Prosperity showdown

Taseko Mines’ Prosperity project has started to sound more ironic by the day, after the proposed open-pit copper-gold mine in central B.C. was harshly criticized in a federal review panel’s environmental assessment, especially for its planned destruction of a lake for tailings disposal.

• Taseko management was in damage-control mode in early July, telling shareholders that many people had “misinterpreted the panel findings as a result of poorly reading a poorly written executive summary.”

With the provincial government having already approved the $800-million project, Taseko is now waiting on the federal cabinet to give its blessings. The cabinet will theoretically weigh all the costs and benefits of Prosperity, unlike the federal review panel, which only looked at its environmental aspects.

The project has split communities in the region, with the local Tsilhqot’in First Nation and the Union of B.C. Indian Chiefs urging its rejection, and non-native residents of nearby communities, such as Williams Lake, are often in strong support of the project, owing to the jobs it will create.

If the local First Nations communities continue to vehemently oppose this project, odds are Prosperity won’t go ahead as currently envisaged, much as we saw with Northgate Minerals’ expensive but futile efforts to expand it Kemess mine in north-central B.C.

Another wrinkle for Taseko and all B.C. miners is the rapidly sinking popularity of the pro-mining, ruling Liberal party, which is now trailing the socialist New Democratic Party in recent polling by an astounding 23 percentage points, after losing roughly half of its voter support by introducing the harmonized sales tax.

• To the relief of many in the industry, the rancorous, year-long strike at Vale’s Ontario operations officially ended, with members of the United Steelworkers Local 6500 and 6200, representing production and maintenance employees in Sudbury and Port Colborne, voting decisively “yes” on a new five-year contract.

Vale management won major concessions by forcing new employees into defined-contribution pensions and reforming bonuses tied to the nickel price. Existing union members won wage increases and are able to retain their more generous defined-benefits pensions.

• In Piura in northern Peru’s Sechura province, Vale has kicked off production at its new US$566-million Bayovar phosphate mine and concentrating plant, which will yield 3.9 million tonnes of phosphate rock per year at full capacity. Tapping into 238 million tonnes of reserves, mine life is set at 27 years, with most of the product expected to be sold into the growing and import-dependent Brazilian fertilizer market. To support the mine, Vale also built a 32-km road, 5-km conveyor belt system and maritime terminal.

Vale picked up the greenfield Bayovar asset in a 2005 auction, and it is its first foray into the phosphate market. The major is also developing further phosphate projects in Mozambique and Brazil.

Vale’s potash assets include the Vassouras mine in Sergipe (the only potash mine in operation in Brazil) and it’s developing projects in Carnalita (also in Sergipe), Rio Colorado and Neuqun in Argentina, and Regina (Canada).

• Controversial Gabriel Resources founder Frank Timis popped up in the news again as his London-listed, West African-focused iron ore vehicle African Minerals struck a $1.5-billion deal with Shandong Iron and Steel Group. It’s African Minerals’ second deal with a Chinese steelmaker this year. The money will go towards building African Minerals’ flagship iron ore mine at Tonkolili in Sierra Leone. In return, Shandong gets 25% of Tonkolili and two related subsidiaries, plus a long-term, discounted offtake agreement.

The deal pushed African Minerals share price up 15%, giving it a US$1.7-billion market cap. Timis owns a 15% stake worth US$250 million. Timis has been blackballed from serving as a director on companies listed on the Toronto Stock Exchange and the Australian Stock Exchange (ASX). The Toronto ban related to Timis’s infamous two convictions in the 1980s for heroin possession in sufficient quantity to be deemed likely for sale, and his involvement with AIM-listed Regal Petroleum, which was hit with a record 600,000 fine for misleading investors with respect to a potential oil discovery in Greece while Timis was executive chairman.

The similar Australian ban is on shakier ground, following a ruling by the ASX Appeals Tribunal that a ban on two Timis-linked companies — African Petroleum (formerly Global Iron) and International Petroleum — was “infected by error and must be set aside.” However, the tribunal can only make recommendations and cannot overturn a decision by the ASX, which has yet to respond to the tribunal’s scolding.