South African Mine Strike Spreads To More Mines

As many as 75,000 miners are already on strike. This equates
to about 15 percent of South Africa's mining sector's total workforce.

JOHANNESBURG (REUTERS)- Since Wednesday the mine strike has spread to a new sector: iron ore and it has hit another gold firm. Kumba an industrial unit of the global miner Anglo American, said the mine strike at its giant Sishen Mine in the Northern Cape involved 300 employees. It was limited to one area in the open cast mine, leaving most of the facility unaffected. Kumba is one of the world's top 10 iron ore producers. It produced 41.3 million tonnes of ore in 2011. Kumba's share price dropped more than 4 percent.

The strike is also testing President Jacob Zuma's leadership. The president is under fire for failing to address and contain the workers' protests demanding wage increases. There are glaring wealth inequalities persisting in South Africa since the end of the apartheid in 1994. Source: South Africa Wildcat Strikes Spread To More Mines (Reliability: High)

Comment: The spreading of labor unrest has raised fears that the country could see a repeat of the stand-off with police at Lonmin's platinum mine in August that led to the shooting of 34 miners. It was South Africa's bloodiest security incident since the end of the apartheid in 1994.

Mineral Trade War Looms In East Asia

The Senkaku/Diaoyu Islands dispute
is a continuing source of tension
between Japan and China.

NEW SOUTH WALES, AUSTRALIA (THE AUSTRALIAN)--Due to the recent flare-up of a territory dispute between China and Japan, China is reportedly planning to halt all rare earth sales to Japan. Japanese companies are scrambling to find alternate sources, which shows in recent deals with companies like Lynas Corp and Alkane Resources. Unfortunately these sources have lower concentrations of  heavy rare earths such as dysprosium and neodymium that Japanese companies require to make everything from wind turbines to handheld electronics. In light of China's recent attempts to corner the global gold market, experts are also keeping watch on gold prices. Source: Rare earths a victim of Japan-China islands spat (Reliability: Medium)

Comment: China enacted a similar rare earth embargo on Japan in 2010, causing the price of some rare metals to more than triple. Two years later but still with few alternate sources for the heavy rare earth metals, Japan again faces potential shortages. Alkane Resources' Dubbo Project does contain heavy rare earths, but since Japanese companies will be required to process the metals in Japan it will almost certainly take a few years to develop before it significantly affects global prices.

Price of Gold Soars as Investors Seek Safe Haven

People are investing more in gold because of the increased price.

AUSTRALIA (ABC NEWS) -   For most of this year, the price of gold has been around it's all time high of USD 1700 an ounce and is predicted to rise to USD 2000 in 2013.  Sources claim economic problems in the United States and Europe are causing the increase in the price of gold.  Gold is becoming a safe investment against market volatility due to the economic stimulus measures by the U.S. and Europe according to financial advisor Jordan Eliseo.  Analysts are predicting mergers and take-over bids to increase because gold miners are undervalued compared to the price of gold.  Countries are also starting to stockpile gold in order to build up their reserve currency during the tough economic times.  China in particular is a government that is known to stockpile bulk commodities and industrial related metals.  Analysts suggest this is the time to start investing in gold.       Source:  Price of Gold Soars as Investors Seek Safe Haven (Reliability: High)

Comments:  Before gold, iron ore was in the focus of Western Australia's mines.  Due to the economic times, more and more people are beginning to invest in gold instead. 

Designing Products For Conflict Minerals Compliance

According to enoughproject.org: "Dodd-Frank
is not a solution to the social, historical,
political, and economic problems of the
DRC...but a stong and firm U.S. response to
the call from the Congolese people...to
end years of illicit plundering."

OHIO (SUPPLY CHAIN DIGEST) - Beginning in May 2014, companies will need to report to the SEC the presence of any conflict minerals from the Democratic Republic of the Congo (DRC). The Conflict Minerals law, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, specifies these new requirements for publicly traded companies that manufacture products containing tin, tantalum, tungsten, gold and their derivatives.

Manufacturers should begin implementing identification of critical minerals early in the product development cycle so that any potential issues can be resolved before they become costly problems. Additionally, by identifying minerals across the organization, manufacturers may be able to negotiate bulk purchase rates for the materials used across the company’s portfolio of products. This could have an enormous impact on reducing costs of goods sold while generating savings. Source: Designing Products For Conflict Minerals Compliance (Reliability: Medium)

Comment: While identifying any potential conflict minerals early in the design process is optimal, current products already in production are also affected by this law. It is likely manufacturers who do not monitor their supply chain from mine to product will have difficulty conforming with the law. Therefore, it is important for any manufacturer who uses tin, tantalum, tungsten, gold or their derivatives to begin addressing the use of conflict minerals now.

Nevada's Safe Bet On Gold

Mining operations create jobs that pay approximately
double the national average income for an individual.

LAS VEGAS (Las Vegas Review Journal) -- While Nevada is famous for its tourism, it is little known that the state makes just as much off of its mining industry. Gaming and mining bring in approximately $10 billion a year, each. Most of the money brought in from mining goes into state coffers to support many social programs. In 2011, Nevada processed approximately $24 million in gold each day, helping make the United States the third largest gold producer behind China and Australia. It is estimated that Nevada has 15 years of gold reserves left and is continuing to search for more throughout the state. Production of gold in Nevada is of critical strategic importance, as the United States strives to become less dependent on foreign countries for its minerals. Source: Nevadans Have Long Bet Their Lives, Fortunes On Mining (Reliability: High)

Comment: Nevada acknowledges that mining has its booms and busts, and so it is continually searching for new places to mine, replenishing resources, and being strategic in its operations to make the industry last well into the future.

Soon Businesses Will Be Required To Disclose Where Their Minerals Come From

DEMOCRATIC REPUBLIC OF THE CONGO (LOS ANGELES TIMES) -- New regulations in the U.S. could see publicly traded companies have to state whether or not their mineral purchases are directly funding conflicts in the Democratic Republic of the Congo or neighboring countries. However, despite it's good intentions, there are activists and businesses that are questioning the effectiveness of the legislation.

Money from mineral exports is directly
 funding DRC militia groups

The law will require that publicly traded companies state whether they use minerals from the troubled region, as well as assessing whether their minerals are 'DRC conflict free'. Activists focused on the conflict believe that naming and shaming the bigger corporations using this law may lead to them ceasing in their activities. The U.S. Chamber of Commerce has questioned how costly and effective these laws will be, stating that cutting off one source of revenue won't stop militias from fighting.
There are also huge flaws in the currently proposed legislation. Whilst the DRC is synonymous with government troops and rebels involved in mass slayings and rape, some companies will be able to disassociate themselves with the minerals and legislation as they do not directly make/mine the product. This will let many big brands off the hook as they merely stick a label on a product and sell it, rather than mining it themselves and facing the legislation.
Legitimate US companies in Africa could be harshly affected by this. The SEC estimates that the overall cost of this legislation could escalate to as much as $4 billion. Many companies may cease to do business in Congolese minerals. The biggest question remaining is how will this new legislation affect businesses and the conflict itself, once it is put into place?
Source: New Regulations Seek To Expose Congo Conflict Minerals (Reliability: High)

Comment: Businesses in the US could suffer dramatically if this legislation is put in place. With the SEC estimating losses at $4 billion and the U.S. Chamber for Commerce putting that figure between $8 and $16 billion, this is a huge move that may punish businesses without necessarily fixing the bigger issue of militia and DRC conflict.

Theft Of Catalytic Converters Likely To Steadily Increase, Due To Rising Metal Prices; LE Struggles Likely To Continue

Executive Summary:
Catalytic converter thefts will likely continue to increase due to rising metal prices. In addition, it is likely that law enforcement agencies will continue to struggle with these crimes as stealing a catalytic converter takes a matter of minutes to commit, is hard to trace, and yields high returns. Increasing awareness for motor vehicle owners, working with scrap yards, and implementing various deterrents are likely to facilitate law enforcement agencies in reducing the number of these crimes committed.

Discussion:
Every new vehicle sold in the United States must meet specific emissions standards. In order to achieve these, automobile manufacturers use a device called a catalytic converter to reduce harmful emissions into more benign ones. Manufacturers construct catalytic converters with metals that include: platinum, rhodium, palladium, and, increasingly, gold, in order to reduce carbon dioxide emissions. The significant increase in prices for these metals in the last decade, coupled with the ease of removing and selling these parts for scrap, will likely contribute to the rising number of thefts.

Theft of catalytic converters is difficult for law enforcement to detect and stop.  The catalytic converter comes free of the vehicle after two cuts along the exhaust line using a battery operated saw and thieves can accomplish this in under a minute. Thieves prefer vehicles that sit higher off the ground, such as SUVs and trucks, as they are easier to maneuver under. In addition, catalytic converters are worth anywhere from $50 to $200 from scrap metal dealers. The National Insurance Crime Bureau reported an increase in the theft of catalytic converters beginning in mid-2008. Due to the low risk of apprehension, coupled with the high payoff for a quick job, it is likely that this trend will continue to increase.


Once a catalytic converter is stolen, thieves take converters to scrap yards. Scrap yard then typically resell the catalytic converters to plants that are designed to recover the metals. With rhodium worth approximately $9,500 an ounce and platinum worth approximately $2,000 an ounce, and the value of the metals only increasing, it is likely that the number of thefts will continue. Recently, scrap yards have tried to deter catalytic converter thefts refusing to buy  them directly from individual sellers.

The number of catalytic converter theft cases are plentiful nationwide. For instance, on 16 August 2012, the Ventura Police Department in Ventura, California issued a public warning to city residents to be aware of an increase in thefts of catalytic converters from vehicles since 1 July 2012. Police said that over the course of the two month investigation, criminals stole converters from 13 vehicles, all Toyota SUVs.  Milwaukee’s Journal Star reported an increase in thefts beginning in May 2012, and the NY Daily News reported that, across the country, the black market resale of the converters has increased thefts.

Because of the increase seen across the country,  the concern for law enforcement agencies on all levels will likely increase. Police agencies attempt to combat the problem by issuing a series of public warnings, like the case in Ventura, CA, and raising awareness. Unfortunately, the nature of the crime negates the possibility of truly combatting criminals. Law enforcement authorities’ efforts are mostly focused on prevention. The Ohio Department of Insurance Fraud Division, along with Nationwide, sponsored an “Etch and Catch” event in Columbus to help motorists protect their vehicle’s catalytic converters from being stolen.

Gary Bush, the National Law Enforcement Liaison and Director of Theft Prevention at the Institute of Scrap Recycling industries said that a lack of communication between victims, law enforcement and recyclers can cause thefts to go unsolved.  Adding to the difficulty, thieves often mix stolen items with legitimate ones, making it difficult for scrap yards to tell the difference.

Analytical Confidence:
Analytic confidence for this assessment is moderate.  The analysts did not utilize structured methods of analysis for this report.  Source reliability is high and the sources corroborated each other.  The analysts’ expertise is  low and the analysts worked in a group.  Subject complexity is medium and the time available for the task was adequate.

Methods And Processes:
Tools used by the team were divided by purpose. In order to coordinate a time in which work would be done, the team agreed to use phone communications, both calls and SMS. While working on the document, the team used Google’s built-in document chat. If work was done outside of the team work sessions, the Google Doc comment function was used to note additions, revisions, or suggestions.

Due to conflicting schedules, the team was unable to work simultaneously for very long. However, the team was still able to carry out its original plan, with the only modification being the use of SMS to update other team members of work done.

Contact Information:
For comments, questions, or additional information, please contact the analysts:

Chad Los Schumacher
clossc80@lakers.mercyhurst.edu

Peter O’Malley
pomall01@lakers.mercyhurst.edu

Shawn Ruminski
srumin25@lakers.mercyhurst.edu

National Mine Strike In South Africa Likely To Continue

Executive Summary:
The national mine strike in South Africa is likely to expand. South African politician Julius Malema called for a national strike in all of the South Africa’s mines. Labor unrest in South African mines already halted the production at two platinum and gold mines. South Africa accounts for 80 percent of the metal’s global output and will likely result in dramatic price fluctuations.

Discussion:

Platinum rose almost 3 percent on Wednesday due to the supply fears after labor unrest halted production. South Africa’s economy was built on mining, and it remains an integral driver of growth. The mining sector employs about 500,000 people and it contributes between 5 percent and 8 percent of gross domestic product. Miner unrest is a central issue in South Africa since police shot and killed 34 striking miners and wounded 78 on August 16th at Lonmin PLC’s platinum mine at Marikana.

The South African miners’ strike is becoming increasingly volatile. Eight thousand striking miners marched to a hospital to see roughly 190 miners who claim to have been beaten and tortured in police custody. In Marikana, north west of Johannesburg, strikers are threatening to kill anyone who goes to work. A dead man at Marikana was found near a granite hill where strikers normally gather. This raises the toll from violence at Lonmin’s mine to 45, including 10 people killed in the days before the police shooting. Two police officers have been hacked to death by strikers with machetes. Two mine security guards were burned alive in their vehicle.

Lonmin is condemning the ongoing intimidation and threats to life and property. Only 3 percent of workers have shown up to work in the Lonmin mines. Lonmin’s production in South Africa has been halted for five weeks. Anglo American Platinum, the world’s largest producer of platinum metal, said it was suspending operations at five shafts in Rustenburg to protect the security of its 26,000 employees at the mines. Gold Fields has since been hit by two strikes, one erupting days after the other had been resolved. The strikes have halted platinum production in South Africa which accounts for 80 percent of world platinum production. The strikes have also substantially diminished the production in the country's largest gold mines. 

Julius Malema told striking miners that South Africa’s critically important mining industry should be stopped and force the removal of the leadership of the National Union of Mineworkers. Malema said, “There must be a national strike. They have been stealing this gold from you. Now it is your turn. You want your piece of gold. These people are making billions from these mines.” Malema was expelled from the ruling African National Congress earlier this year for showing disunity and failing to accept party discipline.

Mine workers are demanding higher wages. Many workers have rejected representation of the National Union of Mineworkers; the country’s biggest union and an ally of the ruling African National Congress. Lonmin has offered an increase far below the $1,522 USD a month the miners are demanding. On Sunday, they said they could not afford the miner’s demands.

Analytic Confidence:
Analytic confidence for this assessment is medium. Source reliability ranges from medium to high, but given the nature of the issue, it is difficult to maintain a firm understanding of what is taking place and the situation extremely fluid and dynamic. However, the sources do not conflict with each other indicating there is a general consensus on past events. The analysts had low expertise, worked separately and did not use structured analytic methodologies. The subject is moderately complex and the deadline was easy to meet.

Methods And Processes:
Using Google Documents, the authors shared a mutually accessible database of recent articles collected over the previous 72 hours. We independently used Google News searches to obtain articles from a variety of sources to corroborate the information available to us. Because information came from a large pool of sources and was not conflicting, the authors were able to establish that the reliability of the information was high.

After independently gathering and sharing articles on the topic, the authors met on Google Hangout and simultaneously edited the SFAR document. The edits included checking sources, providing links to sources and and proofing written material for correct usage of language and words of estimative probability. The collaborative nature of Google Hangout and Google Documents was critical to accomplishing the task of writing a joint SFAR, and allowed for maximum flexibility and minimized time lost.

Authors:
Author: Irena Lazarevic: lazarevic.irena@gmail.com

Author: Karl A. Gustafson: gustafsonkarl@gmail.com

Mt. Todd Estimated Measured & Indicated Gold Resources Increases

Diagram of Mt. Todd ore body by Vista Gold Corp.

DENVER, CO (Equities.com) - Vista Gold Corp. updated its mineral resource estimate at Mt. Todd in Northern Territory, Australia to include 18 drill holes at approximately 13,036 total meters. The Batman deposit is now estimated to contain 7.01 million ounces of gold in the Measured and Indicated categories, a 17 percent increase over 2011 estimates, and 2.09 million ounces in the Inferred category, a 37 percent increase over previous estimates. With on-going drilling, the company expects to announce further updates in early 2013. Frederick H. Earnest, President and CEO of Vista, stated that "the results of our past and ongoing drilling programs combined with technical evaluations currently in progress support my belief that Mt. Todd is becoming a world-class gold project in one of the world's most favorable mining jurisdictions." Source: Vista Gold Corp. Grows Mt. Todd Estimated Measured & Indicated Gold Resources to over 7 Million Ounces (Reliability: High)

Comment: Vista acquired the Mt. Todd property in February 2006 for approximately US$2 million. With gold holdings in Mexico, Indonesia, Australia and the United States, Denver, Colorado-based Vista Gold Corp. is a mid-tier player in the gold market. While production of gold increases, demand has been leveling off, especially in the jewelry sector, because of high prices. Decreasing demand will likely eventually drive the price down making the investment in mining less attractive.