Archive for the ‘PROJECTS’ Category

Dominion Diamond to go ahead with Ekati mine expansion in Canada

Thursday, 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

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

Sunday, 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

UGL wins massive Santos GLNG services contract

Tuesday, April 7th, 2015

UGL-wins-massive-Santos-GLNG-services-contract-image www.www-globalcommodities.com

UGL has won a $120 million contract to provide services at Santos’ Curtis Island LNG facility.

The contract will run over three years and includes an option to extend work at the site for an additional four years.

Under the agreement UGL will perform maintenance, shutdown, engineering, and project services for the LNG facility.

It will mobilise to site in the second quarter of the year.

UGL welcomed the win, with CEO Ross Taylor stating: “This contract, along with the recent announcement of the APLNG maintenance contract further enhances UGL’s strong base of recurring revenue and positions us well for future maintenance opportunities as LNG facilities currently under construction move into their operational phase.”

The final module for GLNG was installed in November last year, with first gas reaching the project earlier this month.

Final-module-installed-at-GLNG-image www.www-globalcommodities.com

Santos have announced yet another milestone for their Curtis Island gas liquefaction plant, with the installation of the final LNG train module.

With two trains in the GLNG plant comprised of 111 modules constructed in the Philippines, the final module was installed early this week.

LNG trains are used to cool natural gas down to a liquid form which can be stored in tanks and pumped onto ships for export.

Santos GLNG general manager for downstream operations Brenton Hawtin said the installation was a key project milestone.

“Once we’re in full production, these massive pieces of infrastructure will together produce up to 7.8 million tonnes of liquefied natural gas each year,” he said.

“Each module had to be built with a margin of error of only 2mm, which is amazing when you think the heaviest weighed more than 2,500 tonnes and longest stretched nearly 75 metres.”

Construction works on GLNG undertaken by contractor Bechtel now include final pipework and cabling, followed by commissioning of the plant which will begin later this year.

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Henry Sapiecha

Canada approves world’s largest copper-gold mining project

Saturday, December 20th, 2014

Copper & Gold ore of 130,000 tonnes per day over a mine life of 52 years

KSM-Mitchell-looking-SE-canada copper gold image www.www-globalcommodities.com

Canada’s minister of the environment on Friday gave the green light to Seabridge Gold’s KSM project in British Columbia, the world’s largest undeveloped gold-copper project by reserves.

The joint harmonized federal and provincial environmental assessment process took nearly seven-years and KSM is only the second metal mine in five years to receive approval by Canada and BC.

Since 2006, Seabridge has spent more than $176 million in exploration, engineering and environmental work to bring the project this far.

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Seabridge Gold plans combined open-pit and underground gold copper silver and molydenum mine in the Kerr, Sulphurets, and Mitchell Creek watersheds located approximately 65 kilometres northwest of Stewart, BC and roughly 35 km northeast of the Alaska border.

The deposit boasts 38.2 million ounces of gold, 9.9 billion pounds of copper, 191 million ounces of silver and 213 million pounds of molybdenum provable and probable reserves.

The mine is expected to process 130,000 tonnes per day of ore over an anticipated mine life of 52 years.

KSM forecasts 1,800 direct and 4,770 indirect jobs across Canada during the five-year construction period and 1,040 direct jobs annually while in production.

During construction, Seabridge will spend $3.5 billion in British Columbia and $6 billion in Canada. Over the life of the mine’s operations, more than $400 million in GDP will be produced for British Columbia and more than $42 billion for Canada.

Seabridge Gold holds a 100% interest in several North American gold resource projects with its Courageous Lake gold project located in the Northwest Territories its principal asset outside KSM.

project & construction finance banner image www.money-au.com (3)

Henry Sapiecha

Rio, BHP on the verge of developing U.S. largest copper mine

Friday, December 5th, 2014

rio-bhp-getting-close-to-develop-u-s-largest-copper-mine image www.www-globalcommodities.com

Arizona’s lawmakers slipped Tuesday night a piece of legislation that would allow mining giants Rio Tinto (LON:RIO) and BHP Billiton (ASX:BHP) to jointly build a massive copper mine in the state as part of a deal with the U.S. Government.

According to Arizona Republic the bill —set to be passed before the end of the year— would allow Rio to acquire 2,400 acres of the federally protected Tonto National Forest in southeast Arizona in exchange for 5,000 acres in parcels scattered around the state.

The land land-swap bill was added into the 1,600-page National Defense Authorization Act, the annual defense appropriation legislation that must be passed each year, according to the report.

Both miners have said they expect operations at their Resolution Copper project —55%-45% owned by Rio and BHP— to start as early as 2020. But they have had to deal with legal hurdles and opposition by the San Carlos Apache Tribe and other southwestern nations, who claim the massive project would weaken the ground beneath their sacred Native American lands.

Analysts are confident this time the miners will get their wish granted.

Analysts are confident this time the miners will get their wish granted.

“This land swap has faced a long and bumpy road in Congress,” Caitlin Webber, a Bloomberg Intelligence analyst told The Daily Telegraph.

“Finally being tucked into this must-pass bill is the closest it’s been to enactment,” she added.

Resolution Copper, located in Arizona’s famous Copper Corridor, is expected to create 3,700 direct and indirect jobs and bring more than $6o billion in economic benefits to the state over its 66-year life. Rio and BHP estimate that output from the mine will meet 25% of the U.S. total demand, which will make it North America’s largest copper mine.

Learn more about the project:

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

AFRICAN IRON ORE DEAL SIGNED & THIS WILL BE A GAME CHANGER

Friday, July 4th, 2014

chalco-selling-stake-in-simandou-iron-ore-project-for-2-billion-image  www.www-globalcommodities.com

A deal between the Guinea government and Rio Tinto (LON:RIO) regarding the Simandou iron ore development was inked on Monday.

The deal with Anglo-Australian giant and its partner – China’s Chalco together with the World Bank – sets out conditions for the associated infrastructure for the ambitious $20 billion project.

A sticking point in the negotiations was the route and funding of a railway to get the Simandou area ore to port.

Monday’s agreement calls for a new 700km railway across the country to Conakry, Guinea’s capital in the north, at a conservatively estimated cost of $7 billion, Reuters reports:

It would also need a deep-water port at Morebaya costing a further $4-billion, and support infrastructures estimated to cost a minimum of $2.5-billion, documents seen by Reuters showed on Monday. The port and railway would eventually be expanded to handle up to 100-million tonnes of minerals a year.

Because of the economic benefit to the impoverished West African nation Guinea this route was chosen in stead of a much shorter and cheaper railway to the deep Buchanan port in neighbouring Liberia to the south. The developers will operate the infrastructure for thirty years whereafter ownership reverts to Guinea.

Rio Tinto CEO Sam Walsh said in a speech recently that “the infrastructure that brings Guinea’s natural resource wealth to global markets can do so much more for the country,” pointing out that once Simandou is fully operational, it will contribute an estimated $7.6bn to the Guinean economy each year, dwarfing the amount of aid payments the country receives.

Guinea is home to some of the richest and easily exploitable iron ore fields outside of Australia’s Pilbara region and top producer Vale’s Brazilian home base.

Initially scheduled for next year, even with the new deal in place initial exports is doubtful for this decade. Monday’s deal committed the partners to producing a feasibility study within little over a year, another more than two-half-years for financing and production within a decade.

guinea-railway-africa-liberia-conakry-simandou-buchanan image www.www-globalcommodities.com

Simandou would by itself be the world’s fifth-largest producer

Rio acquired the rights for the vast mountain deposit hosting some of the world’s highest-grade ore more than 15 years ago.

Rio Tinto is developing the southern part of Simandou and has already spent more than $3 billion building open pits, but the scale and scope of the development had been placed in doubt by the fall in the price of iron ore and a looming supply glut.

At full production Simandou would export up to 95 million tonnes per year – that’s a third of Rio’s total capacity at the moment – and would catapult Rio past Vale as world number one.

Simandou would by itself be the world’s fifth-largest producer behind Australia’s Fortescue Metals and BHP Billiton.

The northern part of the Simandou concession was held by BSG Resources and Brazilian giant Vale (NYSE:VALE), but the Guinea government withdrew the mining permit in April, accusing BSGR of obtaining its rights through corruption in 2008.

Rio Tinto has filed its own lawsuit against both Vale and BSGR for what it qualifies as a “steal” of its previously-owned concessions.

Fellow Anglo-Australian miner BHP Billiton has decided to pull out of the country and is in the process of selling its stake in a nearby iron ore project called Nimba.

Henry Sapiecha

Padbury Mining no contender for $6.5bn Oakajee iron ore port and rail project in Western Australia

Friday, July 4th, 2014

australias-6-5bn-oakajee-project-image www.www-globalcommodities.com

In an unsurprising announcement for those following the news, Australian Padbury Mining (ASX:PDY) said Wednesday it is axing its multi-billion dollar deal to develop the Oakajee port and rail project in Western Australia’s Mid West.

oakajee-west australia map image www.www-g;obalcommodities.com

In a statement to the Australian Stock Exchange, the company said it had “signed a deed of termination and release in relation to the agreement.”

Padbury, a company with a market value of less than $70 million, told the ASX earlier this month that it had struck a deal with unnamed private Australian investors who would provide $6.5bn in equity to build Oakajee.

The money had been “secured”, Padbury said, and the deal was a “major breakthrough for the company and the region”, which meant the Midwest could finally “exploit its mineral assets.”

The news sent Padbury shares soaring more than 100% to a high of 5.2 cents. On the same day, the miner placed itself in a trading halt because it would not name private equity investors it said would fund the deal. In mid-April it went into voluntary suspension with the same questions still unanswered, until last week Sydney billionaire Roland Bleyer came out claiming to be the main backer.

Plans to open a deep-water port at Oakajee have been on the drawing board for decades.

A previous proponent of the project, Mitsubishi Corporation, shelved it last year due to weak economic conditions.

The port and rail infrastructure would enable the region’s iron ore miners to be one of the major suppliers of the steel-making material to Asia.

Henry Sapiecha

LIQUIFIED NATURAL GAS IS HUGE IN AUSTRALIA BUT COST BLOWOUTS WITH UNION ACTIVITIES COULD STIFLE IT

Tuesday, May 28th, 2013

THE MASSIVE EXPANSION OF LNG IN AUSTRALIA & UNION THREAT

LNG PIPES IMAGE www.www-globalcommodities.com

The speed and scale of Australia’s liquefied natural gas boom are big reasons for the industry’s growing cost pressures, Resources Minister Gary Gray says, while conceding that ”unreasonable” union wage demands are also contributing to the problem.

As the oil and gas industry heaps pressure on governments to tackle rising labour and construction costs – or risk losing out on more than $100 billion of future investment – Mr Gray said the unprecedented boom, with three major gas plants being built in Gladstone, was unforeseen.

”And so some cost pressures grow because of the very large impact of what it is that companies are actually doing,” he said. ”Nowhere in the world has anyone attempted the kind of ramp-up in LNG that we have in prospect in Australia.”

But speaking to reporters at the Australian Petroleum Production and Exploration Association conference in Brisbane on Monday, Mr Gray said militant behaviour by certain unions, including the Maritime Union in Western Australia, was ”unreasonable”.

”We do have to be conscious that unreasonable wage demands do place pressures on projects,” he said. ”My observations are not anti-union, my observations are about how prudent that behaviour is.”

But the oil and gas industry remains hell-bent on government action, not just on labour cost but other productivity issues such as the removal of perceived duplication in environmental approval processes.

Exxon Mobil vice-president Mark Nolan said Australia was an attractive place to invest in but also had ”significant disadvantages in labour costs and labour productivity. I think the government has a role to help us manage labour relations, there’s no question about that, it’s a significant factor. As we consider projects around the world, those sorts of issues drive our decisions.”

Exxon Mobil is operating the Scarborough gas field in a $10 billion joint venture with BHP Billiton. Mr Nolan said it remained a ”very challenged” project owing to the dry gas and the shallow, broad nature of the field, requiring expensive horizontal drilling.

Other oil and gas industry leaders, including Chevron managing director Roy Krzywosinski and APPEA chief executive David Byers, warned that government inaction on rising costs could cost the economy $100 billion in projects.

And Royal Dutch Shell global chief executive Peter Voser told the conference ”the policy decisions made today will have a profound effect on your economy and society”.

The commentary prompted Infrastructure Minister Anthony Albanese to brand the energy industry as ”self-interested”.

But opposition resources spokesman Ian Macfarlane said Mr Albanese was ”on his own” if he thought Australian wages were internationally competitive.

”A cook on an oil rig gets paid more than Anthony Albanese,” Mr Macfarlane said. ”If it’s costing twice as much to do a project here as it is somewhere else in the world, we’re not being competitive.”

The government has also come under pressure from the manufacturing sector, which is concerned that soaring gas prices and a looming east coast gas crisis will exacerbate widespread job losses.

Amid claims from Manufacturing Australia that 200,000 jobs were at risk, Mr Gray outlined a ”comprehensive” government analysis of the domestic gas market.

But the government did not agree that a domestic gas reservation would keep gas prices down or put more gas into the local market. ”In our view it would create uncertainty and deter investment in new gas supply,” Mr Gray said

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Henry Sapiecha

fine gold line

AUSTRALIAS NEWCREST MINING & A $9B WAFI-GOLPU GOLD MINE OPERATION IN PAPUA NEW GUINEA

Saturday, September 29th, 2012
WAFI-GAFU GOLD MINING IN PAPUA NEW GUINEA TO BE HUGE
harmony_wafi_golpu

Johannesburg-based Harmony Gold Mining  (NYSE:HMY) has outlined the potential of the Wafi-Golpu project, a 50-50 JV with Australia’s Newcrest Mining in Papua New Guinea, saying in a presentation the deposit could support a $9.8 billion mine with peak annual production of 560,000 gold ounces and 335,000 tonnes of copper.

The mine with a 26-year mine life will cost $4.85 billion to bring to production with annual output at 490,000 ounces of gold and 290,000 tonnes of copper with start-up in 2019 followed by expansion.
Groper Career Test

The economics of the mainly underground mine located 80 km from the port of Lae is sweet – gold output will cost a negative $2,600 an ounce while copper would be extracted for just $0.54 a pound. Copper was trading at $3.76 in New York on Friday.

The market has been anticipating great things from  Wafi-Golpu. Harmony’s 2007 pre-feasibility study showed a 1.3 million oz gold and below 1 million tonnes of copper. This has now grown to contain roughly 12.4 million ounces of gold and 5.4 million tonnes of copper.

Harmony Gold says the site is highly prospective and will embark on a feasibility study next year with a focus on enhancing gold recovery which is pegged at 61% at the moment and a $400 million drilling program.  Discussions with local landowners are also ongoing.

Harmony Gold’s Australian partners Newcrest’s (TSX:NM, ASX:NCM) Lihir gold mine in Papua New Guinea has run into trouble with landowners over compensation and the 600,000 gold oz per year mine had to be briefly shut in August.

The government of PNG has the option to take a 30% stake in the Wafi-Golpu mine at cost.
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Sourced & published by Henry Sapiecha

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