Fire damages Canadian Syncrude equipment, forces firm to halt production

US stocks were driven down at Tuesday's start as Europe's debt troubles and the US employment outlook continued to rattle investors' nerves. The the major indexes were down for a third session and the S&P 500 Index SPX entered bear market territory, off 20% from its April high. The Dow Jones Industrial Average fell more than 200 points to 10,435. The S&P 500 dropped 1.7% to 1,080 and the Nasdaq Composite Index came off lightest, down 20 points. The resource-heavy TSX composite index fell more than 2% to hit a 20-month low of 11,006 shortly after the open. Unsurprisingly the carnage was greater in the Eurozone where the major indices in London, Frankfurt and Paris all lost more than 3%. The crude oil market declined further with US futures down 2% to under $76. Gold could not capitalize on the uncertainty and traded $10 lower at $1,647/oz.

CME Group, which operates the largest  US futures exchanges, will from today increase to $500 million the amount of physical gold its US clearing members can post as collateral for margin requirements, more than double the existing $200 million. The Chicago-based firm which first accepted bullion two years ago is the latest of a number of  exchanges including IntercontinentalExchange and other financial services companies like JP Morgan that accept the use of gold as collateral, which essentially places the precious metal in the top tier of asset classes alongside government bonds and currencies. The World Gold Council is also lobbying to have the Basel Committee on Banking Supervision  do the same, which could have widespread repercussions for bullion.

After crashing through the $80/barrel level on Friday, the price of US crude oil fell further on Monday to trade just above $76/barrel, the lowest in a year, sending the shares of the biggest oil sands players into a tailspin. Suncor tumbled 5.5% and the oil sands bellwether has now lost a staggering $70 billion in market value since its pre-recession high set in May 2008. Canadian Natural Resources gave up 5.6%, Imperial Oil shed 6.5% while Cenovus lost 4.1%. Canadian heavy oil – exported only to the US due to a paucity of pipelines – sells for $10.50 less than US crude and trades at roughly $35 below the international benchmark, meaning oil sands developers have to deal with an effective oil price of $65 and change and now sell some of the cheapest fuel on the planet.

The price of coking coal is likely to remain buoyant despite a recent price cut by Wesfarmers and softening Chinese demand for steelmaking inputs. Wesfarmers, an Australian conglomerate based in Perth, over the weekend cut the price it receives for its Curragh coal to US$280 a tonne over the next three months. The move prompted analysts to consider whether coal, like several commodities like copper, nickel, and zinc, is the next domino to fall as slowing global growth pinches commmodities.

E-mails between the State Department and TransCanada, the company behind a $7 billion proposal to build a pipeline between Canadian oilsands and Gulf Coast refineries, demonstrate "a sometimes warm and collaborative relationship," states a report in today's New York Times. The e-mails, the second batch to be released in response to a Freedom of Information Act request filed by the environmental group Friends of the Earth, show a senior State Department official at the United States Embassy in Ottawa procuring invitations to Fourth of July parties for TransCanada officials, sharing information with the company about Secretary of State Hillary Rodham Clinton’s meetings and cheering on TransCanada in its quest to gain approval of the giant pipeline, which could carry 700,000 barrels a day.

Late last week Ivanhoe Mines (TSX:IVN)(NYSE:IVN)(NASDAQ:IVN) and Rio Tinto received a letter from a representative of the Mongolian Cabinet inviting the companies to discuss potential changes to the Oyu Tolgoi Investment Agreement. The changes related to the conditions under which the Mongolian Government may negotiate with Ivanhoe Mines to acquire, on mutually agreed terms, an additional 16% interest in the project and the application of a sliding-scale royalty to the project. In response to this letter, Ivanhoe Mines and Rio Tinto have formally advised the Mongolian government that the companies are not prepared to renegotiate the investment agreement.

Tom Scholl, CEO of Keystone Industries, told CNBC that he could put more people to work but the U.S. federal government is standing in the way. Scholl said the states are working "pretty close" with the mining companies. It is the federal government that is holding up mining and not working fast enough on permitting. Scholl singled out the US Army Corp of Engineers as creating the slowdown. "We are the Saudi Arabia of coal in the United Stats. It is a great export commodity. And any time you export it it is going to create a lot of jobs."

The Renewable Energy Accountability Project has developed some hit and miss advocacy ads. The latest attempt at producing a viral video takes aim at coal. Renewable Energy Accountability Project is lobbying for greater use of renewable energy sources.

Arch Coal (NYSE:ACI), one of the world's top five coal producers, declined 5.14% on Friday after lowering guidance. Arch Coal expects earnings to be $900 million to $1.0 billion range and adjusted earnings per diluted share to be in the range of $1.00 per share to $1.40 per share. "The reduction in earnings guidance resulted largely from lost metallurgical coal production at the Mountain Laurel complex," said the company in a statement.