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Artisanal miners not adhering to mining regulations

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Artisanal miners not adhering to mining regulations

AN Environmental Management Agency (EMA) official has accused artisanal miners of not adhering to mining regulations and interfering with water channels, resulting in avoidable disasters.

Addressing a Zimbabwe Environmental Law Association (Zela) discussion on the possible causes of the recent Battlefields mine disaster, an EMA official, Fanuel Mangisi said artisanal miners used different underground tunnels that were only known to them and were difficult to trace.

“The lessons learnt from the Battlefields disaster is that we need to formalise artisanal mining, and we also need to encourage miners to respect the recommendations and regulations made by different institutions on issues of safe mining,” Mangisi said.

“There are many cases we deal with as EMA of, for example, our railway lines that have been threatened by artisanal miners and at Globe and Phoenix Primary School in Kwekwe, where there is mining taking place underground, and there is a sewer system in Kwekwe that is always vandalised by some illegal miners. They want to use the sewer water to process the ore and they say that it is good for processing ore.”

Mangisi said whenever the sewer is vandalised, waste spews all over and after authorities repair it, the illegal miners always vandalise it again.

“Learners at Globe and Phoenix School have said while learning they hear sounds coming from underground, and the walls of the school are cracking.

“The illegal miners detonate some dynamite close to infrastructure. We need to mine in an environmentally friendly manner, which is acceptable. If we do not protect our environment it endangers our communities and livestock can even fall into open pits,” he said.

Asked why EMA has not taken action on the Kwekwe artisanal miners, who have been vandalising infrastructure for several years, Mangisi said the panners operated at night, moved in large numbers and are armed and dangerous.

“They mine underground using numerous secret entrances. At Hwandara in Shurugwi, they operate at night and move in large numbers. In other instances, they are becoming very violent. This needs the intervention of all stakeholders, not EMA alone in terms of enforcement. This needs the intervention of EMA, the police, civic society and politicians as well,” he said.

Mangisi said whenever EMA tried to hold educational meetings with the illegal miners they refused to attend. “No one knows what is underground and it is not stable out there. When political will is there I think we can do something and deal with them,” he said.

NewsDay

Gold steady while palladium hovered near record peak

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Gold steady while palladium hovered near record peak

Gold prices were steady on Wednesday as the dollar stood near a three-week low after the Federal Reserve’s chairman reiterated the U.S. central bank would stay patient on further interest rate hikes, while palladium hovered near a record-peak.

Spot gold was flat at $1,328.90 per ounce at 0152 GMT, while U.S. gold futures were up 0.2 percent at $1,331.20.

Rising risks and recent soft data shouldn’t prevent solid growth for the U.S. economy this year, but the Fed will remain “patient” in deciding on further interest rate hikes, Fed Chair Jerome Powell said on Tuesday.

The dollar was trading near its lowest against major currencies since early February.

The pound surged against the greenback after UK Prime Minister Theresa May offered lawmakers the chance to vote in two weeks for a potentially disorderly no-deal Brexit or to delay Britain’s exit from the European Union if her attempt to ratify a divorce agreement fails.

Spot palladium, which scaled a record-peak of $1,565.09 per ounce in the previous session, was flat at $1,560.

Palladium has climbed about 24 percent this year on widening supply tightness in the market, while threats of strikes by mineworkers in South Africa added support to the autocatalyst metal

Norilsk Nickel, the world’s largest palladium producer, said tighter emissions regulations in all major markets and flattish primary supply would widen a palladium deficit in 2019.

U.S. President Donald Trump and North Korean leader Kim Jong Un meet on Wednesday for their second summit, betting that their personal relationship can break a stalemate over the North’s nuclear weapons and end more than 70 years of hostility.

In a stinging rebuke to President Trump, the House of Representatives brushed aside veto threats and passed legislation to terminate the emergency he declared at the U.S.-Mexico border in order to build a wall there.

Meanwhile, the White House formally notified Congress that if the measure passes Congress, Trump’s advisers would recommend that he veto it in order to maintain the power he activated on Feb. 15 as a way of circumventing Congress.

China’s net gold imports via main conduit Hong Kong doubled in January from the previous month, as banks in the world’s top consumer likely stocked up at the beginning of the year.

Uganda’s gold exports jumped 23 percent last year from 2017, for the first time overtaking coffee as the East African country’s top foreign exchange earner, central bank data showed.

Indonesia’s disaster agency said on Wednesday that rescuers were searching for survivors after more than 60 people were feared buried by the collapse of an illegal gold mine on the island of Sulawesi.

DATA AHEAD (GMT) 1500 Fed’s Powell to testify on U.S. monetary policy and the economy before the House Financial Services Committee-Reuters

Coal production to increase

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Coal production to increase

PRIVATE coal miner Makomo Resources says it expects to produce 350 000 tonnes of coal per month this year on the back of an anticipated increase in demand from the Zimbabwe Power Company (ZPC).

The ZPC has taken a stance to cut on coal imports due to forex challenges and procure all its requirements locally.

Makomo managing director Raymond Mutokonyi told NewsDay that the year ahead looked bright for the coal miner and would ramp up production to meet the anticipated increase in demand.

“This year looks good for us, looking at what is happening in our region, especially in South Africa where electricity is in short supply. So we will fail to import, which will force everybody to be serious about local production,” Mutokonyi said.

“We project that ZPC will need a lot of coal because they are our biggest customer. So, because they would want to have maximum output, especially as we go towards winter, we are projecting that volumes will start to increase. We will be operating at full throttle, producing between 300 000 tonnes and 350 000 tonnes (of coal) per month,” he said.

Mutokonyi said their production was demand-driven and last year the production was subdued.

“We were marginally down last year,” he said.

He said they were facing challenges such as high inflation and rising costs.

“. . . but we are seeing a bright future. Obviously, industry can’t close because of anything. As long there is a market, we will be there. So, we see the production firming up . . .,” he said.

Makomo Resources is the largest privately-owned coal producer in Zimbabwe, and it supplies the country’s thermal power stations, industrial and agricultural sectors.

NewsDay

USD, RTGS Bank exchange rate impacts operations: Mahlahla

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USD, RTGS Bank exchange rate impacts operations: Mahlahla

Yesterday the Zimbabwe Miners Federation (ZMF) National Chrome Representative Mashonaland Central ZMF chairperson Masango Mahlahla presented a seven point grievance list at the ZMF MONETARY POLICY REVIEW BREAKFAST MEETING attended by  Ministry of Mines led by Deputy Minister Polite Kambamura and the Reserve Bank of Zimbabwe (RBZ) led by  William B.  Manhimanzi following the new monetary policy presented last week at a meeting held at Rainbow towers’ Harare International Conference Centre (HICC) in Harare.

Rudairo Dickson Mapuranga

According to Mahlahla, miners were of the view that RBZ would be using the exchange rate which was being offered at the parallel market and were hopeful the policy presentation was long overdue, however, RBZ failed to reach miners expectations when they failed to adhere to market forces.

“As the ZMF National Chrome Representative, we are advocating for 80% USD and 20% RTGS valued at the current market rates, taking into consideration the country’s need for foreign currency to support industry and commerce, market rates were noted to be rated between 3.5 and 4 by the RBZ Governor in his new monetary policy speech last week. Additionally we are advocating for a review of the 30 days retention policy upwards to 6months to one year.  Our expectation as chrome miners was that the RBZ would start the exchange rate at the current parallel market rate of 3.5 to 4.  As the RBZ formalized the trading of RTGS to USD, the market would then receive the steady supply of foreign currency which in turn would reduce the gap in value between RTGS and USD overtime.  In this case the start rate of 2.5 was too aggressive and immediately negatively impacts our business operations” said Mahlahla.

 

Mahlahla said that, it is high time the mining sector is transformed from being dominated by the small scale semi-mechanized operations and grown to fully mechanized operations as growth in the sector is too vital, he also lamented over USD retention because equipment purchases and rentals are still paid in USD.

“Our Equipment is imported and priced in Foreign Currency. In order for small scale miners to grow and increase production and efficiency we need to move our operations from being semi-mechanized to fully mechanized through the purchase and ownership of mining equipment such as, Dump Trucks, Front End Loaders, Excavators, Bulldozers et cetera” said Mahlahla.

 

It is the miners’ view that for the development of the mining sector, each piece of equipment can cost over $300,000 USD new and on average a used piece of equipment can cost around $100,000 USD each. Most small scale chrome mines are critically undercapitalized and require the access of sales proceeds in the form of foreign currency in order to grow operations. Masango Mahlahla said that the only solution towards turning the mining sector to a favorable outcome is by increasing foreign currency retention.

“Due to the challenges faced within our economy which includes conflicting government business policies, foreign banks as well as domestic banks are unwilling to loan money to chrome miners who have very low foreign currency reserves within their bank accounts.  Having high retained foreign currency cash reserves within a miners bank account will enable a miner to make strategic purchases and even obtain loans” said Mahlahla.

Mahlahla pointed out that, ZMF is in support of the Ministry of Mines and Mining Development to promote formalization of mining as well as best business practices, however, there is a need for strong financial management.

“The 30 days retention will push miners to make rushed spending decisions and lose out on strategic purchases which can only be obtained when a miner has the foreign currency available in the bank on short notice. The thought that preowned mining equipment can be purchased internationally under our current economic environment along with conflicting business policy challenges via payment plans is not a realistic assumption” he said.

 

Experts believe that chrome production growth is further being suppressed due to the collusion by foreign buyers who have setup domestic buying operations.  All buyers are now activity working together to keep chrome prices artificially low.  Whereas the current export sales price of chrome is around $85 USD per tonne the buyers are paying as low as $12 USD per tonne.

“We as chrome miners are requesting RBZ and the Ministry of Mines and Mining Development to investigate the domestic Buyers and to cancel all export and business licenses of any buyer found to be predatory buying chrome.  New Buyers should be invited in who are willing to conform to Zimbabwean business laws and pay international market based prices in order for our industry to grow’ Mahlahla said.

De Beers merges Canadian, South African assets

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De Beers merges Canadian, South African assets

De Beers Group has decided to merge its mining assets in Canada and South Africa under the name De Beers Group Managed Operations. The change is expected to create a more sustainable business and to streamline operations in both countries.

De Beers announced the change as its mining footprint in both countries is shrinking due to the closure of the Snap Lake mine in Canada’s Northwest Territory and South Africa’s Voorspoed mine plus the already announced closure in May of the Victor mine in Ontario.

Mpumi Zikalala

The new managing director of De Beers Group Managed Operations will be Nompumelelo (Mpumi) Zikalala. She and the management team will work out of offices in Johannesburg. Joining her is Allan Rodel as head of operations. Additional support services will be maintained in Canada. Zikalala’s responsibilities will include those currently held by Phillip Barton, CEO of De Beers Consolidated Mining, and Kim Truter, CEO of De Beers Canada. Both men are leaving the organization to focus on new opportunities.

This story first appeared in Canadian Mining Journal.

Tax war won at cost

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Tax war won at cost

Last year it was the Democratic Republic of Congo. This year it is Zambia.

Both African countries have driven through draconian changes to their mineral tax regimes, overcoming the entrenched opposition of some of the world’s biggest mining houses.

Both are betting that the world’s need for their resources, particularly copper and cobalt, will keep the tax receipts flowing.

Right now, however, the push for a greater share of the wealth lying beneath the African Copperbelt is causing supply-chain disruption for both copper and cobalt.Operating in both the Congo and Zambia just got more expensive.

One Zambian copper smelter has closed, another has reduced operations and Glencore last week confirmed media reports it will be cutting production at its Mutanda mine in the Congo.

The news sparked a rally in the copper market underlining just how important these two African countries have become to the global supply picture.

Cobalt barely reacted because last year’s “hot” metal is still digesting the production glut that followed the 2017 price surge.

The current supply turbulence, however, promises more volatility ahead for cobalt as well as copper.

Miners lose rumble in the jungle

The Congo and Zambia have for some time been slugging it out with mining companies about the proposed tax changes.

The arguments were still playing out at the Mining Indaba conference in Cape Town earlier this month.

But the miners have lost the contest.

Congo signed its new mining code into law in June last year.

Copper royalties were raised from 2.0 to 3.5 percent and those on gold from 2.5 to 3.5 percent. A new “super profits” tax, set at 50 percent, was introduced. It kicks in when profits exceed 25 percent of those forecast in a mine’s original feasibility study.

Miners took another blow in December, when Congo declared cobalt a “strategic” mineral, nearly tripling the royalty rate to 10 percent.

Zambia’s tax hits on miners came into effect at the start of this year, lifting the sliding royalty scale by 1.5 percentage points to between 5.5 to 7.5 percent, depending on the copper price.

If copper exceeds $7,500 and $9,000, the royalty rate will go up to 8.5 and 10.0 percent respectively.

A new 15-percent royalty on gold and gemstones has also been introduced, while mining companies are waiting nervously to see the details of the Zambian government’s plan to replace value added tax with a non-refundable sales tax at the start of April.

Operating in both the Congo and Zambia just got more expensive.

Border disruption

However, it’s a less headline-grabbing change in Zambia’s tax system that has caused the immediate supply chain disruption.

A new 5.0-percent import tax on copper concentrates has halted the flow of raw materials from Congo to smelters in Zambia.

The latter has excess smelting capacity, the former too little.

Smelters such as Vedanta’s Nchanga and ERG’s Chambishi have historically relied on Congo for part or all of their feed.

The reaction to the new import tax has been swift, Nchanga reducing output and Chambishi closing. Each has generated knock-on effects.

Nchanga operations have been “rationalised” because the new import duty makes smelting Congolese concentrates “commercially unviable”, according to local operating unit Konkola Copper Mines (KCM).

The smelter produced 135,000 tonnes of refined copper in the first nine months of 2018, including 67,000 tonnes from third-party, for which read Congolese, feed.

Lower output at the smelter means less sulphuric acid for the Nchanga copper mine, where the acid is used to leach concentrate into metal. KCM therefore suspended mining operations at the start of January.

ERG has shuttered its smaller 50,000-tonne per year Chambishi smelter because it was wholly reliant for feed on concentrates from the company’s Boss Mining and Frontier operations in the Congo.

This too has caused a ripple effect, Fastmarkets reporting that ERG is now placing Boss Mining on care and maintenance as the company studies the feasibility of adding more processing capacity to treat the concentrates previously headed for its Zambian processing plant.

ERG’s cross-border flow included cobalt raw materials for refining at Chambishi, putting another kink into this market’s volatile supply side.

Future threats

Glencore is facing a similar dilemma to ERG at its Mutanda mine, where the ore body is transitioning from oxide, suitable for straight-to-metal leaching, to sulphide, which generally requires processing by a smelter.

Such ore body changes are not uncommon in copper mines as early operations deplete the near-surface oxide deposits which overlay the deeper sulphide deposits.

A new mine plan will halve Mutanda’s production to 100,000 tonnes going forward, “pending an investment decision on whether and how to process the now increased sulphide reserves/resources,” Glencore said.

An investment decision that has been made more difficult by Congo’s tougher tax regime and the potential for more changes ahead.

Another key proviso of last year’s new mining code was a reduction in operating contract stability from 10 to 5 years, meaning more frequent potential shifts of the goal-posts by the government.

Glencore’s investment decision at Mutanda will be a micro play-out of a broader theme. Have Congo and Zambia pushed the redistribution of resource wealth too far by stifling investment in future production?

Too big to lose

Mining companies fear that this may not be the last assault in either country, given both are burdened by heavy national debt and creaking budgets.

They are also, however, key sources of two metals expected to see fast-accelerating demand from the electric vehicle revolution, cobalt for lithium-ion batteries and copper for the infrastructure that will enable that revolution.

Cobalt’s dependence on the Congo is a well understood problem for both lithium-ion battery manufacturers and their automotive customers.

Greater assertiveness by Congo’s government joins a long list of supply stability issues.

Copper, by contrast, must learn anew the potential for central Africa to instill unpredictability into the price.

Congo’s copper production collapsed over the 1990s and early 2000s to the point that it lost its former preeminent role in the global production picture.

But now it’s back. National output has grown from under 30,000 tonnes in 2005 to 1.2 million tonnes in 2018. Along with Zambia’s output of 800,000 tonnes, the two countries account for around a tenth of global production.

Only time will tell if Congo and Zambia are right in their belief that miners will accept, however reluctantly, the new costs of doing business.

But the short term outlook is for more supply-chain turbulence-Reuters

Palladium hits record high

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Palladium hits record high

Palladium hit a record high on Tuesday, surging above $1,550 as a threatened strike by South African mineworkers added to supply risk concerns in an already tight market, while gold prices edged up on a subdued dollar.

Spot palladium traded as high as $1,553 per ounce as of 0400 GMT.

The metal has risen 23 percent this year on a sustained supply deficit and has gained for seven straight months.

At least 15 mining firms in South Africa, a major producer of the autocatalyst metal, have received notices of strikes to be held later this week.

“Support comes from supply side issues, mainly from South Africa where a strike by the union has a potential to disrupt output further,” ANZ analyst Daniel Hynes said, adding that positive news on Sino-U.S. trade is also providing support.

“There’s been a feeling that demand overall would be impacted by tariffs on the either side and this potential deal will minimize the risk of that occurring, so the market is viewing this as a positive move.”

U.S. President Donald Trump said on Monday he may soon sign a deal to end a trade war with Chinese President Xi Jinping if their countries can bridge remaining differences, saying negotiators were “very, very close” to a deal.

“(However,) considering the rally we are seeing in prices, the risk of a correction is increasing by the day. (But) for the moment the trend is likely to continue,” Hynes said.

Meanwhile, spot gold gained 0.2 percent to $1,329.08 per ounce and U.S. gold futures were up 0.1 percent at$1,331.2 as the dollar remained subdued.

The U.S. unit was down 0.1 percent against major currencies .

“Investors will now be moving away from the trade issue and will start to focus on macro releases and testimony by Federal Reserve Chairman Jerome Powell,” INTL FCStone analyst Edward Meir said in a note.

Fed chair Powell will be testifying on U.S. monetary policy and the economy before the Senate Banking Committee on Tuesday and Wednesday.

“Powell could use the opportunity to move perceptions a little bit more towards the hawkish side. In such a case, we could see modest dollar strengthening set in over the course of his remarks, likely exerting more downward pressure on gold.”

Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.15 percent to 788.33 tonnes on Monday.

Elsewhere, silver rose 0.2 percent to $15.91 per ounce, while platinum was up 0.6 percent at $854, after scaling its highest since early November at $856.50._Reuters

Beny Steinmetz makes Guinea comeback in Sarkozy-brokered deal

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Beny Steinmetz makes Guinea comeback in Sarkozy-brokered deal

Israeli mining tycoon Beny Steinmetz is making a dramatic return to Guinea after the billionaire ended a bitter dispute with the West African country that brought his business empire to its knees.

The settlement, brokered by former French President Nicolas Sarkozy, ends a seven-year-old dispute centered around one of the world’s richest mineral deposits that included a colorful list of characters from billionaire George Soros to former U.K. leader Tony Blair and mining heavyweights Rio Tinto Group and Vale SA.

After months of secret negotiations, Steinmetz’s BSG Resources Ltd. agreed with Guinean President Alpha Conde to withdraw allegations of corruption leveled against each other over years and to drop a two-year-old arbitration case over one of the world’s most-fabled mineral deposits — the Simandou iron-ore project. Guinea also agreed to partner with mining grandee Mick Davis, who will develop the Zogota iron-ore mine once the disputes have been settled, marking a comeback for one of the industry’s biggest names.

The reconciliation puts Steinmetz, BSGR and Davis in prime position to lead the development of Guinea’s massive iron-ore reserves. Mining giants like Rio Tinto, Vale and Aluminum Corp. of China have all failed to develop projects in the country.

“We were enemies. Now we are friends and partners with the Guinean government. We have both put aside the past and BSGR and its employees and advisers have been vindicated.”

“A good agreement is much better than any war,” Steinmetz, who acts as an adviser to BSGR, said in a phone interview on Sunday. “We were enemies. Now we are friends and partners with the Guinean government. We have both put aside the past and BSGR and its employees and advisers have been vindicated.”

For Steinmetz, the heir to one of Israel’s premier diamond businesses, the arrangement is a remarkable return to favor in Guinea. BSGR entered administration a year ago to protect itself from the outcome of litigation and arbitration it was involved in related to the country. In 2012, Guinea stripped BSGR of its rights to Zogota and half of Simandou, thought by miners to be the world’s biggest undeveloped iron-ore deposit. A government committee alleged he and his officials paid millions in bribes to obtain the rights.

“We are all really pleased with the situation,” Steinmetz said. “Guinea wants to work and they see us as the pioneers of the iron-ore situation, because nobody else has picked it up. Production and export of iron ore will be expedited and this is a win-win situation for everyone.”

Sarkozy, who was in office between 2007 and 2012, had a relationship with both sides and was able to broker the deal, according to a person with knowledge of his role.

Long-time director Dag Cramer negotiated the deal for BSGR, a firm owned by a Steinmetz family foundation. Under its terms, the company relinquishes rights to Simandou and Zogota, and Davis will develop the smaller deposit.

BSGR keeps an economic interest in Zogota, which, according to Steinmetz, will move toward producing “very fast.” The company will get a share of the revenue from the new project, which will be developed by Davis in partnership with Guinea.

‘Win-win’

“We’re pleased with the agreement,” Guinea’s Mines Minister Abdoulaye Magassouba said in an emailed statement, adding that the new projects will be in line with the country’s new mining code. “It’s for the good of the people. It’s with this aim that the government will try hard to work in a win-win partnership with the investors.”

The reconciliation suited both sides. Guinea faced the possibility of an embarrassing loss in arbitration court, while BSGR would have been able to do little with an award by the tribunal if Guinea’s government remained hostile. The government withdrew all allegations of corruption against BSGR and Steinmetz.

Steinmetz, 62, was originally sent out by his family to secure supplies of rough diamonds, introducing him to difficult environments across the globe. He developed a diamond mine in Sierra Leone before setting his sights on Simandou in neighboring Guinea. Ailing President Lansana Conte stripped Rio Tinto of its rights to half of the asset, which the Anglo-Australian miner hadn’t developed in a decade of control. The rights lost by Rio were transferred to Steinmetz weeks before the president passed away in 2008.

BSGR rapidly sold half of its Guinean assets to iron-ore mining giant Vale SA for $2.5 billion.

Mining review

After Conde was elected in 2010, he announced a review and clean-up of the mining industry, Guinea’s main source of income. Billionaire hedge fund manager George Soros and former U.K. Prime Minister Tony Blair advised on and funded Conde’s initiative. A lurid dossier of alleged corruption against Steinmetz became the basis for BSGR’s loss of rights in 2012.

Steinmetz and BSGR always denied any wrongdoing and insisted they would one day be vindicated. Rio Tinto, meanwhile, is now under investigation in the U.K. and Australia for payments it made to a consultant to try to restore its rights to Simandou.

The Guinean saga has been more than just a painful business loss for Steinmetz. He has been the subject of investigations by authorities in the U.S., Switzerland, Romania and Israel, where he was briefly detained in 2016 and then placed under house arrest.

Though Simandou has long been a fabled asset, developing it may be impossible. It would require an investment of $20 billion, including the construction of railway lines across a mountainous country. Rio attempted to later sell its share of the project to Aluminum Corp. of China, but the deal collapsed last year.

Mick the Miner

Davis may have a favorable solution, with the government allowing him to export via an existing railway line through neighboring Liberia, using his newly formed Niron Metals venture.

“Niron believes that the Zogota deposit can be brought into production on an accelerated timetable, thereby helping to unlock the potential of Guinea’s rich resources for the benefit of all stakeholders, including the Government and people of Guinea,” the company said in a statement.

Davis, nicknamed Mick the Miner, was one of the industry’s most successful operators in the early part of the decade as the mining industry boomed on China’s rampant industrialization. As Xstrata Plc’s chief executive officer, Davis led a team renowned for transforming the coal producer through about 40 deals worth $35 billion over 10 years from 2002, before agreeing to a friendly merger with commodity trader Glencore Plc, where Ivan Glasenberg managed to beat him to the top job.

Since then, the U.K. Conservative Party treasurer has struggled to regain a footing. His private equity vehicle X2 Resources folded after failing to make any deals amid volatile commodity prices and disparate investors who couldn’t agree on what assets to buy.

Bloomberg News

Mick Davis to mine Guinea’s Zogota iron ore deposit

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Mick Davis to mine Guinea’s Zogota iron ore deposit

Niron Metals, headed by the former boss of Xstrata Mick Davis, will develop Guinea’s Zogota iron ore deposit, previously owned by BSG Resources (BSGR).

The news, confirmed via an emailed statement, follows a Monday agreement between Israeli tycoon Beny Steinmetz, BSGR’s owner, and the government of Guinea over the rights to Simandou, one of the world’s largest untapped reserves of iron ore.

“[BSGR’s deal] has paved the way for the creation of an effective mining partnership between Niron and the Government to mine this deposit,” it said, “The company looks forward to bringing this to fruition subject the satisfactory settlement of all disputes between the parties.”

As part of that settlement, BSGR has relinquished its claims on blocks 1 and 2 of Simandou, whose development has been hindered by years of legal wrangling as well as the $23 billion cost of the required infrastructure.

The Zogata project is expected to produce around 2 million tonnes of iron ore a year.

Rio Tinto (ASX, LON:RIO), the world’s second largest iron ore producer, still holds a 45.05% stake in Simandou’s remaining blocks 3 and 4.

“At the request of the Republic of Guinea, a new group of investors (presented by and including Steinmetz) will exploit the Zogata deposit, in order to export iron ore, according to an accelerated timetable,” a statement quoted by Financial Times reads.

The Zogata project is expected to produce around 2 million tonnes of iron ore a year, which will be transported by rail and exported via a port in neighbouring Liberia.

Guinea’s government had previously stated that ore had to exported via the West African nation’s own ports.

Davis is well known in the mining industry. He led Xstrata from a $500 million business in the early part of the last decade to an operation so big that — at one point — it made a takeover offer for Anglo American (LON:AAL).

His latest venture, mining fund X2 Resources, ended up losing its backers as it was unable to score any deals in the three years since launch.

Mining.com

Barrick makes hostile $17.8 billion bid for Newmont

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Barrick makes hostile $17.8 billion bid for Newmont

Canada’s Barrick Gold (TSX:ABX)(NYSE:GOLD), the world’s second-largest bullion producer, is going hostile in its bid to acquire U.S. rival Newmont Mining (NYSE:NEM) and create a mega-gold corporation with a $17.8 billion all-share offer.

The move, announced before markets opened on Monday, increases the potential for a three-way fight among some of the world’s largest gold miners, and comes after Newmont’s chief executive, Gary Goldberg, qualified the approach as a “desperate” and “bizarre” move by Barrick.

If successful, the bid will create the world’s largest gold company with a value of around $42 billion at current market prices. That gold mammoth would hold assets in almost every continent, including Australia, Africa, the U.S. and Latin America.

The move increases the potential for a three-way fight among Barrick, Newmont and Goldcorp, some of the world’s largest gold miners.

The Toronto-based miner is offering 2.5694 shares for each Newmont share, giving investors of the U.S. company a 44.1% of the combined entity. The deal, Barrick said, it’s “far superior” to Newmont’s $10-billion offer to buy Goldcorp (TSX:G) (NYSE:GG), unveiled in January and still on the works.

In a letter to shareholders, chief executive Mark Bristow said acquiring Newmont would create up to $7 billion in synergies, mainly through cost savings due to the overlap in operations in Nevada, where both companies have massive mines and exploration projects.

“Considered globally, the merger represents a radical and long-overdue restructuring of the gold industry, and a transformative shift from short-term survival tactics to the long-term creation of sustainable value,” Bristow said.

The companies already own in Nevada — the largest U.S. gold- and silver-producing state —  Turquoise Ridge mine, in a 75%-25% partnership. And Newmont alone has 19 mines adjacent to Barrick’s own operations.

“There is no other transaction in our industry that can create better value for shareholders and other stakeholders than a business combination between Newmont and Barrick,” John Thornton, Barrick’s executive chairman, wrote to Newmont’s board. “The market reaction to date to your Goldcorp transaction suggests that investors do not endorse your rationale.”

A deal between the two world’s largest bullion miners would likely thwart Newmont’s intended acquisition of Goldcorp, leaving the Vancouver-based company stranded — or back in play — amid a wave of consolidation in the gold sector.

The potential mega-merger of the two world’s largest bullion miners would likely thwart Newmont’s intended acquisition of Goldcorp.

It’d also bring into question Barrick’s ability to integrate another miner, as the company has just completed the acquisition of Randgold.

The potential mega-fusion would follow years of relatively sluggish gold prices, with futures stuck in a range between $1,000 and $1,400 per ounce since 2013. But the precious metal seems to be on the way up, with prices increasing about 11% since October.

Barrick and Newmont have held merger talks every decade or so for almost thirty years, with the last one blowing at the 11th hour in 2014.

The news comes as the mining industry is still recovering investors’ trust following a stretch of ill-timed and badly-chosen expansions and acquisitions that sent billions of dollars down the drain.

Barrick itself was responsible for one of those —  the acquisition of Equinox Minerals in 2011, which Thornton since qualified as if not the worst, one of the five worst acquisitions in history.

Shares in both Newmont and Barrick were largely unchanged in early trade.

Mining.com

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