January 22, 2013

Barron’s Roundtable: Bullish on #Gold - Focus on Funds - Barrons.com

soon heading to the low- to mid-$2,000s

Barron’s Roundtable: Bullish on Gold

Gold’s price, lapped recently by its distant cousin, platinum, is steady so far in 2013, but this year’s Barron’s Roundtable discussants see good things ahead for the metal.
Allow me to pluck a few items of interest for holders of funds such as SPDR Gold Trust (GLD), iShares Gold Trust (IAU) or Sprott Physical Gold Trust (PHYS), or Market Vectors Gold Miners (GDX). Felix Zulauf, president of Zulauf Asset Management in Switzerland, expects gold’s price to get up and running again “soon,” before heading to the low- to mid-$2,000s.

ZUMAPRESS.com
Fred Hickey, editor, The High-Tech Strategist in Nashua, N.H.: I own a lot of gold stocks. I am not short anything. I don’t know when this thing is going to blow. The European Central Bank promised to print unlimited amounts of money, and it suddenly looked like Europe’s problems were solved. They aren’t. The Bank of England is on QE6 [a sixth round of quantitative easing], and England is heading back into recession. Money-printing doesn’t work. It has been tried for 2,000 years and hasn’t worked. It always ends in tears.
Fred, gold wasn’t such a great investment last year.
Hickey: It has been great for 12 years, but it doesn’t always go up. In the last great gold bull market, gold rose from $100 an ounce in 1970 to $800 in 1980. But it fell 46% in 1975-76. Anyone who left the market then missed the best part of the rally — a subsequent rise of 600%. In the latest 12-year period, there have been five corrections in the gold price, ranging between 15% and 30%. The latest correction was 19%, and gold has bounced off its recent lows already.
You have to be in gold. You have to be in real estate. Semiconductor sales have been poor, yet semiconductor stocks are rising. That is a result of money-printing. That is why the performance of stocks isn’t related to the performance of the economy. Stocks could go up again this year. All assets could go up in price. But you’d better protect yourself. At some point, stocks will underperform and inflation will run higher. That is the history of all monetary inflations.
Stocks will hold some but not all of their value. If you were an investor in Weimar Germany, your stocks lost 90% of their value. The best places to be were in other currencies and gold. But this time around, there is no alternative currency to the dollar. ….
Felix Zulauf, President, Zulauf Asset Management in Zug, Switzerland: We are living in a world of money-printing. Almost 40 countries are pursuing a policy of zero or negative real interest rates to spur more economic growth. We have never seen anything like this in modern history. The people will try to protect themselves against this monetary baloney. It is accelerating the debasement of paper currencies around the world. That is why I have to recommend gold again. Gold’s fundamentals are strong; although some technical indicators of sentiment and momentum turned down in the summer of 2011, gold is at the very end of a cyclical correction and the gold price will be up and running again soon. Once gold surpasses $1,800 an ounce, it will run to the low- to mid-$2,000s.
Read the whole Barron’s 2013 Roundtable here.

Barron’s Roundtable: Bullish on Gold - Focus on Funds - Barrons.com

The MasterMetals Blog

#Gold in 2013 - evidence for cautious optimism abounds - Mineweb.com

A survey of five fund managers heavily invested in the junior gold space reveals reasons for optimism

Gold in 2013 - evidence for cautious optimism abounds

INDEPENDENT VIEWPOINT

A survey of five fund managers heavily invested in the junior gold space reveals reasons for optimism. A Gold Report interview.

Author: The Gold Report
Posted: Tuesday , 22 Jan 2013

PETALUMA, CA (The Gold Report) - 
The Gold Report's first-ever survey of fund managers who invest heavily in junior gold mining stocks reveals cautious optimism on the sector's performance in 2013. The historical performance of gold in the year following a U.S. presidential election, the devaluing of the U.S. dollar and current low valuations for gold miners all bode well for an upturn this year, but some doubts remain. Learn how professional investors decide which companies are worth investing millions of dollars in this year.
Five fund managers participated in the survey: Frank Holmes of U.S. Global Investors, Brian Ostroff of Windermere Capital, Steve Palmer of AlphaNorth Asset Management, Peter Vermeulen of Plethora Precious Metals Fund and Adrian Day of Adrian Day Asset Management.
One reason for optimism is the historical performance of gold and gold equities during and after a U.S. presidential election. Gold and gold mining stocks both fell significantly last year during the contest between President Barack Obama and former Massachusetts Gov. Mitt Romney. One fund managers believes that bodes well for a rebound for gold and gold stocks this year because historically the precious metal and gold equities have performed well in the year after an election. Others expressed the opinion that further devaluation of the U.S. dollar, which could result from the Federal Reserve's asset purchases and/or the failure of the president and Congress to reach a deal on spending cuts, will boost the prospects for gold generally and gold stocks in particular. In addition, the fund managers asserted that gold producers are very close to their historic valuation lows again. That, too, may signal the possibility of a rebound.
The Gold Report: On a scale of 1 to 10 with 10 being the best, how would you rate junior gold companies as an investment in 2013?

January 21, 2013

Bracing for the extinction of 500 juniors or an entire institution? - Kaiser #Gold


Not a pretty picture...

Bracing for the extinction of 500 juniors or an entire institution?
    Publisher: Kaiser Research Online
 
Sun Dec 2, 2012
    Author: Copyright 2012 John A Kaiser


During my travels the past couple months I have been repeatedly surprised by declarations from others that about 500 Canadian listed resource juniors will disappear within the next year unless there is a remarkable turnaround for the resource sector in 2013. These numbers have their origin in my May 23, 2012 Kaiser Blog post Staving off Mass Extinction with the Big Anomaly which provided the grim statistics on which this now widely circulated warning is based. Since then the situation has worsened, as is evident in the figures as of November 30, 2012 which active KRO members can see updated on a regular basis in KRO Key Charts.

Kaiser Research Online tracks all companies listed on the TSX and TSXV who appear to be involved with resource sector exploration, development or mining, as well as a handful of former resource juniors which have shifted their focus to energy or other arenas. We do not track the capital pools until they have made a qualifying transaction involving the resource sector, but we do track resource juniors that have abandoned their projects, reorganized, and are shells looking for a new focus. Currently we have 1,803 companies that are trading. The Working Capital Distribution chart above shows the percentage trading in each of the 12 price categories, the median working capital for each price range, and the average working capital. It also shows separately compiled figures whose particulars KRO members can peruse using our KRO Search Engine or by clicking the links in the table below.
Companies with less than $200,000 working capital632
Producers with more than $200,000 working capital121
Resource Feasibility Stage Companies with more than $200,000 working capital428
Discovery Exploration Companies with more than $200,000 working capital506
Shells with more than $200,000 working capital116
Note: Producers are companies with a flagship project at the production stage, resource feasibility are companies with a flagship project at the infill drilling through construction stages, discovery exploration are companies with a flagship project at the grassroots through discovery delineation stage - ie no 43-101 resource estimate, and the shells are the remainder. The links deploy the search engine to list the corporate and flagship snapshots for each member of that set. There is no link for the shells because we cannot (yet) search for companies that lack a flagship project.
The latest batch of figures do not yet include the September 30 quarterlies whose filing deadline was November 29 and which KRO will have updated by the end of December. Given that there are more than 900 companies for whom the latest balance sheet is dated June 30, I can guarantee you that the numbers will be worse, especially in light of the weak financing conditions in 2012. As of November 30, 2012 TSXV listings have raised only $3.6 billion through private placements in 2012, the lowest since 2004 when $3.7 billion was raised. November 2012 was particularly dismal in that only $179 million was raised, the lowest since May 2009. While normally 75% of the funding is for resource sector listings, during 2012 a higher proportion went to energy and other sector listings. Should we enter a dry period such as prevailed from 1998-2002, the TSXV as a junior resource sector financing institution will undergo terminal collapse.
In that event much of the blame for handing the future of high risk high reward resource exploration and development to the Australian Stock Exchange can be laid at the feet of the TMX Group which in pursuit of short-sighted greed and possibly bankster inspired stupidity has strangled the resource sector as a risk capital allocation arena where investors speculate on fundamental outcomes rather than manufactured volatility. The decision to allow short-selling on a down-tick and the hookup of algorithmic trading systems to the electronic order book in a regulatory environment where juniors are severely handicapped in helping investors visualize the value of potential outcomes as a project travels from grassroots concept to a production decision, has created a one-sided playing field where trading predators systematically harvest capital in-flows from investors placing bets on fundamental outcomes.
Thanks to high speed connections that feed market depth data to powerful computers on a real time basis a new reality has been created whereby the TSX/TSXV market for resource listings can be likened to a vast information web on which lurk spiders monitoring for the slightest quiver that signals anomalous inflow of capital not emanating from fellow spiders. Like spiders sensing an ensnarled fly these traders race toward that stock's electronic order book and start feeding sell orders to match the incoming buy orders, displacing long shareholders by inserting their orders ahead of manually placed orders, or at the same price in the multitude of order execution platforms whose existence is touted as some sort of ode to competition and liquidity but which in reality fragments the market, violates the first come first serve principle that retail investors assume, and creates a two-tiered transparency where the professionals see the order book consolidated while the rest see only the TSX/TSXV order book unless they pay extra. The "spiders" see it all, and they intercept incoming real money orders by selling paper they intend to borrow, paper they never need to borrow, because before the day is over, after they have sucked up all the new capital possibly generated by a positive research report, a newsletter tout, a favorable mention by a video or audio media talking head or web article, or even by a direct pitch made by management to a fund manager or investor group, they lean on the bid side of the order book pounding out stock on a down-tick, triggering instant buyer's regret among the new shareholders placing bets on fundamental outcomes, and unleashing capitulation among the existing longs, who add their real sell orders into the downtrend, enabling the spiders to close out their short positions before the market close and eliminating the need to deliver on their intent to borrow the stock.
To what extent this happens today is hard to tell, because fundamentals oriented investors have withdrawn from the market, with the result that liquidity has dissipated, and the spiders find themselves cannibalizing each other, a practice that lacks sustainability because there is not a potential open-ended inflow of spiders with trading capital. Even if this equivalent of a vampire squid sucking the life blood out of the junior resource sector is muted today, the TMX Group has created the physical and regulatory infrastructure to facilitate this sort of activity on a massive scale should there ever again be a reason for fundamentals oriented risk capital to flood into the junior resource sector.
The tragedy is that during the past decade the Canadian junior resource sector matured, moving beyond the drill target generation and testing stages of the exploration and development cycle that characterized the eighties and nineties. The technical infrastructure to take a project from grassroots concept to a production decision is now available to the juniors, thanks to a strategic decision by producers to restrict their exploration to brownfields sites, namely next door to existing mines, and relying on takeover bids to bring mine development candidates into the fold. While the last decade proved very lucrative for geologists and mining engineers who migrated to the juniors where high salaries and stock options vastly exceeded the pitiful income they received while toiling as salaried company men for the majors, they tend to be over 60 years old, and not so keen to spend the next five years toiling in a bear market where extinction rather than a return to the glory days may be the outcome. Because the TMX Group has erected infrastructure that will snuff out the junior resource sector if and when it attempts a revival, we may see a situation where the Canadian resource sector not only sees the administrative institutions that support the junior sector vanish, but it may also witness the early retirement of the technical infrastructure. The latter is a problem because during the eighties and nineties when the environmental movement forced the mining industry to mend its ways, not a lot of young people felt compelled to study geology and mine engineering, and so there is a significant experience demographic hole in the mining sector.
Allowing short selling on a down tick and algo trading in a fragile market such as resource venture capital is worsened by the regulatory environment that has been erected to "protect investors". In this context it is wrong to use the word "investors", because anybody who puts money into a resource junior is speculating on an uncertain outcome. Let's be blunt: he or she is gambling. But unlike conventional gambling forums which are a zero-sum game minus the operator's cut where all that is accomplished is the redistribution of existing wealth, the flow of capital into the treasuries of resource juniors who spend most of the money (hopefully) on testing their geological hypotheses has the potential to create new wealth in the form of raw material resources that can support global economic growth. The mining sector is not engaged in creating new methods to waste time such as social networks and iPhone apps; it creates the means to make physical differences in the lives of people. Gambling on the fundamental outcome of exploration plays is the mechanism by which risk capital gets allocated to the prospects with the best probability of generating this new wealth. And for this mechanism to be effective, the gamblers need to have a way to visualize the payout, assess the odds of its delivery, and decide when a bet is good, fair or poor.
Visualizing a target or an emerging discovery is a difficult and complex process, though not one that is impossible to master. The task of painting a potential outcome is now officially done with reams of 43-101 compliant data and graphics provided by qualified professionals to the juniors, which can enable investors to construct resource estimates using rectangular blocks, drill intersections and orebody arithmetic (length x width x thickness - in metres - times specific gravity) that come surprisingly close to the formal 43-101 estimates. But when it comes to turning that potential orebody into an economic number, the company's lips are sealed until it produces a preliminary economic assessment which is done after the initial inferred resource estimate is published, typically 2-3 years after the junior started drilling a promising target.
The problem is that industry professionals know how to quantify the economic value range potential well before the initial resource estimate is published, but they are restricted from publishing such "educated guesses" in the case of brokerage firm analysts, and inclined to keep such quantifications to themselves for competitive reasons in the case of mining company employees. Both groups share a common agenda of conspiring against the interests of the resource junior and its shareholders. In the case of the brokerage industry whose goal is to finance a junior as cheaply as possible with the position accruing primarily to its client base, it has at its disposal an intimidating arsenal in the form of trading accounts, related hedge funds, and offshore entities that can manipulate the price downwards. However, through its encouragement of a predatory trading culture involving "independents" with direct human access to the electronic order book, or even algorithmic access, the dirty work of hammering down a junior's stock price, and shattering the expectations and confidence of the fundamental investors to whom the company has privately pitched the potential outcome, has been shifted into a parallel universe whose complicity with the corporate finance departments of Canadian brokerage firms cannot be proven.
The visualization gap between the industry professionals and retail investors is a key reason why the Canadian junior resource sector will have a difficult time adapting to the shift from the resource feasibility demonstration cycle that characterized the last decade, to the discovery exploration cycle that must characterize the mining sector during the next five years while we wait for global economies to recover from the 2008 financial crisis, and to see to what extent the mobilization of new supply from all those failures of past exploration cycles matches demand once the global raw materials super cycle is back on track.
The takeover chart above shows that since 2005 bigger companies have taken over 209 Canadian listed juniors in transactions worth $115 billion. Except for a handful of exceptions such as Virginia's Eleonore and Aurelian's Frutta del Norte which were grassroots discoveries, all of these companies owned deposits that were discovered during the 20th century, discarded as sub-economic also-rans, in effect exploration failures, were dragged out of the woodwork during the last decade and stuffed into publicly listed shells, and subjected to the advanced stages of the exploration and development cycle whose focus is to demonstrate the economic feasibility of the resource. These deposits came from land open to staking, private owners, and government mineral reserves.
The general public did not participate in these success stories because the "discovery" mechanism consisted of sophisticated investors and other elites acquiring the project through a private company, and merging that private company with a publicly listed capital pool or shell, of which there were a lot on the TSXV after the 1998-2002 metals bear market. These transactions took place while the public shell was halted, with multiple financing tiers slapped into place which tapped institutional and sophisticated investor capital pools.
The end-game was not to unload the paper onto unwitting retail investors who have yet to recover from the Bre-X Betrayal, and who are naturally averse to the sort of number-crunching required by the discounted cash flow valuation model that underpins advanced resource projects, and even less inclined to fret about the macroeconomic and geopolitical prognostication needed to make the 10-20 year metal price assumptions that must be plugged into the valuation models.
The end-game was to lure the bigger established mining companies into buying out these advanced projects for cash or highly liquid paper. And the street was very successful in this regard because during the 1998-2002 bear market the producers had downsized their exploration departments, and during the first half of the last decade, they did not recognize until 2006 that the emergence of China in a context of post-Communism globalized trade constituted a quantum demand shift that necessitated higher real prices that dragged many of the old exploration "failures" into the money. The juniors, not the majors, ended up owning these deposits, and the majors paid dearly for these assets in competition with Chinese state owned mining entities serving the additional mandate of securing China's long term raw material needs.
Now the major producers have their hands full with copper, nickel, gold and iron deposits, many of whom have sagged back into the category of "exploration failures" as galloping capital and operating cost escalation in the mining sector during the past five years, estimated as high as 10% annually, has caught up to higher real metal prices which in the case of copper, silver and gold have persisted at near nominal record levels. In the long term gold chart above and copper chart below I have inflation adjusted the prices of copper and gold at the end of 1980 by the US CPI until 2008 when I have applied the 10% inflation rate pertinent to the mining sector's capital and operating costs that people like Goldfields CEO Nick Holland have been floating in their presentations.
The real gains of 53% for gold and 26% for copper defined as the difference between the CPI inflated price from the 1980 base and the current spot price vanish when we apply the higher mining sector inflation rate. This, coupled with concern that the cost escalation is not done, partly explains why resource equities have fared so poorly since April 2011 despite metal prices in most cases holding near all time highs.
Most of the existing copper supply has a cash cost in the $1.50-$2.00 per lb range as shown by the Brook Hunt cost curve above. The chart below plots 47 copper deposits as operating cost per tonne, as defined by the most recent PEA, PFS or BFS, against the copper grade, with the bubble size reflecting the mine plan projected annual copper output. The colored straight lines reflect the operating cost per tonne equal to the revenue per tonne generated by the grade at the indicated copper price, with grade adjusted 15% to reflect royalties and smelter fees. In simple terms, for a copper deposit to be economic it needs to plot to the right of a cost-grade curve for a particular copper price. The bulk of the copper deposits plot to the right of the $3/lb curve, implying that if the copper price can stay above $3/lb, 4.3 million tones of new annual copper supply could come on stream during the next five years, easily matching the Brook Hunt demand projection of about 20 million tonnes for 2017. These 47 deposits reflect only those owned by Canadian resource juniors, many of which were bought out by majors since 2005.
Assuming the anxiety about a looming global recession or depression disappears after the United States has wandered over the "fiscal cliff" and discovers that there is no kaboom, the Republicans and Democrats finally get serious about negotiating away the worst aspects of the fiscal cliff, and the pent up desire among Americans to put four years of deleveraging behind them and start feeling good about the future again gets unleashed, we could expect copper to be stable in the $3-$4 range over the next few years. Once the mining industry gets comfortable that the world is not going into a depression, it will launch a round of mergers and acquisitions that will clean out the best of the remaining copper projects owned by the juniors. We will see something similar happen to the advanced gold deposits once the market accepts that $1,500-$2,000 per oz is the new reality for gold.
But what will not follow is the expectation that significantly higher real prices for gold or copper are around the corner. Such expectations will not become realistic until 2015 or later. Normally when a round of M&A cleans out the inventory of advanced deposits owned by the resource juniors one would expect the industry to dredge up a whole new batch of deposits from the private sector and stuff them into any one of the many shells listed on the TSXV. However, the inventory that is available will be of an even lower grade than the "exploration failures" resurrected during the last decade. In the absence of higher real metal price expectations there will be no appetite among institutional investors for projects that require positive macroeconomic developments in order to pay off. The abundance of undeveloped inventory coupled with expectations for stable metal prices are key reasons why I think the junior resource sector will shift from resource feasibility demonstration, which is in effect a speculation on higher future metal prices, to discovery exploration, which is a speculation that new deposits will be discovered that are very economic at current prices and even at considerably lower metal prices.
Unfortunately, this shift from resource feasibility demonstration to discovery exploration will pose a real problem for the Canadian junior resource sector. The 632 companies with less than $200,000 working capital have barely enough money to stay listed for another year while doing nothing to advance project fundamentals except in the case where the project is under option to another party. Filtering for companies that have Negative Working Capital generates 499 hits, close to the widely circulated number of 500 juniors on the extinction list. Many of these companies have more issued stock than the median for their price range, making it difficult to raise additional capital through equity financings. There are 409 companies trading below $0.20 with no money; who will finance them so that they can limp along for another year doing nothing? During 2013 there will be hundreds of rollbacks (reverse splits) followed by price retreats back below a dime. In a few cases these juniors will own advanced projects, "diamonds in the rough" that have some value, perhaps to be reinterpreted for brownfields exploration targeting a Big Anomaly. But the rest will join the 116 juniors with more than $200,0000 we classify as shells because they do not have a discernible flagship project worthy of additional exploration dollars. Because these shells will end up trading below a dime, insiders will have the opportunity to refinance so that the core group owns 90% of the paper at cheap prices, the traditional "tight shell" regarded as essential for a proper promotion and funding cycle.
The TSX/TSXV, however, is not the same as the OTCBB pump and dump machine. The potential audience for the resource juniors is small and sophisticated, even among retail investors. Liquidity is more valuable that illiquidity when it comes to place bets on real fundamental outcomes. Companies where the insiders own all the cheap paper will be shunned by the market. And when the corporate administrators discover that there is no need for shells, hundreds of them will simply disappear, either through the suspension-delisting cycle or by merging redundant members of a management stable into a single junior. The departure of 500 resource juniors would be a healthy development for the sector because when the retail investor does return to this sector, we want the field of choices not to be diluted with worthless distractions.
The group to watch during 2013 will be the 428 juniors with advanced projects undergoing feasibility demonstration. These may benefit from a slingshot effect if the market decides the macroeconomic glass is half full rather than half empty, rapidly boosting prices 100%-200% as M&A fever kicks in. But the really interesting companies to investigate will be the 506 juniors that have more than $200,000 working capital and have projects that could deliver a major discovery that provides 10, 20, 30-fold price gains from their current depressed levels. These are the ones which could attract the retail investor, but to attract the retail investor an antidote to the predatory spiders must be created, an antidote in the form of a system that facilitates visualization of the potential outcome in both physical and monetary terms, and externalizes it into a public forum through a wisdom of crowds process. Such a dynamic consensus outcome visualization will allow a resource junior to bend like a reed when the hurricane blows, snapping back to the equilibrium price as fundamentals oriented speculators rush in to take advantage of the temporary good speculative value created by the volatility traders. No longer will the resource junior be a fragile sapling easily broken by a destructive trading culture devoid of legitimate purpose. There will still be plenty of volatility, but it will revolve around competing visualizations of the potential outcome, making the Canadian junior resource sector stronger, perhaps "antifragile" in the sense intended by Nassim Taleb. I have developed a plan for how this can be done; its seeds are in the rational speculation model.

Copyright © 2013 by Kaiser Bottom Fish   All rights reserved worldwide.


Kaiser Bottom Fish - Kaiser Blog - Bracing for the extinction of 500 juniors or an entire institution? - Mon Jan 21, 2013


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January 18, 2013

#Bakken Production fell in November for the first time in 20 months- Implications






Big question is: Are we peaking in the Bakken sooner than expected. Too early to say. With very high decline rates and a falling rig count ( see attached), it is hard to see how the production could continue to increase at the same pace.
 
This could have massive implications for the US oil price: help the WTI discount and heavy oil discount overtime.
Bakken Oil Output Fell in November for First Time in 18 Months
By Dan Murtaugh - Jan 11, 2013 11:03 PM GMT+0100
Oil output from North Dakota’s portion of the Bakken shale formation slipped in November for the first time in 20 months after producers began pulling rigs out of the state.
Production declined 2.2 percent from October to 669,000 barrels a day, according to the North Dakota Industrial Commission. It was the first month-to-month drop since April 2011. The decline closely followed a decline in rig counts in the state, from 210 on Oct. 19 to 181 on Nov. 30, according to data compiled by Smith Bits, a drilling products and services provider owned by Houston- and Paris-based Schlumberger Ltd. (SLB)
Bakken wells tend to have steep decline rates because they’re created with directional drilling and hydraulic fracturing,James Williams, president of WTRG Economics in LondonArkansas, said by telephone.
“The question is, are you drilling enough new wells to make up for the decline?” he said. “With a little decline in the rig count, and the very fast depletion rate of the wells, it’s not terribly surprising that the Bakken production leveled off.”
Increased production out of the Bakken, the Eagle Ford formation in South Texas and the Permian Basin in West Texas helped U.S. oil output exceed 7 million barrels in the week ended Jan. 4 for the first time since 1993.
Production in the Williston basin, which includes the Bakken, will rise to 1.19 million barrels a day by December 2014 from 840,000 in December 2012, the U.S. Energy Information Administration said in its Short-Term Energy Outlook Jan. 8.
To contact the reporter on this story: Dan Murtaugh in Houston at dmurtaugh@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
 
 
 
 
 

2013 #BP World #Energy #Outlook 2030 Part 2 - Supply

Asia Pacific will account for nearly half of global growth. Together Shale Oil & Gas will account for almost a fifth of the increase in global energy supply to 2030.

The latest BP World Energy Outlook 2030 is out.  Here are some excerpts from the report.

Asia Pacific for almost a fifth of the increase in global energy supply to 2030

World primary energy production growth matches consumption, growing by 1.6% p.a. from 2011 to 2030.
As is the case for energy consumption, growth in production will be dominated by the non-OECD countries, which will account for 78% of the world’s increase.These countries will supply 71% of global energy production in 2030, up from 69% in 2011 and 58% in 1990.
The Asia Pacific region, the largest regional energy producer, shows the most rapid growth rate (2.2% p.a.), due to large indigenous coal production, and accounts for 48% of global energy production growth. The region provides 35% of global energy production by 2030. The Middle East and North America contribute the next largest increments for supply growth; and North America remains the second largest regional energy producer.
Energy production will grow in all regions but Europe.

The Shale Oil & Gas Revolution




High prices are also supporting the expansion of supply, and not just from conventional sources – the development and deployment of new technologies across a range of energy sources is opening up new supply opportunities at scale.
The “shale revolution”, first for gas and then for oil, is an example of this. From 2011 to 2030 shale gas more than trebles and tight oil grows more than six-fold.Together they will account for almost a fifth of the increase in global energy supply to 2030.
High prices for fossil fuels also support the expansion of non-fossil energy. Renewable energy supply more than trebles from 2011 to 2030, accounting for 17% of the increase in global energy supply. Hydro and nuclear together account for another 17% of the growth.
Despite all the growth from shale, renewables and other sources, conventional fossil fuel supplies are still required to expand, providing almost half the growth in energy supply. 






The MasterMetals Blog

2013 #BP World #Energy #Outlook 2030 Part 1 - Demand


Population growth in Emerging Economies will make up 90% of global energy demand growth.

The latest BP World Energy Outlook 2030 is out.  Here are some excerpts from the report.

Population and income growth underpin growing energy consumption
Population and income growth are the key drivers behind growing demand for energy. By 2030 world population is projected to reach 8.3 billion, which means an additional 1.3 billion people will need energy; and world income in 2030 is expected to be roughly double the 2011 level in real terms.
World primary energy consumption is projected to grow by 1.6% p.a. from 2011 to 2030, adding 36% to global consumption by 2030.The growth rate declines, from 2.5% p.a. for 2000-10, to 2.1% p.a. for 2010-20, and 1.3% p.a. from 2020 to 2030.
Low and medium income economies outside the OECD account for over 90% of population growth to 2030. Due to their rapid industrialisation, urbanisation and motorisation, they also contribute 70% of the global GDP growth and over 90% of the global energy demand growth.
page9image8248

Industrialisation and growing power demand increase the world’s appetite for primary energy

Almost all (93%) of the energy consumption growth is in non-OECD countries. Non-OECD energy consumption in 2030 is 61% above the 2011 level, with growth averaging 2.5% p.a. (or 1.5% p.a. per capita), accounting for 65% of world consumption (compared to 53% in 2011).
OECD energy consumption in 2030 is just 6% higher than in 2011 (0.3% p.a.), and will decline in per capita terms (-0.2% p.a. 2011-30).
Energy used for power generation grows by 49% (2.1% p.a.) 2011-30, and accounts for 57% of global primary energy growth. Primary energy used directly in industry grows by 31% (1.4% p.a.), accounting for 25% of the growth of primary energy consumption.
The fastest growing fuels are renewables (including biofuels) with growth averaging 7.6% p.a. 2011-30. Nuclear (2.6% p.a.) and hydro (2.0% p.a.) both grow faster than total energy. Among fossil fuels, gas grows the fastest (2.0% p.a.), followed by coal (1.2% p.a.), and oil (0.8% p.a.). 

Source: 2013 BP World Energy Outlook


The MasterMetals Blog

January 17, 2013

Rio Tinto CEO pays price of calamitous acquisitions | Reuters $RIO

Rio Tinto sacked chief executive Tom Albanese on Thursday and revealed a $14 billion (8 billion pounds) writedown in connection with his two most significant acquisitions, Mozambican coal and the Alcan aluminium group.

Rio Tinto CEO pays price of calamitous acquisitions

Photo
9:23am GMT
By Clara Ferreira-Marques
LONDON (Reuters) - Rio Tinto sacked chief executive Tom Albanese on Thursday and revealed a $14 billion (8 billion pounds) writedown in connection with his two most significant acquisitions, Mozambican coal and the Alcan aluminium group.
A mining heavyweight who joined Rio two decades ago, Albanese will be replaced by iron ore boss Sam Walsh. Doug Ritchie, who led the acquisition and integration of the Mozambican coal assets, was also shown the door.
Alaska-trained Albanese had until now survived the consequences of his disastrous $38 billion acquisition of Alcan in 2007, a bruising top-of-the-market deal when Rio was under pressure from rivals to bulk up or be acquired.
The deal turned bad as markets crumbled and aluminium prices slumped. Rio has since seen years of losses in aluminium and taken billions in impairments - it had already taken an $8.9 billion charge on those struggling assets a year ago.
Walsh was welcomed by investors and analysts as a safe pair of hands, but many questioned whether the veteran would be a long-term solution for the group, and raised concerns over management of a group that also announced the departure of its chief financial officer last July.
"It's another black mark in terms of (Albanese's) M&A record and I suppose, given the magnitude of this writedown ... I'm not surprised that he's stepping down with this, nor am I surprised that Doug Ritchie is," analyst Jeff Largey at Macquarie said.
Rio had planned to shrink the aluminium division by hiving off most of its Australian and New Zealand assets, but industry sources say it has not been mobbed by buyers.
Albanese then spearheaded a deal to buy Mozambique-focused coal miner Riversdale in 2011, fighting off rival bids from steelmakers. There, however, Rio has come up against infrastructure problems more challenging than anticipated.
News of Albanese's departure and the writedown, more than twice its 2011 profit, took the market by surprise, knocking Rio shares down 2.5 percent to 3,372 pence in early London trading.
"I wasn't expecting the $14 billion writedown," said Tim Schroeders, a portfolio manager at Pengana Capital, which owns Rio Tinto shares. He said the departures pointed to a company under pressure to do a better job of managing its purse strings.
"I think it's clearly a case of the board's laid down the law in terms of stricter accountability than we had pre-(crisis)," he said.
TAKING THE HIT
Rio said on Thursday the impairments would include a charge of around $3 billion relating to the Mozambique business, as well as reductions in the carrying values of Rio's aluminium assets in the range of $10 billion to $11 billion.
The group also expects to report a number of smaller asset writedowns in the order of $500 million. The final figures will be included in Rio Tinto's full year results on February 14.
"It is non-cash, it doesn't impact valuation, it doesn't impact the earnings near term. But (flagship Mongolian copper-gold mine) Oyu Tolgoi's still to plan," said one London analyst who declined to be named. "For me, it's clearly negative, but it's not the end of the world."
Neither Albanese nor Ritchie will take lump-sum payments and both will forfeit bonuses on departure, including outstanding bonus share entitlements earned in previous years.
Albanese is the latest chief executive of a major mining company, many of whom took the reins in 2007, to step down or announce his departure. BHP Billiton has said it is seeking a replacement for chief executive Marius Kloppers, and Anglo American has replaced chief executive Cynthia Carroll.
(Additional reporting by Sonali Paul in Melbourne, Jim Regan in Sydney and Sarah Young in London)
© Thomson Reuters 2011. All rights reserved.

Rio Tinto CEO pays price of calamitous acquisitions | Reuters


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January 14, 2013

Greeks ask if recovery must trump environment $ELD #Gold

El Dorado gets some more bad publicity for its Greek mine. 

From The International Herald Tribune:

Greeks ask if recovery must trump environment


BY SUZANNE DALEY

IERISSOS, GREECE — In a forest near here, bulldozers have begun flattening hundreds of acres for an open-pit gold mine and processing plant that a Canadian company hopes to open within two years. The company, Eldorado Gold, has also reopened other mining operations in the nearby hills, digging for gold, copper, zinc and lead.

For some local residents, all this activity, which promises perhaps 1,500 jobs by 2015, is a blessing that could pump some life into the dismal economy of the surrounding villages in this rural northeast region of Greece.

But for hundreds of others, who have staged repeated protests, the mining operations are nothing more than a symbol of Greece's willingness these days to accept any development no matter what the environmental cost. Only 10 years ago, they point out, Greece's highest court ruled that the amount of environmental damage mining would do here was not worth the economic gain.

''This will be a business for 10, maybe 15 years, and then this company will just disappear, leaving all the pollution behind like all the others did,'' said Christos Adamidis, a hotel owner here who fears that the mining operations will end up destroying other local businesses, including tourism.

''If the price of gold drops, it might not even last that long,'' Mr. Adamidis said. ''And in the meantime, the dust this will create will be killing off the leaves. There will be no goats or olives or bees here.''

Tensions over new development programs are being felt elsewhere in Greece, too, as the country stumbles into its sixth year of recession, eager to bring in moneymaking operations and forced by its creditors to streamline approval processes. Environmentalist are objecting to plans that would sell off thousands of acres for solar fields and allow oil exploration near delicate ecosystems.

''We see laws changing, policies changing,'' said Theodota Nantsou, the policy coordinator of the World Wide Fund for Nature in Athens. ''We see things getting rolled back under the guise of eliminating impediments to investment. But over the long run all these things will have a heavy cost.''

The fund says standards are being ignored or lowered virtually across the board, affecting air, water and land use. Worries include a reduction of mandatory environmental impact reviews, plans for increasing the use of coal, and the likelihood that 95 percent of an environmental fund — more than a billion dollars collected for projects like improving energy efficiency and sustaining nature conservancies — will be absorbed into the general government budget.

In June, the fund issued a report saying it was witnessing an ''avalanche of serious environmental losses.'' It said some rollbacks were an attempt to fulfill the demands of the troika of creditors — the European Central Bank, the International Monetary Fund and the European Commission — that have been sustaining Greece in recent years. But it said that, to an equal extent, the losses were due to initiatives put forward by various ministries.

But no project appears to have elicited more of a public outcry than the resumption of mining operations in the mineral-rich hills here, where legend has it that Alexander the Great also mined for gold. Past mining operations here have been boom-and-bust enterprises that swung with the price of metals and left behind ugly piles of sandy gray tailings.

But perhaps as much as anything, the anger over the mines is a reflection of the fundamental distrust many Greeks feel toward their government, firm in their belief that most officials are busy enriching themselves, their friends and their families at the expense of the country.

One columnist, Nick Malkoutzis, writing in the conservative daily Kathimerini, said it was hard to blame villagers for their distrust, when so often companies had been allowed to ignore regulations. ''Perhaps in another country, locals would feel more comfortable with the project because the process for awarding public contracts or environmental certificates is transparent and trustworthy,'' he wrote.

Opponents complain, for instance, that while making the deal with Eldorado, the government failed to ensure that Greece received a percentage of the earnings, a common practice in mining contracts.

And they believe the $50 million letter of credit the government secured as a guarantee against any problems is not nearly enough. A spokesman for Eldorado, Kostas Georgantzis, said the company had actually offered more, but that was all the government wanted.

Until recently, environmentalists were beginning to feel optimistic about Greece. Green issues dominated the political agenda after George Papandreou was elected prime minister in 2009. He established an Environment, Energy and Climatic Change Ministry and appointed a noted environmentalist to head it. He talked with enthusiasm of eco-tourism and renewable energy.

But as Greece's financial problems snowballed, the head of the ministry was replaced by the former finance minister, George Papaconstantinou, who is now embroiled in a scandal over whether he removed family members from a list of Greeks with Swiss bank accounts. Shortly after his appointment, the permit for mining was issued, though it is still under review in the courts.

Officials of the Environment Ministry, in a written response to questions, acknowledged that they were overhauling regulations with a view to making ''modern environmental policies'' go hand in hand with much-needed investments. But they said the World Wide Fund for Nature's report was ''excessively negative'' in its conclusions.

They also defended the decision to reintroduce mining in the Chalkidiki area, in which Ierissos lies, saying that northern Greece constituted a ''wealth reservoir'' of metals worth more than €20 billion, or $27 billion. It said the permit was issued after an eight-year period of preparations, evaluation and public consultation that ensured that the mining activity would not damage the environment.

In fact, the officials said, the new activity would ensure that the acidic runoff from abandoned mine operations would be averted and modern practices of waste management put in place. The ministry officials said they were unable to explain the letter of credit because the official in charge of that was on vacation.

Eldorado has big plans for the region. It intends to invest €1 billion in various mining operations there, and its executives expect mining activities to last 15 years or more.

But some opponents question that, too, noting that right now the price of gold hovers at $1,700 an ounce, making even the tailings left behind by past mining efforts valuable. Eldorado is already at work reprocessing those tailings, which still contain about 300 grams, or 11 ounces, of gold per ton. But the new open pit mine is expected to produce only 100 grams per ton. What will happen if the price of gold drops, they ask?

Eldorado officials say the villagers need not worry because the open pit mine will also yield copper. But the villagers are not so sure.

The new mining operations have divided the region. Most often it is those who live close to the sea, where tourists arrive in the summer, who oppose the project and those who live in the hills, where there is little work, who support it.

''These jobs mean that the barber and the doctor will have work too,'' said Kostas Karagiannis, who has been working at clearing the forest. ''It is not just the miners who benefit.''

But opponents of the mines worry about dust and groundwater pollution. In the last year, opponents, many of them retirees, have staged more than a half-dozen demonstrations, some of which have been broken up by the police with tear gas and rubber bullets.

Both sides point fingers. Mining officials say the villagers surrounded city hall and kept the mayor imprisoned for eight hours at one point. But the villagers say that during one particularly large demonstration at the end of October, when 21 villagers were arrested, the police used brutal tactics.

Rania Ververidis, 62, who with her husband retired to a small cabin a block from the sea near the mines, said that she had been ordered out of her car and told to kneel. At that point, she said, a police officer had stomped on her ankle. She was still limping three weeks later.

But she said she intended to protest some more. She fears that Greece is in the process ''of selling everything.'' ''We can't let that happen without doing anything, '' she said.

Dimitris Bounias contributed reporting. 

January 9, 2013

Eco Oro gets its final death call: #Colombia Environment ministry to create park effectively rules out #mining in N. Santander province

Colombia to prohibit mining in mineral-rich northern area

The move by the country's environment ministry to create the park effectively rules out any mining in the northern Santander province.
Author: Reuters
Posted: Wednesday , 09 Jan 2013
BOGOTA (Reuters) - 
Colombia will create a wilderness park and prohibit mining in a region rich in gold and silver in the country's northeast where Canada’s Eco Oro Minerals Corp had hoped to produce precious metals, the government said on Tuesday.
Eco Oro, formerly known as Greystar Resources, had faced opposition from local authorities, the country's inspector general and environmental groups. They called its Angostura gold project a threat to the delicate Andean ecosystem.
The move by the country's environment ministry to create the park effectively rules out any mining in an area of more than 12,000 hectares in northern Santander province.
The company could not be immediately reached for comment.
Critics have said mining would affect Santurban, a so-called "paramo" area believed to be the source of rivers and streams that supply water to 2.2 million inhabitants in Colombia.
The company had rejected those concerns, saying its mine would pose no risk to the environment.
Angostura has 10.2 million troy ounces of measured and indicated gold reserves and 3.4 million of inferred resources, with 74 million ounces of silver reserves and resources, according to preliminary studies.


Colombia to prohibit mining in mineral-rich northern area - FAST NEWS - Mineweb.com Mineweb

The MasterMetals Blog

January 3, 2013

Kaplan’s #Electrum buys C$149 million worth of #NovaGold - #Gold - Mineweb.com

It can all be summarized as follows:
"You've got a perfect storm with no apparent solution," he [Kaplan] told the WSJ, pointing to the declining mine supply of gold and financial wherewithal of Western governments. "If the world does well, gold will be fine. If the world doesn't do well, gold will also do fine … but a lot of other things could collapse."

Read the article here: Kaplan’s Electrum buys C$149 million worth of NovaGold - JUNIOR MINING - Mineweb.com Mineweb