MUST READ: Gold – the race for the world's most seductive metal |
- MUST READ: Gold – the race for the world's most seductive metal
- Chinese coal producers say their industry is strong
- Kitco to file claim for $122 million in damages against Revenue-Quebec
- Goldcorp faces lawsuit threat from Mexico and a $3.2 million fine in Argentina
- Gold, copper and silver to face more troubles in 2014— PwC
- Freeport may have to cut Grasberg output by 40%
| MUST READ: Gold – the race for the world's most seductive metal Posted: 09 Dec 2013 04:40 PM PST When it comes to putting together a book on a storied subject like gold, the hardest task for the writer is not gathering the material. It is which tales to leave out. Matthew Hart, author of Gold: The Race for the World's Most Seductive Metal, does a splendid job of transporting readers from one defining moment in the history of gold to the next. Hart, author of seven books including Diamond and a veteran journalist who has appeared on CNN and 60 Minutes and contributed to Vanity Fair, Globe & Mail and others, had to pick his targets carefully to fit into Gold's brisk 233-page narrative. Hart does not find the space to chronicle India's ongoing love affair with gold, the Bre-X scam of the late Nineties, or today's headline-making dispute over Europe's largest gold project in Romania, but the omissions provide Gold with admirable pacing and cohesion. He often jumps back and forth hundreds or even thousands of years to create an arc that spans from the first gold jewellery created more than 6,000 years ago through vivid descriptions of how Inca gold transformed the European financial system, the "Nixon shock", the game-changing creation of gold-backed ETFs and right up to how the centre of the gold universe has shifted to China. Gold is peppered with aphorisms – "Ore is a human construct, not a natural one. Nature makes metal. Ore is made by math." – and the style is emphatic: "It was a thirst that powered the first gold rush – a murderous, cruel, intoxicating, brutal adventure that swallowed an entire civilization and spat it out as coins." In addition to interviews with the major entrants in the race for gold like explorer Mark Bristow of Randgold and Barrrick Gold's founder Peter Munk, Hart spends time discussing the also-rans. South Africa's illegal miners who live for months at a time kilometres down working mine shafts, the artisanal miners caught up in Africa's First World War in Congo and the thousands of "carrying-ore-on-the-back-people" extracting the last ounces from China, also shine in Gold. Although Gold sometimes reads more like a novel, it features extensive notes, missing from so much non-fiction, a handy index and an audio version. Despite the vast scope of the work, Hart is able to include anecdotes from gold's long history like the Brink's MAT robbery in Britain, a bullion haul that at today's prices would be worth hundreds of millions of dollars. The 1983 heist (still begging for a Hollywood treatment) is covered in the chapter discussing ETFs, hedge funds and speculation and is used to poke holes into one of the central arguments of backers of bullion – that it's just like cash. The robbery and the 2010 case of the 349 tonnes of gold that suddenly appeared at the Bank for International Settlements (the central bank of central banks) are examples of Hart's skill to take shorter episodes in the life of the yellow metal to illuminate many of the mysterious aspects of the gold market. Gold's place in the world of money and monetary policy remains fiercely contested and central bankers like Ben Bernanke and Janet Yellen admit they don't understand the mechanisms of the market. Hart does not take sides in the gold as money debate, he is more interested in the motivations of those who covet the metal. He sees gold as an emotive metal that can be used to take the temperature of the human race. With gold on the brink of its first down year in more than a decade and hundreds of dollars below its peak, one of Hart's characteristic paragraphs supplies cutting insight into how we got here: "But gold is never peaceful. It's a fever spread by doubt. Doubt and suspicion are its pathogens. Besides jewelry and a few industrial uses, there are no other reasons to own it. If you're not suffering from the fever, you are betting that others will. Gold is inseparable from speculation about disaster, misfeasance, or manipulation. Even when the price is high, owners suffer from the fever, because what if the price goes down?"  |
| Chinese coal producers say their industry is strong Posted: 09 Dec 2013 03:53 PM PST Despite its very publicized attacks on coal, China may not be headed towards a coal-free future – not even close. According to the country's Xinhua news agency, the China National Coal Association (CNCA) is seeing coal output and sales stabilizing over the past 10 months, and the price rising. October sales rose by 1.9% after a 0.3% decline year-on-year since the beginning of 2013, Xinhua reports. A stabilizing economy and increased thermal power growth might help the black rock recover from low demand and overcapacity. CNCA Deputy Director Wang Zhanjun predicts that the country might actually record a 3% consumption increase for the year. Last month, CNCA forecasted consumption reaching 4.8 billion metric tonnes by 2020, a 1.3 billion-tonne increase on 2012. Currently, China accounts for more than 50% of world coal consumption. According to a report by OilPrice.com, the country uses 300% more coal today than it did in 2000. Although China's air pollution measures include shutting down 2,000 small coal mines over the next two years, it isn't overly-ambitious on reducing its dependence on coal. According to Radio Free Asia (RFA), the country's plans on getting 65% of its energy from coal by 2017, a 3.4% decrease from 2011. And while the government is cracking down on smaller operations, it's also showing support for the larger ones. In November the government said it would pursue policies to provide relief to struggling coal producers by halting the approval of new small mines and phasing out those that produce less than 90,000 tonnes per year. Meanwhile, the CNCA sees coal consumption growing by 4% per year, RFA writes. But Philip Andrews-Speed, a China energy expert at the National University of Singapore's Energy Studies Institute, told RFA that he's sceptical of CNCA's numbers. "First, we should note that this projection comes from the coal producers, who obviously want coal production to keep rising," said Andrews Speed. |
| Kitco to file claim for $122 million in damages against Revenue-Quebec Posted: 09 Dec 2013 02:26 PM PST Revenue-Quebec has filed 240 charges against Kitco Metals and its founder Bart Kitner, accusing the Canadian precious metals purchaser of tax fraud. In response, Kitco says it will file a claim for $122 million in damages. Eleven other gold trading firms have also been charged. The Province is calling it "one of the biggest tax fraud investigations in provincial history." The tax agency is demanding $750 million in fines and prison sentences for several directors, including Kitco's Kitner, Revenue-Quebec announced on Monday (in French only). In total, the agency has filed 1,920 charges as part of an investigation that's lasted several years. Kitco is accused of making false statements in tax returns and attempting to obtain rebates to which it is not entitled between March 2008 and August 2010. "The evidence is significant," Revenu-Québec spokesman Stéphane Dion told The Province, also noting that the total amount allegedly derailed by all companies in total is $350 million. Kitco could face $454.6 million in fines. Kitco responds Kitco has also issued a statement, saying that it categorically rejects of all Revenue-Quebec's allegations. "Among Kitco's lines of business is the purchase of scrap precious metals. Kitco pays the companies' sales taxes on these purchases and receives tax credits for the corresponding amounts. It is then the companies' responsibility to remit these taxes to the ARQ. Alleging that some of these companies have not paid back the taxes owed to it, the ARQ is unjustly holding Kitco responsible for these unremitted taxes." "In all respects, Kitco continues to vigorously contest all aspects of the ARQ's actions," the company wrote. Kitner says the Agency's "continuous pursuit in this case" has caused "substantial harm to Kitco's ongoing operations and development." The firm says that the charges have left it with "no other choice" than to file for damages with the Quebec Superior Court totalling $122 million. This is not the first time Kitco addresses Revenue-Quebec's claims. When the investigation, dubbed Projet Carat, was first revealed in 2011, Kitco issued a statement denying all allegations, saying it had respected all laws since its founding in 1977. |
| Goldcorp faces lawsuit threat from Mexico and a $3.2 million fine in Argentina Posted: 09 Dec 2013 11:28 AM PST  Goldcorp's Peñasquito mine, Mexico. Canadian gold giant Goldcorp (TSX:G), (NYSE:GG) has more than enough reasons to suffer from "Monday Blues," as it began the week with a group challenging its use of lands around the Peñasquito mine in Mexico and a US$3.2 million fine for transgressions to health and safety standards at its Argentinian Cerro Negro mine. The Vancouver-based gold miner and Mexican landowners group, the Cerro Gordo Ejido, locked horns early in the year, when an agrarian court nullified Goldcorp's lease of the lands and ruled they should be returned to the locals. The world's biggest gold miner by market value managed to win in June a temporary suspension of such ruling and has been trying to reach a settlement with the group ever since. However, Reuters reports Goldcorp received Monday a notice from a Canadian law firm said to represent the Cerro Gordo Ejido group, which threatened with litigation in Canada for the properties in question. Meanwhile, authorities from the Argentine province of Santa Cruz, where the company is developing its Cerro Negro mine, said the miner would have to pay about $3.2 million for breaching health and safety standards. Opi Santa Cruz (in Spanish) reports that, among the irregularities detected, the company failed to provide enough drinking water to its workers, as well as to keep eating facilities clean. Photo courtesy of Golcorp. |
| Gold, copper and silver to face more troubles in 2014— PwC Posted: 09 Dec 2013 09:34 AM PST Amidst write downs, commodity price drops and lower revenues, gold, silver and copper were the hardest hit metals this year and will continue to struggle in 2014, reveals the latest report published Monday by PwC. In its Gold, silver and copper report 2014, the research firm says that while bullion prices have been the "big mining story" of the year, the metal wasn't the worst performing. The title, they say, goes to silver, which prices plummeting 40% in 2013. Gold prices, which surpassed $1,900 per ounce in 2011, fell to around $1,200 this summer and they are currently hovering not far above that. Dr. Copper, meanwhile, gave clear signs of an ailing industry, falling from $3.70 per pound at the start of the year to above $3 currently. This, says PwC, made it the metal that "outperformed" this year. The bad news is that PwC predicts the challenges affecting these metals are not over yet. Gold producers are preparing for another challenging year. Reflecting lower levels of confidence, 47% of gold producers expect the price to increase in the next 12 months, compared to 88% a year ago, the study shows. Silver miners are surprisingly optimistic for 2014, with only 9% anticipating the price of silver to fall further next year. PwC found that 62% of the respondents thinks that copper would be stable next year, with prices remaining pretty much the same. Keeping costs in line and finding finance After years of spending on mergers and acquisitions and expanding operations with money generated from high metal prices, this year most companies have been cutting back. "Encouraging investors to return to the mining space will involve strict cost management strategies and responsible investment in production growth," ," says John Gravelle, PwC's Global and Canadian mining leader Managing costs and finding financing are among the top priorities for miners, according to the report:
There is light at the end of the tunnel, says PwC, as the industry has faith that fundamentals will recover. "Gold, silver and copper may not reach record levels in the near future, but expect prices to increase alongside the stabilizing global economy," Gravelle says. China's economic growth is expected to remain strong as it executes its reform agenda and the US gradual recovery should also help increase long-term demand for commodities, concludes the report. Image by The Everett Collection |
| Freeport may have to cut Grasberg output by 40% Posted: 09 Dec 2013 07:27 AM PST  Grasberg is the world's largest gold and second-largest copper mine. Freeport-McMoRan Copper & Gold (NYSE:FCX) is reportedly trying to get permission from the Indonesian government to keep exporting copper concentrate from its flagship Grasberg mine, as it will have to slash output to 30 to 40% of the maximum if a ban is imposed. The Arizona-based company, Bloomberg reports, would need to lay off about 30,000 employees and dozens of contractors if it is not allowed to ship concentrates from the country any longer. Indonesia's proposed ban on export shipments of unprocessed metals is set to come into effect on January 12 and mining companies operating in the country are forecasting disaster if the government implements it in full. With a population of 240 million, the nation is the world's premier thermal coal exporter, a nickel, bauxite and tin powerhouse and is also rich in gold and copper. In October, FT.com quoted Garibaldi Thohir, a vice-chairman of Indonesia' chamber of commerce (Kadin) and chief executive of Adaro, the country's number two producer of thermal coal for power stations as saying: "If the government implements a full ban, the whole industry will collapse." Production at Grasberg, the world's largest gold and second-largest copper mine with a history that dates back to the 1930s, was halted for about two months in spring as the Indonesian government conducted an investigation into several accidents at the mine. The most infamous of them was a tunnel collapse that killed 28 at the copper, gold and silvers mine. Freeport's current contract to operate Grasberg in the Papua province expires in 2021. Image courtesy of Kutztown University of Pennsylvania |
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