Dominion Diamond to go ahead with Ekati mine expansion in Canada

July 7th, 2016

dominion-diamond-to-go-ahead-with-ekati-mine-expansion image www.www-globalcommodities.com

Canada’s Dominion Diamond (TSX, NYSE:DDC) has decided to proceed with a key expansion for its Northwest Territories-based Ekati mine, which would help keep the iconic operation in production until 2033.

The decision of moving forward with the development of the Jay pipe, located near Ekati’s existing Misery pit, was based on positive feasibility study results, the company said in a statement.

Dominion also expects to begin construction of a fourth pipe at its 40%-owned Diavik mine, Canada’s largest diamond mine and one of the oldest.The project, which includes building a dyke, draining part of a lake and digging an open pit, will be funded from existing cash and internal cash flow, Dominion said. Without the expansion, Ekati would have run out of its existing reserves by 2020.

In a separate statement, the company said it would focus on developing its core assets in the Lac de Gras region of the Northwest Territories and on buying back shares. As part of the plan, Dominion also expects to begin construction of a fourth pipe at its Diavik mine, Canada’s largest diamond mine and one of the oldest, which it co-owns with Rio Tinto (ASX, LON:RIO).

Additionally, the firm announced that chief financial officer Ron Cameron would step down on July 15 and vice president Group Controller Cara Allaway would take over as interim CFO.

Dominion is also selling its office building in downtown Toronto. That transaction, said the diamond miner, should be completed in the third quarter of fiscal year 2017.

The company is still assessing damage after a fire halted processing operations at Ekati on June. It is believed that more than 300 employees and contract workers are at risk of being laid off as a result.

www.worldwidediamonds.info

www.gem-creations.com

www.www-gems.com

DDD

 

 

 

 

Henry Sapiecha

Luxembourg invests big time $$$ in space mining

June 24th, 2016

luxembourg-invests-heavily-in-space-mining image www.www-globalcommodities.com

Luxembourg is stepping up efforts to become Europe’s centre for space mining by agreeing to buy a major stake in US-based asteroid miner Planetary Resources.

While it was not immediately clear what the government’s initial investment in Planetary Resources Luxembourg would be, the parties said in a statement that the agreement seeks to speed up the development of technologies and lines of business toward the exploration and utilization of resources from asteroids.

The government has also opened a $225 million (€200 million) line of credit for entrepreneurial space companies to set up their European headquarters in Luxembourg.The tiny European nation is one of the euro zone’s wealthiest countries and already has a long-standing space industry, playing a significant role in the development of satellite communications.

While its drive to become a significant actor in the asteroid mining industry is rather new, the country has already taken major steps towards achieving that goal.

On Friday, it announced the opening of a €200 million (US$225 million) line of credit for entrepreneurial space companies to set up their European headquarters within its borders.

And last month, the government reached an agreement with another US-based company, Deep Space Industries, which will be conducting missions to prospect for water and minerals in outer space. Both parties are currently developing Prospector-X, a small and experimental spacecraft that test technologies for prospecting and mining near Earth asteroids after 2020.

Legal frame

Luxembourg’s administration is also working on a legal frame for exploiting space resources so that private companies can be entitled to the resources they mine from asteroids, but not to own the celestial bodies themselves.

Luxembourg invests heavily in space mining

Digital rendition of a robotic asteroid mining equipment. (Image courtesy of Deep Space Industries)

The only international legal body available dates back to 1967. The Outer Space Treaty, signed by the US, Russia and a number of other countries, says that nations can’t occupy nor own territory in space.

“Outer space shall be free for exploration and use by all States,” the treaty says, adding that “outer space is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.”

And while a discussion on the matter is bound to happen, countries such as the US, have decided to make their own rules. In November, President Barack Obama signed a law granting American citizens rights to own resources mined in space.

The ground-breaking rule was touted as a major boost to asteroid mining because it encourages the commercial exploration and utilization of resources from asteroids obtained by US firms.

Such law does include a very important clause, as it clarifies that US citizens are not granted “sovereignty or sovereign or exclusive rights or jurisdiction over, or the ownership of, any celestial body.”

Geologists believe asteroids are packed with iron ore, nickel and precious metals at much higher concentrations than those found on Earth, making up a market valued in the trillions of dollars.

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Henry Sapiecha

The world’s 40 biggest mining companies listed here in an infographic

June 15th, 2016

Coal-mining-machinery image www.www-globalcommodities.com

PwC’s latest report into the performance of the world’s 40 largest mining companies shows just what a watershed year 2015 was.

The management consultants’ Mine 2015 report shows the top 40 companies suffering their first collective net loss in history ($27 billion), a decline in collective market capitalization of 37% (to below half a trillion dollars from a peak of $1.6 trillion in 2010), the lowest return on capital ever, asset impairments totalling $53 billion (for a total of nearly $200 billion since 2010), record high leverage of 46% and operating expenditure cuts of $83 billion.

The entries, re-entries and movements up and down the ranking also provides insight into the changing landscape of global mining.

The authors point out that the market capitalization threshold for attaining Top 40 status remained consistent at $4.5 billion despite “the huge decreases in value of the top mining companies, and demonstrates that the new entrants are catching up.”

A lithium miner joins top ranks of listed mining firms for the first time as the price of the battery ingredient skyrockets

China is featuring more heavily. All four companies admitted to the list for the first time was from China, pushing out Canada’s First Quantum and Teck Resources. China now provides 12 of the top 40 listed mining firms versus six from Canada despite one Chinese firm dropping out.

Gold’s changing fortunes saw AngloGold Ashanti re-emerge in the ranking for the first time since 2013 although other top gold producers Goldfields and Kinross haven’t made it back onto the list. When grouped by primary commodity mined gold producers still lost a combined $12 billion in market value.

The only sector to show an increase in market value was rare earths with the world’s top producer of the 17 elements jumping 23 places in the ranking. Another technology mineral is showing up for the first time.

Even though it’s early days for the lithium boom, the Top 40 has already welcomed its first miner of the battery raw material. Sichuan Tianqi Lithium enters as the world’s 31st most valuable miner helped by a doubling of the price of lithium carbonate just over the final months of 2015 and predictions of explosive growth in demand spurred by the electric vehicle and mass grid storage market.

SPP

Henry Sapiecha

It must be pointed out that this list is for 2015 & may not represent an accurate current status in 2016

top-40-2015-mining-companies-infographic image www.www-globalcommodities.com

 

 

Afghanistan mineral wealth being looted by Taliban & others, experts say

May 4th, 2016

lapis lazuli images www.www-globalcommodities (2)

KABUL, Afghanistan — The brilliant blue stone lapis lazuli, prized for millennia, is almost uniquely found in Afghanistan, a key part of the extensive mineral wealth that is seen as the best hope for funding development of one of the world’s poorest nations.

Instead, lapis has become a source of income for the Taliban, smugglers and local warlords, emblematic of the central government’s struggle to gain control over the resources and rein in corruption.

Afghanistan is missing out in millions of dollars in revenues from lapis as illegal miners extract thousands of tons from the mines in northeastern Badakhshan province, according to experts and officials. A local police commander named Abdul Malik has control over a major mine, charges illegal miners to use it and pays the Taliban to allow him to operate, according to an internal memo to Afghan President Ashraf Ghani from his top adviser on mines, seen by The Associated Press, and a top official.

Smugglers bribe local officials to turn a blind eye as they transport the gems to Kabul and to neighboring Pakistan for sale, they said.

Stephen Carter, Afghanistan campaign leader at international advocacy group Global Witness, said the country’s mining sector “funds armed groups and is a major source of instability and corruption, not just in Badakhshan but across the whole country.”

Describing lapis lazuli as a microcosm of the mining sector, he said that without fundamental safeguards, especially to increase transparency and security in mining areas, “there is a real risk Afghanistan could face a chronic, resource-driven conflict.”

lapis lazuli images www.www-globalcommodities (3)

Javid Mujadidi, a Badakhshan lawmaker, estimates that 70 percent of the proceeds from the lapis lazuli “goes to the Taliban, who have a presence at the mine,” located in the province’s Kuran-wa-Munjan district in the mountains near the border with Pakistan. The extortion has helped fund the insurgency’s spread from the southern heartland to the previously peaceful northern provinces.

Afghanistan has reserves of coal, copper, iron ore, zinc, mercury, rare earths, gems such as rubies and emeralds, gold and silver, and much more. True values are difficult to assess, but Afghanistan’s mineral and petrochemical deposits have been valued at up to $3 trillion.

But little of that wealth is mined legally. Homegrown expertise in exploration, extraction and processing is poor. Inadequate infrastructure and lack of security keep international miners out, and recent ventures with foreign companies in iron ore, copper and gold have collapsed.

Afghanistan has a virtual monopoly on lapis, which has been mined in Badakhshan for thousands of years. Egypt’s pharaohs treasured lapis jewelry. Renaissance artists ground it to powder for ultramarine pigment. Today it is used for jewelry and ornaments.

commercial business loans info flyer www.money-au (19)

 

 

 

 

 

 

Legal mining peaked in 2014 at near 5,500 tons. Rough lapis lazuli ranges in value from $4 to $2,000 a kilogram (2.2 pounds), depending on quality. Illegal mining was rampant and, in an effort to stop it, Afghanistan’s National Security Council banned all lapis lazuli mining in early 2015.

 lapis lazuli images www.www-globalcommodities (1)

But the mines themselves were not secured to prevent illegal exploitation, so Malik was able to take control with apparent impunity, said the official. Malik pays the Taliban in the area about $440,000 a month in protection money, the official said. He spoke on condition of anonymity fearing reprisals from those involved in the illegal trade.

Malik could not be reached by the AP to comment on the accusations. Afghan media have also identified him as controlling lapis mining, and he has not responded.

Malik charges enormous rents to illegal miners allowing them to mine for 24 hours at a time, according to a Dec. 19 memo to Ghani from his senior adviser on construction, mines, water and energy, Mohammad Yousuf Pashtoon. The mines are being damaged by the high explosives that the miners use in an effort to get out as much as possible in their short permitted time, he wrote in the letter, a copy of which was obtained by the AP.

Pashtoon also said Malik’s son works for the Badakhshan branch of the national intelligence agency and warns his father of any intended operations against illegal mining or smuggling.

He also wrote that 5,000 tons of lapis mined illegally from Kuran-wa-Munjan was being stored in four districts.— Keran wa Menjan, Juram, Barak and Angam, where the Taliban have long had a presence — by the miners, transporters and traders who plan to profit from it. He wrote that 1,000 tons had already been moved to China. Lapis with an estimated market value over $1 billion had been under-declared and tax paid on stone valued at only $230,000.

The contraband lapis is transported to Kabul, hidden in trucks carrying fruit, coal or other commodities. In the capital, it is sorted for global markets and from there most is taken to the Pakistani city of Peshawar, though some is flown to Dubai, United Arab Emirates, or the Indian city of Jaipur. Throughout the process, the central government receives nothing in taxes, and instead all along the route, local authorities and powerbrokers benefit, extracting payments from smugglers.

In Peshawar, most of the lapis is bought by Chinese gem traders. With their purchases of precious stones, “the Chinese are funding the war in this country,” said the official.

The NSC, the president’s office and the Interior Ministry, which is responsible for security forces, refused requests for comment.

For traders who wish to work within the law, the ban has been financially debilitating. Jurm businessman Qari Abdulwadood has had 2.5 tons of legally extracted lapis in storage for two years at a cost of $8,000 a month. He said has already paid the pre-ban 15 percent royalty and would pay the 9 percent export tax.

“Now they want us to take it to Kabul, to a central storage facility, but there is no security on the way or once we get there. How can we find the foreign buyers who will be able to cover all our costs?” said another local businessman, Ahmad Jan, who has 120 tons of lapis stored in Badakhshan.

commercial business loans info flyer www.money-au (17)

Henry Sapiecha

NASA releases gold-covered telescope putting the Hubble to shame

April 30th, 2016

nasa-unveils-gold-covered-telescope-that-will-put-the-hubble-to-shame

NASA has finally unveiled the giant successor to the Hubble Space Telescope, the James Webb, which is equipped with a collapsible honeycomb-like mirror made of 18 gleaming, gold-covered pieces.

Scheduled to be launched in 2018, the $10 billion tennis-court-sized telescope is the result of a joint effort involving NASA, the European Space Agency and the Canadian Space Agency.

james web telescope images www.www-globalcommodities (2)

Ball Aerospace optical technician Scott Murray inspects the first gold primary mirror segment. (Image provided by NASA)

Each coffee table-sized mirror segment, weighing roughly 46 pounds (21kg), is made from beryllium and is coated with a fine film of vaporized gold to optimize the reflection of infrared light.

james web telescope images www.www-globalcommodities (1)

Rendering of the James Webb Space Telescope. (Image by Northrop Grumman | NASA )

The James Webb telescope has been described as a ‘time machine’ that could help unravel the secrets of our cosmos.

Unlike The Hubble, the new instrument will look in the infrared part of the spectrum, instead of capturing visible light. This will allow it to better see through clouds of gas and dust, where stars are being born, which should give us a view farther back to the beginning of the universe.

james web telescope images www.www-globalcommodities (3)

Standing tall and glimmering gold inside NASA’s Goddard Space Flight Center’s clean room in Greenbelt, Maryland (Image provided by NASA)

Once launched, the James Webb will be the world’s biggest and most powerful telescope, capable of peering back 200 million years after the Big Bang.

Learn more about The James Webb telescope in the video below:

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Henry Sapiecha

WORLDS MOST NORTHERNMOST MINES IN FOCUS

January 12th, 2016

bluemarble_globe_west image www.spy-drones.com

The world’s northernmost mines are all located in just three countries; on Norway’s Svalbard archipelago in the Arctic Ocean you’ll find four of them. All are underground coal mines, operating in the rugged, frigid terrain between continental Norway and the North Pole.

Further south, in Russia, you’ll find Alrosa’s diamond mines. Nizhne-Lenskoye, in the Sakha Republic, is the fifth northernmost mine in the world.

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Data provided by IntelligenceMine.com

#1 Gruve 7
Location: Norway
Owner: Store Norske Spitsbergen Kulkompani
Type: Underground coal mine


#2 Barentsburg
Location: Norway
Owner: Arctic Ugol
Type: Underground coal mine


#3 Lunckefjell
Location: Norway
Owner: Store Norske Spitsbergen Kulkompani
Type: Underground coal mine


#4 Svea Nord
Location: Norway
Owner: Store Norske Spitsbergen Kulkompani
Type: Underground coal mine


#5 Nizhne-Lenskoye
Location: Russia
Owner: Alrosa
Type: Placer diamond mine


#6 Mary River
Location: Canada
Owner: Baffinland Iron Mines
Type: Open-pit iron ore mine


#7 Almazy Anabara
Location: Russia
Owner: Alrosa
Type: Placer diamond mine


#8 Sydvaranger
Location: Norway
Owner: Sydvaranger Gruve AS
Type: Open-pit iron ore mine


#9 Taimyrsky
Location: Russia
Owner: Polar Division (Mine Complex)
Type: Open-pit/underground cobalt, copper, gold, iridium, nickel, palladium, platinum, rhodium, and ruthenium mine


#10 Oktyabrsky
Location: Russia
Owner: Polar Division (Mine Complex)
Type: Underground cobalt, copper, gold, nickel, palladium, and platinum

OOO

Henry Sapiecha

China’s advance into Central Asia ruffles Russian feathers .Commerce & expansion

January 3rd, 2016

Kazakh traders wait for their goods purchased from China to be cleared on the Kazakh side of the Horgos free-trade zone near Horgos, Kazakhstan image www.ww-globalcommodities.com

Kazakh traders wait for their goods purchased from China to be cleared on the Kazakh side of the Horgos free-trade zone near Horgos, Kazakhstan. Photo: Washington Post

Shymkent, Kazakhstan:  Slowly but surely, a four-lane highway is beginning to take shape on the sparsely populated Central Asian steppe. Soviet-era cars, trucks and aging long-distance buses weave past modern yellow bulldozers, cranes and towering construction drills, labouring under Chinese supervision to build a road that could one day stretch from eastern Asia to Western Europe.

This small stretch of blacktop, running past potato fields, bare dun-colored rolling hills and fields of grazing cattle, is a symbol of China’s march westward, an advance into Central Asia that is steadily wresting the region from Russia’s embrace.

A Chinese surveyor climbs to take measurements at the site of a bridge project near Shymkent, Kazakhstan.image www.www-globalcommodities.com

A Chinese surveyor climbs to take measurements at the site of a bridge project near Shymkent, Kazakhstan. Photo: Washington Post

Here the oil and gas pipelines, as well as the main roads and the railway lines, always pointed north to the heart of the old Soviet Union. Today, those links are beginning to point toward China.

“This used to be Russia’s back yard”, said Raffaello Pantucci, director of International Security Studies at the Royal United Services Institute in London, “but it is increasingly coming into China’s thrall”.

It is a shift that has shaken up the Russian leadership, which is watching China’s advance across the steppe with little apprehension. Moscow and Beijing may speak the language of partnership these days, but Central Asia has emerged a source of wariness and mistrust.

Kazakhstan President Nursultan Nazarbayev with then Australian prime minister Julia Gillard image www.www-globalcommodities.com

Kazakhstan President Nursultan Nazarbayev with then Australian prime minister Julia Gillard. Photo: Andrew Meares

For China, the region offers rich natural resources, but Beijing’s grander commercial plans — to export its industrial overcapacity and find new markets for its goods — will struggle to find wings in these poor and sparsely populated lands.

In September 2013, Chinese President Xi Jinping chose Kazakhstan’s sparkling, modern new capital, Astana, to announce what has since become a cornerstone of his new, assertive foreign policy, a Silk Road Economic Belt that would revive ancient trading routes to bring new prosperity to a long-neglected but strategically important region at the heart of the Eurasian continent.

Bound together by 2000 years of exchanges dating to the Western Han Dynasty, sharing a 1800 kilometre border, the two nations, Xi said, now faced a “golden opportunity” to develop their economies and deepen their friendship.

Tenge currency notes and coins in Almaty, Kazakhstan image www.www-globalcommodities.com

Tenge currency notes and coins in Almaty, Kazakhstan. Photo: Bloomberg

At the China-Kazakhstan border, at a place known as Horgos to the Chinese and Khorgos to the Kazakhs, a massive concrete immigration and customs building is being completed to mark that friendship, rising from the windswept valley floor like a mammoth Communist-style spaceship.

A short distance away, China is building an almost entirely new city, apartment block by apartment block, alongside a 520 hectare free-trade zone, where traders sit in new multi-storey shopping malls hawking such items as iPhones and fur coats.

This is reputed to have been a seventh-century stop for Silk Road merchants. Today, the People’s Daily newspaper calls it “the pearl” on the Silk Road Economic Belt.

Traffic is seen on a section of the road, which will link China and Europe, near Shymkent, Kazakhstan image www.www-globalcommodities.com

Traffic is seen on a section of the road, which will link China and Europe, near Shymkent, Kazakhstan. Photo: Washington Post

But this pearl is distinctly lopsided: On the Kazakh side of the zone, opposite all those gleaming malls, a single small building, in the shape of a nomad’s tent or yurt, sits on an expanse of wasteland where a trickle of people stop to buy biscuits, vodka and camel’s milk.

The Silk Road slogan may be new, but many of its goals are not. Beijing has long been working to secure a share of the region’s rich natural resources to fuel China’s industrial economy; it is building a network of security cooperation in Central Asia as a bulwark against Islamic extremism that could leak into China’s restive western province of Xinjiang, and it wants to create alternative trading routes to Europe that bypass Asia’s narrow, congested shipping lanes.

Under the Silk Road plan, China also is promising to spend hundreds of millions of dollars to build new infrastructure here, and hopes to reap benefits of its own: to create new markets for Chinese goods, especially for heavy industries such as steel and cement that have suffered as the Chinese economy has slowed.

New_silk_road map image www.www-globalcommodities.com

But the scene at Horgos underlines the fact that the economies of China’s Central Asian neighbours are simply too small to provide much of a stimulus to China’s giant, slowing economy.

China’s ambitious Central Asian plans did not go down well, at least initially, in Moscow.

“When China announced its Silk Road plan in Kazakhstan, it was met with a lot of skepticism and even fear by the Russian leadership,” said Alexander Gabuyev, head of the Russia in the Asia Pacific Program at the Carnegie Moscow Centre. “The feeling was, ‘It’s a project to steal Central Asia from us, they want to exploit our economic difficulties to be really present in the region’. ”

Russia had long blocked China’s attempts to create an infrastructure development bank under the auspices of the Shanghai Cooperation Organisation, a regional body, fearing it would become a tool for Chinese economic expansion. Beijing responded by side-stepping Moscow, establishing an Asian Infrastructure Investment Bank in June with a $US100 billion ($137 billion) capital base.

China has overtaken Russia to become Central Asia’s biggest trade partner and lender. Pipelines transport increasing amounts of Kazakh oil to China and vast quantities of Turkmen gas east through Horgos. That has served to undermine Russia’s negotiating position when it has tried to sell its own gas to China.

At the same time, however, President Xi has worked overtime to calm Russian fears, reassuring his counterpart Vladimir Putin that Beijing has no plans to counter his country’s political and security dominance in Central Asia.

In 2014, Russia attempted to draw the region more closely into its embrace by establishing a Eurasian Economic Union, with Kazakhstan a founding member. But even as Moscow moved to protect its turf, the realisation was dawning that Russia lacked the financial resources to provide Central Asia the economic support it needed.

After the breakdown of relations with the West over Ukraine in 2014, and the imposition of sanctions, the dogmatic view that Russia had to be the top economic dog in Central Asia was questioned, and then finally, grudgingly abandoned.

It was impossible, Gabuyev said, so Russia’s leaders decided to divide the labour: Russia would provide security, while China would bring its financial muscle.

In May, Xi and Putin signed a treaty designed to balance the two nations’ interests in Central Asia, and integrate the Eurasian Economic Union and the Silk Road.

China’s expanding influence has provoked mixed feelings in many Asian states, has used “velvet gloves” in its dealings with Central Asia, said Nargis Kassenova, an international relations expert at KIMEP University in Almaty.

About a quarter of Kazakhstan’s citizens are ethnic Russians, while Russian media dominate the airwaves. The Chinese language, by contrast, is nowhere to be seen or heard. Even India has more cultural resonance through Bollywood films, says political scientist Dossym Satpayev in Almaty.

What Beijing can offer is infrastructure loans and investment. It has been careful to frame its plans as more than just a “road” — where Kazakhstan’s natural resources are extracted, and Chinese goods waved through on their way to Europe – but as a “belt” of economic prosperity.

Nevertheless, a survey conducted by independent analyst Elena Sadovskaya found that Kazakh attitudes toward Chinese migrant workers reflect fears that China would one day dominate the country, swamp it with immigrants and cheap goods, grab land or simply suck out its natural resources while giving little in return. “In 2030, we’ll all wake up and find ourselves speaking Chinese,” is one common saying here.

In July, scores of people were injured when a mass brawl broke out between Chinese and local workers at a copper mine near the northern Kazakh city of Aktogay.

Kazakhstan’s Foreign Minister Erlan Idrissov plays down concerns. China may outnumber the 17 million Kazakh population by 80 to one, but its progress and development is good news, he says.

“Our philosophy is simple: We should get on board that train,” he said in an interview in Astana. “We want to benefit from the growth of China and we don’t see any risks to us in that growth.”

China’s state-owned investment giant CITIC runs an oil field and an asphalt factory in Kazakhstan, and says it has established a $US110 billion fund to invest in Silk Road projects, much of the money aimed at Kazakhstan and Central Asia.

But private Chinese companies and ordinary Chinese traders say they have yet to reap the rewards, as the small Kazakh economy is shrinking under the weight of falling commodity prices and Russia’s economic decline.

Meanwhile Russia is playing interference, they say, imposing new import restrictions under the Eurasian Economic Union in an apparent attempt to keep Chinese goods from flooding the region.

In Almaty, the Yema Group has been importing Chinese bulldozers, diggers and other heavy equipment for more than a decade. Business, once booming, has collapsed in the past two years, as many Chinese vehicles fail to meet tough Russian certification standards that now apply throughout the economic union.

Shi Hairu, a 52-year-old trader from Shanghai, who sells Chinese gloves in a small shop in a market in Almaty, arrived two years ago when the economy at home started to slow. But sales have been halved this year – a sharp depreciation in the Kazakh currency, the tenge, has drastically reduced locals’ purchasing power, while customs clearance has become slower and costlier.

In the Horgos free-trade zone, Chinese traders also say business is poor. Many were lured here by tax breaks and cut price deals to rent shops, and by enthusiastic cheer-leading by state media about the opportunities on offer.

“After we came here, we realised it was all lies,” said one owner of a shop that sells women’s underwear who declined to be named for fear of trouble with the authorities.”We basically got deceived into coming here.”

The Kazakh government is building a “dry port” at Khorgos — with warehouses, an industrial park and rows of cranes to transfer containers across different railroad gauges — in what it hopes will become a major distribution and trans-shipment hub for goods bound between China and Western Europe, a “mini-Dubai” in the making. But the nearby free-trade zone still boasts just the one small supermarket, guarded by four lonely concrete camels, plastic flowers in their saddlebags. The nearest Kazakh city, Almaty, is a five-hour drive away along a bone-jarring road.

Yang Shu, director of the Institute of Central Asian Studies at Lanzhou University, calls Horgos “a mistake,” because so few people are in its vicinity. Trade between the two nations declined 40 percent in the first six months of this year, to $US5.4 billion, just a quarter of 1 percent of China’s global trade.

Nevertheless, experts agree that China’s Silk Road plan has immeasurably more clout than the American New Silk Road plan advanced by then-Secretary of State Hillary Rodham Clinton in 2011 that was meant to bind Afghanistan to Central Asia but barely got off the ground, or Russia’s own pivot to Asia, mired in economic woes and bureaucratic inertia.

For now, Pantucci, at the Royal United Services Institute, said China and Russia have established some sort of “modus vivendi” here. “I used to believe Central Asia would become a bone of contention between the two countries, but the priority in Moscow and Beijing remains the broader strategic relationship,” he said. “Wrinkles like disagreements in Central Asia will get swept underfoot.”

But Tom Miller, at a consulting firm called Gavekal Dragonomics, argues that as Beijing’s investment and financial ties with Central Asia deepen, “its political influence will inevitably strengthen”, too. Harking back to the Great Game, the 19th-century contest between the British and Russian empires influence in Central Asia, he says there is only one winner this time around.

Beijing’s strategists studiously avoid any talk of playing a new Great Game in the heart of Asia – “but they look set to win it nonetheless,” Miller said.

Washington Post

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Henry Sapiecha

Company Investors going wild for world no 1 commodities player

December 11th, 2015

Copper-Smelter-Altonorte-Glencore-333-300x250

At the end of trading in London on Thursday shares in Glencore plc (LON:GLEN) was priced at 89p, up 7.4% in colossal volumes of more than 134 million shares traded.

In New York Glencore’s (GLCNY) over the counter stock advanced by more than 10% in equally busy trade bringing the company’s market value back to within shouting distance of $20 billion.

The reason behind the surge is the Swiss mining and commodities trading giant’s announcement that it has increased its debt reduction target and cut spending plans. Again.

That these type of corporate initiatives (which are now a common feature of the industry) can inspire such a frenzy is a good indication of just how much turmoil and uncertainty there is in the mining sector.

The Baar-based company said it now aims to reduce its debt load by $13 billion from the previous target of just over $10 billion. Some $8.7 billion has been cut under the plan. By the end of next year Glencore wants the pile down to $18 billion to $19 billion.

Down 70% just this year despite today’s bump, Glencore is now worth $15 billion less than before the Xstrata takeover

Glencore CEO Ivan Glasenberg also announced its capital expenditure for 2015 will come in at $5.7 billion, $300 million below previous targets while next year’s outlays will be cut to $3.8 billion from $5 billion.

Apart from idling copper mines in central Africa, cutting coal production in Australia, reduce lead and zinc production in central Asia and inking streaming deals for its precious metals byproducts in South America, Glencore is also putting up assets for sale to cut costs and raise money.

In October, Glencore said it began the sales process for its Australian copper mine New South Wales and its Lomas Bayas copper mine in the Atacama desert in Chile. The company expects initial bids by mid-December and completion some time during the first half of 2016. Glencore has the same timeline to sell a stake in its agriculture business.

Glencore was first floated in May 2011 and two years later the company acquired coal giant Xstrata, turning it into the world’s fourth largest miner. Down 70% just this year despite today’s bump, Glencore is now worth $15 billion less than before the Xstrata takeover.

Image supplied by Glencore show Anibal Contreras clearing slag at the company’s Altonorte metallurgical facility, northern Chile.

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Henry Sapiecha

 

Why is the US reluctant to bomb ISIS oil fields?

December 5th, 2015

oil rig image www.www-globalcommodities.com

There has been some revealing new information coming out recently regarding the strategy against ISIS. One aspect many find troubling is the apparent failure of U.S. and coalition forces to sufficiently target and destroy oil infrastructure located in ISIS territory, which accounts for a significant portion of the terror group’s annual income. The argument goes, if we want to impact their operations, we should target their primary sources of income, and choke off their operational funds. So, why does ISIS oil infrastructure still stand? Is this the result of an intelligence failure? Negligence? Or, is there a more purposeful reason?

Using data from the Department of Defense, we can see the targeting of oil infrastructure has indeed been a relatively low priority. Buildings and military positions receive the bulk of coalition attention, and only 260 oil-related targets have been destroyed since operations began, out of 16,075 targets damaged or destroyed. And, we now know just how many of these oil-related targets remain. So, what reason could coalition forces have for holding off?

We now know with a high degree of certainty that ISIS receives the majority of its oil income selling unrefined crude, at the pump. There was some idea this was the case, but now it is more certain. This means the ISIS oil trade goes as far as pumping oil from the ground, and then selling it to a long line of waiting tanker trucks that are typically not affiliated with the group. And, while ISIS used to run some marginal refining operations, that appears to no longer be the case. Additionally, we now know the organization’s largest market is not from exports, but through sales to its local, monopolized market in northern Syria. The fact that most of the income is local, and not from exports is even more fascinating when you learn that not only does this oil find its way to local civilians that need fuel for power generation, but that much of the fuel finds its way to Assad’s government forces and the various rebel groups that are arrayed against ISIS itself.

We also now have a better understanding of the extent of ISIS’ diverse revenue stream outside of oil. For instance, last year, in the midst of the chaos in northern Iraq, the terror group turned to robbery, and stole well over $500 million from Iraqi banks. They also onerously tax the locals that are unfortunate enough to live under their rule. And, most surprising are the large revenues garnered from farming on very fertile Syrian and Iraqi land. These sources are far more important than the oft-reported revenues from hostage taking and the selling of sex slaves. This tells us oil is important, but not a silver bullet to disrupt operations.

So, a possible reason for not decisively interrupting oil operations could include preservation of infrastructure for rebuilding after the conflict. This certainly has precedent, since coalition forces have tried this in Iraq and Afghanistan most recently, and territorial shifts occur rapidly in this current conflict. Consider this a lesson learned from Kuwait in 1991.

Another possibility is the US does not want to cause any environmental damage in the surrounding region, having learned another hard lesson from the First Gulf War. This is possible, but highly unlikely. In the face of open war and killing enemies, it is extremely difficult to imagine any government placing environmental concerns over decisive strikes against an enemy. This approach does not have precedent.

Another scenario, which may be the be most plausible, is a play for local fighters to turn on ISIS, prevent further humanitarian issues in the region, and to maintain supplies to rebel groups fighting both ISIS and Assad. A loss of fuel in this region would be extremely detrimental to the local population, which relies overwhelmingly on generators for power, fueled by ISIS oil. The same goes for all the groups fighting ISIS – they all receive fuel from their enemies’ oil pumps. Without fuel, this could hamper the war effort on the ground, and even draw the local population into further compliance with ISIS. Since oil provides the lifeline for many civilians under ISIS rule, this must be taken into account for any long-term strategy in the region.

Some might mock the fact that the U.S. Air Force, before a recent strike, dropped pamphlets on the oil transport vehicles giving the occupants 45 minutes to vacate their tankers before air attacks would commence. This is simply a recognition of how crucial a local population is to combatting insurgencies and terrorist groups. We know the tanker drivers are most likely not affiliated with ISIS in any way, and might even despise the terror organization. They might even be retrieving fuel to be delivered to the very forces that are fighting against ISIS.

It’s incredibly important to keep in mind the limits of military power when waging counter-terror and counter-insurgency operations, a fact not lost on top military officials in Washington. Our understanding as to how to effectively combat terror groups has grown immensely in recent years, and key aspects of this are to allow for the creation of divisions in the territory and the terror organization itself and to ultimately draw in the local population to your side. The former involves containing the group and allowing those divisions to bubble to the surface over time.

This is a key point by terrorism expert Daniel Byman, where he makes the case for “containment” and “de-legitimation” in a scholarly work from 2007. In a sense, this was U.S. counterterrorism strategy globally before 2001. The other component is key, and was effectively used in Iraq in 2006-2007, when the Sunni Awakening went into effect after local tribal groups cut deals with U.S. forces, and turned on al Qaeda. This was a vital juncture in the campaign in Iraq ushering in relative calm in a turbulent part of the world.

It’s important to note that the available information provides a conflicting picture and we can’t be entirely clear on motives at this point. However, the evidence does plausibly point toward forcing realignment of local tribal groups against ISIS, and the maintenance of crucial supplies to resistance groups throughout the region, both corroborated with past actions by U.S. and coalition forces, and counterterrorism strategy. It also remains to be seen if the United States is forced to abandon this strategy given recent attacks and Russian involvement in the region. It may now simply be untenable, for any reason, to forgo attacks on oil infrastructure in the region.

Article Source: http://oilprice.com/Geopolitics/Middle-East/Why-Is-The-US-Reluctant-To-Bomb-ISIS-Oil-Fields.html

By Ryan Opsal for Oilprice.com

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Henry Sapiecha

 

 

China’s steel giants lost $11 billion in first 10 months of 2015

December 5th, 2015

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Chinese steelmakers, determined to keep their world’s leadership in the sector, have been neglecting profits to the point that they churned out a combined $11 billion (Rmb72bn) from January to October this year, or more than double the profits reaped in 2014.

As domestic demand began waning, the country’s exports of the metal went the opposite way — they increased 25% to 92 million metric tons in the same period. But, as Financial Times reports, the boost in shipments was not enough to offset the effects of a declining local market. This, as Beijing has only cut 50m tonnes of steel manufacturing capacity this year, or a mere 4% of its total 1.14 bn tonnes of capacity, the paper said quoting data from HSBC:

The bank calculates China would need to cut an additional 120m to 160m tonnes of capacity next year for the industry-wide utilization rate to reach a “relatively healthy” level of 80 per cent.

“The problem with China is that they want to sell at any price, not withstanding the losses that they are incurring

“The problem with China is that they want to sell at any price, not withstanding the losses that they are incurring,” Seshagiri Rao, chief financial officer at JSW Steel, India’s third-largest steelmaker, told Bloomberg. That’s an “unfair trade” strategy, Rao said.

The slump in steel prices is, as expected, adding more pain to the already troubled iron ore market. The steel-making ingredient fell to a 10-year-low of $39.40 a tonne, the lowest ever recorded by price assessor The Steel Index (TSI), which began compiling data in 2008. Meanwhile, the most-active iron ore futures in Singapore also sank below $40 a tonne this week for the first time ever.

The decline in Chinese steel consumption is accelerating with use falling almost 6% to 590.47 million tonnes in the January to October period, industry group China Iron and Steel Association said in November. That’s tracking way below estimates by the World Steel Organization, which forecasts steel demand in China will shrink by 3.5% before the end of the year.

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Henry Sapiecha

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