Friday is upon us, so here are a few idle thoughts to ponder over the weekend. Re Afghanistan mining, I refer you to this link where we read:
A Chinese state-owned firm has already been awarded the concession for a copper mine in eastern Afghanistan. Many mining industry executives say they expect the Chinese to bid aggressively on Afghanistan’s newly discovered mineral deposits even as many Western firms sit it out. Robert Schafer, executive vice president of Hunter Dickinson, an exploration and mining firm based in Vancouver, Canada, which lost the bid for the copper mine concession to the Chinese company, said he believed that the Chinese “have a different perception of the risk” because they see mineral resource development as part of a national strategy. “Their concern is for the supply of a commodity, so they are willing to do things at a loss,” Mr. Schafer said. “So yes, I could see the Chinese being willing to make investments in areas where we are unwilling to.”
I knew the Chinese were already mining in Afghanistan. I did not know Vancouver companies had bid against the Chinese for the property. Bold fellows out there at Hunter Dickinson. They describe themselves thus:
Hunter Dickinson (HD) is a private corporation and an acknowledged leader in the global mining industry. Hunter Dickinson has an exceptional track record for acquiring high-quality mineral properties and advancing them through the discovery and delineation of resources, detailed project engineering, mine permitting, construction and operations. These mineral properties are held by public and private companies affiliated with Hunter Dickinson as wholly-owned interests, joint ventures and project investments. Behind every HD company is a multi-disciplinary team of Hunter Dickinson Services Inc. professionals with an exceptional breadth and caliber of experience.
Maybe you should spend some of the weekend looking deeper into them as part of your portfolio adjustment of mining investments. The fact that they are trying to outbid the Chinese says they must have money. The fact that they are seeking to mine in Afghanistan may be good or bad, depending on your perspectives of risk and predictions of U.S. and Canadian policy in that war-torn country. You could spend a whole weekend on this evaluation.
Also over the weekend you may choose to do some reading on the Australian mining tax. The situation is fluid; the news is confusing; the outlook pessimistic and optimistic, depending on who is talking. You could spend a whole weekend reading and trying to sort it all out. But then you are more likely to own shares in Australian mining companies than in Afghanistan mining companies. So maybe it is worth it.
The [tax] money would go to rail, roads, ports and “other crucial infrastructure” in mining communities, with projects selected on the basis of local development and job creation, export potential and ability to reduce capacity constraints. Based on the priorities of WA Premier Colin Barnett, Rudd nominated the Pilbara cities of Karratha and Port Hedland as an area of concern, to upgrade airports, water and communications infrastructure, and land servicing. Kelly Howlett, the livewire mayor of Port Hedland, went to Canberra this week to talk about the needs of her town of almost 20,000 people, which is expected to grow by 50 per cent in the coming decade. The message she brought was one of long-term sustainability for a community that has been built around the operations of iron-ore digger BHP Billiton and, more recently, Fortescue Metals Group. “Economic infrastructure, such as the port, roads and rail, has been provided by the miners and other companies,” she says. “What we desperately need now is social infrastructure for the people who live here, and those who will eventually move here, particularly housing and health services.”
With most mines in full-gear verbal support of sustainable development, they can hardly complain that the local communities are now taking them at their word. Afterall the mining companies are an easy target for statements like this one:
The other day, the Prime Minister did not miss his chance to antagonise miners when he was in Mandurah, south of Perth, home to many fly-in, fly-out workers. “Mining companies have stepped back over the last 10 to 20 years from providing all the infrastructure needs associated with their developments, let alone communities like this one which support the mining industry in other parts of the state,” he said.
Before we know it, mining will be so popular with local communities in Australia, they will be doing it themselves—or taxing them to sustainable levels of community relations and the true cost of a social license to mine. Surely time to rebalance investment portfolios.
Don’t get me wrong. I understand the theory of community relations, corporate responsibility, and sustainable mining. I may not agree with any of them. But in Afghanistan and Australia we have delightful opportunities to see the chickens and Chinese come to roost as local communities demand full-scale implementation of these ill-defined, vague, and self-immolating philosophies. The fascinating question is which mining companies will blink first and how big their blink will be. Are they prepared to pay the taxes that support implementation of sustainable mining? Are they prepared to actually spend the money inherent in implementing these grand statements? Or will they flee at the first demand for honesty in advertizing?
Right now we are seeing Canadian companies reticent to put up the money to mine Afghanistan, and international companies making big news of investments stopped in Australia and diverted anywhere else. Thus I repeat: this weekend is a perfect time to master these issues and decide how they will affect your mining investment portfolio. No time for sentiment. No time for philosophy. Time only for hard monetary decisions. Although it will be fun to read the lies told by the politicians and PR people. Enjoy the weekend.
