Written by Jeff Nielson Monday, 10 December 2012 12:10
There were a number of points to examine regarding Freeport Copper & Gold Inc’s $9 billion purchase of two energy companies. Sadly, it doesn’t appear that the Corporate Media has latched onto any of them.
One report characterized this deal as:
…a bold bid to diversify into the U.S. energy sector as copper’s prospects wane.
While this quote does absolutely nothing to explain the Freeport deal, it does perhaps come close to a record for cramming the most idiocy into a fourteen word sentence-fragment.
Let’s begin with the suggestion that “copper’s prospects” have waned. Has anyone heard the government of China (or any of the other Asian Tigers) proclaim that they planned to “stop growing” their economies? Has anyone ever heard of a modern economy which could develop itself without large amounts of copper (particularly copper wiring)?
The ¾ of the world’s population in “emerging economies” are at most ¼ of the way toward catching up with the more technologically advanced West. This means we are still in the early stages of the longest/strongest global economic boom in history. Thus the inference that Freeport is somehow bailing-out of copper production and moving into oil & gas is just silly.
Similarly, the suggestion further into the same article that it has become “too hard to find” new copper projects to develop (and that’s why Freeport is moving into energy) is an absurd interpretation of the actual dynamics here. Unlike oil, no one is talking about “peak copper.” There is plenty of copper in the world. All that has changed is that as the richest deposits get mined-out these mega-producers have been forced to move toward lower-grade projects – in order to find the mega-tonnages that these mining giants lust over.
Here we get to the true purpose of the Freeport deal: hedging. What we are supposed to believe here is that none of the business news reporters from Forbes, or Reuters, or these other Corporate Media enclaves understand that mining companies use lots of energy. Apart from wages, energy costs are far-and-away the largest cost of production.
As lower-grade copper deposits (in the future) make copper miners like Freeport even more energy-intensive companies, and Peak Oil ensures that energy prices will increase at least as fast as copper prices; this is not a “bold move” at all. Rather, it would be reckless for these mining giants to forge ahead with their operations without some strategic plan in place to mitigate against rising energy prices.
Indeed, the Yahoo article explicitly notes that “a handful of major miners” have already added oil & gas assets. Yet despite now several examples of what is an obvious hedging strategy, we’re supposed to believe that no one in the Corporate Media can figure out what is really going on here?
Written by Jeff Nielson Saturday, 08 December 2012 15:09
by Brian Boutilier
As 2012 winds down and I look ahead to the investment climate in 2013, I’m troubled by increasing warnings of potential “hyperinflation” ahead. As an investor, one way I can deal with this potential threat is to look for producing mining companies with large, verified resource deposits, and the capacity to develop these resources. One Company which fits that description is Revett Minerals, a copper and silver miner that I recently had the pleasure of visiting on a recent tour of their operations.
Imagine if you will, a morning walk, the muted foot-falls of leather on a dirt path. The quiet of a valley morning unbroken, the view ringed by the Cabinet Mountain Wilderness of Montana. An inverted mist hanging over a stream, the air so moist it seems a shame to let the morning sun break up such a splendorous sight. A bend in the road, and another scene evolves.
There are banked hills, and earthworks akin to what The Army of Engineers would create, such as for a small reservoir. Upon further inspection, this appears as an upper plateau, tall grass growing pale under the sun, the valley a few hundred meters distant. In that valley, a stream runs through, laden with trout; frogs sunning themselves on the bank. A stand of yellow pines blankets the far hillside, fair cover for elk to calf in the spring.
This scene is disrupted by activity in the foreground, pipes are delivering a brown, clay-like slurry coming from the direction of the mountain range above. Its contents landing like a soft serve, piling up over time. Pan out, and one sees that there were hundreds of square meters of this dried slurry, aging, drying out, creating fields that are being planted. Something is going on here, perhaps some conservation experiment by the forest service?
Readers need to appreciate the natural beauty of Northern Montana. I just described the scene at the Troy Operation of Revett Minerals – an operating copper/silver mine -- amid the Cabinet Mountain Wilderness of the surrounding area. The “conservation experiment” is their tailing pond/fields.
This isn’t some “sideshow” for Environmentalists, but an operation within the operation, and one that Revett is very proud of. We spent as nearly as much time touring the tailings and conservation areas as we did the mine and the mill. Many in society have a pre-existing distrust of large mining operations, and the environmental hazards that they pose.
That being stated, it can be hard for some to wrap their heads around the idea that mining operations and conservation aren’t mutually exclusive. Yet when visiting Revett Minerals, you simply wouldn’t know you were near a mining operation if you didn’t have the sign to remind you.
One approaches the plant, and mine on a simple gravel road, ending in what appears to be a town garage in a rural area. The mine is further above, at the foot of the mountain with the ground-level entrance virtually out of sight. The ramp and tunnels ascend into the mountain. This is a unique ore body. While “underground”, it isn’t deep. There are few watering issues, the water runs naturally from mountaintop, down through the mountain. Even when its raining outside, or with snow melting in the spring, the water drainage issues through the mountain are minimal.
The ore-body consist primarily of 0.7% copper and 1 oz/ton silver, and is reportedly quite benign, having no arsenic or other chemicals that would harm the groundwater. They have to monitor the copper they are extracting, and a few other trace elements. The mine is a pleasant 55-60 degrees or so, and remains fairly constant throughout the year: mining heaven, and a robust workforce that appreciate how good they have it.
Because the ore-body is nearly devoid of chemicals such as arsenic, this makes it a comparatively clean operation from mine to mill to tailings pond below. The plant has no cyanide circuit, the end product is concentrate which is shipped to a smelter, for electrowinning and the eventual production of copper and silver. There are no leach fields, no liners; so consequently the ground water is not in danger of contamination by cyanide or other toxic chemicals.