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Peru seeks to fast-track gold, sliver mine

Australia: mining expansion and taxes
Canberra, Australia (UPI) Oct 21, 2010 - Mining giant Rio Tinto said it plans to spend $3 billion to expand its iron ore operations in the Pilbara region of Western Australia. The announcement Wednesday comes two days after the company abandoned its iron ore merger in Western Australia with rival BHP Billiton because of regulatory hurdles the $120 billion deal would have encountered. U.K. company Rio, the world's second biggest exporter of iron ore, said the investment would increase annual infrastructure capacity to 283 million tons and would require further investments such as mine and housing expansions, with approval of those anticipated within the next 12 months.

Sam Walsh, Rio Tinto chief executive for iron ore and Australia, said the company's plan is to boost capacity by more than 50 percent to 333 million tons a year, with the potential to grow further. The company's current production capacity in Australia is 220 million tons a year. "This is the largest mining project ever undertaken in Australia and highlights the quality of our growth options. It confirms Rio Tinto's strength as Australia's leading long-term supplier of iron ore, our unrivaled reputation for delivering major projects to plan and our confidence in the long-term outlook for iron ore demand," Walsh said in a statement. In related news, the two mining giants, along with Xstrata are considering walking away from a deal struck this year with the Australian government on aspects of its mine tax agreements. They said they are concerned that Canberra wouldn't honor its agreement that all state and territory royalty taxes would be credited against the Mineral Resources Rent Tax, the Web site Australian Mining reports.

The mining companies maintain that the agreement applies to all state royalties, not just those that were in place when Prime Minister Julia Gillard's predecessor, Kevin Rudd, proposed a "super profits" resource tax last May. But Gillard on Wednesday said the government wouldn't be guaranteeing to refund to miners all future rises in royalties. ''We have said all along we'll credit existing royalties and scheduled increases and the policy transition group is going to advise government on the best way to provide certainty to the industry,'' she said, The Sydney Morning Herald reports. Gillard said that in implementing the minerals resource rent tax, the government wouldn't be giving a green light to state and territory governments to increase their royalties "in a way which means the federal government effectively foots the bill."
by Staff Writers
Lima (UPI) Oct 21, 2010
Peru is fast-tracking production at its Inmaculada gold and silver mine following agreements signed between International Minerals Corp. and Hochschild Mining plc, the two international companies involved with the project.

The deal between the investors signaled renewed international interest in the Peruvian economy after many years of financier hesitation, partly because of the country's role in the cocaine trail to North America, drug-related violence and resulting insecurity.

International Minerals Corp., also known as IMZ, said it signed a binding framework agreement with Hochschild Mining plc to fast-track development and commencement of production at their jointly owned Inmaculada mine. The site is 15 miles south of the Pallancata silver mine, which is jointly owned by IMZ and Hochschild.

Production of gold, silver and copper in Peru increased in 2009 but the increased income hasn't filtered down to the bulk of the country's population 29.5 million, which remains poor.

Gold production increased 1.41 percent to 6.4 million ounces, while silver production increased 4.56 percent to 136 million ounces, the Ministry of Energy and Mines said.

Peru is the world's top producer of silver and ranks as the third largest copper producer and sixth largest gold producer.

The expansion of Peruvian mining industry has driven the government to seek means of increasing energy production. Wind energy projects are among renewable energy sources being explored by the government.

IMZ controls a 70 percent interest in Inmaculada through its 51 percent direct ownership and its right to earn an additional 19 percent interest by completing a feasibility study before September 2013 and by issuing 200,000 shares to Hochschild.

Based on the terms of the agreement, IMZ would own a 40 percent interest in

Inmaculada and Hochschild would hold the balance of 60 percent. The transaction remains subject to regulatory approvals and definitive documentation which will be expedited, IMZ said.

Hochschild specializes in building and operating low-cost underground precious metal mines in difficult terrains in the high Andes.

IMZ's President and Chief Executive Officer Stephen Kay emphasized the purpose of the deal was to fast-track production. The deal, he said, would allow IMZ to focus its own efforts on expediting production at its 100 percent-owned Goldfield project in Nevada.

The company says it is "aggressively drilling" at the U.S. site and plans to complete a feasibility study by the end of next year. Production is expected to start in 2014.

The Inmaculada deal is structured in a similar way to the successful Pallancata mine deal in 2006, where production was significantly accelerated and IMZ has already received about $24 million of free cash flow on an original investment by IMZ of only $5.5 million.

Pallancata is set to become the world's fifth largest primary silver mine in 2010 after only three years of production.

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Obama: US a 'pushover' on trade with nations like China
Seattle, Washington (AFP) Oct 21, 2010
President Barack Obama said Thursday the United States had been a pushover on trade with developing nations like China and vowed to drive a tougher bargain for American products. Obama, on a four-day swing through western states less than two weeks before congressional elections, argued that the global trading regime needed to be restructured so that it was more fair. "When a lot of the ... read more

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