Goodbye ‘Inco’

The end of the Inco era became official in the last week of May, as Vale announced it is killing the name “Vale Inco” for its nickel business. It will now simply be called “Vale.”

Rio de Janeiro-based iron ore powerhouse Companhia Vale do Rio Doce (CVRD) acquired Inco in late 2006, and created a new nickel business named “Vale Inco” and headquartered in Toronto. The CVRD mothership then rebranded itself as “Vale” in a global marketing campaign in 2007.

Vale’s presence in Canada’s via Inco’s old nickel assets continues to be controversial, with bitter strikes in Ontario and Labrador approaching the 1-year mark this summer. It comes from bad strategy on both sides: Vale Inco workers were foolish to strike exactly when it was clear to everyone that nickel was in massive oversupply, and Vale management has vastly underestimated the strength of the labour movement in Canada, whose members aren’t pushovers like they are in Brazil. Canadian union members’ bargaining position is also weakened by the fact that Vale’s managers don’t want to set collective bargaining precedents in Canada that its vastly larger and poorer workforce in Brazil will adopt as their own demands in the future.

• Well, you couldn’t keep Joe Conway out of the mining game for long. The seasoned mining and investment-banking executive who retired as president and CEO of Iamgold in mid-January has popped up into the public eye again as the new president and CEO of little-known gold junior Mala Noche Resources.

The announcement came as Mala Noche agreed to buy Goldcorp’s San Dimas gold-silver mine in Mexico for US$500 million. Located on the border of Durango and Sinaloa states, San Dimas comprises three underground gold-silver mines that produced 113,000 oz. gold and 5.1 million oz. silver last year.

Mala Noche — a moniker that may conjure up images for some of a rough night out drinking too many tequilas in Puerta Vallarta — is also going to change its name to a more-positive-vibed “Primero Mining Corp.”

• It’s a grubby story Canadians are long tired of, but for the benefit of our foreign readers, there was some closure to the long-standing controversy over the conduct of former Canadian Prime Minister Brian Mulroney after he left office in 1993 to return to life as a businessman, including a role from 1993 to the present as a prominent director at Barrick Gold.

After hiding the fact for many years, including during sworn testimony, Mulroney admitted to receiving cash payments on three occasions totaling at least $225,000 from German arms dealer and lobbyist Karlheinz Schreiber, who now sits in a German jail after having been convicted of income-tax evasion. Mulroney failed to declare the funds as income for many years and kept it in places such as a home safe and a safety deposit box rather than a bank account, and never came up with a convincing story as to why Schreiber was handing him that money.

All this and more was detailed in a three-year investigation by Justice Jeffrey Oliphant of Manitoba, who concluded in his newly released 782-page report that Mulroney’s relation with Schreiber was “inappropriate.”

Barrick shareholders who take their company’s ethics policies seriously might wonder again why such a person, whose personal credibility is in shreds, is still representing Barrick to the world. Personal loyalty should only go so far.

• In the “Signs of the Times” category, there’s the story of Gold Fields setting itself up to become the world’s first gold-mining company to sell “Certified Emissions Reductions” (CERs) — the financial securities used to trade carbon-emission credits.

Gold Fields says it will capture methane gas produced at its large underground Beatrix gold mine in South Africa’s Free State province, and then sell 1.7 million CERs to European energy trading company Mercuria Energy Trading under forward contracts which will run until 2016. Tradition Group’s TFS Green subsidiary brokered the deal, which Gold Fields reckons is worth about R200 million at current CER values and exchange rates.

Gold Fields will use the money to install methane-extraction and flaring technology at Beatrix this year, and later will look at ways to burn the methane to generate electricity to power the mine and reduce its dependence on coal power.

Gold miners around the world don’t often have to deal with much methane, so it’s not clear how much of a precedent this will be for them, but underground coal miners should take a close look at the financial and technical details of this deal to see if anything is applicable to their own situations.

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