Editorial: Korean trade deal helps Canadian coal, aluminum

The Canadian government presented another gift to Canada’s mining industry with the signing of a new free-trade agreement with mineral-hungry South Korea.

The Mining Association of Canada describes the Asian powerhouse as “an important market for Canada’s mining products,” and underlines that the agreement will swiftly reduce tariffs on Canadian mineral products that are upwards of 8% for metals, including iron, aluminum and nickel.

The MAC notes that in 2012, the value of Canadian mineral exports to South Korea exceeded $1.8 billion. Coal accounted for more than $1.1 billion of that sum, followed by aluminum, copper, nickel and zinc.

Teck Resources is a major producer of metallurgical coal in Canada for markets in Asia, and president and CEO Don Lindsey congratulated the Canadian government in a prepared statement, describing the agreement as a “milestone in Canada’s continued efforts to enhance market access for our products across the Asia Pacific.”

 The Aluminum Association of Canada also gave its thumbs-up to the deal, and said it “applauds the excellent work” by the Canadian negotiator, Minister of International Trade Edward Fast.

The free-trade agreement with South Korea is another move towards increasing open markets for the Canadian mineral products after the recent, similar agreement in principle with the European Union.

• Taking another step in its investigation launched last October into allegations of major, long-term rigging of US$5.3-trillion-a-day foreign exchange markets — of which London is the leading global centre — the Bank of England appointed veteran U.K. commercial lawyer Anthony Grabiner to lead its investigations into whether any Bank of England officials were involved in, or aware of, manipulation of foreign exchange markets between July 2005 and December 2013.

The Bank of England said in early March that it has suspended one employee and is overhauling the way it oversees and interacts with banks and financial markets in response to allegations that key currency benchmarks were rigged.

As part of a new governance structure that will be further detailed on March 18, Bank governor Mark Carney is creating a new deputy governor position to be responsible for banking and markets.

Carney, the former head of the Bank of Canada, appeared before British lawmakers for four and a half hours in early March, where Reuters reported he said the FX-rigging allegations were “as serious as Libor — if not more so — because this goes to the heart of the integrity of markets, and we have to establish the integrity of markets.” (“Libor” here refers to the far-reaching interest rate-rigging scandal that was exposed in 2012 and led to criminal charges against traders, resignations of top bankers and US$6 billion in settlements paid by banks.)

Relating to the latest FX-rigging allegations, Reuters reports that more than 20 currency traders at several of the world’s biggest banks have already been placed on leave, suspended or fired.

Certainly these latest FX allegations add another argument to the gold bugs’ long-standing case for widespread manipulation and suppression of the gold price: why should gold be the one major market that isn’t rigged?

• The latest world-exploration trends report from SNL Metals & Mining (formerly the Metals Economics Group) shows that mining companies slashed exploration in 2013 amidst lower metal prices, uncertain demand and poor market conditions.

SNL calculates the global mining industry’s total budget for nonferrous metals exploration was US $15.2 billion in 2013, or a 29% drop from the record US$21.5-billion total in 2012.

SNL says the “steep plunge” is “due to a combination of investor wariness of the junior sector that made it difficult for most companies to raise funds, and a strong pullback by producing companies on capital and exploration spending to improve their margins.”