Archive for November, 2014

US Dollar destruction of commodity prices is almost at an end

Friday, November 28th, 2014

dollar-and-gold-standard-image www.www-globalcommodities.com

The gold price drifted lower on Thursday falling below $1,200 and down nearly $10 overnight, hurt by a 6% slide in the price of oil.

The two commodities often move in tandem because cheaper crude leads to lower inflation, tarnishing gold attractiveness as a hedge against faster rates of price growth.

The fall in the price oil has given another boost to the US dollar. Commodities priced in US dollar usually have an inverse relationship to the world’s reserve currency.

The greenback’s rise to near five-year highs against a basket of currencies has pressurized not on the price of gold, but everything from copper and cotton to milk and molybdenum.

InvesTRAC passed on this price graph to MINING.com indicating that the US dollar’s stunning run since May may be close to correcting.

The technical research and investment blog notes the advance from the May low has “unfolded in five waves which ought to be followed by a three wave correction”:

The top of wave 5 seems to be tracing out a head and shoulders top and a dip through 87.50 would open the way to violate the uptrend and teat the bottom of wave 4 at 84.50. The technical picture shows InvesTRAC’s short term direction indicator has turned down from an overbought situation with the forecaster showing weakness could be expected until the last week of December. So the stage is set for declining dollar and rising to soon get underway.

investrac-dollar-index image www.www-globalcommodities.com

InvesTRAC believes the dollar chart confirms movements in the CRB Commodities index and that the decline in the broader commodities index from its June high was probably terminating after a 15.5% decline.

The InvesTRAC short term model shows that the OB/OS indicator has just begun to rise with the forecaster showing a rising ternd into early February. The daily chart below shows a 15 percent rise form the January lows which has more than been taken back by the second half slump…the index has ticked up slightly and is encountering the downtrend with a massive divergence on its RSI. My conclusion is that the worst is over and that we should now (or very soon) see the hard hit commodity prices lifting off their lows.

investrac-commodity-index image www.www-globalcommodities.com

Henry Sapiecha

Paul Wilson, CEO, World Platinum Investment Council: “We will help investors by providing better data on platinum”

Sunday, November 23rd, 2014

silver bullion bars image www.www-globalcommodities.com

Paul Wilson recently took up the role of Chief Executive Officer at the newly created World Platinum Investment Council (WPIC). The Council was launched by a group of six platinum producers in South Africa, in order to further develop the global market for platinum investment.

Readers may know that our affiliate Sprott Asset Management LP manages one of the largest above-ground stockpiles of platinum in the world, in the form of the Sprott Platinum and Palladium Trust (NYSE: SPPP). For more information, click here.

What will the World Platinum Investment Council do? Their CEO Paul Wilson was kind enough to call me up and tell me what it’s all about:

“We are launching a new organization called the World Platinum Investment Council – an entity focused on helping investors. Platinum is already a serious investment asset but we don’t think it has been fully considered by many investors as it should have been. Part of the reason has, to date, been a lack of high quality market data and a perception of opacity. The purpose of WPIC is to shine a light on the market, giving investors access to high quality information that will help them make more informed decisions while increasing their understanding of platinum’s investment potential.

The purpose of WPIC is two-fold, to provide much better market data on platinum and, in due course, help facilitate new routes to invest in the metal.

We will provide data on supply and demand, as well as above-ground inventory information, on a quarterly basis – this is a first for the metal. Significantly, we will be presenting a much better analysis of above ground stocks than has been done previously. We are working with SFA Oxford in the UK, who are finalizing the first, independent quarterly analysis, which will be available on December 3rd 2014. Crucially, WPIC is opening up this data to anyone; it’s free and you will be able to sign up to receive it by visiting our website (www.platinuminvestment.com).

Currently, 36 percent of demand comes from automobile usage in catalytic converters. 34 percent comes from jewelry. Another 20 percent is used in industrial applications. Finally, 10 percent comes from investment. Demand has been rising by around 2 percent per year over the last 5 years, principally because of increased usage in jewelry and investment.

How do we get our data? We look at the basis for consumption in each category. We go to people who are working with platinum buyers, and we try to understand how much platinum they are using, how they use it, and how they plan on using it in the future. On the supply side, we will be talking to the miners and trying to get as much information as possible about how much platinum they produce, how much metal there is, and what they’ll be putting out in the future. It’s a detailed research task but one that will be a game changer in terms of market information for investors.

The information that will come out each quarter will be an analysis of supply and demand, and the above-ground stocks of platinum. We will also provide a next year forecast starting from mid-2015. We will then be looking at the investment performance for platinum – how it has appreciated in value over the years and served as an effective store of value. Platinum has appreciated over 20 years at a similar rate to gold and silver, and more quickly than global equities and equities and real-estate in the UK. Over the last 30 years, platinum1 has appreciated more than gold2, and a lot more than silver (ed. note: taking 1984 average prices to today November 20, platinum has risen from $357 an ounce to $1213, a 240% rise1. Gold has gone from $361 to $1,190, a 230% rise2. Silver has gone from $8.14 to $16.13, a 98% increase3)

I think that platinum has been treated as a niche product by investors in the past. Our improved data and perspective will broaden its appeal and will be of use to existing and new, sophisticated and regular investors.

On the sophisticated investor side of the equation, we’re looking to attract mutual funds, insurance companies, and others of that nature to invest in platinum. I think platinum is an asset that should be considered by high net-worth individuals in North America, Europe, and Asia.

Platinum should also be of interest to retail investors. The products that investors might be interested in are broad – they could be physical bars and coins, or exchange-traded products like the Sprott Physical Platinum & Palladium Trust. In China, for instance, we will look to set up ‘accumulation funds’ so that individuals can contribute an amount per month which would go towards the purchase of physical platinum bars which they could eventually take away and store.

We will also be looking at whether or not worldwide markets have suitable exchange-traded funds set up to help investors purchase exposure to platinum and, often, help hedge against their weak domestic currencies. If in some countries, more sophisticated products are needed for family offices or institutional customers, we will look to work with existing financial institutions to try to fill those gaps.

For all these types of investors, whether retail, institutional, or family office, we think we will provide a benefit with improved information on platinum.

Our group is backed and funded by the six largest platinum miners in South Africa. The idea is that more transparent numbers on world production, usage, and available supply will benefit all investors in platinum.”

As readers may know, platinum supplies have threatened to decline for some time now. Mines are not making enough money to stay open. For Rick Rule, this is the real underlying cause of the violent protests that occurred at platinum mines in the last year. Workers need to get paid a decent salary, but platinum mines aren’t generating enough cash to give them a raise.

Nick Holland, CEO of South African gold mining firm Gold Fields Ltd., echoed the same conclusion, saying that the prospects for higher salaries for the 280,000 mine workers was dim without higher platinum and gold prices.

Because platinum mines are becoming deeper and less economic (our in-house geologist Andy Jackson has explained why), commodity experts have been calling for higher platinum prices this year. They’ve been wrong. Platinum prices have remained low. This raises questions about how much supply is really out there and whether demand can outstrip available inventory. The new Platinum Council’s upcoming report is meant to shed some light on this question. Stay tuned for what we find out.

P.S.: Sign up here to subscribe to Sprott’s Thoughts for free and hear more about this issue.

By Henry Bonner 

1 http://minerals.usgs.gov/minerals/pubs/commodity/platinum/550798.pdf

2 http://www.nma.org/pdf/gold/his_gold_prices.pdf

3 http://minerals.usgs.gov/minerals/pubs/commodity/silver/880798.pdf

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This information is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination by Sprott Global Resource Investments Ltd. that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their particular needs. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested.

Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and nowadays also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment. Because of significant volatility, large dealer spreads and very limited market liquidity, typically you will not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.

Henry Sapiecha

WORLD SUPPLY OF CHOCOLATE IS HEADING FOR A SHORTAGE & PRICE HIKE

Saturday, November 22nd, 2014

Chocolate-shopper-in-China_image www.www-globalcommodities.com

Growing market … chocolate sales in China have doubled in the past decade, and on average each person eats 100g annually – but that pales in comparison to the UK, where per capita consumption is 8kg a year. Photograph: Imaginechina/Corbis

THE FARMERS
Ivory Coast

If you’re looking for a place to start telling the story of chocolate, you could do worse than head to Abengourou, in the east of Ivory Coast, the world’s biggest cocoa producer. Farmers have been growing cocoa for generations here – but, in a week of fresh warnings of a global shortage by 2020, they say that their livelihood is far from easy.

They know the hardships; the risk of diseases, inconsistent rains and buyers forcing them to sell at rock-bottom prices. With aging trees that yield fewer pods and the arduous process of harvesting, farmers have been giving up on their plantations.

Adou Leon, 34, switched to rubber seven years ago. “I know the difficulties that my parents faced with cocoa. This really did not encourage me to start planting cocoa,” he says, adding that “all the young people are turning to rubber.” He believes cocoa could even disappear from this area one day. Another disillusioned cocoa farmer, 40-year-old Armaud Kakou, says he did not want to give up the family tradition of cocoa but, financially, he had no choice. “The people wearing the ties [the government] don’t care about the farmers,” he says. “The farmer has no say. It is miserable.”

Cocoa Production in Abengourou, Ivory Coast - 01 Dec 2011

A man transports cocoa beans on a motor cycle in Abengourou, Ivory Coast. 

The government tells a different story. It says the raft of cocoa reforms it introduced in 2012 to try to keep farmers in the industry – including a return to price fixing – has raised incomes by 30%. And in general, the industry is booming in Ivory Coast. This year’s crop was the largest in the West African nation’s history at nearly 1.8m tonnes of beans; an increase of more than 10% on 2013. It coincided with the government raising the farmer price, for the second year in a row, to 850 CFA francs (£1.02)) per kilo.

On the other side of the country to Abengourou, farmers are in a better mood. “We are very happy with the price,” says Souleymane Bamba, a cocoa farmer from Biankouma in the rich, mountainous region in the west of the country known for growing coffee, not cocoa. Bamba starting growing cocoa three years ago after seeing other farmers in the area doing the same, believing he would get more money. Despite real fears of Ebola – badly hit Liberia and Guinea are just across the border – there has been no impact on exports yet. “There are more young plantations, like mine, starting up,” says Bamba. “ I think cocoa is only going to grow every year.”

ooo

THE PROCESSORS
INDONESIA

When the cocoa bean leaves the farm, it’s still a long way from the world’s favourite treat. To get it a step closer, huge processing plants such as those found in Indonesia are essential. But even in this country – the world’s third-biggest producer – stagnating harvests and heavy demand mean that more and more of the beans that wind up in those plants are coming from other nations – including Ivory Coast.

ooo

Indonesia’s problem lay in a troubled, $350m (£223m) cloning experiment that ran in 2009. It was supposed to flood the country’s cocoa farms with 70m disease-resistant, fast-growing seedlings; the government predicted yields would reach 1m tonnes annually. Instead the harvest is in decline, beset on all sides by disease, old age and the cocoa pod borer, a tiny moth that is the bane of Asia’s cocoa growers. Eight years ago production was 600,000 tonnes a year. Now it is just 490,000.

“At the beginning we processed 100% Indonesian beans, but right now there is a local deficit,” says Thomas Jasman, supply chain director at a cocoa grinder on the outskirts of Jakarta, BT Cocoa, where 45% of beans come from Ivory Coast. Domestic demand is such that the BT Cocoa plant runs 24 hours a day. Says Jasman: “Basically, cocoa grinders in Indonesia have been increasing their capacity during the past five years, but the local bean production hasn’t been what we expected.”

Domestic chocolate consumption is growing more than 20% a year, according to the Indonesian Cocoa Industry Association, while rising demand in China, Asia’s largest chocolate market, has foreign companies rushing to break into the region. Cargill, Barry Callebaut and Olam International are all expanding grinding operations in Indonesia.

“We’ve seen a double-digit growth for powder demand annually,” says Jasman. “I think, fundamentally, with a good economy, better purchasing power, increasing middle class, you have these snacks flying off the shelves.”

THE CORPORATIONS
SWITZERLAND

They may be expanding grinding operations in Indonesia, but Barry Callebaut, the world’s largest chocolate company, keeps its central nervous system firmly based in a country that is synonymous with the stuff: Switzerland.

You have probably never heard of Barry Callebaut, but you are more than likely to have tasted the company’s products. It produces chocolate for Cadbury’s owner Mondelez, Hershey, Unilever, which owns Magnum and Ben & Jerry’s ice cream, and hundreds of other firms.

“We are the world’s biggest chocolate manufacturer, but you can’t find our products on the shelves,” Raphael Wermuth of Barry Callebaut, says. “We provide chocolate as an ingredient to customers, they then use it to make the final chocolate you buy.”

It was Barry Callebaut’s annual report that sparked the latest round of anxiety about the future of chocolate this week. It joined other major industry players in bemoaning a 25% hike in cocoa prices this year – caused partly by the Ebola crisis – and warning of a “potential chocolate shortage by 2020” of as much as 1m tonnes.

Barry Callebaut supplies chocolate to manufacturers. image www.www-globalcommodities.com

Barry Callebaut supplies chocolate to manufacturers. Photograph: Nelson Antoine/AP

The company, which operates 52 chocolate factories across the world including one in Banbury, Oxfordshire, has warned for some time that consumers are facing a chocolate crisis unless production can be increased to meet growing demand.

Not everyone agrees. Laurent Pipitone, director of economics at the International Cocoa Organisation, says the deficit is likely to be closer to 100,000 tonnes. Still, the price of cocoa beans has increased by almost two-thirds since 2012 to hit £2,000 per tonne in August. This year’s price hike was one of the sharpest since a commodity trader nicknamed “Chocfinger” bought up 7% of the world’s cocoa beans – valued at £658m – in 2010.

Whoever turns out to be right, Barry Callebaut professes to be relatively sanguine. The company says it is insulated from price swings by contracts that charge customers more or less depending on the price of the beans. It has been suggested that the likes of Mondelez and Hershey may try another money-saving tactic that could horrify chocolate lovers even more than price rises: cutting back on the cocoa content. Are Barry Callebaut’s customers trying it? Wermuth declined to say.

THE SHOPKEEPERS
CHINA

When he returned from a spell in the west eight years ago, Xiang Puren brought his new love with him. His Black Koko cafe in central Beijing – with its handmade chocolates, ginger-infused chocolate hotpot and jasmine-tinged iced chocolate – is testament to his passion.

“At that time, China didn’t quite have a chocolate culture, so I wanted to bring it here,” he says.

But Xiang found it harder than anticipated to win hearts and tastebuds. He has already opened and closed several outlets, though he plans to launch more.

US company Lay’s has a line of potato crisps dipped in chocolate.image www.ww-globalcommodities.com

“The market is growing, but it might take longer than we expected,” he says.

When observers try to explain rising cocoa prices, China’s 1.4bn consumers sometimes get the blame. Yet while chocolate sales have more than doubled in the last decade, they stood at just $2.43bn (£1.6bn) in 2013 – compared to $17.1bn (£10.9bn) in the US. Consumption per capita is around 100g annually; in the UK, it is 8kg.

In a sense, that is where the worry lies. The big chocolate companies’ battle for supremacy in China is motivated by the idea of a vast, relatively untouched market. When economic reforms began in the late 70s, “there were 1 billion people who had never tasted chocolate,” says Lawrence Allen, whose book Chocolate Fortunes examines the competition. “Chocolate is like cigarettes: you have lifetime consumers of the same brand. In China you had consumers with no taste profile; they were virgin.”

The initial challenge was physical; there was no chilled means of distribution and people shopped at markets rather than air-conditioned grocery stores. Chocolate producers had to wait for retail to catch up. The flavour was also too alien to appeal to many customers, and even mass-market products too expensive.

“You need to write off the older generation. But the people born in the 80s and 90s – that’s your consumer market. Their palate is much broader and you now have 350 to 400 million Chinese with the disposable income to buy chocolate once in a while,” says Allen.

He estimates that perhaps 200 million people in China have tasted chocolate and buy it regularly. But in the long term, he believes, this will become the world’s largest market.

man talks to visitors at a stall of the Salon du Chocolat in Shanghai.image www.www-globalcommodities.com

THE CHOCAHOLICS
UK

Despite the analysts who are quick to point to Chinese and Indian consumption to explain the chocolate shortage, there is really another factor closer to home: the remarkable and still growing western taste for chocolate with everything.

ooo

You can now find chocolate in increasingly surprising places – in gourmet savoury dishes, vodka and gin and strange new products, such as the chocolate-covered potato crisps launched in the US last year. But perhaps the best example of how chocolate is increasingly infusing a whole category of foods is breakfast cereals.

“When I was a kid there were two chocolate cereals and your mother wouldn’t give them to you unless you did your homework,” says Marcia Mogelonsky, a food and drink analyst for Mintel, based in Chicago. Last year, she says, “40% of cereal launches had chocolate in them”.

Sure enough, on the shelf of a supermarket in Hastings, there are at least 23 varieties of cereal containing chocolate. Within minutes, one woman puts boxes of the supermarket’s own brand chocolate “pillows” and chocolate-flavoured Weetabix in her trolley. “My children like it,” says Linda, a stay-at-home mother of two. “It’s a treat – it’s not something they have week in week out, but once a month they get to choose.”

But these cereals are not just marketed to children. “Now grownups are eating this stuff,” says Mogelonsky. This year, Nestlé launched a cereal based on their Toffee Crisp bar, aimed at the over-35s market. “We have an opportunity to delight adult chocolate-cereal lovers with a more grownup taste profile,” marketing manager Michelle Bull told the Grocer in January. In the cereal aisle of this supermarket, you can find pricey cornflake clusters with “smooth chocolate curls”, and the flavouring makes it into adult “healthy” products, such as bran flakes and granola.

Another shopper, Wendy, says that she gets through around two boxes of chocolate cereal a week, devoured by the international students she hosts in her home. “They love chocolate cereal, and I like to start them off happy.

“Unfortunately my kids have got addicted to it. I try to monitor it though.” I had stopped her in the neighbouring aisle, where she was looking at the chocolate advent calendars, thought to have been first mass-produced in the 1950s. She gave me a look of mock shame: “I don’t think I’m going to be buying one now.”

Henry Sapiecha

U.S. Senate reveals major banks had‘unfair advantage’ in global commodities business

Friday, November 21st, 2014

u-s-senate-reveals-top-banks-unfair-advantage-in-physical-commodities-business image wall st sign www.www-globalcommodities.com

A two-year probe into U.S. Senate-led into Wall Street’s top three banks’ involvement in physical commodities has concluded they exposed themselves to catastrophic financial risks, environmental disasters and potential market manipulation by investing in oil, coal and power plants.

A report published by the Senate’s Permanent Subcommittee on Investigations say the heavy involvement of Goldman Sachs (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and Morgan Stanley (NYSE:MS) in the business of storing and moving commodities like oil, aluminum, uranium and copper also gives them unfair trading advantages in financial markets.

The 400-page report, which was made public on Wednesday evening, adds the lenders assumed a role of such significance in the commodities markets that it became possible for them to affect prices paid by consumers, while also securing inside information about the markets that could be used by their own traders.

Banks defend their businesses 

Bankers from Goldman Sachs and JPMorgan, along with other industry executives and regulators, will testify about the allegations at hearings today and Friday. According to the Wall Street Journal, they will address several questions, including “conditions at a Goldman-owned coal mine in Colombia and the airline fuel arrangements that Morgan Stanley struck with United Airlines.”

The lenders assumed a role of such significance in the commodities markets that it became possible for them to affect prices paid by consumers, while also securing inside information about the markets that could be used by their own traders

The subcommittee also studied over 30 power plants owned by JPMorgan, as well as its copper activities and trades.

Last year, JPMorgan had to pay a $410m penalty to settle with the Federal Energy Regulatory Commission, which accused the bank of manipulating energy markets at the expense of consumers.

You can read the full report here.  Charts and exhibits can be found here.

Henry Sapiecha

Blood diamonds still at the heart of the Central African mining sector

Friday, November 21st, 2014

blood-diamonds-still-at-central-africa-mining-sectors-heart image www.www-globalcommodities.com

Diamonds and gold sales continue to finance conflict in chaos-ridden Central African Republic, which has illegally exported an estimated 140,000 carats worth $24 million this year despite international efforts to clamp down on illicit trade.

a United Nations panel is advising peace troops to step-up monitoring of the country’s main mining sites.

While tensions appeared to have eased in the nation’s capital Bangui after several days of a standoff between former rebels and international peacekeepers, a United Nations panel is advising peace troops to step-up monitoring of the country’s main mining sites.

In report unveiled earlier this month, U.N. experts warned an export ban on raw gems from the African nation imposed last year is not working as expected, Reuters reported.

The chairperson of the Kimberley Process — a group of 81 nations, including all the major diamond producers, formed to prevent “blood diamonds” from funding conflict — has even put in a written request to the U.N. Security Council to alert neighbouring countries to the presence of renewed diamond contraband, Mining Weekly reports:

Cases of contraband have already been documented and diamond trafficking networks involved in the gradual resumption of artisanal mining activities identified.

A May report from the Enough Project showed the country’s diamonds were being sold mainly to traders in the Darfur region of Sudan, as well as Chad, Cameroon and the Democratic Republic of Congo.

Previous studies also revealed that Central African blood diamonds may have also hit the United Arab Emirates, Belgium, India, South Africa, Saudi Arabia and Qatar markets.

Image: Screenshot from ViceNew documentary, via YouTube.

Henry Sapiecha

5,000 workers to be hired for a new huge $15bn coal mine in Australia

Monday, November 10th, 2014

coal stack image www.www-globalcommodities.com

 

 

 

 

 

The developer of Australia’s US$15bn Carmichael coal mine, one of the world’s largest fossil fuel projects, said it will start hiring the over 5,000 people it needs for the construction phase beginning next year.

With the announcement, Adani Group —an Indian conglomerate with interests spanning mining, energy and logistics— has doubled the estimates made when the coal mine and rail project got its final approval.

carmichael-coal-mine-map image www.www-globalcommodities.com

 

 

 

 

Map from the Queensland’s Department of State Development, Infrastructure and Planning web site.

Designed to eventually produce 60 million tonnes of thermal coal a year, the project consists of six open-cut pits and up to five underground mines, to supply coal-hungry Indian power plants with enough of the fossil fuel to generate electricity for up to 100 million people.

According to Ferret Group Media, Adani is accepting resume submissions through its website. It will be hiring for coal exploration, coal mining, rail construction and operations, infrastructure construction, and port expansion and operations.

The port Adani will use, Abbot Point, has been the centre of heated debate, as conservationists opposed a proposed expansion on the ground the project would dredge up 3 million cubic metres of sand and then dump it near the Great Barrier Reef.

Opposition to the port expansion and the proposed Galilee basin coal mines has grown in recent weeks. First UNESCO warned it might place the Great Barrier Reef on its endangered list as a result of the port expansion. And last week US ice cream company Ben & Jerry’s launched a Save the Reef campaign that prompted authorities to call a boycott from Australian consumers, as they claim it is “propaganda” that has damaged the reputation of the reef, jeopardizing jobs and tourism dollars.

Henry Sapiecha

MINING SUPPLIERS CREATE MORE JOBS THAN MINING ITSELF STUDY REVEALS

Monday, November 10th, 2014

MINERS IN DARK WITH HELMET LIGHTS ON image www.www-globalcommodities.com

Mining suppliers in the Canadian province of Ontario provided 2.5 times as many direct jobs in 2011 as did mining itself, a fresh report reveals.

Examining what’s been called a “hidden sector” not tracked by Statistics Canada, the study — conducted by PricewaterhouseCoopers LLP for the Canadian Association of Mining Equipment and Services for Export — shows the sector created 40,960 direct and 27,471 indirect jobs in 2011, paying $4.6 billion in salaries.

Suppliers of equipment and services contributed $3.9 billion to provincial GDP for that year, or $6.2 billion when indirect impacts were counted.

A similar study released in 2012 found the mining sector accounted for 16,000 direct jobs, compared with 40,960 direct jobs provided by suppliers.

The PwC report follows other recent studies extolling mining’s economic virtues. Among them was a report listing some of the benefits to Greater Vancouver from British Columbia’s resources sector and an OMA study examining how a single new gold mine could benefit Ontario.

Henry Sapiecha

Zimbabwe rethinks & mulls over ending tax on diamonds

Monday, November 10th, 2014

zimbabwe-mulls-ending-tax-on-diamonds black miners image www.www-globalcommodities.comThe government of Zimbabwe plans to eliminate a 15% value added tax levied on diamond miners as part of measures to stimulate production and attract investment in the sector, Mines Minister Walter Chidakwa announced last week.authorities are also planning to remove tax royalties on locally cut and polished diamonds

Addressing delegates to the 2nd Zimbabwe Diamond Conference on Thursday, Chidakwa said authorities are also planning to remove tax royalties on locally cut and polished diamonds, The Source reported.

President Robert Mugabe said the country’s mining industry needs more than just cutting taxes, as an energy crisis and the lack of new technologies are hindering development in the sector.

Miners operating at the country’s Marange and Chiadzwa fields have been warning for months that it has become economically unviable for them to dig any deeper for alluvial diamonds —those easily extractable through open cast mining.

Expert Paul Zimnisky attributes last year’s Marange diamond production at nearly 17 million carats, or 13% of global supply by volume. But he says this year the total will drop to around 8 to 12 million carats or less. 

Local boost

Hit by smuggling and under-invoicing, which has caused a massive leakage in diamond revenues, Zimbabwe has been looking for ways to ensure that the bulk of its diamonds are processed locally. This, as opposed to being exported in raw form, as it happens now.

“In spite of mining being an important contributor to the country’s economy, the mining sector has been limited to extraction and exportation of minerals in their raw or semi-processed form, without due care taken to beneficiation and value addition. The finite resources should be made to remain competitive, in both regional and global markets,” Mugabe was quoted as saying.

He also revealed his government was considering setting aside up to two million carat of diamonds or 10% of its annual production for local industry to encourage local value addition and beneficiation.

Henry Sapiecha

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