Norwegian Pension Fund Sheds Rio Stake

Taking issue with serious environmental concerns at the Grasberg gold mine in Indonesia -- the world's largest -- Norway's Finance Ministry has decided to liquidate its $850 million holding in Rio Tinto, a partial owner in the project.

The stake accounted for half of a percent in a fund that invested the country's petroleum wealth in foreign stocks and bonds. The move to remove Rio as a component in the fund is one of the more prominent examples of a major institutional investor withdrawing its holdings over ethical issues in the last several years.

The main souce of concern at the Grasberg mine was the dumping of tailings into a nearby river, which according to Friends of the Earth, has resulted in severe toxicity of the surrounding aquatic life. The mine's main operator, Freeport-McMoRan has also come under fire from shareholders for employing the Indonesian military personnel for security purposes -- controversial because of the military's involvement in human rights abuses in the region.

> Norwegian wealth fund sells stake in Rio Tinto [Times of London]

Steelmakers, Iron Ore Miners Explore New Roles

According to a recent article in the Wall Street Journal, a number of major steelmakers are reverting to the the old industry paradigm of relying on ore from producers by pursuing vertical integration through mine ownership. Conversely, giants like Vale of Brazil are investing in domestic steel-processing facilities in order to grab a share of steelmakers' China-driven profits.

The swing back towards vertical integration is most evident in Brazil, which has vast reserves of iron ore that remain either untapped or up for grabs.

"Brazil is the strategic place for the steel industry," says Lakshmi Mittal, the chief executive of ArcelorMittal, the world's largest steelmaker by production. "It has the raw materials. It has the market. It has the growth."

In the past month, steelmakers and miners have announced major investments in Brazil's fast-growing economy.
...
Steelmakers have focused on Brazil in part because Australia's iron ore reserves are controlled by BHP Billiton and Rio Tinto, meaning there are almost no opportunities for a newcomer to gain a foothold in the market.

> Steelmakers and miners swapping roles as demand grows [WSJ via Australian]

China Skyscraper Construction to Support Commodities Boom

Rejecting suggestions that the global demand for steel and other building materials is headed toward a significant downturn, Rio Tinto has cited recent research on Chinese skyscraper construction to justify continued optimism in commodities markets. Last month, the mining group reported H1 profits of $5.5 billion.

A report by McKinsey & Co. forecasts that China will build 50,000 skyscrapers in the next 20 years -- the equivalent of 10 NYCs.

Some analysts had been forecasting a dip in Chinese investment after the Olympics, but Rio is predicting that there will be a post-games boom. The company cited research from McKinsey, the management consultancy, which said the scale and pace of urbanisation would continue at an unprecedented rate.

By 2025, the report predicts that China will have 221 cities with more than a million inhabitants, compared with 35 in Europe today. As well as the need for huge pending on infrastructure, McKinsey projects that China will build between 20,000 and 50,000 skyscrapers, many of them in less developed interior provinces far from Beijing and Shanghai.

> Chinese skyscraper builders to put up equivalent of 10 New Yorks, says Rio Tinto [Guardian]

Canada Looks to Mine the Far North

The federal government of Canada has unveiled its vision to explore its Arctic territories for natural resources with a $100 million plan to map mineral and petroleum deposits in the northernmost reaches of the country.

The move comes just as climate change studies have renewed Northern nations' interest in mining the Artic for resources.

Launch

In the course of scanning mining-related news articles as part of my research at Factiva, I came across a particularly attention-grabbing lede from the Economist, dated Feb. 7 of this year:

EVERYTHING to do with mining is impressively vast. It is an industry that makes huge holes in the ground and relies on trucks with tyres the size of houses. In recent years, thanks to China's rapid industrialisation and its voracious appetite for metals, mining companies have also produced mammoth profits, boasted gigantic valuations and undergone a series of outsized mergers and acquisitions.

I was struck by the passage because I found its concise assessment of today's mining industry radically different from what it was just five years ago. When I started at Factiva, mining was a scarcely-mentioned topic in the mainstream press (albeit a simmering one, due to China's already apparent rise as a major resource consumer); now, it is at the forefront of attention in newspapers around the world.

As I observed the rapid evolution of the industry in the last couple of years, due in large part to major consolidation and the Middle Kingdom's dizzying rise, I started thinking about creating this weblog; it was this run-of-mill article, however, that prompted me to finally launch this site, which I hope to maintain as a record of this dynamic sector's rapid ascent amidst a global scramble to secure natural resources.

> Some miner concerns [Economist]