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LUMI - Lundin Mining News Story

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Basic Materials
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Market Cap £6.14bn
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Mining revival offers hope in crisis-hit Europe

Thu 4th July, 2013 4:34pm
* Countries offer large labour pools, good ore prospects, low risk * EU policy initiatives encourage raw materials independence * EU initiatives to revive steel, aluminium industries By Susan Thomas LONDON, July 4 (Reuters) - A gradual shift in European attitudes and policy toward mining in the past four years, spurred by the need to create jobs and to ensure supply of critical materials, has led to investment and a nascent revival of the industry. New or resurrected mining and smelting projects in some areas of Europe are providing some prospects for growth in the region as countries struggle with recession and crippling unemployment. A handful of countries, including hard-hit Spain and Portugal, are attracting investment with good grades of ore, a large labour pool, revamped mining regulations and low political risk. "Spain has gone from being shy of mining to being welcoming of mining. The political landscape has turned 180 degrees," said EMED Mining  EMED.L  Chief Executive Harry Anagnostaras-Adams, whose London-listed company plans to reopen a former Rio Tinto RIO.L   RIO.AX  copper mine near Seville. "There has been a marked transformation between when we arrived six years ago, when mining was not conventionally regarded as a favourite industry, to today when it overshadows most other initiatives in the area." Redevelopment of the mine, which is likely to begin next year and last 12 months, will directly employ 1,000 people on the site in a region where around 50 percent of the population is unemployed.   At EU level, new broad policy initiatives on raw materials have been adopted to boost employment and make the bloc less dependent on imports of vital raw materials. The EU is the world's largest or second-largest producer of some industrial minerals, including feldspar - used in glass and ceramics  - and construction mineral gypsum.  It remains an importer of most others including copper, zinc and tin. Its domestic production of metallic minerals is limited to about 3 percent of world output. Leading emerging market producers of minerals in Africa and Asia, meanwhile, are increasingly adopting strategies designed to protect their resources for future development and for domestic markets. "Growing resource nationalism in many parts of world makes Europe more attractive from a political risk point of view," Raw Materials Group analyst Magnus Ericsson said. "There's also a slow but steady process of re-formulating EU policy and making it more positive towards mining in Europe to secure supply of metals. There are a number of exploration and investment projects that might come on stream in the next four to five years." More work needs to be done to simplify and streamline bureaucracy and policy in the European Union and its member countries, however, to bring on a full mining revival, executives say.  "The EU is trying to stimulate mining and reduce the dependency of imported raw materials ... but at the same time some of the EU regulators make it much more difficult to operate in Europe," Lundin Mining  LUN.TO  Chief Executive Paul Conibear. He cited environmental policies, a potential ban on using certain chemicals common in mining, and restrictions on transport of certain materials as difficulties. "When a (full) mining revival comes, we would say that attractive fiscal regimes, low risk and stable jurisdictions will be a driving force," he said. NEW POLICIES, NEW INVESTMENTS Among the changes so far, Portugal has partly overhauled its labour code, which in the past was punitive for companies such as miners that must operate 24 hours a day, seven days a week to be viable, Conibear said. Sweden has lowered its corporate income tax from 26 percent to 22.5 percent to attract heavy industry investment such as mining, he said.  "That is an excellent move that should bring in far more aggregate economic stimulation than the reduction in federal tax revenue," Conibear said. Lundin produces copper, zinc, lead and nickel from operations in Portugal, Sweden and Spain. It is currently expanding its Portuguese and Swedish mines and is actively looking for new base metals assets in eastern Europe, he said.  Rio Tinto has invested nearly 80 million euros in its Dunkirk aluminium plant in France in the past 18 months and plans to invest at least that much again over the next five years to improve its energy saving and efficiency. ID:nL5N0EO1RT   Trafigura  TRAFGF.UL , the world's third-largest trader in raw materials, plans to plough over 300 million euros into a newly acquired copper, zinc and lead mine in Spain. ID:nL6N0DB40X  Trader Glencore  GLEN.L  has reopened its Portovesme lead smelter in Sardinia.  ID:nL6N0CCBNX     Finland has attracted more new mineral discoveries and mine projects than other parts of Europe as a result of favourable mining legislation and an attractive tax regime. Certain ex-communist Central and Eastern European countries are also trying to revive their mining sectors, but with varying degrees of success, Conibear said. Slovakia has substantial untapped industrial metals and coal reserves, EMED's Anagnostaras-Adams said. "Their regulations need to be updated, they are quite outmoded. But the intent is there." Last month, the European Commission announced an array of recommendations to revive the steel industry, which has been hurt by tumbling demand and high energy costs relative to rivals in the Middle East and United States.  The "EU steel action plan" is the first comprehensive attempt by the Commission to stem a decline in the steel sector since the Davignon Plan sought to tackle an industry slump in the mid-1970s. A similar plan is in the works for the aluminium industry.  ID:nL5N0EN36C  (Additional reporting by Maytaal Angel and Silvia Antonioli; editing by Jane Baird) (( 542 6880)(Reuters Messaging: Reuters messaging: Keywords: MINING EUROPE
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