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The world’s two largest silver mines have seen their productivity decline substantially due to falling ore grades and rising costs. Gone are the days when silver mines could produce silver at 15-20 ounces per ton. Today, the Primary Silver Mining Industry is likely producing silver at an average yield of 4-5 ounces per ton.

In my newest video, I discuss the changes that have taken place in the world’s two largest silver mines, the Cannington Mine in Australia and the Fresnillo Mine in Mexico. Falling ore grades and rising energy costs have contributed to the doubling and tripling of production costs at many silver mining companies. Investors who believe it still only costs $5 an ounce to produce silver, as it did in 1999, fail to grasp what is taking place in the silver mining industry:

A big problem that has confused investors is the reporting of the “CASH COST” metric by the mining industry. Some silver mining companies can brag that they have a very low cast cost of $5 an ounce, but they arrive at that figure by deducting their “by-product credits.” By-product credits are the revenues they receive from producing copper, zinc, lead, and gold along with their silver.

For example, Hecla Mining stated their silver cash cost of $0.16 per ounce for the first three-quarters of 2017. They were able to report that very low $0.16 cash cost by deducting $175 million of their zinc, lead and gold revenues. Hecla’s three silver mines had total revenues of $278 million, but they deducted $175 million in by-product credits to get the low $0.16 cash cost. They deducted 63% of their revenues to arrive at that low meaningless cash cost.

According to Hecla’s financial statements, they only made $4.2 million in net income on a total of $417 million in total revenues Q1-Q3 2017 (including $140 million from their Casa Berardi Gold Mine).

…click on the above link to read the rest of the article…

Mining CEO Warns Of Massive Deficits: “We’re At Critical Levels… Less Than 10 Days Of Supply”

January 22, 2018

Mining CEO Warns Of Massive Deficits: “We’re At Critical Levels… Less Than 10 Days Of Supply”

With much of the investment world focused on crypto currencies and blockchain, it’s no surprise that the fundamental building blocks of the physical world have been ignored for so long. The focus in recent years has been on mining digital assets, but in the real world mining companies that specialize in essential metals like silver and zinc have been warning of massive deficits that, as SGT Report notes in a recent interview with Callinex Mines CEO Max Porterfield, could easily lead to supply shortages.

With President Trump recently announcing a national infrastructure budget of over $1 trillion dollars and tensions on the Korean peninsula mounting, prices for base metals could rise sharply in coming months and years. Max Porterfield explains:

The growing conflict between North Korea and the United States continues to get stronger… North Korea doesn’t seem to be backing down at all…. This is going to potentially have a dramatic impact on the zinc market… People don’t realize that 55% of refined zinc production comes from three countries… China, Japan and South Korea…

The zinc market is already very, very tight… we’re in a supply deficit… you look at zinc inventories and those inventories are less than 10 days of zinc supply… and it has declined over 85% since 2012… we’re at critical levels.

The following chart shows just how much stockpiles are plummeting while demand continues to rise:

30-day-zinc-lme

In short, one misstep and the entire supply side could run dry. Which would mean that the prices for base metals used to manufacture most of the products and infrastructure we use on a daily basis could skyrocket:

…click on the above link to read the rest of the article…

Bitcoin Doesn’t Exist – 5

December 10, 2017

Bitcoin Doesn’t Exist – 5

Gustave Courbet Sunset on Lake Geneva 1876

Chapter 1 of this five-part series by Dr. D is here: Bitcoin Doesn’t Exist – 1

Chapter 2 is here: Bitcoin Doesn’t Exist – 2

Chapter 3 is here: Bitcoin Doesn’t Exist – 3

Chapter 4 is here: Bitcoin Doesn’t Exist – 4

Next up: all 5 chapters combined in one big essay.

Dr. D: Bitcoin can be stolen. Although “Bitcoin” can’t be hacked, it’s only software and has many vulnerabilities. If held on an exchange, you have legal and financial risk. If held at home, you could have a hard drive fail and lose your passwords. If it’s on a hardware fob like a Trezor, the circuits could fail. For a robust system, computers themselves are pretty fragile. You could write down your passwords on paper, and have a house fire. You could print out several copies, but if any of the copies are found, they have full access to your account and stolen without you knowing. You could have your passwords stolen by your family, or have a trojan take a screen or keystroke capture.

Hackers could find a vulnerability not in Bitcoin, but in Android or AppleOS, slowly load the virus on 10,000 devices, then steal 10,000 passwords and clear 10,000 accounts in an hour. There are so many things that can go wrong, not because of the software, but at the point where you interface with the software. Every vault has a door. The door is what makes a vault useful, but is also the vault’s weakness. This is no different than leaving blank checks around, losing your debit card, or leaving cash on your dashboard, but it’s not true that there are no drawbacks. However the risks are less obvious and more unfamiliar.

…click on the above link to read the rest of the article…

Bitcoin Doesn’t Exist – 1

December 5, 2017

Bitcoin Doesn’t Exist – 1

Gustave Courbet The wave 1869

A while ago, I asked a regular commenter at the Automatic Earth, who goes by the moniker Dr. D, to try and write an article for us. Not long after, I received no less than 31 pages, and an even 12345 words. Way too long for today’s digital attention spans. We decided to split it into 5 chapters. After we work through those 5, we’ll post it as one piece as well. Dr. D, who insists on sticking with his nom de plume, picked his own topic, and it’s -fittingly- bitcoin. A topic about which one can cover a lot of ground in 12345 words.

Now, I wouldn’t be me if I didn’t throw in my own two Satoshis: Dr. D claims that “..everyone has an equal opportunity to solve the next calculation..”, but while that may perhaps have been sort of true at the very start, it isn’t now. It’s not true for the computerless or computer-illiterate, for those too poor to afford the electricity required by bitcoin mining, and for various other -very large- groups of people.

The equal opportunity idea sounds nice, but I think bitcoin runs the risk of creating just another set of elites, while reinforcing existing elites, who can afford to either buy bitcoin at whatever price at some point in time, or spend large sums to build mining ‘installations’ in locations where electricity is cheap. And sure, there will be losers among elites too, but inequality itself will not change; only the faces of winners and losers will, while the world’s real losers will remain just that.

It’s nothing new of course, inequality is our society’s middle name, but maybe that is precisely the problem. Maybe bitcoin should have come with an inbuilt way to spread wealth, not just shift it around.

Then again, it may all just be a giant bubble. Or a bubble inside a bubble inside a bubble.

…click on the above link to read the rest of the article…

BITCOIN vs. GOLD: Which One’s A Bubble & How Much Energy Do They Really Consume

November 2, 2017

BITCOIN vs. GOLD: Which One’s A Bubble & How Much Energy Do They Really Consume

If you are investing in either Bitcoin or Gold, it’s important to understand which asset is behaving more like a bubble than the other. While it’s impossible to understand how the market will value these two very different assets in the future, we can provide some logical analysis that might remove some of the mystery associated with the market price of Bitcoin versus Gold.

I’ve read some analysis on Bitcoin profitability and energy consumption that seemed unreliable, so I thought I would put my two cents in on the subject.

For example, many sites are using the Digiconomist’s work on Bitcoin energy consumption. However, I believe this analysis has overstated Bitcoin’s energy consumption by a large degree. According to the Digiconomist, Bitcoin’s annual electric use is approximately 24 TerraWatts per year (TWh/yr):

In a recent article that was forwarded to me by one of my readers, How Many Barrels Of Oil Are Needed To Mine One Bitcoin, the author used the information in the chart above to calculate the energy cost to produce each Bitcoin. He stated that the average energy cost for each Bitcoin equals 20 barrels of oil equivalent. Unfortunately, that data is grossly overstated.

If we look at another website, the author explains in great detail the actual energy cost to produce each Bitcoin. According to Marc Bevand, he calculated on July 28th, that the average electric consumption of Bitcoin was 7.7 TWh/yr, one-third of the Digiconomist’s figure. Here is a chart and table from Marc Bevand’s site showing how he arrived at the figures:

This graph shows the increase in Bitcoin’s hash rate and the efficiency of the Bitcoin Miners at the bottom.

…click on the above link to read the rest of the article…

In Photos: The Canadian Mining Boom You’ve Never Seen Before

October 30, 2017

In Photos: The Canadian Mining Boom You’ve Never Seen Before

“If you’re in Vancouver this is way out in the middle of nowhere, but way out in the middle of nowhere is our backyard.”

Those are the words of Frederick Otilius Olsen Jr., the tribal president of a traditional Haida village on Prince of Wales Island, Alaska.

When I met him, he had travelled to Ketchikan, Alaska, to meet with officials about the risk posed by the mining boom across the border in British Columbia.

He stood on the boardwalk overlooking Ketchikan’s fishing fleet and waved his hands animatedly while he told me about how his culture — and southern Alaska’s economy — depends on salmon.

The week before, I’d spent several hours flying in a small fixed-wing plane over B.C.’s mining boom to capture never before seen images of the province’s largest and most remote mines.

Door removed, I captured hundreds of frames as we passed over the Red Chris copper and gold mine, which began operation in late 2014. Its tailings pond and dam rises impossible and angular out of a soft, sloping valley.

Set within the vast and largely intact headwaters of northwestern B.C.’s greatest wild salmon rivers, the Red Chris mine is just one of 10 mines either in operation, in development or in advanced exploration stages in this region.

It is owned and operated by Imperial Metals, the company responsible for the Mount Polley mine disaster in central B.C. If the name seems familiar, it’s because in 2014, a tailings dam at Mount Polley collapsed, resulting in one of the worst environmental disasters in Canadian history. All told, 24 million cubic metres of contaminated mining waste flooded into a lake — a source of drinking water and salmon-spawning ground that feeds the Fraser River.

…click on the above link to read the rest of the article…

Diesel is finite. Trucks are the bedrock of civilization. So where are the battery electric trucks?

June 18, 2016

Diesel is finite. Trucks are the bedrock of civilization. So where are the battery electric trucks?

Introduction to battery electric trucks

Heavy-duty diesel-engine trucks (agricultural, cargo, mining, logging, construction, garbage, cement, 18-wheelers) are the main engines of civilization. Without them, no goods would be delivered, no food planted or harvested, no garbage picked up, no minerals mined, no concrete made, or oil and gas drilled to keep them all rolling. If trucks stopped running, gas stations, grocery stores, factories, pharmacies, and manufacturers would shut down within a week.

Since oil, coal, and natural gas are finite, and biomass doesn’t scale up, clearly someday trucks will need to run on wind, solar, hydro, and geothermal generated electricity. Yet even batteries for autos aren’t yet cheap, long-lasting, light-weight, or powerful enough for most Americans to replace their current gas-guzzlers with. And given the distribution of wealth, few Americans may ever be able to afford an electric car, since two-thirds of Americans would have trouble finding even $1,000 for an emergency.

Trucks that matter — that haul 30 tons of goods, pour cement, haul mining ore, and so on can weigh 40 times more than an average car. So scaling batteries up for heavy-duty trucks (NRC 2014) is impossible now given the state of battery technology. For example, a truck capable of going 621 miles hauling 59,525 pounds, the maximum allowable cargo weight, would need a battery weighing 55,116 pounds, and could only carry about 4,400 pounds of cargo (den Boer et al. 2013). And because a heavy-duty truck battery is so heavy and large, charging takes too long — typically 12 hours or more.

And car battery development is hitting the brick-walls of the laws of physics and thermodynamics, yet truck batteries need to be even more powerful, durable, and long-lasting.

…click on the above link to read the rest of the article…

In One Year The US Mining Industry Lost More Money Than It Made In The Prior Eight

March 23, 2016

In One Year The US Mining Industry Lost More Money Than It Made In The Prior Eight

For anyone still looking for context to the biggest ever collapse in commodity prices in history, one far sharper and now longer than that in the deflationary aftermath of the Lehman failure, look no further than the chart below: as the WSJ notes, the U.S. mining industry, a sector which includes oil drillers, lost more money last year than it made in the previous eight.

Mining corporations with assets of $50 million or more recorded a collective $227 billion after-tax loss last year, according to Commerce Department data released Monday. That one year loss wipes out all the profits the industry had made since 2007, or almost a full decade worth of profits, gone in 12 months.

It wasn’t just shale drillers: other types of mining operations were stung by falling commodity prices tied to weak demand from China and other parts of the globe. Mining revenues also fell sharply, down 38% in the fourth quarter from a year earlier.

The faltering global economy also stung the manufacturing sector: as the WSJ notes, manufacturing revenue declined 7.8% in the fourth quarter from a year earlier, meaning dropping global demand for U.S.-made goods, which is nowhere more obvious than in Caterpillar’s impploding retail sales.

Finally, the WSJ hedges by saying that the declines come despite steady, if unspectacular, demand on the part of U.S. consumers. “Retailers’ revenue grew 1.5% in the fourth quarter from a year earlier. Annual revenue growth was between 1.5% and 2% all of last year. Retail sales tend to match up with other measures of consumer demand.”

One wonders how much longer the retail sector can sustain the headwinds from the manufacturing collapse if oil fails to rebound strongly back to where it needs to be for profitability to return to the mining sector, somewhere well north of $50.

Not on This Land: A Western Tribe Takes a Stand and Says No to Big Coal

November 18, 2015

Not on This Land: A Western Tribe Takes a Stand and Says No to Big Coal

The Northern Cheyenne are opposing a proposed railroad that would cut through their ancestral lands to haul Montana coal to the Pacific coast for export. An e360 video reports on the Cheyenne’s fight against the railroad and the extraordinary coalition of tribal people and ranchers who have joined together to stop the project.

With coal development on three sides of their Montana reservation, the Northern Cheyenne know the changes that coal can bring to the landscape. So when a rail line was proposed that would carry coal from yet another huge open-pit mine planned near their border, the Northern Cheyenne decided to oppose it.This e360 video, produced by The Story Group, tells the story of an unlikely alliance between the Cheyenne and local ranchers who are seeking to block the

Tongue River Railroad, which would run alongside the reservation and carry coal from the planned Otter Creek mine to rail lines that connect to Pacific ports. The tribe’s long fight against the railroad is coming to a head, with a decision by the federal Surface Transportation Board expected in the spring.

“This is our homeland,” tribal councilman Conrad Fisher tells the filmmakers. “It’s the cultural landscape, it’s the social landscape, it’s the spiritual landscape. Essentially, it’s the fabric of who we are as Cheyenne people.”

Watch the video.

The Haunting Legacy of South Africa’s Gold Mines

November 13, 2015

The Haunting Legacy of South Africa’s Gold Mines

Thousands of abandoned gold mines are scattered across South Africa, polluting the water with toxics and filling the air with noxious dust. For the millions of people who live around these derelict sites, the health impacts can be severe.

The name is derived from “happy prospect” in Afrikaans, and once upon a time, life and the gold haul were both good at the Blyvooruitzicht Gold Mine, 50 miles west of Johannesburg. But two years after the mine’s owners abandoned it because it was unprofitable, sewage runs in the streets of the old mining village, tailings impoundments cover nearby towns in dust, and illegal miners rule the abandoned shafts.

“I’m just going to take one or two potshots at them to keep them at a distance,” says Louis Nel, head of security at the now-abandoned Blyvooruitzicht.

Dean Hutton/Bloomberg via Getty Images

Mining waste piles from the closed Blyvooruitzicht gold mine line a roadside in South Africa.

He raises his shotgun and shatters the afternoon calm with several blasts. A few zama zamas — illegal miners whose title means “We try! We try!” in Zulu — run for cover.

Blyvooruitzicht is but one of thousands of abandoned mines scattered across South Africa, many from the gold industry. With recently shuttered mines adding to the massive impact of those left derelict years ago, the country faces a growing environmental, health, and social crisis created by a withering gold industry and inadequate oversight.

South Africa’s Department of Mineral Resources, or DMR, holds a list of 6,000 “derelict and ownerless” mines, which became the government’s problem over the years when the former owners disappeared. While the DMR slowly rehabilitates those mines— at a rate of about 10 per year — companies continue to walk away from operations such as Blyvooruitzicht, and both mining companies and the government are slow to accept responsibility.

…click on the above link to read the rest of the article…

Supreme Court rejects Rio Tinto’s efforts to dismiss Innu class action lawsuit

October 16, 2015

Supreme Court rejects Rio Tinto’s efforts to dismiss Innu class action lawsuit

Innu claim mines have harmed environment and their way of life

The Supreme Court of Canada has refused to end a class action lawsuit filed by two Innu communities against the Iron Ore Co. of Canada and the Quebec North Shore and Labrador Railway Co.

The country’s highest court dismissed with costs their appeal of a Quebec Court of Appeal ruling. No reasons were provided Thursday as is customary when the court makes such a decision.

The Innu First Nations of Uashat Mak Mani-Utenam (Uashaunnuat) and Matimekush-Lac John claim the IOC, which is majority owned by Rio Tinto, has violated their rights for nearly 60 years and are seeking $900 million in compensation.

The Innu claim the mines and other facilities have ruined the environment, displaced members from their territory and prevented them from practising their traditional way of life.

They also say a 578-kilometre railway between Schefferville and Sept-Iles has opened up their territory to “numerous other destructive development projects.”

‘A great victory’

The allegations have not been proven in court.

“Today’s decision by the Supreme Court is, in fact, a great victory for all First Nations in Canada that are seeking to force companies to respect their rights,” the chiefs of the communities said in a news release.

Uashaunnuat Chief Mike McKenzie said the Supreme Court ruling means Rio Tinto and its subsidiaries will no longer be able to evade its lawsuit, which now reverts to the Quebec Superior Court for trial.

“We are more determined than ever to see it through to the end and, sooner or later, the company will have to answer for what it has done, including its systematic violation of our rights since the 1950s,” he said.

…click on the above link to read the rest of the article…

Macroeconomic Instability For Emerging Markets Thanks To Commodity Bust

October 12, 2015

Macroeconomic Instability For Emerging Markets Thanks To Commodity Bust

The bust in commodity prices is sending ripples through the world of emerging markets.

Countries depending on resource extraction and exports of commodities have run into a brick wall this year the prices collapsed for all sorts of materials – oil, gas, coal, gold, copper, and more. The bust presents macroeconomic risks to these countries, and the risks are greater for economies that are less diversified and more dependent on commodities.

Already, we have seen the sharp loss in value for currencies in emerging markets. China devalued its currency over the summer, sending a wave of panicthrough emerging markets. The currencies of commodity exporters (Russia, Brazil, Mexico, Nigeria, and Iraq, just to name a few) were already under pressure before China’s devaluation, but China’s decision threw the weaknesses of emerging markets into sharp relief.

Related: Has Oil Finally Bottomed?

Commodities tend to go through booms and busts. The seeds of the latest “supercycle” for commodities were planted around a decade ago. Capitalizing off of the scorching growth in China, capital-intensive resource extraction projects were planned around the world. Between 2005 and 2014, a staggering $745 billion worth of investment flowed into new oil, gas, and mining projects. The sum peaked in 2008 and 2009, when petroleum and mining projects accounted for 10 to 12 percent of total foreign direct investment around the world.

Of course, an oil project, or a new coal mine takes several years to build and to bring online. That explains the massive volume of new capacity for all types of commodities that came online in the last two years or so. In other words, the run up in commodity prices between 2005 and 2010 sparked a wave of investment, but all that new capacity came online in 2013-2014, popping the bubble in commodity prices.

…click on the above link to read the rest of the article…

The stuff problem

September 30, 2015

The stuff problem

28.09.15-yes-to-renewables-590x393.jpg [Related Image]

‘Yes to renewables!’ Hundreds rallied outside the Victorian Parliament House, Melbourne, 10 December 2013. Takver under a Creative Commons Licence

How much mined material will we need to build a 100-per-cent renewable world? Danny Chivers works it out.

The problem with wind turbines, solar panels, ground-source heat pumps and electric cars is that they’re all made of stuff. When people like me make grand announcements (and interactive infographics) explaining how we don’t need to burn fossil fuels because fairly shared renewable energy could give everyone on the planet a good quality of life, this is the bit of the story that often gets missed out. We can’t just pull all this sustainable technology out of the air – it’s made from annoyingly solid materials that need to come from somewhere.

So how much material would we need to transition to a 100-per-cent renewable world? For my new NoNonsense book, Renewable Energy: cleaner, fairer ways to power the planet, I realized I needed to find an answer to this question. It’s irresponsible to advocate a renewably powered planet without being open and honest about what the real-world impacts of such a transition might be.

In this online article, I make a stab at coming up with an answer – but first I need to lay down a quick proviso. All the numbers in this piece are rough, ball-park figures, that simply aim to give us a sense of the scale of materials we’re talking about. Nothing in this piece is meant to be a vision of the ‘correct’ way to build a 100-per-cent renewably powered world. There is no single path to a clean-energy future; we need a democratic energy transition led by a mass global movement creating solutions to suit people’s specific communities and situations, not some kind of top-down model imposed from above. This article just presents one scenario, with the sole aim of helping us to understand the challenge.

– See more at: http://newint.org/blog/2015/08/15/material-requirements/#sthash.FQbbzNu7.dpuf

Tackle Climate Change Now or Risk 720 Million People Sliding Back Into Extreme Poverty Report Warns

September 26, 2015

Tackle Climate Change Now or Risk 720 Million People Sliding Back Into Extreme Poverty Report Warns

An astonishing 720 million people around the world face falling back into extreme poverty unless we tackle climate change immediately, warns a new report by the Overseas Development Institute (ODI).

The report was published as world leaders gathered this week at the United Nations General Assembly and agreed the Sustainable Development Goals(SDGs), among which is the eradication of extreme poverty by 2030.

This goal is achievable, according to the ODI, but not without a greenhouse gas (GHG) emissions peak in 2030, and a fall to near zero by 2100. “Climate change increases the probability that those who emerge from extreme poverty will be at risk of falling back into it,” it concludes.

Beyond 2030

Sustaining poverty reduction therefore relies on curbing climate change the report argues.“If the global community is serious about eradicating extreme poverty for good, it needs to think beyond 2030. Eradicating poverty by 2030 will be no great accomplishment if we are incapable of sustaining that achievement from 2030 onwards.”

It continues: “It is policy incoherent for big GHG emitting countries, especially industrialised ones, to support poverty eradication as a development priority, whether through domestic policy or international assistance, while failing to shift their own economy toward a zero net emissions pathway.”

As the report notes, progress on poverty eradication over the past two decades has reduced the percentage of people living on less than $1.25 a day in the developing world – defined as the extreme poor – from 43 percent in 1990 to about 17 percent as of 2011.

Sierra Club ✔@sierraclub

“In order to stop poverty, we must stop climate change.” – Jay Winter Nightwolf, Echota Cherokee nation. #ActOnClimate

8:04 AM – 24 Sep 2015

Analysing data on the impact of climate change on food prices, the effects of childhood malnutrition and stunting, the productivity of primary sectors (such as agriculture or mining), and increased droughts, the ODI estimates that up to 720 million people are at risk of facing extreme poverty from 2030 to 2050 under a business-as-usual scenario.

…click on the above link to read the rest of the article…

For the Love of Water: El Salvador’s Mining Ban

September 3, 2015

For the Love of Water: El Salvador’s Mining Ban

For some time now, U.S. and Canadian mining companies have been seeking out new mining sites in Latin America and elsewhere in the developing world. This is partly because high-grade ores that are easily accessible in the U.S. and Canada are in the process of being used up. It is also due to expensive litigation and mitigation costs that mining companies must undertake in developed countries. Not long ago, Salvadorans welcomed foreign owned mining companies into their country. Yet for the last several years, metal mining has been banned in El Salvador by presidential decree and citizen groups are now working to enact a permanent nationwide ban on such undertaking.

With six million people, El Salvador is the smallest and most densely populated country in Central America, as well as the most water-scarce. It also is one of the most environmentally degraded countries in Latin America. A period of rapid urbanization and industrialization in the 1990s deprived the country of about 20 percent of its subsurface water. Today, over 90 percent of its surface water is contaminated with industrial chemicals, making it unsuitable to drink even if the water is boiled, chlorinated or filtered beforehand.

In order to extract tiny particles of gold, mining companies have to apply a leaching process that involves the use of cyanide and enormous amounts of water. As NACLA reported in 2011, “the average metallic mine uses 24,000 gallons of water per hour, or about what a typical Salvadoran family consumes in 20 years.” In less developed countries where regulatory agencies are weak and water scarce, then metal mining can have serious public health and environmental consequences.

Back in 1992, after a lengthy and devastating civil war, reformed-minded Salvadorans were eager to rebuild their conflicted ravaged country. In the years that followed, the rate of economic growth was well above the average for Latin American countries.

…click on the above link to read the rest of the article…

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