Gold’s best run since 2011 exposes `global complacency’ on rates

China's state news agency reports all production at Freeport McMoran's Grasberg mine in a remote province of Indonesia has been halted after a pipeline was sabotaged, access to the pit and underground operations were blocked and three miners were killed in an ambush. The latest attack follows an incident last week when Indonesian security forces fired on striking workers after a protest turned violent, killing one and injuring a dozen other. Some 12,000 Workers at Grasberg began a strike on 15 September and has vowed to shut down the mine if hourly wages of $1.50 is not upped 8-fold. The local police chief said between 500 – 600 policemen are now billeted at the mine.

Despite bans on export of iron ore from India, the price of the steelmaking ingredient has fallen in China. Business Standard reports that the price of iron ore originating from India has dropped 12% in Chinese markets to $168 a tonne, compared to $191 a tonne two weeks ago. The website quotes the chairman of Maya Iron Ores, a commodities brokerage, saying that Chinese steelmakers and traders expect the market to drop even further due to global financial turmoil and reduced demand:

World energy consumption is set to grow 53% by 2035 and most of that energy will be coming from fossil fuels, according to a study by the U.S. Energy Information Administration. While energy consumption will grow slowly in the U.S. and Europe, countries like China and India that are growing their industrial base will be gobbling up more and more energy.

Reports on Monday say Indonesian security forces fired on striking workers at Freeport McMoRan's Grasberg mine in the country's poorest province West Papua after a protest turned violent, killing one and injuring a dozen other, including seven police, some of them critically. The local police chief said between 500 – 600 policemen are now billeted at the mine. About 12,000 workers vowed Friday to paralyse production at the massive gold and copper mine as their strike over pay enters its second month. There is a history of violence at the mine and Freeport, based in Phoenix Arizona, report annual payments reaching an average $5m each year for government-provided security and $12m for unarmed, in-house security at the Grasberg complex dating back to the 1970s.

The Wall Street Journal reports Mongolia is relaunching talks with international miners on developing the western block of Tavan Tolgoi in the South Gobi desert, the world’s largest deposit of high-quality coking coal used in steelmaking. Mongolia's National Security Council rejected a deal struck with US giant Peabody Energy, China's Shenhua and a Russian-Mongolian consortium mid-September, just two months after they were announced as winners. At the time losing bidders from Brazil, India and South Korea raised serious concerns and Japan went so far as to call the bidding process 'extremely regrettable'. Mongolia still hopes to privatize its Erdenes Tavan Tolgoi coal-mining company which controls the remainder of the 6 billion tonne resource for upwards of $3 billion next year.

Workers at Freeport's Grasberg – one of the world's largest gold and copper mines – in the remote Indonesian province of West Papua vowed Friday to paralyse production, as their strike over pay enters its second month. About 12,000 of Freeport's 23,000 Indonesian workers have joined the strike that started on Sept. 15 and on Friday Freeport said some workers have returned, putting it in a position to increase mining and milling output. The gulf between the the two parties are so wide that chances of a settlement appear remote – Freeport has offered a 25% increase on wages while the union wants the current minimum rate of $1.50 an hour raised more than 8-fold.

A new report from research firm TNS could have implications for mining. A survey of affluent households around the world — defined as greater than $100,000 — found that 80% of the world's wealthy live in Western countries.TNS's Global Affluenty Investor study conducted interviews across 24 markets including China, Brazil and India.

Shares of Ivanhoe Mines (TSE:IVN) and Rio Tinto (ASX:RIO) both gained today on news that Mongolia has backtracked on a demand for a greater share of the massive Oyu Tolgoi copper-gold complex. Rio was up 4.94% on the ASX while Vancouver-based Ivanhoe jumped 13.06% on the Toronto exchange. The two companies and the government of Mongolia issued a joint release yesterday saying that all parties have "reaffirmed their continued support" for the 2009 Oyu Tolgoi Investment Agreement.

John Garnaut identifies a disturbing trend for iron ore exporters, with Chinese steel prices falling and iron ore prices expected to follow, he writes in the Sydney Morning Herald. Garnaut quotes Chinese analysts saying that capacity utilization is declining because steel demand and prices are falling, while the prices for raw materials used in steelmaking — namely coal and iron ore — remain high. The steel and iron ore markets were bracing for "volatility on a declining trend", said Yin Jimei, an analyst at Iron & Steel Information Website in Tangshan. Xu Xiangchun, at Mysteel in Shanghai, said market anxieties over the global economy have coincided with softening domestic demand including a decline in railway construction due to a series of scandals in the Ministry of Railways.