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Zijin axes expected gold output after losing PNG mine – MINING.com

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Porgera gold mine. (Image courtesy of Barrick Gold.)

Zijin Mining, China’s no.1 gold producer and second largest copper miner, has revised down its gold production guidance for 2020 after Papua New Guinea (PNG) refused to extend the mining lease for the Porgera mine it operates with Barrick Gold (TSX: ABX) (NYSE: GOLD). 

Zijin had forecast gold production
for the year of 44 tonnes, rising to 42-47 tonnes in 2021 and 49-54 tonnes in
2022.

Following PNG’s decision, the miner now expects to maintain gold production levels in 2020 “about the same as” last year’s, when it churned out 40.8 tonnes of gold.

Zijin plans to speed up the upgrade and construction of its Longnan project in China and look into acquisitions to keep gold production at 2019 levels

The gold producer said it planned
to speed up the upgrade and construction of its Longnan Zijin project in China
and boost production at other mines in its portfolio in order to offset the
loss of Porgera.

Zijin’s share of the mine’s gold
production in 2019 was 8.827 tonnes.

The company also said its joint venture with Barrick would “pursue all legal avenues” to fight PNG’s move and “to protect its legitimate interests and recover any damages.”

Since the mining lease for Porgera
expired in August last year, Barrick led attempts to renew it, but faced backlash from landowners and residents over what they
claimed were negative social, environmental and economic impacts from the mine.

Negotiations were complicated
further by a split among the landowners.

The manager of Porgera, Barrick Niugini Limited, applied for a permit extension in June 2017 that would have renewed its rights for 20 years and had been engaging with the government on the matter since then, Barrick said on Friday.

In response to a request from PNG’s Prime Minister James Marape, the world’s second-largest gold miner proposed in 2019 a benefit-sharing arrangement. The deal would have delivered more than half the economic benefits to PNG stakeholders, including the government, for 20 years, according to Barrick.

Mulling acquisitions

Zijin, which has a portfolio of producing and developing assets in its home country, Australia, Russia, Mongolia, Serbia and Kyrgyzstan among other countries, said it would pay attention to market opportunities and consider mine acquisitions to boost output.

Porgera contributes to about 10% of the PNG’s exports and employs over 3,300 locals. Last year, the mine generated 284,000 ounces of gold, and is estimated to hold as much as 3.6 million ounces of the precious metal.

The open pit and underground mine sits at an altitude of 2,200-2,600 metres in the Enga province, and is about 600 km northwest of Port Moresby.

PNG officials said military and police were deployed early on Monday to secure the asset.

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Did Iraq Just Doom The OPEC Deal? | OilPrice.com – OilPrice.com

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Did Iraq Just Doom The OPEC Deal? | OilPrice.com

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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    OPEC

    OPEC is in negotiations with its members to find the best way forward, but talks appear to have stalled over one laggard, Iraq, which has failed to live up to its agreement under the cartel’s production cut deal. Does this give OPEC cover for meeting delays and overall noncompliance, or is it a sincere effort to get it onboard?

    Whether Iraq can be brought in line and fully comply with its share of the OPEC deal is certainly doubtful. Yet interestingly enough, OPEC and Russia have staked the extension of the dealy past June, when the current level of cuts expire and cuts begin to ease, entirely on whether all laggard members bring production down to agreed-upon levels. 

    Either OPEC and Russia are certain they can get Iraq to bring its production down to its quota, or they are content to have the cartel’s production above normal. 

    Russia and Saudi Arabia both agreed that the current level of production cuts should be extended at least one more month. The caveat? That all other countries implement their established quotas in full. 

    That’s a pretty big ask, and if history repeats itself, it’s impossible. What this means for oil prices is that there would be no extension, inventories won’t draw down as quickly, and oil prices will remain depressed along with demand for crude–which although it is picking back up thanks to lockdowns being lifted, is still about 20 million barrel per day under what it was before the pandemic. 

    Iraq isn’t the only laggard, to be fair. Nigeria, Angola, and Kazakhstan are also not keeping up their end of the bargain. The cartel went to work trying to get the three, and Iraq, to recommit to the cuts, and with the exception of Iraq, all three gave the requisite assurances.  Related: Are Investors Ignoring The Largest Financial Risk Ever?

    Of course, that doesn’t mean they will necessarily do so, but it’s at least a start. 

    Iraq, however, has not committed to bringing its production down to the quota in June. 

    OPEC’s compliance for May is thought to be about 89%. This isn’t terrible considering the volume of how much is being cut. Still, compliant Saudi Arabia is declaring its unwillingness to continue its share of the cuts for another month unless the laggards get their act together. Laggards that include Iraq, whose compliance reached only about 42% in May.

    OPEC won’t even have the meeting this week unless Iraq agrees to improve its compliance. 

    Is it all just a ploy to manage market expectations in the run up to the meeting to ensure that whatever agreement is hatched is looked upon favorably, therefore maximizing the price impact? Is it a strategy to get out of extending the deal, perhaps as discussed with U.S. President Donald Trump? Is it designed to put maximum pressure on Iraq to comply? 

    Chances are, we’ll never know. But one thing is for certain: Iraq will not comply with the deal–period. 

    In fact, it said as much. Iraq said it would fully implement cuts by the end of July-in their promise-to-fulfill-later kind of way that they have done in the past. 

    Iraq the Laggard

    For the most part, when it comes to chronic noncompliance, we are talking about the usual suspects of Iraq and Nigeria. But Iraq is so much bigger. 

    Both countries have unique challenges when it comes to sticking to any production cut deal that OPEC or OPEC+ could ever hatch. For Iraq, it is their reliance on international oil companies, most of which operate in the semi-autonomous Kurdistan region. So on one hand, Iraq doesn’t want to bite the hand that feeds it–big foreign oil companies–and on the other, Iraq has a tough time trying to regulate what goes on in the Kurdistan region. This is not even to mention the rocky political climate in Iraq. Related: Can Yemen’s Oil Industry Make A Comeback?

    For Nigeria, it’s the fact that it has a strong reliance on its oil revenues. Most OPEC nations rely on oil revenue for a substantial part of the revenue. But for Nigeria, shutting down oil production and forgoing the revenue associated with that oil production is tough.  Yet Nigeria has agreed, although its May compliance was still not up to snuff.

    OPEC’s Other Problem

    Is OPEC really worried about the extra barrels Iraq is pumping? After all, Saudi Arabia has overachieved its own quota for well over a year while the laggards basked in their overproduction. Most signs point to legitimate worry. Saudi Arabia has declined to publish its July OSP for July until after the meeting. The Kingdom is also raising its customs duties on hundreds of products to generate more non-oil revenue. In a similar vein, it’s tripling its VAT and suspending its cost of living allowances. These are worrisome signs.

    What’s most concerning in the market, however, is the notion that the OPEC deal could fall apart entirely. 

    The previous deal catastrophe is all too fresh in our minds after Russia and Saudi Arabia–the two heavyweights in the deal–failed to reach an agreement over the cuts. The deal failure triggered a price war between the two, plunging the world into a glut of oil and sending prices spiraling as demand fell in the wake of the pandemic. 

    By Julianne Geiger for Oilprice.com

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      Russia's Energy Minister Sees Shortage In Oil Market Next Month – OilPrice.com

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      Russia’s Energy Minister Sees Shortage In Oil Market Next Month | OilPrice.com

      Julianne Geiger

      Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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      Kremlin

      Russia’s Energy Minister Alexander Novak is predicting a shortage in the oil market next month, Ifax reported on Thursday.

      Novak said that the global oil markets could see a shortfall between three and five million barrels per day in July, depending on the outcome of the OPEC meeting that could be held yet this week.

      The meeting that will help shape the future of the oil market over the next few months is proving difficult, however, even though it would appear that Saudi Arabia and Russia have reached an agreement in principle to extend the current level of cuts through the end of July.

      The cuts are currently set to ease starting in July.

      But negotiations among the cartel members are complex, with Iraq, Angola, Nigeria, and Kazakhstan overproducing—a bone of contention with more fastidious members such as Saudi Arabia.

      OPEC+’s compliance reached 89% in May. OPEC’s second largest producer, Iraq, reached only 42% compliance, based off of preliminary data. While Saudi Arabia and Russia agreed to extend the cuts at least for another month, they are not interested in doing so unless Iraq and the other overproducers bring their production in line with the given quotas.

      OPEC+ quotas call for total cuts of 9.7 million bpd. Oil demand, however, is still off by 21 million bpd as of May, according to Novak. But that’s up from 25-28 million bpd off in April.

      Novak added that the filling up of oil storage has slowed, and that thanks to the current production cuts and the improving demand figures so far, the market should achieve balance in June, before slipping into a deficit in July.

      Based on May’s production, OPEC has another 1 million barrels to cut to get into full compliance with the current deal.

      By Julianne Geiger for Oilprice.com

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      CPA Canada hit by cyberattack, affecting data of more than 329000 – CP24 Toronto's Breaking News

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      The Canadian Press


      Published Thursday, June 4, 2020 4:15PM EDT


      Last Updated Thursday, June 4, 2020 5:41PM EDT

      TORONTO – A cyberattack on the Chartered Professional Accountants of Canada website has affected the personal information of more than 329,000 members and stakeholders, the organization said.

      The information includes names, addresses, emails and employer names, but passwords and credit card numbers were protected by encryption, CPA Canada said.

      It warned the data could be used in email phishing scams and encouraged those affected to “remain vigilant.”

      The attack by “unauthorized third parties” occurred between Nov. 30 and May 1, according to an internal investigation carried out with the help of cybersecurity experts.

      The organization said it beefed up its security measures and contacted the Canadian Anti-Fraud Centre and privacy authorities after learning of “a possible security incident” the week of April 20.

      “Upon discovering this, CPA Canada took immediate steps to secure its systems and conduct a thorough analysis to determine what information may have been involved,” the group said in an email.

      “There is no evidence that the encryption keys were affected in this incident and we have no reason to believe the encryption was compromised.”

      The personal information relates mainly to the distribution of CPA Magazine and everyone affected has been notified, the organization said.

      Hacks against a wide range of companies since 2018 have included medical test laboratory LifeLabs and credit union Desjardins, which combined saw the theft of the personal information of more than 19 million Canadians.

      This report by The Canadian Press was first published June 4, 2020.

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