Flash News: Update on Plenty

17 11 2011

I have been following mining events more closely and this week it appears that a number of topics covered in previous entries have evolved to a significant extent. I am summarizing those in the present list post.

In a rare alignment of activists and large corporations’ mindset, Fortescue is once again sharing its beliefs in the conspirationists leanings of the Australian Government and the Super Majors. Mining

Rarely said about taxation. Well done Zambia. Financial Post

Steady progress is reported on Nautilus Minerals’ Solwara 1, its marine copper and gold mining project in the Bismark Sea (Papua New Guinea). Production should begin in late 2013. Mining

The Oppenheimers swapping diamonds for property development? Botswana Guardian (listen to an interview with Nicky Oppenheimer on Mineweb)

Forces at Play in Afghanistan’s resource extraction race. AFP

On the issue of mine waste. Infomine

 

 

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The BBC’s One Planet on Mining

19 10 2010

The BBC World Service’s One Planet has done a programme on mining last week. It dealt with the Chilean miners, economic development in resource rich countries and more interestingly, the Hungarian spill of caustic sludge. This last section starts at the 13:45 mark. Click here to enjoy!





When the Mud Slides…

12 10 2010

The Hungarian caustic sludge spill last week has gathered international attention. While we wonder if 2010 should be remembered as the year of the spill, let’s just see how red mud can be handled to reduce reliance on stockpiling and storage, which has unfortunately shown its limits. 

Red mud is produced during the transformation process of bauxite into alumina during the Bayer process. About 1.5 to 2 tonnes of red mud is generated for every tonne of alumina produced. This residue is highly alkaline (high pH, that is) and contains traces of various metal substances and other minor or trace amounts of heavy metals and radioactive isotopes. 

It has been estimated that in 2000, the global inventory of bauxite residue stood at about 2 billion tonnes and is likely to reach 4 billion tonnes by 2015 unless improved means of storage, rehabilitation and re-use options are developed in large scale.

Current Means of Disposal

For now, red mud is often stored on land for future rehabilitation or uses (with or without neutralising its toxicity).  This is done through either lagooning or dry stacking and accounts for 90% of alumina refineries surveyed by this study.  Red mud can also be discharged into mid-sea.  This accounts for less than 10% of cases surveyed by the study. The practice has steadily declined steadily since the 60s. The move towards dry stacking has been economically motivated by the need to reduce the land required for storage, minimise risks of caustic liquor release while maximising the recovery of liquor for the refinery.

The next big thing has a fancy name. Hyperbaric steam filtration is an emerging technology which discharges residue as a dry, granular material of low soda content. This gives red mud properties that allow long term storage, remediation and re-use.  This method is not economically viable at the moment but is undergoing trials in refineries in Germany, Japan and Venezuela.

Re-Uses

Re-using red mud into new applications would solve the problems arising from its disposal and would create economic incentives to treat its toxicity. Since the 60s, several hundreds of researches have sought new end uses for red mud but emissions of radon coming from the mud as well as the low value of materials that red mud could be substituting have hindered its economic viability. Red mud can be used in metallurgy (for the recovery of iron, vanadium, chromium, rare earths and titanium dioxide), catalysis, and soil remediation.

The most promising uses would be in construction materials such as cement, bricks, roofing tiles and glass ceramics. A few examples include the Jawaharlal Nehru Aluminium Research Design and Development Centre’s work on ceramics and Jamaica’s National Work’s Agency’s reliance on geopolymers in order to use red mud in road construction. Other uses can be found here.





International Arbitration: Canadian Firms in Troubled Waters

11 06 2010

It seems that lately, Canadian firms have been at the mercy of government’s will to play nice or not. In the last remedy available to protect substantial investments in developing countries’, firms have turned to international arbitration hoping to overturn decisions made by sometimes corrupted domestic courts or abrupt policy shifts.

Africa-First Quantum (TSX: FM, LSE:FQM)

The highest profile case to emerge lately was of course First Quantum whose rights to two mines (Frontier and Lonshi) in the Democratic Republic of Congo were annulled by a court and handed over to a state-owned firm. The Court cancelled a letter giving First Quantum’s the mining rights to the two properties claiming that subsequently to a reform of mining laws, a decree was required to allow First Quantum to exploit the mines. This behaviour from Congolese authorities could be partly explained by the decision of the firm to seek international arbitration in relation to a previous ruling made on its Kolwezi project.

The Kolwezi project is developed by the Kingamyambo Musonoi Tailings SARL (“KMT”), a partnership involving First Quantum (65%), the state-owned Gécamines (12.5%), Industrial Development of South Africa (10%) and the International Finance Corporation (5%). A contract review conducted in September 2009 highlighted contract irregularities and production delays to the project. The review pointed that the constitution of the company resulted of a fraud for which Gécamines and the Mining Registry were seeking compensation of US $7 billion and 5$ billion respectively.

First Quantum explained in a press release that partners in the Kolwezi project were not served and with a proper Notice of Hearing Date for matters related to the Kolwezi project and noted that there were grounds for thinking that the Code of Civil Procedure was not adhered too in the process. The firm began arbitration procedures on February 1, 2010 through the International Chamber of Commerce International Court of Arbitration in Paris which (sadly) does not publish documentation on the case on its web site.

Central America

 Amazingly enough, 61% of the mining cases filed to the International Center for Settlement of Investment Disputes, the most commonly used arbitration court, involved Latin American countries. It seems that Governments have settled previous dilemmas between resource development and environmental protection and have taken swift turns in the latter direction, making some mining projects casualties.   

El Salvador-Pacific Rim (TSE: PMU), a Vancouver-based firm, has seen its El Dorado gold project jeopardized as a result of the government refusing to provide a mining permit for fear of being clobbered by citizens opposing mining. In responding to popular pressure the Government avoided to approve an Environmental Impact Assessment. The company provided its first impact assessment in 2004 and substantially reviewed it, at the Government’s demand until 2006, and then nothing.

 Ironically, it was conveyed in the press that the environmental quality of the project is not the factor preventing the issue of the permit as the final design of the mine is exceeding international standards. The government of then-President Tony Saca acknowledged this by telling the company that there is no technical problem with the mine, only political ones”. Opponents to the project however argue that the measures to mitigate adverse environmental impacts are not sufficient. In response to this stalemate, Pacific Rim has filed for international arbitration.

 Pacific Rim announced in December 2008 their intention to file for arbitration under Dominican Republic-United States-Central America Free Trade Agreement’s (“CAFTA”) investment rules. Pacific Rim can rely on this agreement as it has U.S. subsidiaries operating in El Salvador (PRES and DOREX). The company formally filed for arbitration at the ICSID on April 30, 2009. The hearing of preliminary objections has taken place only recently on May 31st and June 1st 2010. The Government of El Salvador was attempting to get the case dismissed at the outset. Video recordings of the hearing are available here. We are still months away of any substantial developments. Should any newsworthy development arises, you will be made aware.

Similarly to Pacific Rim, Vannessa Ventures, through its subsidiary Industrias Infinito S.A, attempted to obtain an environmental permit for its Cerro Crucitas gold project. The permit it obtained was overturned in 2004 by the Supreme Court of Costa Rica as the permit violated provisions from the constitution guaranteeing the public a healthy environment. The court ordered the state to pay costs, damages and compensation to Vannessa Ventures. The company later on filed for arbitration with the ICSID and is now operating on another name: Infinito Gold Ltd. A bit of browsing has indicated that Infinito Gold has also filed for arbitration regarding the expropriation of its Las Cristinas project in Venezuela. Gracias!

 This was just a quick sightseeing of the international arbitration seen from the mining industry’s perspective. The UN Commission on International Trade Law another international arbitration body, similarly to Chamber of Commerce International Court of Arbitration, does not publish a registry of cases. So this entry is only a sampling of current cases but it does underscore the political and social risks inherent to mining operations.





Reaching a Deal in Wonderful Copenhagen?

7 12 2009

With Climate Change Talks debuting in Copenhagen today, it is worth considering what could be the policy options to engage metals, the mining industry and other energy intensive industry sectors in meeting more stringent emissions targets.

Sectoral approach target heavy and energy intensive industries worldwide such as steel, aluminium, cement, and pulp and paper. These industries have a disproportionate political weight due to employment that they generate and their exposure to global competition which has deterred some governments from taking ambitious positions and climate policies.

Sectoral approach would have provided a bottom-up approach to emissions reductions by establishing sector-based targets (voluntary or mandatory) in which developing countries as well as Annex 1 countries would have been part of. This would have for effect of easing competitiveness and carbon leakage concerns in developed countries and could provide developing countries with technological incentives as well as revenues from selling their emission allowances. Sectoral agreements, it has been argued, would have made it easier to set aggressive targets in Annex 1 countries.

The sectoral approach to climate change, which had initially been championed by Japan, seems to have fallen off the radar since well before Poznan but it could have made a clear contribution in fighting climate change.

That said sectoral approaches to climate change have not entirely disappeared. The Asia-Pacific Partnership for Clean Development and Climate is a forum that builds on a sectoral approach to climate change. APP is a public-private partnership under which industry sectors from China, India, Canada, Australia, the United States, Japan and Korea work to carry on technical projects to reduce emissions from industrial facilities. APP currently has eight task forces and is planning on expanding its work.





Mineral Resources Management in Québec

12 11 2009

I will have a post tomorrow on Osisko, a company active in Abitibi Témiscamingue. Until then, I thought that, this RDI Enquête report would be interesting as it sums up pretty well the society and environment interface in which mining companies operate in Québec.

For the English essential, here are a few facts that caught my attention:

• According to Québec’s Auditor General, there are over 300 acidified tailings ponds for which no work has been undertaken.
• At the start of a project 70 per cent of mine rehabilitation costs should be set aside and paid to the Ministère des Ressources Naturelles et de la Faune to guarantee that the rehabilitation can take place. In 7 out of 15 per cent of cases, payments were not made.
• In sum the regulatory environment is fairly lax and the fiscal treatment of mining companies is generous. In fact, companies will be able to benefit from enough tax credits and allowances to cover for the full payment of the royalties.





Less coal more cool

6 10 2009

Coal is controversial. Its place as part of countries’ energy mixes (from heavy to marginal reliance), mountaintop removal, and approvals of new coal fired plants haven given rise to much debate. I like to think that when it comes to coal less is more and for that specific reason signs of the demise of coal or at least the struggles of the industry are always pleasant to notice. Last week the sweet treat came courtesy of the US EPA who delayed 79 coal mining permits in four Appalachian states for mountaintop removal.

Mountaintop removal is the surface mining of coal using explosives to remove up to 300 vertical meters at a top of a mountain to expose the coal seams. This method is usually seen as a productive and economic way to mine coal as the output per worker per hour more than doubles in comparison to underground coal mining. It is also safer for workers but the benefits of surface coal mining end there. At the environmental level, the impacts of mountaintop removal are offsetting the economic benefits. Due to excess rock and soil being dumped into “valley fills”, water is contaminated in the process and substantial deforestation takes place. A study has shown that measures undertaken to mitigate the environmental impacts of mountaintop removal have little effect in reducing environmental damage. It is summarized here.

The mining permits delayed this week were delayed due to uncertain compliance with the US Clean Water Act. EPA stated in a letter that the applications have not yet adequately demonstrated that anticipated adverse environmental and water quality impacts have been fully avoided and minimized since more than 80% of the permits “exhibited the potential to cause or contribute to violations of applicable water quality standards”. The EPA required additional information regarding potential cumulative impacts as well as an assessment of the effectiveness of existing mitigation plans to compensate for anticipated loss of functions associated with the burial and mine through of headwater streams. If projects were approved as currently envisioned a total of 170 miles of streams would be buried under mine waste.

At the community level, the coal industry has been pretty swift in to taking the jobs and energy security rhetoric in reaction to the EPA’s announcements of delays. West Virginia Coal Association President Bill Raney said in a statement that “They don’t understand why Washington is willing to kill-off good paying jobs when our economy is still on the ropes and the unemployment rate is still unacceptably high”. This one sentence sums up well the reluctance of the industry to acknowledge the environmental challenges ahead of mankind. At least this time the industry made it without slamming climate change science. Perhaps the US coal industry could take note of the Dalai Lama’s comment when asked about the development of the oilsands:
In a choice between “destruction of environment or losing money, then we have to choose losing money.”

There are conflicting regulatory measures in the US regarding the disposal mine waste as, since 2001, tailings are considered to be fill material and can now be placed legally in a waterway and since December 2008 mining waste can be put directly into headwater waterways. The Clean Water Protection Act, being debated in Congress, would review the definition of fill material to exclude mining waste and would therefore forbid the disposal of tailings in waterways. Until this comes into force, one can only find comfort in the fact that some US utilities companies are shifting away from coal-fired power generation due to the US progressing towards a cap and trade. This is the case of the Arizona Public Service, the NV Energy, PNM Resources as well as California’s Pacific Gas and Electric (if I am not mistaken California aims to have a coal-free energy mix)

P.S. Browsing the web for this post, I found a lot of information on Coal Tattoo, a blog hosted on the Charleston Gazette’s website. It’s now on the blogroll.