Fortune Minerals on track with Arctos

 British Columbia (BC) is blessed with a raft of minerals and metals, the main ones being copper, precious metals, zinc, lead, molybdenum and thermal coal. But king of the castle is undoubtedly metallurgical coal, which accounted for $3.5-billion in revenue during 2012, according to professional services firm PricewaterhouseCoopers.

Metallurgical coal is converted into coking coal for use in the steelmaking process, with British Columbia material being renowned for its quality. It also affords Asian steelmakers an additional supply stream from a reliable jurisdiction.  

“BC has several areas of high-quality resources; has some great companies operating coal mines in established areas for a long time; has solid infrastructure; and is well-placed to access the critical Asia-Pacific market,” Fortune Minerals VP of operations and COO Mike Romaniuk told Mining Weekly Online.

FIRST NATIONS FIRST

BC’s main coalfields lie in the east of the province, in East Kootenay and Peace River. But one key area yet to be tapped is Klappan, in the northwest. This region hosts anthracite, which, among its various industrial uses, is the highest-quality metallurgical coal available.

However, the area is also home to several aboriginal bands, including the Tahltan, who have voiced deep concerns about coal mining development. In mid-December, it was announced that the Tahltan Central Council and the provincial government had agreed to a moratorium on granting new coal mining rights in the Tahltan Klappan area for a year.

Pre-existing and authorised projects will not be affected, including Fortune Minerals’ Arctos anthracite project, which has been the subject of opposition from some Tahltan members. For example, the company’s summer 2013 drilling, surveying and monitoring campaign for environmental assessment was voluntarily ended in September after a Tahltan group entered the project’s camp in order to protest.

The company stressed that it is committed to dialogue and is keen to let First Nations stakeholders have their say. “As we move through the environmental permitting process there’s an opportunity for any and all interested parties to voice concerns, opinions or views. Because the project is on their lands, the Tahltan obviously have a strong and important voice,” Romaniuk said.

“You have to work with individuals, the elders, and communities as a whole. It’s also about working closely with the provincial and federal governments to ensure that the appropriate consultation takes place,” he added. “But when you’re dealing with these kinds of investments, in these kinds of locations, you will always have a vocal minority opposed.”

Fortune works within the parameters of the Canadian Council for Aboriginal Business’ progressive aboriginal relations (PAR) programme and has been awarded bronze level status. It has also developed purchasing and employment opportunities with local communities; for example, roughly half of those employed in the summer 2013 campaign were from local aboriginal communities.

“We also have ongoing programmes with the communities, supporting things like hockey tournaments, bike rides and community feasts and festivals. Plus, we are committed to regular community meetings in our operational areas,” Romaniuk said.

THE RIGHT PATH

Fortune Minerals’ first focus is to develop the project’s Lost Fox deposit as an openpit mine. It contains run-of-mine reserves at 125-million tonnes that can be washed to produce 69-million product tonnes of a 10% pulverised coal injection (PCI) sinter material for steelmaking purposes.

Under a 2012 feasibility study, the project will require capital expenditure of C$788.6-million and, at a base case of $175/t ultra-low volatile PCI, it has a 14.7% after-tax internal rate of return.

“Lost Fox will give us a good 25 years of mine life, producing three-million tonnes a year of clean coal. The coal that we’ll be producing is anthracite, the high-quality, premium material that’s highly desired by steelmakers,” Romaniuk said.

“We’ve done extensive engineering studies and we’re on the environmental permitting path. [Progress depends on] getting the data together and having all the inputs from stakeholder groups in terms of their concerns and the issues they want to raise,” he said.

“We’re looking for a decision within the next two years. But it’s an ongoing thing, so the timeframes and things like that – especially early on as you’re seeking inputs – can be a little bit fluid,” he added.

The company already has a strategic partner. Poscan, a subsidiary of the South Korean steelmaker Posco, holds a 20% stake and funds 20% of the capital and operating costs. It will receive 20% coal-in-kind once Lost Fox is operational. 

In the meantime, Fortune is also hoping to tap into the electrical grid as the British Columbia Northwest Transmission Line project approaches completion. “The BC government is extending the grid into this area and that will be a great benefit to our project, enabling us to tie into the electrical grid and take us off diesel generation. Obviously that will have a significant and positive impact on our costs,” Romaniuk said.

Rail connectivity will be critical for sending the project’s output from pit to port. Fortuitously, a railway bed was developed by the provincial government in the 1970s that the company hopes to use.

“The BC government was aiming to open the area up in the 1970s, recognising the significant opportunities in the region for the mining and forestry industries. But the project was halted after significant cost overruns and a change of government,” Romaniuk explained. “So we’ve just picked up the ball where they left it, using the same engineering, same drawings, same route etcetera that they already have in place. All we’ll be doing is completing it.”

The Ridley coal terminal at Prince Rupert has the capacity to accept Fortune’s output, he added.

“So things are going according to plan and the only area where we see schedule risk is during the input phase for the environmental permitting, the critical stage where many voices want to be heard,” he said. “Once we’re past this phase, I’m confident we’ll be able to deliver the project on schedule and to the timeframe we’ve set out.”

GOLD: McEwen gets okay for El Gallo 2 expansion

MEXICO – The Mexican government has granted environmental approval the El Gallo 2 project belonging to McEwen Mining of Toronto. The new mine in Sinaloa is expected to produce 95,000 oz AuEq per year (5.2 million oz of silver and 6,100 oz of gold) at an approximate cash cost of US$750/oz AuEq.

McEwen has shaved an estimated $20 million from the El Gallo 2 project by reducing the number of leach tanks; installing a smaller Merrill-Crowe plant and refinery; using modular crushers; and reducing the number of transformers. The company says about $150 million, including $10 million already spent, will be required to complete the mine.

The final decision to proceed with El Gallo 2 has yet to be made. That decision awaits various optimization studies and financing alternatives.

Hitachi and Wenco embark on cloud-based fleet management Proof of Concept

Hitachi and Wenco International Mining Systems, a Canadian subsidiary of Hitachi Construction Machinery, have announced the beginning of a joint Proof of Concept (PoC) project. The PoC project, initiated by Hitachi and Wenco, and facilitated by Teck, “will combine Hitachi’s highly reliable cloud service and Wenco’s Fleet Management System (FMS) with Teck’s mining operation team to demonstrate how much the efficiency of the system will be improved.” The results of the project is being evaluated for approximately 40 days from the launch date on January 20.

In this PoC project, Wenco’s FMS will be installed at Hitachi’s data centre in North America, and will provide cloud-based FMS service to Teck via the internet. Teck will support the project and provide feedback on the performance and efficiency of the system within one of its facilities located in British Columbia, Canada. “Wenco is very excited about the associated benefits our industry partners can leverage with the combination of fleet management and cloud computing. Minimising learning curves on hardware and software, expanding accessibility, and reducing capital costs will increase system longevity and effectiveness for our clients,” said Phil Walshe, President and CEO, Wenco.

Using on-board computers, the Wenco FMS is installed on dump trucks, excavators and additional equipment. It displays mine-specific instructions for the operators that help increase efficiencies at a mine site. Currently, the FMS is individually maintained and operated on each mine site, but the cloud-based FMS service utilised in the PoC project will demonstrate the ability for mines with multiple sites to manage their mine sites from one facility. The goal of the project is to reduce the initial start-up and operating costs of the FMS in small-scale mining.

Hitachi and Wenco will work together toward the success of the PoC project and its future full-scale application in other mines. Hitachi has positioned the mining-related area as one of the core focus areas of the Social Innovation Business, and will accelerate the global rollout of these business activities. Also Hitachi has organised its smart information related products and services into “Intelligent Operations.” After analysing and evaluating the results of the project, Hitachi will advance the development of an Intelligent Operations for Mining solution as a part of its Intelligent Operations.

“The PoC project that Hitachi and Wenco are starting with Teck is a new chapter in the history of resources development. We will work through this PoC project to promote efficiency of resources development by improving efficiency of the equipment with our advanced IT by the whole Hitachi Group,” said Keiichi Shiotsuka, Vice President and Executive Officer, Chief Executive Officer of Services Business, Information and Telecommunication Systems Company, Hitachi Ltd.

Surprisingly, for junior mood, not so depressing - Cambridge House VRIC 2014 kicks off

Let's get right to feedback on attendance and mood at the Cambridge House Vancouver Resource Investment Conference. Just a half dozen hours after open at presstime and the traffic, it seemed, was respectable for a Sunday, the first day of the two day conference.

It wasn't shoulder to shoulder down the rows of booths and there certainly wasn't a mass of retail investors bustling in to hear the latest stories. An exploration panel headed up by Rick Rule and headlining Brent Cook, Exploration Insights, John Kaiser, of Kaiser Research, Peter Spina, of Goldseekmoney.com, and Lawrence Roulston, of the Resource Opportunities, was about three quarters full in chairs, with a fair number standing at the back.

It was not a teeming crowd, no. But, then it wasn't a depressing showing either. Much like the mood. The junior management I spoke with were generally upbeat Sunday. In context of 2013 - a terrible year for juniors - that is something.

First I caught up with Roland Butler, CEO of Callinan Royalties. He recalled 2002.

It was not a great year for juniors. But it was a year on the cusp of a turnaround after years of a chill from the Bre-X scandal and low gold prices.

Butler vividly remembered a talk at a January Roundup Conference (which is coming up about week from now) in 2002 by Dorothy Atkinson, an analyst with Wolverton at the time, he said.

"I get the sense that something has changed in the past week," Butler recalled her saying.

"Now 2002 wasn't a spectacular year," Butler noted. "But it was the year before 2003." That was the beginning of a turnaround for juniors.

This memory was now on Butler's mind after a good run for a number of junior stock since late December 2013. Could the move have some legs?

Then again Butler added: "It may be just a rebound off such an awful, awful 2013." 

The least impressed person I spoke with about the upbeat mood at VRIC was Greg Davis, Sunridge Resources' vice president of business development. He noted that last year there was also some optimism at VRIC on the back of a new year market uptick, a regular occurence for junior stock. The hope back then was that things would pick up again after an unspectacular 2012 for juniors.

And then we had 2013. In Davis' estimation, the optimism was back again this year and he wasn't reading too much into it.

Next, over at the UEX booth, Sierd Eriks, vice president of exploration, fell decidedly in the more positive camp.

"I'm surprised how busy it is for a Sunday," he said.

For comparison, he recalled the San Francisco Hard Assets conference last year. "That was pretty slow," he said, a description some would consider an understatement.

Like Eriks, Luquman Shaheen, President and CEO of Panoro Resources, pointed to a pick up in conference mood and activity. In terms of vibe he said this year was, so far, a little better than VRIC 2013.

Last year he would have described sentiment as "scared caution," he said. This year he described it as cautious optimism.

US coal demand spiked last year, supply went the other way—EIA

The US coal mining industry saw a modest, but meaningful demand increase last year, driven mainly by higher natural gas prices that caused total consumption in the first 11 months to hit 35 million tons, 4%, more than the same period of 2012.

According to figures released Thursday by the Energy Information Administration (EIA) total coal exports in the first nine months went the opposite way, declining by nearly 8 million tons compared to the same period in 2012.

Continued weakening in the European economy, slower demand growth in Asia, increased output from other coal-exporting countries, and lower international coal prices all contributed to the decrease in US coal exports, said the agency.

But the country also produced less last year. Total coal output fell 0.4% last year compared to 2012, hitting 4 million tons. Inventories also went down, dropping from by 31 million tons from the end of 2012 to 154 million tons at the end of September 2013.

Overall, the increase in domestic consumption more than offset the decline in exports, resulting in higher year-on-year total coal demand.

The EIA expects coal production to stay relatively constant for the next three decades, a forecast experts see as attainable, because regulators continue to be reluctant to let utilities become too dependent on natural gas.

Carabella Resources Ltd announces variation of takeover bid by Wealth Mining Pty Ltd

Carabella Resources Ltd:Says that Wealth Mining Pty Ltd gives notice that it varies the off-market takeover bid for all of the ordinary shares in Carabella Resources (the offer) by extending the period during the offer will remain open.Says the offer period will now close on Jan, 29 (unless further extended). 


Read more: Clermont mine helps Rio reach record thermal coal production

Mining company Rio Tinto says increased production at its Clermont mine in the Bowen Basin has helped it reach record thermal coal production.

During 2013, the company produced 26.8 million tonnes of thermal and semi-soft coal, up 12 per cent from the previous year.

The figures in the fourth quarter were slightly lower than the same time last year, due in part to the closure of the Blair Athol mine in 2013.

Coking coal production was up slightly over the 12 months.

Fortescue Signs Gas Deal to Ease Costs

SYDNEY--Australia's Fortescue Metals Group Ltd. (FMG.AU) signed a 20-year deal to supply its operations with natural gas instead of diesel.

The agreement, with DUET Group (DUE.AU) and TransAlta Corp. (TAC), comes as resources companies scramble to shave costs in the face of a slowing global commodities boom.

Fortescue said the shift to gas from diesel would reduce operating costs at its mines in the remote, resource-rich Pilbara region in Western Australia state. The gas will be delivered through an existing pipeline that runs from near the state capital, Perth, to Australia's northern coastline.

A new 270-kilometer pipeline will also be built to transport the gas to a power station located at Fortescue's main mining hub in the region. The pipeline is expected to be built some time early next year, Fortescue said in a statement Thursday.

The conversion of the 125-megawatt Solomon power station from diesel to a gas platform is expected to save the company about US$20 million a year in costs, Fortescue said.

DUET, in a separate statement, estimated the new pipeline would cost 178 million Australian dollars (US$158 million) to build. The company said it and TransAlta would pay about A$101 million toward the cost.

Mining companies have taken a knife to their operating costs over the past year, as they try to safeguard profits hurt by lower commodity prices. Iron-ore was among the few commodities whose prices held up well last year, but 2014 may be different as more supply comes onstream.

Marine group to film mining and industrial impacts on Great Barrier Reef

It is one of Australia's most significant natural drawcards.

But it has also been identified as a prime location for exporting coal to huge markets in China and India.

In December last year, the Federal Government approved the creation of one of the world's largest coal ports at Abbot Point near the world heritage listed area, sparking outrage from conservationists and the Greens.

The development includes plans to dredge three million cubic metres of seabed.

The Environment Minister Greg Hunt says strict measures are in place to protect the reef.

The Abbot Point approval comes with a condition requiring the nearby water to contain less sediment than at present.

But the Byron Bay based marine conservation group Positive Change For Marine Life wants to know whether or not that truly is the case.

A film crew working with the organisation will spend the coming months travelling up and down the north Queensland coast filming and interviewing stakeholders.

It will also explore effects associated with dredging in Gladstone Harbour.

Positive Change for Marine Life founder and CEO, Karl Goodsell says they want to get the 'real' story out to the public.

"There's a lot of differing sides and opinions when it comes to industry and what's happening along the coastline adjacent to the Great Barrier Reef Marine Park and World Heritage Area," he says.

"We want to investigate that from a neutral perspective and put the story out there to the Australian and international community to let them make up their own mind."

The organisation plans to release the film later this year or early in 2015.

UPDATE 3-Worried Fed seeks to curb Wall Street banks commodity trade

Jan 14 (Reuters) - The U.S. Federal Reserve on Tuesday took a first formal step toward restricting the role of Wall Street banks in trading physical commodities, citing fears that a multibillion-dollar disaster could bring down a bank and imperil the stability of the financial system.

The Fed board voted to publish its concerns and potential remedies following months of growing public and political pressure to check banks' decade-long expansion into the commodities supply chain. The Fed also questioned the initial rationale for allowing them to trade and invest in risky raw materials and lease oil tanks or own power plants.

The Fed "expect(s) to engage in additional rulemaking in this area," according to prepared remarks of Michael Gibson, the Fed's director of bank supervision and regulation, to a U.S. Senate banking committee hearing on Wednesday.

The new rules could include a cap on total assets or revenues from such trading, increased capital or insurance, or prohibitions on holding certain types of commodities "that pose undue risk."

Facing a clearly uneasy regulator, some banks including JPMorgan Chase & Co are already quitting the business, a once-lucrative trading niche that has reaped billions of dollars of revenue for Wall Street over the years but is now facing diminished margins and stiffer capital rules.

But others, such as Goldman Sachs Group Inc, have stood firm, defending an operation they say benefits customers. Due to a grandfather provision in a 1999 banking law, the Fed has less leeway to restrict the activities of former investment banks Goldman and Morgan Stanley, Gibson said.

In a 19-page document that included two dozen questions, the Fed offered a host of reasons for imposing new restrictions in the interests of limiting potential conflicts of interest and protecting the safety and soundness of the banking system. It invoked disasters including BP's oil spill in the Gulf of Mexico in 2010 and the derailment and explosion of an oil train in Canada last year.

"The recent catastrophes accent that the costs of preventing accidents are high and the costs and liability related to physical commodity activities can be difficult to limit and higher than expected," the Fed said in its notice.

The "advance notice of proposed rulemaking," which is an optional initial step in the sometimes years-long process of making new regulations, seeks comments until March 15.

To read the full notice click:

CONFLICTS, RISKS AND CAPITAL

It is the Fed's first detailed public comment since it shocked the banking industry last July by announcing a "review" of its 2003 authorization that first allowed commercial banks such as Citigroup to handle physical commodities.

U.S. Senator Sherrod Brown of Ohio, who led the first hearing last summer, said the measure was "overdue and insufficient", warning that consumers and end-users risked paying higher commodity prices until new curbs are imposed.

But others saw it as a likely prelude to tough action that would curtail so-called "too big to fail" banks amid a wider political move to restore the historical division between commercial banking and riskier business. Eliminating that divide 15 years ago helped open the door to commodities trading.

"That was the Greenspan era, and it was anything goes as far as activities. Now, we realize that we made a lot of mistakes during the Greenspan era," said Cornelius Hurley, banking law professor at Boston University and former assistant general counsel to the Fed Board of Governors.

Beyond the financial risks, the Fed is also seeking comment on potential conflicts of interest for banks, and the risks and benefits of additional capital requirements or other restrictions - measures that have been hinted at in the past.

The Fed said that new limits on the three ways in which banks may deal in physical commodities were up for debate: the authority to trade raw materials as "complementary" to derivatives; the investment in commodity-related business as arm's-length merchant banking deals; and the "grandfather" clause that has allowed Morgan Stanley and Goldman Sachs much wider latitude to invest in assets than their peers.

The Fed also questioned several previously cited justifications for allowing banks to trade in physical commodities such as crude oil cargoes and pipeline natural gas -- markets in which some banks such as Goldman Sachs and Bank of America's Merrill Lynch are still active.

It said, for instance, that although most banks are not allowed to actually own infrastructure assets, those that lease storage tanks or own physical commodities held by third parties may nonetheless face a "sudden and severe" loss of public confidence if they are involved in a catastrophe.

They also said that several banks' recent moves to sell all or parts of their physical trading operations "may suggest that the relationship between commodities derivatives and physical commodities markets...may not be as close as previously claimed or expected."

While scoping out possible measures to tighten up commodity trading and merchant investment, the Fed offered little insight into how it might level the playing field by narrowing the grandfather exemption that Goldman and Morgan enjoy.

"Our ability to address the broad scope of activities specifically permitted by statute under the grandfather provision...is more limited," Gibson will tell lawmakers.

Legal experts say the provision - which has long been a bone of contention with other banks who had never been allowed to invest in oil tanks and power plants - was widely written. It may require Congressional action to crack down - a seemingly unlikely outcome given the political divisions in Washington.

One legal expert at a private commodity trading firm said the tone of the Fed's notice and mention of catastrophic risks made it almost certain that some form of regulatory action would follow.

"Given some of the things they've said, it would almost make them look bad if they ultimately decided not to do anything," said the expert, who asked not to be identified because they were not authorized to speak to the media.

Deadline looms for mining giants to convince Premier not to cancel Hunter licences

Two Hunter mining companies have until today to try and convince Premier Barry O'Farrell not to terminate their coal exploration licences after a corruption scandal. In December last year, the ICAC delivered its final report to the government which recommended the licences be cancelled due to the taint of corruption. The licences were awarded by former Labor Resources Minister Ian Macdonald, who is facing potential criminal charges over the deals. Mr O'Farrell has given the companies until today to show cause as to why he should not follow that advice.
 The companies behind each licence, NuCoal at Doyles Creek and Cascade Coal at Mt Penny and Glendon Brook, say they are innocent of wrongdoing. Each face a difficult task in persuading the government of the claims. Several former directors of NuCoal's predecessor, Doyles Creek Mining, face potential charges of corruption, as do a number of directors at Cascade Coal. Late last year, the government passed legislation giving it the legal power to revoke the licences. Craig Chapman owns land near to the proposed Doyles Creek mine and says the ICAC have clearly outlined the reasons as to why the lease should be cancelled. "The ICAC released a very comprehensive report in relation to the shenanigans in Doyles Creek and the fact that the exploration licence was awarded corruptly," he said.
 "The licence is forever tainted and naturally we would be hoping the Premier and the New South Wales Government adopts the recommendations of ICAC and cancels that exploration licence." The secretary of the Bylong Valley Protection Alliance, Craig Shaw, says the ICAC have made clear what the future of the licence should be. "We feel that the Mt Penny licence should be, as in Commissioner Ipp's words, expunged from the books," he said. "We agree and Commissioner Ipp has made it patently clear, through his very precise kind of argument, that the lease is so tainted by corruption that it's non-salvagable."

Iron ore mining contract for Western Desert in Northern Territory

Thiess makes a return to iron ore mining having secured a A$135 million three-year contract with Western Desert Resources at its Roper Bar project, a remote greenfield iron ore mine in Australia’s Northern Territory. Thiess has been working with Western Desert Resources for some time, providing on the ground mobilisation and project support since November 2013. The contract has just commenced, with Thiess leading the mining operations.

Thiess Managing Director Bruce Munro said he was delighted to be returning to mining in the region. “Our offering to Western Desert Resources is based on our ability to provide both safe and efficient operations to our client,” he said. “We are very pleased with the flexible relationship that’s been developed and look forward to a successful and long-term partnership.”

Central to the relationship developed between Thiess and Western Desert Resources is a joint vision and commitment to providing opportunities to Indigenous Australians.

Thiess’ Executive General Manager of Australian Mining Michael Wright said the focus from the very outset was to ensure both parties worked together to deliver optimal outcomes for local communities.

“We have a shared strategy with Western Desert Resources to offer Indigenous Australians training and employment opportunities, and this includes a partnership with Rusca Bros Mining, which has a well-established connection with local communities,” Wright said.

The Roper Bar iron ore project is located approximately 600 km southeast of Darwin, with iron ore to be exported from the Bing Bong loading facility.

The project initially involves an open pit operation with a production output of 1.5 Mt/y of ore in its first year and increasing to 3 Mt/y by year three. Associated infrastructure includes a 165 km private haul road to transport direct shipping ore (DSO) to an existing loading facility, on-site workers accommodation and processing facilities.

Initial results indicate the orebody contains a higher grade DSO and a lower grade ore that will undergo initial processing or beneficiation prior to shipping. Under the project’s Mining Lease Application, up to 24 Mt of iron ore will be produced over a nine year period.

Norway's Oil Fund Heads For $1 Trillion; So Where Is Alberta's Pot Of Gold?

The country’s oil fund — which collects taxes from oil profits and invests the money, mostly in stocks — exceeded 5.11 trillion crowns ($905 billion) in value this week, making it worth a million crowns per person, or about $177,000 per Norwegian.

That’s right. Norway, the “socialist paradise,” is effectively running a surplus of nearly a trillion dollars, thanks to oil revenue.

About the same time this happened, the Canadian Taxpayers Federation released calculations showing that the taxpayers of Alberta are on the hook for $7.7 billion in debt, or about $1,925 per person. It expects the debt to spike to $17 billion by the end of the 2015-2016 fiscal year. The CTF is so alarmed by the province’s descent into deficits that it has launched a debt clock specifically for Alberta.

What's wrong with this picture? Norway, with an economy and population somewhat larger but on the same scale as Alberta's, has managed to guarantee its citizens' prosperity for decades to come. Norway's oil production is declining, down to one-half what it was in 2001. Alberta, where oil production keeps growing and growing, is writing IOUs.

Norway isn’t the only one, though its fund is the largest. The United Arab Emirates’ funds are valued in excess of US$800 billion, Kuwait has about US$400 billion, and Russia and Kazakhstan have accumulated about US$180 billion each.

These facts should renew the long-running debate about whether the federal government or the provincial governments of oil-rich provinces should set up the sort of sovereign wealth fund that has made Norway stupendously, incomprehensibly rich.

But are Albertans, or other Canadians, ready for the sort of reforms that would turn Alberta into the new Norway?

In socialist-leaning Norway, oil profits — including from state-run Statoil — are taxed up to a whopping 78 per cent, and that’s where the seed money for the fund comes from.

Alberta, meanwhile, never even had a provincial sales tax. Albertans pay far, far lower taxes than Norwegians, and if conventional economic theory is right, this should give Alberta the advantage.

But does it?

The average total income in Alberta is around $53,000, well below the province's (stunning) economic output of $80,000 per person. Norway's economic output is actually much lower than Alberta's, at $65,000 per person, but its average income is about the same, at $58,000. Norwegians take home a much larger chunk of the economy's wealth than Albertans do.

The Alberta government blames its deficit on the “bitumen bubble.” Oilsands product is selling for considerably less than conventional crude, mostly because of the boom in shale oil production in the U.S. It was selling for 22 per cent less than West Texas Intermediate oil as of this week, and this, apparently, is putting pressure on Alberta's finances.

But this is a sad excuse. Norway, too, has had to deal with low oil prices over the decades, but always found the political will to feed its rainy day fund.

Alberta “was just greedy and decided that a drunken, blow-out dance party today was better than a string of candle-lit dinner parties down the road,” writes noted economics reporter Eric Reguly in Corporate Knights.

Had Alberta set up a proper sovereign wealth fund decades ago as Norway had — or even if it were simply willing to draw higher royalties — it could use that money to stay out of deficits. It wouldn’t have to go begging to the federal government for aid when flooding hits.

This isn’t news to policymakers. The IMF, the Canadian International Council (CIC), and a recent University of Saskatchewan report are among those recommending Canadian governments set up sovereign wealth funds.

“The arguments in favour were just so logical,” said Melanie Drohan, co-author of a CIC report favouring oil funds, in an interview with iPolitics.

It would insulate the economy from commodity price busts, allow governments to save for future generations, and perhaps best of all, “it would keep government spending within their means,” she said. “We wouldn’t have these huge surpluses going into huge deficits.”

Some parts of the country are listening. British Columbia Premier Christy Clark last year announced the creation of a wealth fund that will collect profits from the proposed development of the liquified natural gas (LNG) industry on the west coast.

It won’t be anywhere near the size of Norway’s fund; the B.C. government projects it will collect $100 billion of a projected $1 trillion in LNG wealth generated over the next 30 years. Then again, the LNG business in B.C. isn’t expected to be as large as Norway’s oil business.

But aside from B.C., there is little interest among elected officials. The Harper government has roundly rejected the creation of a federal sovereign wealth fund.

And in Alberta, the idea of a sovereign wealth fund appears to have come and gone. The province came close when then-Premier Peter Lougheed set up the Heritage Savings Fund back in 1976. But the province didn't take it seriously at all. After a decade in operation, Alberta's government basically stopped paying into it, instead drawing on it as another source of revenue. It stands today at a measly $16.7 billion, a tiny fraction of what Norway has accumulated.

Incidentally, the fund's size is about what Alberta’ debt is projected to be in a couple years. The province could just give up the ghost, raid the fund and pay off the debt.

It won’t help make Alberta a more fiscally responsible place in the future, but at least it will temporarily eliminate the unforgivable embarrassment of Canada’s wealthiest, most economically dynamic province showing the world how to waste its wealth.

America’s trade deficit is shrinking. Thank fracking.

Some news Tuesday morning about America's trade deficit bodes well for growth. And there may be bigger lessons about the global economy working its way toward a more sustainable balance.

The United Stated imported only $34.3 billion more in goods and services than it exported in November, down 13 percent from October. It is the lowest monthly trade deficit in more than four years. It was strong enough to lead forecasters to dramatically upgrade their expectations of how fast the U.S. economy grew in the fourth quarter. Macroeconomic Advisers, one leading firm, bumped its estimate of GDP growth to 3.5 percent, up from 2.6 percent before the trade announcement!

The big question for the future is whether this is a onetime blip in the (always-volatile) trade data, or something that will recur. Even more important, does it signal progress toward a more sustainable, balanced global economy in which the United States isn't just the buyer of last resort for all the world's goods?

The improvement in the trade balance came via a slight increase in exports ($1.7 billion) and a larger decrease in imports ($3.4 billion). Most of the decline in imports came about because of a $2.5 billion drop in the value of imported crude oil. That's not just a one-month trend. Through the first 11 months of 2013, crude oil imports were down almost $40 billion, a 13.7 percent drop. There were also large drops in other petroleum products (liquified petroleum gas imports, down $2.2 billion, other petroleum products down $1.6 billion).

So, the domestic energy boom is translating pretty clearly into a more favorable trade balance for the United States, which in turn means stronger overall growth. That may not create as many new jobs as one might hope (see an exploration of that questionhere). But what does it mean for the longer-term project of making a more sustainable global economic order?

The United States was running consistently large current account deficits in the years before the crisis, very likely a contributor to the imbalances that made the financial system vulnerable to the near-collapse in 2008. In short, we bought more stuff from other countries than we sold to them (particularly from Asian exporters of consumer goods and Middle Eastern oil exporters). The money those other countries made from selling us all that stuff was recycled into U.S. financial assets (think anything from the Abu Dhabi sovereign wealth fund to an Indonesian billionaire's holdings of Treasury bonds). That inflow of money into U.S. financial assets pushed interest rates down artificially and encouraged the most interest-rate-sensitive sectors of the economy, particularly housing, to get into a massive bubble.

The broadest measure of whether that kind of imbalance is still a problem is the nations' current account. And there the news is also pretty good. In the third quarter, the country's current account deficit was 2.2 percent of GDP, the lowest level since the start of 2008.

Chevron to clear more land on Barrow Island

Western Australia's Environmental Protection Authority has given Chevron permission to use an extra 10 per cent of A-class land on Barrow Island as the company pushes to finish its Gorgon LNG project.

The company will expand its footprint on the island in a plan that will see the clearing of a further 32ha of land in addition to the 300ha that it was already permitted to disturb.

EPA Chairman Paul Vogel said the proposal was assessed to determine if the existing conditions on the development could be applied to the revised footprint.

"The EPA concluded that the conditions set out in the original approval are effective in managing impacts and should be implemented for the additional development,” Vogel said.

An extra condition of the approval means Chevron will be required to extend a "threatened species translocation and reintroduction program" at the island from 12 years to 14 years.

The extra space will be used for additional laydown and logistical support, with Chevron and its partners hoping it will improve efficiencies at the site.

Logistics on the island have been an issue as strict rules and quarantine requirements that come with working on an A-class nature reserve proving one of the projects biggest challenges.

High labour costs and a strong Australian dollar have also proved testing with the project experiencing massive cost blowouts.

It is now estimated to cost $US54 billion, up from the previous forecast of $US52 billion and is not due to be completed until mid-2015.

Originally the project was supposed to cost $US39 billion and begin shipping LNG in 2014.

Chevron vice chairman George Kirkland has previously said the economics of the project remain attractive.

“We continue to make steady progress against key project milestones and are applying lessons learned to our Wheatstone development which is almost 25 per cent complete,” he said.

One year later, more public hearings for Baffinland

It’s been a year sinceBaffinland Iron Mines announced changes to its Mary River project. Now a regulatory hurdle that the company had hoped to pass six months ago has evolved into another set of public hearings.

The Nunavut Planning Commission plans to hold oral hearings next week in Clyde River, Grise Fiord, Resolute Bay, Arctic Bay and Pond Inlet.

It’s the first time the NPC will play a lead role in a major environmental review.

"NPC has a very similar role to the one they played before, but they are being a little more active,” says Baffinland’s Greg Missal. “And you know, we'll work with them as much as we possibly can to make sure they get the information they need to fulfill their mandate"

The Nunavut Impact Review Board won't be part of next week's public hearings.

Board officials decided to sit out, after complaining about the planning commission's process, and a lack of communication. But beyond next week's hearings, the NIRB is part of the ongoing review.

NPC process “deviating significantly”: NIRB

While the Nunavut Impact Review Board is responsible for environmental reviews, it’s the job of the Nunavut Planning Commission to first determine whether projects fit with any land use plans in place.

A Nunavut-wide land use plan has been in the works for over a decade, but there is a plan for the North Baffin region that's been in use since 2000.

Five years ago, the Nunavut Planning Commission agreed that the original Mary River project fit within that plan, but they've yet to issue a decision on whether the altered project does.

This summer, Baffinland provided details on its latest plans to the NPC, and requested a timely decision, suggesting June 28 as a suitable date. In a June 28 letter to NIRB, the commission wrote only that "the NPC timeline is not one that other parties are able to influence."

The NPC made several more requests for information from Baffinland before announcing in November, without consulting with NIRB, that it would hold oral hearings into the issue under a new set of its own rules and procedures.

That’s when NIRB announced in a letter that it would not take part in the hearings.

"The board is concerned that the current joint review process is deviating significantly from the previous joint review process for the Mary River project, with no supporting rationale,” wrote NIRB’s executive director, Ryan Barry, in a Nov. 22 letter.

He called the development “regrettable,” noting that, “with no prior discussion, no consultation and no notice the Board has been left in the untenable position of being approached by participants" seeking “explanations regarding the basis and rationale for these significant deviations from the communication process... which the board is unable to provide."

In recent weeks, the NPC has been involved in a flurry of correspondence, part of which involves gathering information previously collected and made public by NIRB.

2014 gold price rally builds against record bearish bets

The gold price enjoyed a second day of double digit gains, adding 1% on Friday to reach a near 3-week high and notching up its best performance since October.

On the Comex division of the New York Mercantile Exchange gold for February delivery added as much as $13 an ounce to a day high $1,238.30 in early afternoon trade.

Gold's fightback from last year's lows of $1,187 which was again tested on the last trading day of 2013 has put the record number of short sellers in the market on the back foot .

Short positions – bets that the price will go down – held by large investors or so-called managed money climbed to a record to 82,765 lots or 8,276,500 ounces in the week to December 24 according to the delayed Commodity Futures Trading Commission data released yesterday.

So many big players short of gold could translate into further upside for the metal as commercial traders and hedge funds are forced to cover their positions should gold go higher from here.

Gold has also been boosted by increased demand from Asia. The premium paid for taking immediate delivery of gold in Shanghai has risen to $23 an ounce, up from zero in November and a 4-month high.

Demand from world number two importer of the metal could also be boosted this year.

The Reserve Bank of India  lifted some import restrictions on December 31 which was responsible for a plunge in imports  on the subcontinent of between 250–300 tonnes in 2013 from a peak above 1,000 tonnes in 2011.

A negative in the market remains continued outflows from gold-backed exchange traded funds.

Holdings of the world’s largest gold ETF – SPDR Gold Shares (NYSEARCA:GLD) – dropped 3.5 tonnes yesterday after a 45 tonne decline in December.  At 794.6 tonnes GLD holdings are at the lowest level since January 2009.

Overall, the more than a hundred gold-ETFs traded around the world saw net selling last year of 869 tonnes with the bulk of the selling – 586 tonnes – occurring in the first half of 2013.

The price of of gold ended 2013 down 28% at a shade over $1,200 an ounce, bringing a 12-year bull run that took it from around $270 an ounce at the end of 2000 to a record high above $1,900 in September 2011 to a decisive end.