, 2013.

Trade Minister Craig Emerson defended the Treasury forecasts and said the government would still deliver a surplus budget.

"We take note of the forecast provided by officials and we stand by those forecasts: we stand by the MYEFO, the Mid-year Economic and Fiscal Outlook. We're on track for a surplus and they're the figures that we stand by," Emerson said on Monday.

Source: Reuters

AngloGold says Tanzania law changes worry investors

Tanzania should stick to existing agreements in the fast-growing mining sector or investors will lose confidence, the company which owns the country's biggest gold mine, said on Saturday.

Major international miners are still in talks with the government two years after it passed mining legislation that included a rise in royalties on gold exports to 4% of gross value from 3% of netback value.

The law also required mining companies to pay the government 0.3% of their annual turnover, up from the previous requirement of a maximum $200 000 a year.

AngloGold Ashanti told Reuters it expected the Dodoma government to respect its mineral development agreement, which it said was a legal contract signed before the new mining legislation was put in place.

"Our investors obviously expect that those contracts should be honoured because they've made an investment for the long term," Gary Davies, managing director of AngloGold's Geita gold mine said in an interview.

"What's key is that the goal posts are stable because otherwise investors will need to factor that into their investments. I think any investor would be concerned about that, we are no different."

East Africa's second biggest economy argues it is not seeing the fruits of soaring commodity prices, in particular gold. It plans to increase the mining sector's contribution to the economy to 10% of GDP by 2025 from 3.3% last year.

But the miners say hiking taxes and increasing royalties is the wrong approach. They say Tanzania should focus on attracting more investors and issuing additional mining licences.

Tanzania is Africa's fourth biggest gold producer. Gold export earnings jumped 47% to $2.226-billion last year.

HINDERING GROWTH

Major gold mining companies in Tanzania include African Barrick Gold, which has four gold-producing mines, AngloGold Ashanti and Resolute Mining.

Tanzania's Energy and Minerals Ministry declared in July that all mining companies had agreed to pay the new royalty rate from May and said the government would keep mining contracts under review in a bid to deepen their economic contributions.

African Barrick Gold, which has four gold mines in Tanzania, is however the only company that has so far publicly announced it will pay the new 4% royalty rate.

AngloGold's Davies said negotiations continued over several aspects of the 2010 legislation.

"Investors need to have that degree of certainty and stability in order to put large investments over the long term."

The Geita mine recorded revenues in excess of $4.2-billion over the past decade and paid $683-million to the Treasury during the period in corporate tax, royalties, withholding taxes, payroll taxes and other fees, Davies said.

"Last year we produced 494 000 oz and we are looking to be in a similar range this year," he said.

Laurent Coche, AngloGold's senior vice-president for sustainability in Africa, said the company wanted talks with Tanzania about how to boost growth of the mining sector.

"There is also a need to distinguish between the short-term issues and long-term issues. We would be willing to be part of a conversation around developing the country's mining vision ... looking at 20 or 30 years down the road," Coche told Reuters.

Other mining companies contacted on the matter directed Reuters to the Tanzania Chamber of Minerals and Energy (TCME), which represents the interests of mining investors.

It has said mining contracts all included fiscal stability clauses and that the unstable legal environment was hindering growth in the mining sector.

African Barrick Gold's Tulawaka gold mine and Resolute Mine's Golden Pride mine are both expected to close down in mid-2013 after depleting their reserves, although work is underway to explore possibilities of mine-life extension.

Edited by: Reuters

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

Peru's mining, energy investment could surpass US$73.2b-Mining Minister

Peru is the "Land of Opportunity", particularly for potential investment in mining, natural gas, and power generation, says the nation's Energy and Mining Ministry.

The potential for mining and energy investment in Peru between 2011 and 2020 could surpass US$73.2 billion, Peru's Minister of Energy and Mines said this week.

Minister Jorge Merino Tafur told an audience of entrepreneurs from South America and the Arab countries that the mining and energy sectors have grown significantly in the past decade, growing from US$1.865 billion in 2001 to US$8.5 billion in 2011.

"We have potential planned mining investments up to US$53 billion, of which we are today developing over US$28 billion" in gold and copper projects, he noted.

The minister stressed the potential of Peru as an energy hub including the development of nearly 70,000 megawatts in hydropower capacity, including projects that will generate up to 30,000 MW of power in the medium term.

To this Peru can also add up to 22,450 MW of wind power generation, as well as 3,000 MW of solar energy, Merino Tafur observed.

The minister asked the Arab entrepreneurs to also consider other investment opportunities, such as construction of new pipelines, the development of a separation of ethane in natural gas project in Peru, a petrochemical project in the south, which would complement the proposed South Andean natural gas pipeline, as well other energy-related projects.

Merino Tafer observed that the country's proven natural gas resources total 12.7 Tcf [trillion cubic feet], while proven oil reserves so far contain 3 billion barrels.

Lundin Mining in search of new acquisitions

Lundin Mining is seeking mine acquisitions in Europe, Canada, Mexico and South America, but not Russia.

The company wants to invest up about US $600 mln in zinc and copper mine acquisitions.

The company wants to boost its production after the company experienced various failed deals and mergers last year.

The company owns the Tenke-Fungurume copper-cobolt mine in the Democratic Republic of Congo.

Chief Executive Paul Conibear said "We are looking at copper and zinc mines that produce 30,000 to 70,000 tonnes of metal per year."

"We are going to be very disciplined, but when we find something for the right price, we will act quickly and aggressively."

Lundin Mining, listed in both Toronto and Stockholm, has up to 4 billion crowns ($604.05 million) to spend on acquisition, the paper said.

Early in 2011, Lundin agreed a $9 billion tie up with rival miner Inmet Mining.

But this fell apart after Equinox Minerals launched a hostile bid for Lundin. Equinox itself was taken over by Barrick Gold and Lundin failed to attract any new suitors and has since then been focusing on expanding its existing mines.

The Tenke project, which is operated by Freeport McMoRan, is on its way to total annual output of 195,000 tonnes of copper cathode. The expansion is expected to be completed in 2013.

Conibear said further investment could take production to close to 300,000 tonnes by 2015.

Lundin is also looking at expanding ore production at its Zinkgruvan mine in Sweden by up to 40 percent to 1.4-1.5 million tonnes a year from the current 1.1 million tonnes.

"We have had a very strong development at Zinkgruvan this year and production is at a record level," he said. "We hope to be able to make a decision on expansion at the end of the year."

At the Neves-Corvo mine in Portugal, Lundin is looking at spending $500 million over the next 5-6 years to boost production.

"Another alternative is for a smaller production increase with less risk," Conibear said, adding that decision would also be taken at the end of the year.

 

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Panoro Minerals awarded full ownership of Peruvian project

Peru-focused project developer Panoro Minerals on Thursday said an arbitration committee had confirmed that it had followed the required legal steps to cancel the Antilla joint venture (JV) agreement with Chancadora Centauro two years ago, and that it was the sole owner of the copper/molybdenum property.

Panoro CEO Luquman Shaheen told from Vancouver that the company would now move forward with a drilling programme on the property within a month, to further prove up the resource.

Shaheen said the company could in 2010 not internally finance the development of its two Peruvian projects, the Antilla project, and its flagship Cotabambas copper/gold/silver project. The company decided to enter into a JV with a partner to develop Antilla.

Under terms of the JV agreement, the privately held Centauro were to make cash payments of $8-million to the company and invest $17-million into the Antilla project in order to earn a 70% interest over a 30 month period.

Shaheen said Centauro at the time paid $1 million upon signing the accord, but the required payments of $4-million within 90 days and the final $3-million within 20 months never materialised. The $17-million investment was to be used to complete a bankable feasibility on the project.

Shaheen said bankable feasibility studies for both projects would now be simultaneously undertaken, funded internally by the company.

The Antilla project had an inferred resource of 154-million tons grading 0.47% copper and 0.009% molybdenum at a 0.25% copper cut-off. This provided for the property to hold 1.6-billion pounds of copper and 30-million pounds of molybdenum.

The company also recently updated the inferred resource at the Cotabambas project to 404.1-million tons grading 0.42% copper, 0.23 g/t gold and 2.84 g/t silver using a 0.2% copper-equivalent cut-off. This provided for 3.75-billion pounds of copper, three-million ounces of gold and 36.9-million ounces of silver.

The TSX-V-listed company’s stocks closed at 80 Canadian cents apiece on Thursday.

Edited by: Creamer Media Reporter

Peru top court puts tribal sovereignty ahead of mining, logging

Peru's top court has affirmed the right of an Amazon indigenous community to block outsiders from entering its lands - a ruling that could foil resource extraction in tribal areas, experts said on Wednesday.

The ruling by the constitutional court in favour of the Tres Islas community sets a precedent for tribes trying to halt mining, logging or oil drilling on their lands.

"We think this will serve as an example for other indigenous groups to take their cases to the top court," said Jaime Tapullima Pashanase, president of the Kechwa peoples council. He called the ruling issued late Tuesday historic.

Tribes have long complained that existing law is contradictory, allowing private oil and mining firms to extract resources from tribal lands via government concessions. Tribes also say they have little recourse to defend their lands from informal wildcatters.

The ruling by the constitutional court takes a step toward clearing up the legal confusion by allowing tribes to assert their sovereignty in a jungle region brimming with hundreds of disputes over land and resources.

Though rights groups welcomed the ruling, they cautioned that it might not go so far as to limit activity by companies that have government concessions, nor help tribes that don't have title to their lands.

"The sentence said every right, even the right to property, has limits, and the state decides those limits. That's dangerous," said Javier La Rosa with the Legal Defense Institute in Lima. "Because of that, the state can suddenly say 'your land is part of a concession.'"

The Shipibo and Ese'Eja peoples who live in the Tres Islas community had complained that wildcatters were destroying their forests and streams. In its ruling, the court said they had the right to block a road that runs through their property to keep out informal miners and loggers.

Indigenous communities have been struggling to maintain autonomy in the Madre de Dios region. A third of indigenous territory in Madre de Dios has been destroyed by informal gold miners.

"I consider this ruling very important for indigenous communities. This is an advance in terms of the rights they have been demanding," Julio Ibanez Moreno, a lawyer for Aidesep, which represents tribes in the Amazon.

The ruling also highlighted the importance of a new law that requires the government to consult indigenous communities before making decisions that directly affect them and says that any government interference on indigenous land "must be duly justified."

The consultation law, which the administration of President Ollanta Humala is now putting into force, gives tribes more say over their lands but stops short of allowing them to veto government-approved extractive projects. It was drawn up in a bid to defuse hundreds of social conflicts that threaten to derail private investment projects worth billions.

"The consultation law was an important step towards realising these rights, but it has been significantly weakened in its implementation," said Gregor MacLennan with the indigenous rights group Amazon Watch.

Edited by: Creamer Media Reporter