Drinking water: Call for halt to coal mining as contamination level increases

Iron concentrations in a rivulet that feeds the Woronora Reservoir have doubled since the expansion of the Metropolitan Colliery, to levels which exceed Australian Drinking Water Guidelines by 30 per cent, a study has found.

Until an independent investigation into its impact on Sydney's water supply has been done, a member of the mine's community consultative committee wants the state government to halt operations.

Once these so-called iron springs are started, they can take decades to stop 

''The mine expansion approval conditions clearly state that there should be no more than a negligible reduction in water quality and quantity,'' said Dr Peter Turner, the National Parks Association-nominated committee member who reviewed the mine's 2012 annual report.

Peabody Energy, which owns the subsidiary that operates Metropolitan Colliery, denied the mine - about 30 kilometres north of Wollongong - had breached approval conditions.

''No performance measures have been exceeded and iron concentrations in Waratah Rivulet are below project approval requirements,'' a spokeswoman said.

Dr Turner also highlighted an attempt by the mine to shift the baseline period used to gauge water quality from May 2010 to the next phase of longwall operations due to start in early 2014.

''The change would mean the contamination increase caused by the first phase of the mine expansion when the water quality had already been compromised would become the new normal'', Dr Turner said.

''It's not what you'd expect from a major multinational mining company.''

The Peabody spokeswoman said the baseline change was ''to ensure consolidation of reporting''.

A spokesman for the Department of Planning and Infrastructure, which set the mine's conditions, said Peabody had been told its bid to alter the baseline was ''inappropriate''.

The department will consider all ''relevant information'' before finalising its review of the mine's draft plan to extend its longwall operations, he said.

It also noted the company had commissioned a peer review of the reported breaches and was also preparing its 2013 annual review.

Longwall mining involves giant machines that shear coal from the seam causing the rock above to collapse behind the machine as it moves forward.

Dr Turner said the contamination of surface waters by underground mining was commonplace in Sydney's drinking water catchment. Coal extraction results in subsidence which cause cracks in the bedrock of rivers and streams. Water then passes through these fractures, leaching out minerals that end up in streams and reservoirs.

''Once these so-called iron springs are started, they can take decades to stop,'' Dr Turner said.

“The underground mines in Sydney’s water catchment can be located from the air because of their impacts on rivers and streams.”

One difficultly in assessing the mine’s impact on water quality is that the company altered its reporting period so that the annual review will be extended to include August-December 2012 as well as calendar year 2013. Peabody was unable to supply interim data for the year to August.

Fracking understood by few Americans, researchers find in survey

CASPER, Wyo. – Fracking is a buzz word, but few Americans know what it actually means. That is the conclusion of a recent survey published by researchers at Oregon State, George Mason and Yale universities.

More than half of the study’s 1,061 respondents reported knowing little or nothing of fracking. And almost 60 percent of those surveyed said they had no opinion on the subject, the Casper Star-Tribune reported Sunday.

Those findings run counter to the often contentious debates seen in Washington and state capitals around the country, where policymakers are weighing the benefits of increased oil and natural gas production against potential environmental damages.

“The fact that half of the people we surveyed know little if anything about fracking suggests that there may be an opportunity to educate the American citizenry in a non-partisan way about this important issue,” said Hilary Boudet, a public policy expert at Oregon State and the study’s lead author. “The question is who will lead that discussion?“

U.S. shale formations containing vast quantities of previously inaccessible oil and gas have been opened in recent years thanks to new production techniques like horizontal drilling and hydraulic fracturing, as fracking is officially known. To frack a rock formation is to inject a mixture of water, sand and chemicals into the ground at high pressure, causing it to fracture and release the oil and natural gas within.

Fracking is a crucial tool for opening oil and gas reserves in Wyoming. The federal government commonly holds that fracking is used to create 90 percent of oil and gas wells drilled on public lands, which make up nearly half of Wyoming.

About 20 percent of respondents said they were opposed to fracking. Women were more likely to oppose fracking, as were those more familiar with the process. Opponents were apt to associate fracking with environmental degradation, hold egalitarian world views and get their news from newspapers.

Around 22 percent of those surveyed said they supported fracking. They tended to be older, better educated and politically conservative. Their primary news source was television, the survey found.

“In some areas of the country, including New York and Pennsylvania, people are more familiar with the issue but opinions are still divided as they try to balance the economic and energy benefits against environmental and community impacts,” Boudet said.

The study said there is increasing concern among scientists about methane emissions emanating from natural gas production. Such emissions could nullify natural gas’s advantage as a less carbon-intensive source of electricity, the researchers said.

“If the argument is that we need natural gas to mitigate our dependency on other fossil fuels and to lower greenhouse gas emissions, it doesn’t make much sense to use a technology that could, in fact, increase methane emissions,” Boudet said. “Methane is a much more potent greenhouse gas than carbon dioxide.“

The survey was conducted in September 2012 and has a margin of error of 3 percent.

Centerra and Kyrgyzstan reach agreement on Kumtor

Sherritt International Corp. (TSX:S) said Tuesday is selling its entire coal business to two separate buyers for a total of $946 million, split almost evenly between Westmoreland Coal and Altius Minerals.

The Toronto-based resource miner, Canada’s largest thermal coal producer, said it will now focus on its core nickel and oil operations. For that reason, it is selling seven producing mines in Western Canada to US-based Westmoreland Coal (NASDAQ:WLB) for about Cdn$465 million. The transaction also includes a stake in an activated carbon plant and a char facility, which supplies barbecue briquette producers.

Its Canadian coal and potash royalty business are being acquired by a group led by Altius Minerals (TSX:ALS) for about Cdn$481 million in cash.

Sherritt is a diversified resource company with operations in several countries, including Madagascar, where it owns a major nickel operation, and Cuba, where it has an oil business.

The firm was one of the companies involved in a November spill earlier this month where hundreds of millions of litres of contaminated water from the company's Obed Mountain coal mine made it into the Athabasca River.

Canada’s Sherritt sells coal business for almost $1bn

Sherritt International Corp. (TSX:S) said Tuesday is selling its entire coal business to two separate buyers for a total of $946 million, split almost evenly between Westmoreland Coal and Altius Minerals.

The Toronto-based resource miner, Canada’s largest thermal coal producer, said it will now focus on its core nickel and oil operations. For that reason, it is selling seven producing mines in Western Canada to US-based Westmoreland Coal (NASDAQ:WLB) for about Cdn$465 million. The transaction also includes a stake in an activated carbon plant and a char facility, which supplies barbecue briquette producers.

Its Canadian coal and potash royalty business are being acquired by a group led by Altius Minerals (TSX:ALS) for about Cdn$481 million in cash.

Sherritt is a diversified resource company with operations in several countries, including Madagascar, where it owns a major nickel operation, and Cuba, where it has an oil business.

The firm was one of the companies involved in a November spill earlier this month where hundreds of millions of litres of contaminated water from the company's Obed Mountain coal mine made it into the Athabasca River.

Toronto stocks rise in short session, led by mining

TORONTO (Reuters) - Canada's main stock index closed higher in an abbreviated session on Tuesday, led by mining stocks after a pair of deals in that sector and stronger-than-expected U.S. economic data.

Base metals miner Sherritt International (S.TO: Quote) jumped 14.8 percent to C$3.88 after the company said it would sell its coal business for C$946 million.

Other base metals miners rallied, helped by higher prices. Molybdenum miner Thompson Creek Metals (TCM.TO: Quote) climbed 7.7 percent to C$2.38.

On the gold side, Agnico-Eagle Mines (AEM.TO: Quote) rose 4.6 percent to C$28.25, while Kyrgyzstan-focused Centerra Gold (CG.TO: Quote) gained 4.8 percent to C$4.16 after it said it had agreed to swap the Kyrgyz government's 32.7 percent stake in the company for half of Centerra's flagship Kumtor mine.

All told, the TSX's mining-heavy materials sector, which has been a drag on the broader index this year, surged 2.3 percent, making it the strongest sector on Tuesday.

With volumes light in the shortened pre-holiday session, investors took their cue from stronger-than-expected U.S. durable goods orders data the latest in a string of positive reports that have raised hopes for robust economic growth in 2014.

"Economic indicators have been fairly good, both in Canada and the U.S.," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

Nine of the benchmark index's 10 subgroups ended higher.

Yesterday’s Oil Sands: Alberta’s first oil sands plant

Some 89 kilometers north of Fort McMurray, on the east bank of the Athabasca River, a clutch of derelict buildings and oil drums dating back to the 1920s stand as a reminder of the first commercial attempts to extract oil from sand.

Parks Canada added Bitumount to the registry of historic Canadian sites in 2006. In the 1920s and 1930s, University of Alberta researcher Karl Clark and the Alberta Research Council developed the “hot water method” to separate bitumen from the oil sands. The private entrepreneur R.C. Fitzsimmons built many of the facilities at Bitumount in the 1920s, including a plant that used Clark’s method. Bitumount counts as the first oil sands camp that included cabins, a long-house, a root cellar and latrines.

Fitzsimmons’s attempt to turn a profit on extracting, separating and refining bitumen proved a failure and in 1943 he sold his International Bitumen Company. In 1948 ownership was transferred to Alberta’s provincial government, which eventually abandoned it in the 1950s. The mine site, dump site, accommodations and processing sites sit not far from several of today’s oil sands mines.

Iron ore, met coal prices slump as Australia ramps up exports

The price of iron ore slumped to a 7-week low and metallurgical coal traded at its lowest level since August on Wednesday.

The benchmark CFR import price of 62% iron ore fines at China's Tianjin fell to $133.40 a tonne on a level last seen at the end of October, while FOB premium Australian coking coal declined to $136.30 a tonne, the lowest since August 2, according to data provided by SteelIndex.

Pushing prices down were renewed worries whether economic growth in China, the world's number one importer of the steelmaking raw materials, would be sufficient to absorb a massive increase in supply.

China buys roughly 65% of the world's 1.2 billion tonne seaborne iron ore trade and after an astonishing 30% jump in 2013 to an estimated 92 million tonnes absorbs almost a third of all coking coal exports.

Chinese mills are still forging steel at a rate of more than 2 million tonnes per day – almost as much as the rest of the world combined – but the industry suffers from chronic overcapacity and low profitability.

Cargoes from the world's largest exporters in Brazil, Australia and South Africa have been edging out generally low-quality domestic supply, with imports into China reaching a record high of 77.8 million tonnes in November, but the questions now becomes whether surging supply is about to overwhelm demand.

New research by Australia's Bureau of Resources and Energy Economics (BREE), the country's official forecaster, show another sharp increase in exports of iron ore and coking coal, which may coincide with a slowdown in China as the country's red hot construction sector cools and the country moves from an investment to a consumer-led economy.

BREE predicts that while Chinese iron ore imports will grow 7.4% next year, the world's top exporter Australia will increase cargoes a whopping 22.1% to 709 million tonnes as projects by Rio Tinto (LON:RIO), Fortescue Metals Group (ASX:FMG) and BHP Billiton (LON, ASX: BHP) come on stream.

Brazil, led by world number one iron ore miner Vale (NYSE:VALE), is set to up exports 9.1% to 352 million tonnes.

India, which has seen exports fall from 120 million tonnes to close to just 11 million tonnes this year, will also re-enter the market as a self-imposed ban on exports expire and stockpiles are sold on.

With more limited supply growth and no new major projects coming on stream, the outlook for the coal price is better.

Chinese imports will increase a still respectable 7.8% and met coal exports will show more modest growth with Australia, which at 168 million tonnes is expected to export three times more than second placed US, growing at just under 4%.

US exports will decline for the the third year in a row, dropping 4.6% in 2014.

Iron ore is second only to the seaborne crude oil trade and represents close to 25% of global dry bulk cargoes with coal a close second.

More than 35% of mined iron ore is shipped and 12% of global coal production is carried by sea.

A Journey Into the World's Deepest Gold Mine

AS IF TOUCHED BY THE LEGENDARY KING MIDAS HIMSELF, everything from tablets to the water faucets of bespoke private jets are coated with shiny, shimmering gold these days. Indeed, some investors can't seem to get enough of the lustrous metal, especially many of the ultra-affluent, who were made even richer in recent years after placing some huge bets on gold.

Some of that frenzy has cooled in the past year or so. But the excitement from it has spurred a massive and still continuing global hunt to find and extract even more of the treasured commodity. Some call it the world's greatest gold rush. What follows is a rare look into the deepest gold mine on the planet, located in South Africa, through an edited excerpt from the new book, "Gold: The Race for the World's Most Seductive Metal," by Matthew Hart.

A SAFFRON LIGHT WAS SEEPING ONTO THE VELD when I drove out to the gates of hell. The midwinter air was dry and sharp. The silhouettes of headframes made blue shapes against the dawn. Forty miles from Johannesburg, I turned off the highway at Mponeng mine, the deepest manmade hole on earth—a vast, stifling oven of toiling men, thousands of them, buried miles underground as they blasted and scraped for the metal that has bewitched and harassed man for 6,000 years. What else but gold.

Picture Manhattan sliced in half at the waist, and the top part set up on its end. Mponeng mine would fill the grid between 59th Street and 110th Street, its tunnels and shafts exposed like a giant ant colony. The half-lit streets would tower into the sky before you, block upon block, to an altitude of almost three miles. You could stack 10 Empire State Buildings on top of each other in the distance from the bottom of the mine to the surface. This gargantuan warren devours as much electricity as a city of 400,000. Rivers of water pulse through its plumbing. Its maze of passageways howls with the noise of ventilation. Two hundred and thirty-six miles of tunnels lace the rock—30 miles longer than the New York City subway system. Every morning, 4,000 men vanish into its subterranean web of shafts, ore chutes and haulage tunnels, and the narrow slots called stopes, where miners crouch in the oppressive heat to drill the gold.

Their target was a 30-inch-wide strip of ore. Considered against the immensity of the mine, as thin as a hair. But on the July morning in 2012 when I went down Mponeng mine, owned by Johannesburg-based AngloGold Ashanti, the price of gold was $1,581 an ounce. That wisp of rock was spilling out $948 million worth of gold a year.

The world is awash in gold. When the price was rising fast in the wake of the collapse of Lehman Brothers, gold attracted one legendary billionaire after another. At the end of 2009, George Soros had $663 million in a single fund. John Paulson, the hedge-fund wizard, was reported to have made almost $5 billion personally on his gold bets. Fear drove the price. Banks tottered and currencies shrank, and in the three years after the collapse of Lehman Brothers the gold price gained $1,000. Spurred by the rising price, explorers ransack the planet in the greatest gold rush ever. At the bottom of Mponeng mine, in the brutal closeness, where the ore plunges steeply down into the rock below the deepest level, they are chasing it with drills. Certainly they will go down and get it.

I joined a small group that was going down. We met in a thatched reception hall. A table was spread with a breakfast of sweet pastries, little tubs of yogurt and a steaming tray of boerewors, a pungent, coarse-cut country sausage that South Africans extol but do not always eat. A group of sturdy males from the mine's underground management stood growling among themselves and eyeing us with pleasure, as if we were Christians that they thought the lions might enjoy. Then they sat us in folding chairs to tell us about the dangers of the world we were about to enter.

NUM, Amplats reach 2-year wage deal

South Africa's National Union of Mineworkers (NUM) said on Thursday it had agreed a two-year wage deal for pay increases of 7.5 to 8.5 percent with Anglo American Platinum, the world's top producer of the precious metal.

NUM's rival the Association of Mineworkers and Construction Union (AMCU), which became the majority union at Amplats last year during a bitter turf war for members, remains deadlocked in wage talks with the company.

NUM spokesman Lesiba Seshoka told Reuters his union had been taking back members in recent months but could not provide an exact percentage for its representation at Amplats.

Officials at Amplats, a unit of global mining group Anglo American, were not immediately available for comment.

NUM's agreement throws down a challenge to its enemy AMCU to deliver results. Seshoka said the increases, which are above the current inflation rate of 5.3 percent, applied only to NUM members.

AMCU officials also could not be reached.

Under the battle cry of a "living wage," AMCU has been pushing for a minimum monthly wage of 12,500 rand ($1,200) for entry-level workers from Amplats and rival Lonmin - more than double current levels. It is also seeking big increases from Impala Platinum.

Companies say they cannot afford big pay hikes as they grapple with low prices and high costs which have made half of the industry's shafts unprofitable, according to analysts.

AMCU emerged as the dominant union on South Africa's platinum belt last year after it wrested tens of thousands of members from the once unchallenged NUM in a violent struggle for members in which dozens of people were killed.

Fortescue in a hurry to squeeze new assets

Fortescue Metals Group is in a hurry.

Barely two weeks after bringing its latest mine into production and shifting gear from construction to operations, the world's fourth largest iron ore miner is already talking about increasing capacity.

Fortescue showed off its new Kings mine as well as its rail and port operations this week, hinting that it's looking to export up to 175 million tonnes per annum (mtpa) from the Pilbara.

For the foreseeable future, any extra capacity will have to come from squeezing existing assets beyond the company's stated goal of 155 mtpa by March next year.

Chief executive Nev Power says he wants to run the company efficiently and avoid building infrastructure and loading up on more debt.

"Our first strategy is to drive what we've got as hard as we can, sweat the assets and get that maximum out," Mr Power told reporters during a tour of the company's Pilbara operations this week.

"We think that's 15 to 20 million tonnes that we might be able to squeeze out of it."

He said Fortescue had originally designed the layout of its Port Hedland operations to cater for a capacity of up to 200 million tonnes.

The design of Herb Elliot Port would allow Fortescue to keep expanding without outlaying too much capital.

Official estimates put the overall export capacity of Port Hedland, Australia's largest bulk commodities port, at 495 million tonnes.

But Mr Power believes the real capacity is somewhere between 600 million and 700 million tonnes.

Any future decision to build a fifth berth at Herb Elliott Port would be significant, given the company's debt profile, he said.

Fortescue is trying to reduce its $12 billion debt pile by around $4 billion to $5 billion over the next couple of years while the iron ore price remains buoyant and as the company delivers on its production targets.

The talk of extra capacity comes after mining giant Rio Tinto recently committed $400 million to upgrade its port facilities in the Pilbara as part of its plan to reach 360 million tonnes.

While Fortescue has some way to go to compete with the likes of Rio and BHP Billiton, the company says it is now a lower cost producer than Brazil's iron ore giant Vale.

Improving productivity and efficiency with berths and ship loaders at Port Hedland is key.

Mr Power says such improvements should be a high priority for all Pilbara iron ore producers.

"The more efficient they are and the more efficient we are, the more tonnes are going to go out through the port," he said.

"It's in everyone's interests."

He also gave an insight into Fortescue's plans to automate part of its trucking workforce, taking the media to view a dozen massive unmanned autonomous trucks as they collected iron ore from an excavator.

But it wasn't all smooth sailing as a computer glitch caused the trucks to stop for about an hour.

If a six-month trial of the futuristic Caterpillar trucks is successful, Fortescue plans to purchase up to 45 vehicles valued at $5 million to $6 million each.

Those trucks would carry around a third of the company's iron ore and do the job of 55 manual trucks.

But for now, Fortescue is stripping back its workforce for the production phase and monitoring its multinational competitors for further expansion plans.

Mr Power says Fortescue will only look at bringing forward future expansion plans if the iron ore market becomes heavily undersupplied.

"Our objective is to make sure that we've got a pipeline of projects that's ready to do when the time is right," he said.

YTC welcomes Pacific Road as new investor

Minerals developer YTC Resources has signed a A$25-million funding agreement with Pacific Road Capital to advance the exploration and resource delineation at its Hera-Nymagee gold and base metals project, in New South Wales.

The funding would be undertaken in two stages, with Phase 1 consisting of the placement of about 58.8-million shares to Pacific Road Capital, at a price of A$0.243 a share, to raise an initial A$14.3-million.

Should YTC choose to raise further capital after Phase 1, Pacific Road Capital would hold the right to first subscribe for further funds.

In Phase 2, YTC could call up a further A$10.7-million from Pacific Road, subject to the company’s election. The Phase 2 funding would be priced at a 10% discount to the 30-day volume-weighted average price of YTC shares.

YTC would require shareholder and regulatory approval for the Phase 2 funding.

“We are delighted to have attracted an investor of the caliber of Pacific Road Capital and welcome them to our register. This strategic transaction with Pacific Road is complementary to the development funding package with Glencore that we completed earlier this year,” said YTC MD Rimas Kairaitis.

He noted that along with the development funding, the Pacific Road transaction would ensure that YTC was funded for an aggressive exploration and resource extension programme, as well as for the development of both its Hera and Nymagee deposits.

“In addition to the resource extension potential at our existing Hera and Nymagee deposits, we have numerous high priority exploration targets at, and in the vicinity of our Hera-Nymagee projects. With exploration funding now secured, and the Hera development progressing very well, we now look forward to significantly ramping up our level of exploration activity as soon as possible.”

A recently completed definitive feasibility study has confirmed that more than A$510-million would be generated in revenue from the Stage 1 development of the Hera-Nymagee project, based on a A$1 450 gold price.

The Hera-Nymagee project consists of the Hera gold/lead/zinc deposit and the Nymagee copper deposit, located within the company’s Cobar basin tenements.

STUDY: Mining investors wary of Quebec

CALGARY – The Fraser Institute reports that uncertainly about protected areas and environmental restrictions, combined with tougher regulation and tax changes, has mining investors increasingly wary of doing business in Quebec.

The institute's study, Quebec's Mining Policy Performance: Greater Uncertainty and Lost Advantage, outlined the four key barriers to investment in that province.

Uncertainty over policy change involving protected areas such as wilderness zones, parks and archeological sites is the primary deterrent for investors. It has a multiplier effect in that activity is discouraged at the exploration level, and without exploration, the industry is at a standstill.

Uncertainty over environmental regulations has created the perception that special interests, not good science, guide policy decision. Such politization is deterring investors.

Increasing taxes threaten to make mining in Quebec unprofitable. Since 2010, the province increased mining duty rates to 16% from 12% of annual profits, and now bases "profits" on an individual project basis. Losses at one operation can no longer be used to offset profits at another of an owner's operations.

Red tape – in regulatory duplication and inconsistencies – is also choking off investment in Quebec's mineral industry. Notably, the province has steadily increased levels of red tape for mineral projects over the past five years.

The defeat of changes to Quebec's Mining Act, Bill 43, at the end of October 2013 does little to reassure would-be investors. The government has announced its intention to make minor changes and retable the legislation.

Oregon Inlet Dredging About to Begin

Plans are currently underway for dredging to begin at the Herbert C. Bonner Bridge on N.C. 12 over the Oregon Inlet in Dare County.

The N.C. Department of Transportation and Great Lakes Dredge and Dock Co. LLC have come to an agreement for the Dredge Alaska to begin dredging sand from the main navigation channel of the Oregon Inlet and deposit it on the area underneath the Bonner Bridge where scour caused the department to close the bridge earlier this week.

Crews this morning began preparing for the dredging operation, which is currently expected to begin Friday afternoon at the earliest and last two days, weather and current permitting.

Once dredging operations are complete, NCDOT crews will then perform additional scans and inspections of the piles to determine the next steps necessary in reopening the bridge.

North Carolina Governor Pat McCrory declared a State of Emergency due to the closing of the Bonner Bridge.

“This declaration will give us the flexibility we need to get the repairs done as quickly as possible,” said Governor Pat McCrory. “However, safety will be the sole factor in determining when the Bonner Bridge reopens to traffic.”

NCDOT earlier this week awarded a $1.6 million contract to Carolina Bridge Company Inc. of Orangeburg, S.C. for emergency repairs on the bridge. NCDOT and the contractor are working together to develop a timeframe for the repairs to be complete.

As part of this emergency repair project, crews will use sandbags and four-foot tall A-Jacks to provide support to the bridge pilings. A-Jacks locked together will be placed in a perimeter around the support structure of the bridge. Crews will then fill the perimeter with sandbags to provide support to the pilings. An additional two layers of A-Jacks and sandbags will then be placed on top of the base layer for a total of 10-12 feet of protection. This will allow sand to collect over the sandbags and A-Jacks, providing additional support to the structure. slurry pump

Vale cuts investment budget to focus on iron ore

Vale has lowered its investment budget for a third successive year as the world’s second-biggest mining company bolstered efforts to focus expansion on its main iron-ore business.

Vale said on Monday it had set a financial 2014 capital spending plan at $14.8bn, down 9.2% from its 2013 financial year. About 80% of spending next year will go to develop new iron-ore projects and for rail, port and other logistics needed to move its products to market.

Shrinking investment plans come as Vale seeks to streamline, sell money-losing units and focus on Brazilian iron-ore output to deal with slowing global demand for major commodities.

Vale is the world’s largest producer of iron ore, the main ingredient in steel. It is also the world’s second-largest producer of nickel, used to make steel rust-resistant, and a major producer of copper, coal and fertilisers.

"We are strongly committed to allocating capital only to world-class assets with big resources, low costs, high-quality products and opportunities for low-cost brownfield expansion," CEO Murilo Ferreira said.

Brownfield projects are those that increase output from existing mines, as opposed to new mines, or "greenfield" projects.

This year, Vale budgeted capital spending of $16.3bn. The 2014 plan is 18% less than the company’s record high budget of $18bn in 2011.

In addition to slowing demand growth for metals and commodities in general, Vale also faces increasing taxation at home with new royalty payments and an agreement on Wednesday to pay 22.3-billion reais ($9.5bn) in back taxes related to profit at overseas operations.

The bill will cost Vale about 1% of revenue a year for the next 15 years, officials said on Monday.

On the mining front, Vale said it remains committed to developing its Moatize coal project in Mozambique and its Salobo copper and gold project in Brazil. But it said it plans to reduce its financial participation in a group that is expanding a rail and port corridor used to move coal from Moatize to the port of Nacala.

The importance of the railway to non-coal operations such as agriculture has led Vale to look for outside partners for the rail link, Mr Ferreira said during a conference call in New York.

Vale said $9.3bn of 2014 investments would go for new projects and $4.5bn for existing operations. The rest, about $900m, will go for mine and mineral prospecting and other research and development. In Guinea, where it has put its Simandou iron-ore project on hold, Vale expects the government to announce a decision on whether or not to grant Vale a licence to develop the project in the coming weeks.

Despite large mining operations in Africa, Canada, Australia, Indonesia and the French Pacific island of New Caledonia processing facilities in the Middle East and Asia, Vale makes 65% to 70% of its investments in Brazil.

Mr Ferreira said that Vale has secured environmental licences — a process that often delays Brazilian industrial projects — for the expansion of its Carajas and Itabirito iron-ore mines in Brazil’s Para and Minas Gerais states.

Iron ore with 62% iron content, an industry benchmark, has declined in the Chinese spot market — to $136 a tonne from nearly $192 in February 2011 — as economic growth in China, the world’s second-largest economy and top steel maker, has slowed.

While world iron-ore capacity was expected to increase next year, world demand was expected to keep pace, Jose Carlos Martins, the Vale executive in charge of iron ore, said during a conference call.

Rio de Janeiro-based Vale expects to produce about 312-million tonnes of iron ore next year, 2% more than its forecast this year.

The 2014 Metals Outlook: Copper

Australian Mining has investigated the current state of Australian metals and looks into how they will perform in the coming year. In the first of this five part series we look at Copper. 

Copper has an interesting future ahead in the coming years. 

Australian Mining has previously gone into detail about the future of copper, looking at it long term and how the sector will develop in the coming years. 

It sits in an interesting position of being a mature industry that still has a bright production future ahead. 

However growth rates are slowing, which is all part of the global shift, and in particular an Australian shift, from the ramp-up investment heavy construction phase into an era of production, just in time to utilise a predicted upswing in demand for copper. 

According to IBISWorld reports industry revenue is expected to increase by 5.1 per cent to $7.8 billion in 2013-14 as increased output is offset lower Australian dollar copper prices. 

IBISWorld explained that "industry revenue is expected to continue to grow over the five years through to 2018-19 reflecting increases in copper ore output, a decline in the value off the Australian dollar and rising US dollar copper prices". 

It went on, going into greater detail, stating that "overall industry revenue is expected to grow by an annualised rate of 1.8 per cent over the five years from 2014-15 through to 2018-19, to total $8.5 billion", which, despite being in growth, is a dramatic slow from the annualised growth rates of 7.5 per cent experienced between 2009-14. 

However in the short term it may be too soon for a surplus. 

According to French bank Natixis, if one goes only by the level of copper stocks held in exchange warehouses, which it defines as those belonging to the LME, SHFE and Comex, then it does look like the market is in surplus, as these stocks have risen by about 110,000 tonnes since the beginning of the year. 

"Anecdotal reports suggest that stocks of copper held at bonded warehouses in China peaked at somewhere between 1 million and 1.1 million tonnes in January, and have since fallen to a low of little more than 300,000 tonnes. Netting off 110,000 tonnes of higher exchange stocks versus 700-800,000 tonnes of lower bonded stocks suggests a substantial deficit," it stated. 

IBISWorld also pointed to a coming decrease next year as mining shifts into its next phase, with "revenue expected to decrease by .02 per cent in 2014-15 as mine construction of expansion activities start to be ramped up," adding that "during this mine expansion the focus off the industry is likely to be on construction activities rather than production, leading to a slight drop in revenue". 

However this is only for the short term. Once these operations come online fully they are predicted to dramatically increase output. 

Next year will see the .02 per cent decrease, however the following year in 2015-16 revenues will leap at a rate of 4 per cent growth, expanding again the in 2017-18 period to 5.7 per cent. 

It is highly unlikely that the sector will ever see the annualised growth in revenue that it did in 2006-7, where it grew at a rate of 34 per cent. 

Yet, this increase in mine output will not be matched by smelting and refinery production, IBISWorld says, which will lift the exports of unrefined copper. 

"Exports of unrefined copper will expand strongly in 2016-17 due to the planned closure of GlencoreXstrata's copper smelting and refining operations in Queensland. 

The forecast: Next year will dip for copper, but the metal will come back with strong growth and soon stabilise.