Gold mining pays $87,000 per year at Quebec mine

Osisko Mining (TSE:OSK) says the average salary for one its miners is $87,000, 66% higher than the average wage in the surrounding area.

The Quebec miner filed a  local and regional economic impact study with the Ministry of Sustainable Development, Environment, Wildlife and Parks and announced the findings on its website.

The Malartic Mine in Quebec is the largest open pit gold mine in Canada.

Other highlights from the report were the following:

• Supports nearly 1,600 jobs in Abitibi-Témiscamingue, including 635 direct jobs at the mine site;
• Supports a payroll of more than $100 million through direct and indirect jobs;
• Makes purchases of over $290 million annually in Abitibi-Témiscamingue;

Ralated Article: Steve Forbes on the gold standard and gold investing

Steve Forbes of Forbes Magazine recently sat down with Daniela Cambone of Kitco News to discuss politics, the US economy, and gold.

Forbes, who predicted last year that the gold standard will return within five years, laid out his case for the "fixed measure in the marketplace," saying that the standard would "ensure the value of the US dollar remains stable."

On bullion investing, Forbes says that when gold is purchased as an asset class, "that tells you that politicians are making a hash of things, central bankers are making a mess."

DC: I like some of your past thoughts on gold. You said jewelers should be buying gold. Gold miners should be buying gold. It shouldn't be bought as an asset class.

SF: Well when it has to be bought as an asset class, that tells you that politicians are making a hash of things, central bankers are making a mess. And so gold, if it's fixed in value, again, the only ones who would buy it would be jewelers, or for some industrial uses and that's it.

DC: Given the world landscape right now, are you buying gold? What are your thoughts on gold today?

SF: Gold should simply be an insurance policy for your portfolio – so if things go wrong, you've got at least something that's going to protect you. But in terms of investing in gold, that's a very tricky thing. We've seen in the last two years, gold's gone from US$1900 to $12-1300. So we gotta be very careful. You should just buy it for an insurance policy. And if the politicians do things right, then you can invest your money in productive assets, instead of trying to defend what you have.

DC: What do you think the fair value of gold should be?

SF: Let the market set that. If the government announces that it's going to fix the dollar to gold, use gold as the ruler, then the markets will tell you pretty quickly. A lot of pricing in recent years of gold was in anticipation of bad things happening, so you're always trying to divine what the people running the Fed are going to do, like we used to do during the cold war, with the Kremlin, Moscow, trying to divine what they're doing. The same thing with the Fed: what are these characters going to do next?

Big Metso order for major Cananea copper mine in Mexico

Global mineral processing equipment manufacturing specialist Metso is to deliver a significant order consisting of 38 feeders for the major Cananeas cooper mine in Mexico, owned by Grupo Mexico. The order will help to double the mine's capacity of copper concentrate by securing prompt copper ore feed flow in the mine extension project. The order value is over US$9 million

The belt feeders will be installed at Grupo Mexico subsidiary  Buenavista del Cobre's Cananea mine, one of the world's largest copper mines, located in Sonora, in Mexico. To assist with the installation and future servicing, Metso will open a new, fully equipped service hub at the mine site.

"This belt feeder order follows our minerals processing equipment contract with Buenavista. The client wanted a reliable, reputable partner to secure the productivity targets of the new mine expansion," comments Alejandro Castillo, Capital Project Sales Manager, Metso.

"Our industry leading services capabilities also greatly influenced the customer's decision. In addition to the equipment delivery, we are able to provide the required services support, including the investment for a new on-site service hub," Castillo adds.

Metso's equipment deliveries to the mine will be completed during March 2014 with start-up in August 2014.

FEEDERS Will SIGNIFICANTLY INCREASE CAPACITY

The belt-type feeder order comprises equipment capable of meeting all copper ore feeding challenges after the mine expansion. Five of the feeders are sized 60" x 8.5 m with a capacity of 1260 tonnes/hour, eight are 60" x 8.5 m with a 918 tonnes/hour capacity, eight are 72" x 15 m with a 1590 tonnes/hour capacity, and sixteen are 36" x 7 m with a 575 tonnes/hour capacity.

The feeders will be installed as part of the copper concentrator expansion project that is targeting a capacity increase of 110,000 tonnes/day. After the project, the mine will be able to process up to 200,000 tonnes/hour of copper ore daily.

Buenavista del Cobre belongs to the Grupo Mexico holding company, which has a number of mining operations in Mexico, Peru and the USA. Grupo Mexico is the third largest copper producer worldwide and owns the biggest copper reserves globally. The group's sales in 2012 were over US$10 billion.

The growing political risk to miners posed by water shortages

In response to the growing global demand for metals and minerals, the mining industry has stepped up exploration and development of mines in various inhospitable places the world over. Though this trend has recently reversed in the wake of softening global demand, 136 new projects were announced in 2012, according to Ernst & Young. Despite the soft medium-term global economic outlook and rapidly decreasing capital expenditures by major miners, the long-term demand expectations of the developing world remain high, and thus so too does the need to continue exploration for metals and minerals in the world's far-flung places.

Unsurprisingly, the development of difficult resource deposits has occurred in increasingly sensitive environments, far from the infrastructure necessary to meet the immense challenges of large-scale mining operations. One of the most common risk factors mining firms are faced with, in the frontier and emerging economies where these new deposits have been found, is a lack of the rivers, lakes, and water sources that are so important to a successful mining operation.

Access to a secure and stable water supply is essential for most mining operations, as water plays a vital role in every step of the mining process, from initial extraction to the refinement of ore.  Water is often used to separate high value metals and minerals from the rock that ore is found in, is used to cool drill bits, and is essential for dust control. For mines that focus on the some of the world’s most important resources, such as gold and copper, water is a necessity. As the easy-access deposits of such valued resources have become increasingly scarce, and reliance on low-quality ores has increased, so too has the demand for water for the mining and refinement process.

Significant Risk to Asian Mines

Water risks are particularly significant in Asia, a continent rife with water scarcity issues and rich underdeveloped mineral resources.  Asian governments, like those of China and India, are becoming increasingly aware of the need to steward water resources for agricultural and municipal purposes more carefully. As Asian governments seek to husband limited resources better, mining firms will find it increasingly difficult to source the water necessary for effective green field operations.

Countries that currently have extensive mining and exploration, such as Mongolia, India, China; countries thought to have great potential, such as Afghanistan and the Baluchistan region of Pakistan; and regions of Asia that remain underdeveloped, such as Central Asia, all suffer from significant limited water availability and a rapid growth in population consumption.

Mining and water issues are converging in a dramatic fashion in Afghanistan.  Assessments of water resources conducted by the UN in 2008 suggest that Afghan groundwater levels have decreased by 4 to 10 meters throughout the country, and 50% of groundwater sources have been lost and are not expected to be rehabilitated in the near future. A 2004 US Army Corps of Engineers white paper on Afghan water usage anticipate that a modest population growth rate of 1% would likely lead to a dangerously arid future for Afghanistan. Afghanistan’s annual renewable water resources are estimated at 55 km3 a year; by comparison, US renewable water resources are estimated to be 2,818 km3.

Although great mining potential exists in Afghanistan, as is demonstrated by the expected one trillion dollar value placed on resources buried beneath its soil, water shortages would make it exceedingly expensive to extract without impacting local water supplies.  This should draw the attention of all involved as major mines, such as Aynak, the largest copper mine in Afghanistan, would likely impact water availability in Kabul province. This would have serious ramifications for Kabul city, where water resources are already under strain due to a rapidly growing population.

In the more political friendly, although equally environmentally challenging, Mongolia, Rio Tinto has had to build a 70km pipeline in order to access the Gunii Hooloi aquifer to supply Oyo Tolgoi copper and gold mine with water. All this points to one clear conclusion: going forward, mining projects will have to look harder for water, take longer to build essential infrastructure, and be costlier and riskier to run. If carefully thought-out strategies for managing water resources are not utilized, local populations will increasingly shoulder the brunt of the negative environmental impact of mining operations.

Water Impacts the Bottom Line, Infrastructure Expensive

It is essential for investors to keep water risks in mind as well, as most mining firms are already experiencing significant cost inflation and water risks present a largely hidden cost, one difficult for investors to see, but sure to materially impact the bottom line.  Global Water Intelligence, a UK-based consulting firm specializing in water issues, estimates that mining companies will spend $12 billion globally on water infrastructure in 2013, a 56% increase from the $7.7 billion spent globally by the mining industry in 2011. According to a recent Moody’s report, 70% of the mines of the “big five miners” (BHP, Rio Tinto, Anglo American, Vale, Glencore Xstrata) are already located in countries already under significant water stress (56%) or moderate stress (14%).

Compounding the issue is concern about the environmental impact of large-scale mining operations on water quality. Long a concern of environmentalists, water quality is quickly becoming a chief concern for governments with limited resources that must be shared between industry and citizenry.  In April of 2012, the government of Peru went so far as to halt development of the Southern Copper-owned Tia Maria mine, a move prompted by concerns about the impact of mining on the quality of decreasing local water resources.

The halt is expected to last approximately one year, pushing the mines start-up to 2016, during which time an environmental feasibility study will examine the cost and impact of piping in raw seawater, which once desalinated would be used for operations instead of local water resources.

The costs associated with such endeavors are considerable.  Both Anglo-American and Freeport-McMoRan are building desalination plants at mining operations in Chile that are projected to cost the firms $96 million and $300 million respectively.  The World Resource Institute estimates that desalination infrastructure for a single large copper mine can run as high as $3.5 billion.  The cost of the initial build is just the start of the expenses associated with piping in seawater to mining projects.  According to a recent article in Emerging Markets Monitor, a Business Monitor International publication, desalinated water can cost mining firms 10 times the cost of locally-sourced freshwater.

Needless to say, the increased scarcity of water, along with government concerns about supplying growing urban populations, will increasingly bring mining firms into conflict with both local and host nation governments. This trend can already be seen in mining operations throughout Asia and South America, and will only add to the difficult operating environment with which global mining firms are faced.

Stronger breeze may power offshore wind market

China's offshore wind market is set to pick up with the approval of more projects, but that may not be enough to ease overcapacity among many struggling turbine makers.

China has become the world's largest wind market after years of explosive growth that also spawned oversupply, intense price competition and quality concerns. In particular, the offshore segment of the industry got off to a relatively slow start because of high costs and the lack of an on-grid tariff that could ensure investment return.

China's offshore capacity stood at 389.6 megawatts at the end of 2012, the third-largest after the UK and Denmark. But that's below 10 percent of China's official target of having 5,000MW offshore by 2015.

"We think the 2015 target is unlikely to be met," said Jin Xiaolong, chief executive of Shanghai Electric Wind Energy Co, a joint venture between Shanghai Electric Group and Germany's Siemens. "The industry's general consensus is 2,500MW to 3,000MW."

Offshore boom

Still, the offshore sector could see a rapid growth period through 2015 as the government approves more projects and may unveil a preferential tariff policy soon, Jin said in an interview last week during the Offshore Wind China conference.

To date, the government has given initial approval for 17 offshore wind farm projects, with a combined capacity of 3,950MW, along the east coast, according to Yi Yuechun, deputy chief engineer at state-owned planner HydroChina Corp. Another 28 projects totaling 8,500MW are awaiting approval.

Among them is the second phase of the Shanghai Donghai Bridge Wind Farm, a 116.6MW offshore facility that will use turbines made by Shanghai Electric. Construction will begin in the second half of this year, Jin said.

The first phase of the Donghai project was supplied by Beijing-based Sinovel Wind Group Co. It started operation in 2010 as the first grid-connected offshore wind project outside of Europe.

Still, Steve Sawyer, secretary-general of the Global Wind Energy Council, said China needs to speed up substantially to meet its 2015 offshore wind target, citing costs as the main challenge in slower economic times.

Jin said Shanghai Electric aims to capture 30 percent of China's offshore wind market through its 51 percent-held partnership with Siemens, which has brought key turbine prototypes to the venture. Siemens is a leader in the global wind market.

A 30 percent share is enough to make Shanghai Electric No. 1 in China's offshore market, a new focus for turbine makers that have suffered from a decline in onshore installations.

Wind's No. 3

Wind is already China's third-largest power source after coal and hydro, but grid connection problem and poor planning have left many onshore wind farms idle, causing slower development and overcapacity in the sector. China installed 15,900MW of onshore wind capacity last year, less than 19,300MW in 2011.

Turbine makers are now hoping to capture the faster growth offshore. However, in addition to costs, China also faces other hurdles in its offshore market.

China has to catch up on marine hydrographic surveys and submarine geological surveys, which are essential for the construction of offshore wind farms.

Also, the government should hasten the process of clarifying the function of sea waters to pave the way for wind farm projects to be erected at potential sites, said Shi Pengfei, vice president of the Chinese Wind Energy Association.

Meanwhile, the offshore wind market is facing competition from other renewable energy sources.

For example, the government has this year initiated an ambitious program to promote distributed solar power generation, with the State Grid Corp of China announcing it will connect all distributed renewable sources, such as solar, for free.

The Ralated Article:China faces test over plans to cut industrial capacity

China is set to release new plans soon to slim down bloated industries from steel to shipbuilding, but applying measures on the ground will be tough after years of lax oversight during a stimulus-fueled rush to expand in Asia's biggest economy.

The new rules, which will also target aluminium, cement and glassmaking, could be announced within weeks. Despite fairly resilient demand, all these sectors have been hit by overcapacity and failure to rein in production gluts could put more pressure on already weak markets.

The global raw materials sector is buttressed by Chinese buying and while efforts to streamline industry could make the long-term outlook more sustainable, they might hit demand. Major sellers to China of iron ore, coal and other staples include Rio Tinto, BHP Billiton and Vale.

China's new government is trying to restructure key areas of the economy, including new efforts to rein in excess credit growth that has led to asset bubbles.

But in tackling industrial capacity Beijing will be wary of moving too fast to avoid social strife from excess job losses.

"Solving this problem is going to be extremely hard and it's going to take a long time, and you can't just expect everything to change with just one policy," said Li Xinchuang, deputy secretary general of the China Iron and Steel Association (CISA), which includes 80 mills accounting for about 80 percent of China's steel output and is involved in policy discussions.

Beijing has sought to tackle overcapacity in sectors such as aluminium and steel for about a decade, but plans have faltered due to resistance from local governments anxious to protect growth and boost revenues.

In a sign Beijing may be getting more serious, cutting capacity is becoming a performance target for local officials.

In the past, the central government tended to rely on quasi-governmental industry bodies like CISA, with limited formal powers to drive plans through.

There has been little economic or legal incentive for local authorities or enterprises to comply, and few formal regulations to determine what projects are legal or not.

The latest plan is likely to seek to block new projects, push for more mergers and acquisitions and raise targets to shut old capacity. China was previously committed to closing 7.8 million tonnes of outdated steel and 273,000 tonnes of aluminium capacity in 2013.

The plan will be supported by steps designed to cut air pollution in cities by closing or relocating heavy industry.

"BLIND EXPANSION"

Beijing has already ordered regional authorities this year to take action against "blind expansion" by closing illegal projects, but analysts say it will be wary of causing job losses in industrial areas like Hebei surrounding the capital.

"They have a lot of heavy industry in Hebei - steel, cement, glassmaking - and if Hebei has economic problems the workers could flee to Beijing," said Henry Liu, an analyst with Mirae Asset Securities in Hong Kong.

China's steel industry, the world's biggest with a capacity to produce about 1 billion tonnes, is now estimated by CISA to have about 300 million tonnes of surplus production capacity, or around 40 percent of 2012 output.

Shipbuilding in China had by 2010 an annual production capacity that was equivalent to total world demand and has continued to grow even with a drop in construction and orders.

LEGAL LIMBO

What is required, say some, is not new policies, but better implementation.

While Beijing has run inspection campaigns or issued orders to force provinces to shut down plants and push mergers, sectors like steel and aluminium have largely existed in a legal limbo.

Until the industry ministry published its first registries of approved steel and aluminium producers in March, even Jiangsu Shagang Group, China's biggest private steel firm and fifth biggest overall, had no authorisation to produce at all.

In the case of aluminium, the Nonferrous Metals Industry Association estimates there was more than 7 million tonnes of idle capacity last year, a third of China's output, and capacity is expected to reach 40 million tonnes by 2015, nearly double the 24 million-tonne target set in an industry five-year plan.

Industry sources said smelters have come under pressure to stop projects in the far northwestern region of Xinjiang, a centre for the aluminium industry, and that more than 10 million tonnes of new capacity could be blocked.

But while China has found it easier to control big projects by encouraging state-backed enterprises like Baoshan Iron and Steel to cut capacity before new projects are built, small private projects have proved harder to curb.

Beijing has said it will use new pollution and environmental standards to block construction of new industrial projects in major cities, and is eyeing targets to reduce coal use in some heavily polluted regions.

"If they can deal with this problem it can kill two birds with one stone. You can help improve the structure of industry and ease pollution," said Huang Wei, a Greenpeace campaigner in Beijing.

But it is hard even to estimate how much capacity there actually is, and therefore how much needs to be cut.

Hebei has said it aimed to cut total steel capacity by 60 million tonnes by 2020, but estimates of total capacity range anywhere from 300 to 400 million tonnes.

"The fact is nobody really knows what Hebei's exact steel capacity is right now," said Huang

China's unsung unconventional energy revolution

At the heart of the vast desert region of Inner Mongolia, half a dozen young engineers from PetroChina watch huge, flat screens in a brightly lit central control office that oversees 5,000 wells at China's largest gas field.

Just a few years ago, two workers travelling in a truck would need three days to check conditions at 50 wells at the Sulige field, which spans 20,000 sq km (7,700 sq miles) in the middle of Maowusu, China's third-largest desert: now, the task can be done in just five minutes.

Remote Sulige, which means "uncooked meat" in Mongolian, is testament to China's success in developing its giant reserves of so-called "tight gas", part of a drive to dramatically boost consumption of cleaner burning natural gas to help replace dirty coal and costly oil imports.

Like the better-known shale gas revolution in the United States, tight gas is transforming China's gas production - accounting for a third of total output in 2012 -- and will form the backbone of the country's push to expand so-called "unconventional" gas production nearly seven-fold by 2030.

The speed and size of the boom has outstripped forecasts and has been led by local firms developing low-cost technology and techniques, already being rolled out by Chinese companies in similar gas fields outside of China.

Like shale gas, although less difficult to extract, tight gas is an unconventional deposit that needs special technology such as horizontal drilling or fracturing to free gas trapped in tiny cavities in rocks like sandstone.

Output of tight gas hit 30 billion cubic metres (bcm) in 2012 -- nearly a third of China's total gas output -- and is expected to rise to 100 bcm by 2030, leading an unconventional fuel boom ahead of shale or coal-seam gas.

"We found our own approach to develop tight gas," said Hu Wenrui, a former Petrochina vice president and a key architect behind developing the deposits. "With this, China's tight gas has entered the fast track."

Forecasts by the China Academy of Engineering (ACE) put 2020 output of tight gas at 80 bcm, more than a forecast 50 bcm of coalbed methane and 20 bcm of shale gas combined.

Despite the excitement over shale gas, of which China holds larger reserves than the United States, the world's top energy user has taken only baby steps to exploit the more complex deposits, drilling just 80 or so wells by the end of last year.

Its output of coal-seam gas continues to disappoint after two decades of development, reaching about 6.5 bcm in 2012.

New ViscoTec RD-Easy Clean Dispenser

ViscoTec realized major modifications for the cleaning and maintenance process (EasyClean) within a new generation of the RD dispenser series. These dosing pumps had been enhanced on the basis of the excentric screw pump principle and can be used for dispensing smallest volumesof some µl up to larger ml volumes with highest accuracy.

In order to reduce time-consuming and costly maintenance processes and to furthermore increase the machine availability, the sealing package is now completely integrated into the bearing housing. Within this new design the sealing area must not be dismantled any longer for the cleaning step (e.g. during product change or regular maintenance). The life time of the sealing parts can be extended, the overall maintenance costs reduced in a mid-term prospective.

This improvement also significantly reduces the maintenance and set-up times of the dosing systems and, thereby, allows for more frequent product changes. It does not only result in a reduction of the changeover time (payroll costs, machine downtime), but also reduces the required amount of cleaning material and the waste management costs of such. The flexibility of production lines rises and small volume production can be performed on higher profit rates.

The introduced RD-EC dispensers show interface compatibility to the previous version of the RD dispensers. The compact design allows an integration into a wide range of axis and robot systems and the installation right at the dispensing spot.

Together with the combined drive and control system ViscoPro, these dosing systems provide the option of a standardized control interface without any further programming efforts.

ViscoTec dispensers work on high accuracy levels with excellent system lifetime values due to the valveless technology. In addition, the excentric screw pump technology is particularly suitable for dosing viscous, shear- and pressure-sensitive as well as filled materials. 

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IADC: “Greener Dredging” Presentation

Rene Kolman, IADC’s Secretary General, held a presentation named “Greener Dredging” at the IAPH Conference, which was held on 21-24 May 2012, in Jerusalem, Israel.

“Dredging is green and is getting greener and greener. In this presentation I will emphasise the fact that my member companies are already taking care of the environment and often even trying to improve it. I will try to “clean up” the image of our industry and show that we were already green yesterday, we are greener today, and we will become even more green tomorrow,” stated Kolman.

Boskalis Bags Veessen-Wapenveld Deal

Royal Boskalis Westminster N.V. has been awarded a contract by the Vallei en Veluwe district water board for the construction of the Veessen-Wapenveld high-water channel in the province of Gelderland, the Netherlands.

The project is one of the more than 30 measures that make up the Dutch national Room for the River program, which is aimed at providing better flood protection for areas close to the country’s rivers. The work, which will be executed in conjunction with Van Hattum en Blankevoort in the IJsselweide construction consortium, is scheduled to start after the summer. The contract represents a value of around EUR 75 million of which Boskalis’ share is 50%.

Room for the River

The high-water channel will be between 500 and 1,500 meters wide and will be formed by building two dikes of around 8 kilometers long between the villages of Veessen and Wapenveld.

In addition to this new contract Boskalis is already involved in several other major hydraulic engineering projects in the context of the government’s Room for the River program. These include the Lower Rhine project, which involves adapting four flood plains along the river between the towns of Renkum and Rhenen, the Deventer project, where a total of six secondary channels of the IJssel river are being dug along a length of 10 kilometers, and the Noordwaard project near the town of Gorinchem, where an area is being ‘depoldered’ to allow the New Merwede river to flow more rapidly during periods of excess rainfall.

Boskalis’ strategy is aimed at benefitting from key macro-economic factors which drive worldwide demand in the markets: expansion of the global economy, increase in energy consumption, global population growth and the challenges that go hand in hand with climate change. This project is largely driven by climate change.

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