Now that Christmas (Holiday Season if that is your style) and bailouts are synonymous, let us greet the mining bailout with happy bells. No I am not making all this up. That Canadian national rag, the Globe and Mail has a headline news story that promises mining bailout. Well it seems to. Here is all it says after a promising headline:
After pledging more than $3-billion to rescue the auto sector, the Harper government is now poised to offer similar aid to the struggling mining and forestry industries in next month’s budget.
Industry Minister Tony Clement said Sunday on CTV’s Question Period that a number of industries are “under distress” and “other industrial sectors, other extraction sectors are on the table for our budget coming out on January 27th.”
B.C. Premier Gordon Campbell called on the Harper government to give “comparable support” to the forestry industry if it subsidizes auto manufacturers in central Canada.
The thought of a minority government that is bent on defunding the arts and defunding national elections coming up with money for anything other than its own survival is ludicrous. And maybe that is the answer: intent on trying to stay in power as a minority government, the Conservatives are making vague promises of bailing out the Canadian mining industry. That way they get the support of all the city folk who did not vote for them in the first place. (Recall that the Canadian cities voted almost overwhelmingly for anybody but a conservative.)
So folk, roll up. roll up. If you are a distressed miner, now is time to get in line for some of that bailout money. Just line up behind a US auto worker, who has taken a day off from his twenty-percent-absentee status to actually do some work. Meanwhile the rest of us will stand in awe at the sight of US conservatives (aka Republicans) bringing down the bailout-house while the Canadian conservatives (aka Conservatives) raise it up again. Just goes to prove there is no such thing as principle; it is all just self-interest.
Sprott Asset Management suggests that the government should buy up surplus metals and stockpile them. That is one way to “bailout” the industry I suppose. But can you imagine an unsophisticated buyer (Ottawa) buying metals from sophisticated sellers? The games of short selling and political connection would overwhelm any decency, honesty, or true aid to the industry.
And what is the point: a government-owned pile of nickel from Cuba & Sudbury sitting in a lake awaiting the return of demand? Or free gold lockets for every homeless lady on Vancouver’s East Side? We begin to approach the stuff of myth, dragons, and gnomes.
Or does the Canadian government intend to send a nice fat check to Vancouver juniors who have worked hard all year only to face bust next year. Some I know are not taking a salary and are working their butts off to recover. They could do with a nice Christmas check from the government.
With all due respect to Mr. Harper, Mr. Sprott, and their buddies in the mining industry, enough is enough. This bailout frenzy has to stop. Taxpayer money to save the financial system is one thing. But taxpayer money to the auto workers whose absentee rate approaches twenty-percent, and to juniors and seniors who mine with slave labor in Cuba. That is just too much. If we do not need the metals, then there is no need to stockpile. We do not need a tiny uranium mine in every parish, an unproductive nickel mine in ever town, and a gold mine in every-body’s pocket. We do not need to support union workers any more than we need to support developers and speculators.
We do need to get the economy going by building things that constitute an investment: a new school, a new bridge, a new sewage plant. Vancouver still pumps untreated sewage into the ocean. So with all due respect to miners: I think it is time to put the civil engineers to work for the benefit of mankind.
PS. This posting elicted comment from my colleagues who teased me about the next bailout being for the oil sands industry. Seems logical enough to me if the price of oil goes down far enough. What better way to be ready for the next upturn?
PPS. Then my attention was draw to the takeover of the Tahera diamond mine by Ottawa’s Department of Indian and Northern Affairs. I had forgotten that like the government is the banker of last resort, the government is the mine owner of last resort.
Good Day
As a metallurgical engineer (mill guy) that has been in the mining industry around the planet for 38 + years and has seen it all, this is not new. In 1982, metal prices collapsed just like they are doing now and stayed there until 2004. This recent burp was unsustainable and could not last. Get used to it. In aforesaid year, at a copper/lead/zinc mine in New Brunswick, the provincial government kicked in bucks to keep it operating in the face of falling prices just before an election. It just staved off the inevitable at cost to the taxpayer. However, the incumbent party did win the election by the largest margin in history up to then. Stockpiling just keeps prices down as the inventory hangover is always there in the background. Then there is the phonomenon of certain other countries, that shall remain nameless (one was mentioned in the article), desparate for foreign exchange subsidizing their minerals industries which goes further to increase supply over demand with resultant price depression.
Here in Reno, the federal government took over the Mustang Ranch to recover unpaid taxes. They attempted to operate it in order to generate some bucks to get some of those taxes. It was a failure and the operation reverted to private enterprise, moved and became the Wild Horse Saloon. Now quite successful. Just goes to show that the government could not even organize unmentionable acts in a legal house of ill repute. There is another way of putting that, but not here.
Cheers
Bruce Ferguson
Reno, NV