Buying a diamond is the ultimate in discretionary spending.
So it should be no surprise that with the world's worst financial crisis since the Great Depression in full swing, sales of both rough and cut diamonds have plummeted.
As many as 300 workers at Rio Tinto's Argyle mine in Western Australia's remote Kimberley region have just discovered that hard truth.
The mining contractor to Rio and Argyle, Macmahon, spent yesterday telling the workforce — it has the highest indigenous representation of any mine in Australia at 25 per cent — that the operation was about to get considerably smaller, reducing annual output from 20 million carats to about 15 million.
More ominous was Rio's decision to adopt a go-slow approach on a $US1.5 billion ($A2.2 billion) life-extending move to begin mining Argyle's billion-year-old diamonds from an underground position, with the existing open-cut operation now on its last legs.
Debt-ridden Rio stressed its need to conserve cash under its $US10 billion debt-reduction target for 2009, as well as the "current global conditions".
Rio did not say so but industry participants have reported that the trade in rough and polished diamonds in the all-important US market tanked in the second half of 2008 as the global financial crisis took hold.
Argyle — the world's biggest diamond mine by volume but not by value because of the relatively low quality of its stones — is the single-biggest contributor to the Kimberley economy and is the major supplier of low-value rough diamonds to India's huge cottage-based diamond cutting and polishing industry.
The move to underground operations was given the go-ahead by Rio in late 2005 and meant that Argyle stones, including the world-famous $US500,000-plus a carat "fancy pinks" that make up a small percentage of its production, would continue to be produced until at least 2018 on the exhaustion of the open-cut diamond resource in the AK1 kimberlite pipe.
Before that 2005 commitment was made, Rio extracted a deal on royalty relief (down from 7.5 per cent to 5 per cent of revenue) and the waiving of secondary processing obligations (fancy pinks would still have to be cut and polished in Perth) from the WA Government.
The plan now is to mine some extensions to the open-cut resource for at least two years and hope that the diamond market bounces back sufficiently to warrant a full-blown move to underground mining.
Average annual production over the life of the underground mine was expected be about 60 per cent of Argyle's historical annual average of 34 million carats.
The quality of the rough stones is expected to be similar, with a value of about $US10 a carat. That low average value compares with gem-quality rough stone values of more than $US150 a carat.
Only 5 per cent of Argyle's output is of gem quality.
Buying a diamond is the ultimate in discretionary spending.
THE nation's mining industry has had one of its darkest weeks in years as the global economic crisis bit harder.
More than 1000 workers were axed, or put on notice, and more than $US2 billion ($3 billion) of expansion shelved or slowed.
Plummeting mineral demand has combined with the drying up of credit to force previously high-flying miners like Rio Tinto, OZ Minerals and Xstrata to take the knife to growth, production and workers.
Since July, more than 5000 mining jobs, or 3.5 per cent of the nation's 140,000-strong mining workforce have been axed, with more job cuts to come in the next month.
Miners, who as recently as November were struggling to find workers in some sectors amid a boom-induced skills shortage, have been shocked at the speed with which the global credit crisis has hit the industry.
Rio is expected to have by far the biggest impact on the nation's mining workforce and growth programs, as the $US39 billion of debt it racked up in the 2007 purchase of Canada's Alcan cripples its growth plans and puts 14,000 workers out of a job worldwide.
Indicating how toxic the debt on a balance sheet has become, BHP Billiton -- which has little debt and similar operations to Rio -- has so far flagged minimal cuts to local operations and few overseas.
But it is not immune to the global economic slowdown and its overall production and financial figures are being affected.
BHP compounded Rio's problems in November when it walked away from its $140 billion hostile bid and sent the former target's share price plummeting.
So far, Rio has announced 600 workers and contractors will be out of a job at its Kestrel coal mine in Queensland, Northparkes copper mine in NSW and Argyle diamond mine in Western Australia.
If Rio's cuts are proportional to the total workforce it has here, however, the total could climb to 3000.
Rio chief executive Tom Albanese said conditions in the new year had shown few signs of sustained improvement and the miner was bracing for a long period of volatility.
"I think we'll see some improvements in some months and we should accept some setbacks in others," Mr Albanese said.
Rio is cancelling the vast majority of its growth projects by cutting back its 2009 capital spending budget by $US5 billion to $US4 billion.
Half of that $US4 billion will be on what Rio calls sustaining capital expenditure on postponed projects, meaning only $US2 billion will be spent on actual production expansion.
So far in Australia, Rio has suspended expansion programs at Northparkes and Pilbara iron ore operations as well as slowing the $US1.5 billion underground extension at Argyle.
Rio says it will announce where its job cuts and capital rein-in will come from with its full-year results on February 12.
Any prolonged downturn in the mining industry will flow on to the rest of the economy.
In a January research paper, the Reserve Bank said the mining sector had become so important to the Australian economy that the ripple effect from a downturn in its fortunes would be particularly pronounced.
"Other things equal, reduced spending by the mining sector, on both investment and inputs to production, would be expected to flow through to slower activity in other sectors of the economy," it said.
Mining investment over the past four years outstripped even the sector's revenue growth, pumping on average an extra $30 billion a year into the economy.
Last financial year, the sector accounted for about a quarter of all private business investment, surpassing the share recorded in previous booms in the early 1970s, early 1980s and mid-1990s.
ABN AMRO mining analyst Warren Edney said the mining sector was unlikely to show any signs of improvement until at least March and more production cuts could be on the way.
"Things have fallen a lot but companies and investors want some sign that at least things may have hit the bottom," Mr Edney said.
"There's a natural period of weakness in the first couple of months of the year from China where you don't get a clear picture of what's going on, so I think it's going to be March before we can say there's a reasonable case things are getting near the bottom," he said.
After Rio, the biggest job cuts so far have come from embattled local miner OZ Minerals and Swiss miner Xstrata, both of which are also struggling with debt problems.
OZ has flagged 559 staff and contractor job losses and its future is looking more and more questionable as it continues to miss deadlines to refinance debt and secure bridging loans.
Xstrata, whose shares slumped 80 per cent last year and which has $US17 billion of debt, has cut 580 local workers because of the global slowdown. Yesterday it threatened to lay off another 300 if the Rudd Government does not approve the stalled McArthur River zinc mine in the Northern Territory.
National Industry Skills Council chief executive Des Caulfield said the speed of the downturn had surprised nearly everyone.
"Nobody saw the depth of the cancer from the financial meltdown, just as when we spoke to people five or six years ago they hadn't seen the boom coming," Mr Caulfield said.
He said the outlook was not all bad for mine workers, especially in Queensland, where coal miners recently were concerned that civil infrastructure projects in Queensland would rob them of workers, and where the burgeoning coal seam gas sector is expected to require thousands of workers in coming years.
The job losses in the Australian mining industry has gone from a trickle to a spurt to a gush.
Thousands of workers have been laid off across the country.
Now it's not just miners on site who're likely to lose their jobs, big city head offices are also being culled.
The job losses started around the middle of last year when commodity prices nosedived, and they just kept on coming.
Then three weeks before Christmas the worlds third largest miner, Rio Tinto, announced plans to shed 14,000 workers.
And although the company has gone public with cuts of mainly contract workers, it's remaining tight lipped about head office job losses.
The ABC's been told some 200 people will be made redundant within weeks, most of them in office jobs in Perth.
Rio Tinto wont confirm or deny the figure and plans to keep details under wraps until it posts full year results in February.
Research analyst, with Ord Minnett Peter Arden, says it's a sign the global downturn is getting rapidly worse.
Small businesses in mining towns across the nation are being squeezed as their customers disappear.
Tom Price is an iron ore town in outback Western Australia.
Hardware store owner there Greg Musgrave says the bad situation is being made worse because mining companies aren't communicating with them.
Unwanted dumping has lead the Mineral Village Board to close its recycling center. The recycling center was designed for the residents of Mineral, with receptacles labeled glass, aluminum cans, broken down cardboard, and newspaper and other recyclable items.
Lately, village officials say, it has become the site of unwanted dumping.
People from outside the area have been seen depositing trash at the center. Proof has been found that residents of neighboring towns are using the center through address labels from mail, catalogs and other identifications.
To add to the headache, a new quote for recycling pick up has more than doubled in price.
“It has gotten out of hand,” said Mayor Glenn Morey. “It leaves us with no choice but to close the center.”
The Mineral Recycling Center will be closed Feb. 1. As of that date, anyone dumping at the site will be fined $500.
In other business, bids were reviewed from several area firms for household garbage pickup. Almost all bids were more than double the current rate of $7 per month.
A bid from Illinois Valley was accepted with a monthly charge of $13.28 per household.
The board agreed to set the garbage pickup at $40 every three months and water usage from $46.50 to $50 every three months. With these increases, curbside recycling was vetoed. The board then decided to increase the number of pickup tags from 13 to 26 allowing another bag to be placed at the curb each week.
The village board also reminded Mineral residents that dry, readily combustible material can be burned from 7 a.m. to sunset daily.
The man who created the Big Nickel is among 27 people being appointed to the Order of Ontario, the province's highest honour.
Ted Szilva, a local businessman and community activist, came up wit the idea for the Big Nickel in the 1960s as a way to promote tourism. The Big Nickel, located at Dynamic Earth near Copper Cliff just off Highway 17, is perhaps the city’s best known landmark.
Former Liberal premier David Peterson is among the others appointed to the Order of Ontario.
Peterson, who was premier from 1985 until 1990, was recognized for his public and community service contributions.
Former Ontario chief justice Patrick Lesage will also be inducted into the order at a black-tie ceremony to be held Jan. 22 at the legislature.
Others being honoured this year include former broadcaster and consumer advocate Peter Silverman, former Olympic figure skater Barbara Ann Scott-King, and human rights advocate George Brady.
Dr. Michael Baker of Toronto, a leading researcher whose work has led to a better understanding of leukemia and other cancers, is also among the recipients.
This year's Order of Ontario also includes:
- Jack Chiang of Kingston, a journalist and author.
- Tony Dean, the former secretary of the Ontario cabinet.
- Mary Louise Dickson of Toronto, a lawyer, educator and advocate for people with disabilities.
Research and Markets has announced the addition of the "Norilsk Nickel (GMKN) Update Report" company profile to their offering.
At least 3 years of history are available for most ratios. Additionally, information on business segments, competitors and future outlook are provided. Information on competition includes short overview of competitive situation in the market, comparison of key stats and description of competitors. Also future plans and strategy of the company is covered in this report. Conclusion contains opinion of our analyst on company's performance, business risk and growth possibilities providing reader with necessary information to make decisions.
Key reasons to read this report:
- Report contains only relevant information, leaving out excessive data.
- Understand company's historic performance and opportunities, competitive situation and business risk.
- Independent opinion from local analyst.
MMC Norilsk Nickel benefits from its large, high-grade reserve base, which supports massive production, product diversity, and low costs. On the other hand, the decrease of nickel price, decrease of demand on nickel from China and other giant consumers of this metal have a negative influence on Norilsk Nickel's activity.
To alleviate for nickel allergy-sufferers, all nickel containing parts are tested to ensure nickel leakage meets the requirements set by Volvo.
Nickel allergy is one of the most common causes of allergic contact dermatitis in the industrialised world. It is estimated that up to 15% of women, and up to 5% of men - up to 120 million people in the industrialised world - have nickel allergy. Those allergic to nickel may get an itchy rash when their skin touches a metal surface with nickel alloy. For these people, it is essential to avoid contact with nickel containing metals. But nickel can be found in many everyday items; from coins to watch bands, from eye-glass frames to necklage clasps - and in components in car interiors.
However, Volvo has a strict requirement that parts supplied for our car interiors fulfill our nickel standard. This means that for all interior components with metallic appearance in Volvo cars, such as interior door handle, gear lever, key, Volvo badge in the steering wheel and climate control buttons, nickel leakage has been minimized. This Volvo standard applies to our whole car range. The nickel containing parts have been covered with a plating free of nickel, and they have all been tested to ensure nickel release fulfils the strict Volvo standard.
"At Volvo Cars, we have worked a long time with our suppliers to reduce allergens in the passenger cabin. All textiles and leather are certified to Oeko-Tex Standard 100, and four models with 9 different cabin interiors have interior air that is recommended by the Swedish Asthma and Allergy Association", says Andreas Andersson, responsible for clean car interiors at Volvo Cars.