Editorial: Red light, green light

With the global commodities boom marching relentlessly forward, the week ended Dec. 8, the 49th week of 2007, was full of major announcements of mines going forward or else being stopped in their tracks by politics.

* In Saskatchewan, France’s Areva and minority partners Denison Mines and OURD Canada gave the go-ahead to the $400-million development of the Midwest uranium mine, located 15 km west of the three partners’ McClean Lake mine and mill. Once all permits are in place, operator Areva will drain part of the Mink Arm of South McMahon Lake in order to mine a 45-hectare pit to a depth of 215 metres, with ore to be trucked to the McClean Lake mill. The pit will produce about 36 million lbs. of U3O8, and satellite deposits could be brought into production once the pit is exhausted.

The normally sleepy Saskatchewan has been on a bit of a roll of late: the provincial economy is going gangbusters thanks to higher prices for potash, uranium, nickel, oil and gas, and a variety of crops; the Saskatchewan Roughriders football team recently won the Grey Cup; the province is the unlikely setting for the smash hit TV comedy Corner Gas; and, with a market cap of $42 billion, Saskatoon-based Potash Corp. of Saskatchewan has recently eclipsed flashy, Toronto-based Barrick Gold to become Canada’s highest-valued mining company, exceeding the gold miner by a healthy $7 billion.

* How does the name “Freeport-McMoRan Copper & Gold & Molybdenum” grab you? The company surprised no one by announcing it will spend US$500 million to reopen its Climax molybdenum mine in Colorado, an asset picked up from its springtime takeover of Phelps Dodge. Once a new mill is built, the mine will be cranking out 30 million lbs. of moly annually, a figure that may later be doubled.

Meanwhile, at its copper operations in Bagdad, Ariz., Freeport will be boosting the annual molybdenum processing capacity by 20 million lbs. through the conversion of its copper concentrate leach facility to a molybdenum concentrate leach facility by 2010.

The Climax mine startup will likely consume most of Freeport’s spare moly roasting capacity such that, combined with Canadian moly major Thompson Creek Metals’ similar ramping up of production, we are likely going to see a dramatic shrinking of toll moly-roasting capacity in North America in the coming decade.

* In Mexico’s Zacatecas state, Goldcorp announced it would be speeding up the mining rate of its already huge, US$1.5-billion Penasquito polymetallic project by ramping up the mill-throughput rate by an astonishing 30% to 130,000 tonnes per day. In June, the company boosted reserves there by 48% to 917 million tonnes containing 13 million oz. gold, 864 million oz. silver, 2.7 million tonnes lead and 5.8 million tonnes zinc. The mine should produce 400,000 oz. gold annually, plus plenty of silver, zinc and lead.

* Across the pond in Romania, Gabriel Resources has hit a wall in its drawn-out development of the ill-starred Rosia Montana gold project. In the face of an increasingly hostile national government and co-ordinated attacks from well-funded foreign NGOs, Gabriel has essentially halted on-site work and laid off much of its Romanian staff. With Rosia Montana being the bellwether mining project in Romania, other foreign mineral explorers are looking with trepidation at the worsening political situation there for miners. Carpathian Gold, which has had great technical success drilling out gold-copper resources near Rosia Montana, has tellingly unveiled a new gold project in mining-friendly Brazil that should help offset the growing Romanian country risk.

* Venezuelan President and Fidel Castro-wannabe Hugo Chavez suffered his first major setback since assuming power nine years ago. In a surprising bit of good news from the crumbling country, referendum voters narrowly defeated Chavez’s radical proposals to entrench socialism in the constitution, remove the requirement he leave office in 2012, and set a maximum 6-hour workday.

Chavez is nonetheless expected to press ahead with the defeated constitutional changes, but this time without seeking approval by referendum.

Never one to ruminate on his failures, Chavez quickly got back to his old routine of pushing people around and changed Venezuela’s time zone by a half hour, so it is now uniquely out of step with its neighbours. Chavez has already changed Venezuela’s military salute, coat of arms and flag — appropriately, the horse is now galloping to the left instead of the right.

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