Singapore drops plans for gold fix amid London pricing probe

Singapore has dropped plans to set a daily reference price for gold, four sources with direct knowledge of the matter said, as regulators in Europe investigate suspected manipulation of precious metals prices by banks.

The Singapore Bullion Market Association (SBMA), an industry body, has been in discussions for nearly a year on launching a price benchmark in Asian trading hours similar to the twice-daily London fix for spot gold prices, the sources said.

But the European probe has made banks reluctant to participate, they added.

"The banks' compliance (teams) and managements are not very keen at this stage to discuss about fixing and benchmark pricing," said one source, who did not want to be identified because he was not authorized to speak to the media. 

"Because of these investigations, everyone wants to play cool on this topic."

Another source said the topic of gold fixing has become too sensitive for banks to be associated with for now.

Singapore is still in talks to introduce some form of pricing mechanism for gold, the sources said, as part of efforts to make it a trading hub for precious metals.

The SBMA declined to comment.

The fixing of the gold price in London is done through a teleconference between five banks, but Deutsche Bank said last week it would withdraw from gold and silver benchmark price setting, after exiting the bulk of its commodities business.

In mid-December, German banking regulator Bafin demanded documents from Deutsche Bank under an inquiry into suspected manipulation of benchmark gold and silver prices, the Financial Times reported, citing sources. (ID:nL6N0JS1DK) 

The other banks involved in fixing the gold price are Bank of Nova Scotia-ScotiaMocatta, Barclays Bank Plc, HSBC Bank USA and Societe Generale .

All four have declined comment on the Deutsche move. 

The first Reuters source said some of the banks that would have potentially done the fixing in Singapore are the same as those participating in the London fix, which is set by matching demand from their customers with supply.

Asian market makers largely follow the London fix, though some have said a fixing during Asian hours would more accurately reflect physical demand in the region.

Asia, led by China and India, is the biggest buyer of physical bullion.

Encouraged by that, Singapore is still trying to figure out how best to introduce a pricing mechanism.

One source said the SBMA was in talks with the Singapore Exchange (SGX) to possibly launch gold futures contracts, though talks were at a very early stage.

The SGX did not reply to request for comment.

Uralkali will sell potash to China at a 24% discount on last year's price

One of the world's biggest potash producers, Russia's Uralkali (MCX:URKA), has struck a deal with Chinese companies for sales during the first six months of 2014: $305 per tonne. In other words, a near-25% discount on the price paid in the first half of 2013.

"The contracts between Uralkali and the Chinese companies clearly testify to growing demand and the beginning of market recovery," Oleg Petrov, Uralkali director for sales and marketing said in a statement. "The terms of the agreement with our Chinese partners are mutually beneficial and serve the interests of our consumers, agricultural producers of the PRC.”

The discount comes after a major slump in potash prices over the past year due to Uralkali's break away from its joint venture with Belaruskali in July. Under the Belarusian Potash Company, the companies controlled roughly 43% of global exports. Uralkali producers about 20% of the world's potash.

The Chinese buying consortium headed by CNAMPGC, one of the major Chinese agrochemical corporations, has agreed to buy 700,000 tonnes of the crop nutrient by the end of June. Last January the Belarusian Potash Company agreed to sell the same volume but for $400 per tonne.

A senior source at one of the global potash producers told Reuters that he's "not sure if this is good news or bad news because this price is not very different from the current reality," though he added that "it will create a benchmark that could spark momentum."

"The current physical demand is not bad and the new price could put prices in proportion."

Uralkali's deal with China isn't too far off from what other potash producers have been selling their product at over the past six months. Mosaic's potash was selling at an average of $342 per tonne in the third quarter of 2013. Meanwhile, PotashCorp sold for an average of $307 per tonne in the same period. Shortly after Belaruskali and Uralkali split, the Russian potash producer warned that prices could fall below $300 per tonne.

In November, Belarus' economic ministry said the country would cut the price of its potash exports to $300 per tonne. But there's been talk lately of a reconciliation between the former partners. John Chu, an analyst at AltaCorp, recently told Potash Investing News that a reunion of Uralkali and Belaruskali would support prices.

Selected blast mining able to revive gold – Robinson

 The introduction of selected blast mining (SBM) has the potential to reduce the cost of mining narrow-reef gold to the extent of resuscitating South Africa’s ghost towns, says veteran research commentator Dr R E (Robbie) Robinson.

Robinson, who spoke to Mining Weekly Online in a video interview (see attached), says that SBM can be satisfactorily carried out using shock tubes and delayed detonators and would be the equivalent of a 30% increase in the gold price.

“You will resuscitate Welkom, Carletonville and what is left of the East Rand after the Aurora debacle. Even ERPM (East Rand Proprietary Mines) has areas that could be mined,” said the former Sentrachem director of mining chemicals and explosives, who has been associated with the South African mining industry since 1949.

SBM dispenses with the need for roof bolting systems, as the mine roof is not fractured.

“Although you cannot do a blast without some shock waves, SBM’s predominantly going to be a drum roll rather than a big bang.

“With a very simply hydraulic ram, the pile of rocks at the back of the stope is compacted to provide support,” he added.

Only reef will be taken to surface for processing, eliminating the cost of needlessly transporting waste rock.

Haulage and grinding costs are reduced by two-thirds.

SBM, which allows for virtually 100% of the gold to be recovered, would enable the industry to depart from its current position of a significant percentage of precious metal failing to find its way into refined gold bar because of reef being widely scattered during blasting.

SBM involves fracturing rock in such a way that the reef remains intact, and Robinson sees it as an interim step ahead of AngloGold Ashanti’s promising automated raise-boring technology, a fully automated mechanical cutting method that enables mining to continue at great depth.

The one-time National Institute for Metallurgy, now Mintek, director said SBM could be re-piloted in a matter of months and become standard practice across South Africa’s narrow-reef precious metals mines within a year, significantly improving what miners refer to as the mine call factor, which is the difference between the quantity of precious metal in the ground and the actual quantity of precious metal that ends up in refined form.

After retiring in 1990, he formed AC Mining Consulting Services and worked intensively on SBM, which involves fracturing rock in such a way that the reef remains intact.

Equipment for AngloGold Ashanti’s “game-changing” technology, which mines “all of the gold, only the gold, all the time, safely”, is under construction, with the first machines scheduled to become available in the first quarter of 2014.

Figuratively speaking, Robinson is “pretty sure” that SBM could be introduced “tomorrow”.

Zimbabwe says platinum mines submit plans for refinery by end-2016

Major platinum miners in Zimbabwe have met a government deadline to agree and submit plans to build a major refinery in the country by the end of 2016, state media reported on Sunday.

President Robert Mugabe's ZANU-PF government gave platinum mines until Jan. 18 to submit proposals to build a precious metal refinery within two years or risk a ban on raw exports of the metal.

The world's two largest platinum producers, Anglo American Platinum and Impala Platinum Holdings (Implats) , both have operations in Zimbabwe, which has the second-largest known platinum reserves after South Africa.

Mines and Mining Development Minister Walter Chidhakwa was quoted by the state-controlled Sunday Mail newspaper's website as saying he had received plans for the construction of a major refinery from Implats' local unit Zimplats, Anglo American's local unit Unki and Mimosa mine, which is jointly owned by Zimplats and Aquarius Platinum Ltd.

"They have submitted to us their proposals and we are evaluating them," he said. "They have made a commitment that they will continue to support Zimbabwe and the setting up of a platinum refinery is one of their aspirations."

Chidhakwa and spokespersons of the mining companies were not available for comment to Reuters on the report.

The Sunday Mail said the mining firms had also promised to look at the possibility of setting up smaller processing plants and processing ore at an existing small plant. The Mail also said the companies raised questions over funding and secure power supplies.

It quoted Zimplats spokeswoman Busi Chindove as saying recently that the company had invested $30 million in feasibility studies that assessed the cost of a major refinery at about $2 billion.

Zimplats owns a base metal refinery that separates minerals like nickel, chrome and copper from platinum metal groups but says outdated technology makes it too expensive to run, so it sends platinum concentrate to South Africa for processing.

The Zimbabwe chamber of mines, which estimated 2012 output of refined platinum at 350,000 ounces, about 6 percent of world output, has said the country would need to raise platinum output to 500,000 ounces a year to justify a refinery.

IT giant Intel takes the conflict mineral bull by the horns

Intel has taken a giant leap forward in responsible sourcing for the electronics and IT industry by announcing that —from now on— every microprocessor the company uses will be made entirely with conflict-free minerals.

CEO Brian Krzanich, who is just six months into the position, said Intel will make sure that every piece of tantalum, tungsten, gold, and tin found in its microprocessors will come from smelters that only source minerals mined outside areas plagued by armed conflict and human rights abuse, such as those affecting parts of the Democratic Republic of Congo (DRC) and surrounding countries.

The company’s move is the culmination of years of effort to track down the smelters, more than 60 in in 20 countries, which provide the firm with key minerals and then auditing them for where the minerals came from.

Other companies, such as Apple, Samsung, and HP, are also taking steps to identify their smelters and keeping them conflict-free when possible.

Dart Mining chief quits in mysterious circumstances

THE chief executive of a company mining near Corryong has quit in mysterious circumstances, but the board’s chairman yesterday said the future of the North East project was solid.

Dart Mining chairman Chris Bain said chief executive and managing director Lindsay Ward had left the company before Christmas.

“I can’t give you any detailed reasons, but that’s what has happened,” Mr Bain said.

He did say Mr Ward’s reasons were personal and not related to company concerns.

Mr Bain said the board was searching for a new chief executive and the upheaval was not affecting the Mount Unicorn project, targeting molybdenum, copper and silver deposits.

“We really do want to make sure we get the message out to the community that we’re not stopping — the project is absolutely not dead,” Mr Bain said.

He said a community meeting would be held at Corryong on Wednesday and Dart would release more information about where the company was headed and what the key issues were for the next year.

Doubt was thrown on the viability of the project in November when Dart announced to the Australian Stock Exchange that it had to slow “certain critical steps” in the feasibility study and approvals process after difficulty in separating zinc from copper. This had been exacerbated by depressed molybdenum prices.

“That molybdenum price had fallen very dramatically and it forces us to reassess all aspects of the project,” Mr Bain said yesterday.

“Fundamentally, it’s still a strong project.

“The company’s aim is not to be too spooked by the price.”

Mr Bain said there was always price volatility with commodities and once it rose again, the company should be able to move ahead.

He said the US mining investor Red Kite was still “very supportive” of the project after it shelled-out $5.2 million for it.

Options to Manage Dredged Material Announced (Australia)

The Queensland Ports Association has announced its “Options to manage dredged material” fact sheet.

What do Queensland ports do with dredge material now?

In most cases, material is placed at sea. Dredges or barges relocate the material to a designated placement site where it is placed according to dredging permit conditions.

Most dredge placement sites used by Queensland ports are located in areas where the seabed is unvegetated and are distant from sensitive habitats such as corals or seagrasses. Rigorous monitoring over long periods of time has shown offshore placement of dredge material has only a temporary impact in a localised area, with recovery evident within a relatively short period.

What happens to material that is placed at sea?

Most of the material, mainly sand, clay and mud, remains in the placement site and is colonised by fauna such as worms, prawns and shellfish. Recovery generally occurs within a year. In many cases, monitoring has indicated placement sites may support large numbers of fish of commercial and recreational value. At some ports, finer material may be dispersed by waves and currents to adjacent areas however impacts are generally localised and short-term.

Careful planning of dredge placement activities is undertaken to ensure no unanticipated impacts occur. Dredging permit conditions require comprehensive monitoring of dredge placement activities. Long term monitoring by Queensland ports has shown port related dredging is well managed and meets required approval conditions. Monitoring of seagrass communities near ports has not shown any long term dredging related impacts.

Why not place all dredged material on land?

Whilst seeming a simple option, there are major constraints to placing dredge material on land. Most dredging involves large volumes that would occupy a large area of land (potentially 100’s of hectares). Coastal areas of Queensland generally have high conservation or residential value and finding several hundred hectares of flat land close to the water and suitable for storing dredge material is difficult.

The excavated material is pumped to a land based site as slurry (a mixture of sediment and water). Excess water would need to be treated to remove fine particles and ensure clear water was discharged back into the marine environment. It takes years to dry, preventing any access to, or use of, the storage area. Areas need to be fenced off to ensure human and animal safety.

Dredged material from ports is saline and therefore is unsuitable for agricultural and vegetation rehabilitation uses. Establishing any vegetation on spread or stockpiled dredged material is expensive and can take years to become successful. Moving the material from a land based site would involve large numbers of truck movements considering the volumes involved creating community amenity issues and increased greenhouse gas emissions.

Can it be reused or recycled?

Reuse or recycling options are very limited. Most material is fine grained and dark in colour (e.g. silts and muds) making it unsuitable for beach nourishment. It has poor engineering qualities, is saline and is expensive to use for construction purposes. Separating any useful product (such as sand) from dredge material is complex. Large areas of land are required for tailwater ponds and separation costs are expensive making the process unaffordable when compared to similar product available on the local market, which is generally well supplied from land based sources.

Turning dredge material into bricks or road base requires large amounts of energy (e.g. use of kilns) and internationally this option is generally only used for contaminated material. Dredge material can be used to fill shallow coastal areas to create land (reclamation) however this also has the potential to cause environmental impacts.

Why not dispose of material far off the coast?

One option often suggested is to dispose of dredge material in deep water (e.g. off the continental shelf) to avoid impacts to inshore areas.

However, this would result in dredges spending a long time transporting material offshore making the dredging project longer. Environmental risks would increase at both the dredging site and along the route to the offshore placement site. It could change a three month dredging campaign into a 12 month project.

Energy (fuel) use and associated emissions would be substantial and the cost of dredging would increase. This would lead to increased greenhouse gas emissions, as well as increased costs for ships using the port, ultimately affecting the cost of goods carried by the ships.

Additionally, scientific assessments indicate environmental impacts to offshore marine communities may be greater than if the material was placed in inshore areas.

Can we avoid placing dredged material at sea?

Options to place material on land are extremely limited. Nevertheless, land based options are required to be investigated for each dredging project. Results of these investigations must be included in all applications to the Commonwealth to place material at sea. Environmental, social and economic factors are considered when deciding how and where dredge material is placed at sea. Approved placement areas in Queensland appear to function well with impacts generally confined to the placement site.

In some cases, new placement sites need to be established as existing sites reach capacity or for additional volumes associated with port growth (capital dredging). Identification of new sites is based on a detailed site selection process taking into account the environmental and social values of the area and potential impacts. Importantly, an Environmental Impact Study is required to support an application to the Government for a new placement site for capital dredging.

This involves input from regulators, scientists, fishermen and community groups.

Is dredge material placed inside the Great Barrier Reef Marine Park?

Some placement sites do exist within the Great Barrier Reef Marine Park (GBRMP) however it is important to note that monitoring occurs to confirm that there are no adverse impacts to any sensitive environmental areas. Queensland ports in locations adjacent to the GBRMP play an important role in the overall stewardship of Australia’s iconic reef.

This includes investing in in-depth studies which guide sustainable development and protection values of the Great Barrier Reef. Queensland ports have operated and grown within the Great Barrier Reef World Heritage Area according to strict environmental management practices for more than 30 years, ensuring environmental values are maintained whilst enabling economic growth.

Press Release, January 10, 2014