The original of this posting caused a stir. Rereading the posting, I can see why. So to any offended, I say sorry. In vino veritas. Nevertheless I edit, but stick to my original thesis: this is a rumination on investing, not engineering. So I write only about my investing thoughts, not about profound and difficult engineering isssues.
It is late Sunday night, I rode too many miles on my bike, ate too much fatty food at Granville Island, drank too much tea, watched too much opera, and drunk too much brandy to be a sound investment advisor.
Yet what I write here is, I submit, profound investment advice. Better than all the talking heads in the blogs on mining investment.
The point is as I have written before: invest in mines that have a decent plan to dispose of their tailings. If they cannot dispose of tailings cheaply, cost-effectively, and forever at no residual cost, dis-invest fast and furiously. Those mines in Nevada and northern Chile can dispose of tailings properly and I invest in them religiously (it is Sunday after all.)
I cannot conceive of how the Pebble Mine can cheaply dispose of their tailings. So I avoid them as an investment. News reports this week talk of tailings dams as big and as long as the Great Wall of China. This is a good analogy. And one day those dams will, I believe, fail and wipe out the salmon industry, in the long term unlesss they do what we did on the UMTRA Project.
I have read everything I can lay my hands on about the Pebble Mine and its tailings. The stories name no names, give no inkling of who the professionals are who are designing the big dams. Are they professional consultants struggling to tell an optimistic story. No names appear. Is there an engineer out there prepared to put their name to what is written? I would be happy to debate them if they give me their names and opinions.
Until I see an independent peer review by those in the tailings industry whom I respect, I will not invest.
Before I reinvest in the pebble Mine, I seek the named opinion of engineers who are honest, blunt, and brutal. This search for harshness is based on long practical experience and the hard reality of been kicked off jobs for telling the truth. I know that consultants can get it wrong. I have been wrong often enough.
So my proposal: convene a peer review group of the people I respect and who are named, and let them tell me the following, in a unanimous report, before I reinvest in Anglo American and the Pebble Mine:
- The tailings can be safely impounded.
- No earthquake wills every cause failure,
- There is no possibility of a dam break.
- No perpetual water treatment will ever be required.
- There is no conceivable probability of affecting downgradient water quality.
As I say, until these august gentlemen can assure me of these simple propositions, no investing for me. You do what you want, but be advised this is not a trivial matter. There are egos, careers, credibility, and vast resources at stake. Only the best will suffice in my mind, which is but the simple mind of an investor.
Perhaps Jack should add a step or two to his soapbox and tell us how all the existing conventional tailing dams in the world are doomed to fail without the intervention of his gang of experts. One professional engineer unfairly slagging on another usually gets one hauled before APEGBC. Jack should stand up and say what he really means “shut down the whole mining industry because the prophet says you are all doomed (unless of course you put me or my buddies on retainer and then all is fine).”
[...] Originally Posted on I Think Mining. [...]
Thanks for pointing out how THIS PROJECT in THIS LOCATION is extremely problematic. The risks are immense given the value of the world’s largest wild sockeye salmon fishery in the Bristol Bay region, so nothing less than the best review from the best independent minds in the business should be accepted.
That’s a real interesting take on the project. Could you provide more information about the ‘mis-characterization’ in the current assessments and mine designs?
I think an important issue is that the region has to be ready to commit to a large-scale mineral development. And after Pebble, there are likely to be other similar district deposits whose economics are opened up after the infrastructure is in place. So it’s maybe not a 20 or 50 or even 80 year project. And it’s very difficult to imagine such long term developments, and what technology may change over time. But it was only 60 years ago when the BB salmon industry was almost wiped out due to foreign owned fishing interests and the terrible exploitation through fish traps….
Is an underground high-grading design with dry stacked tailings not viable?
Just a follow up…From a news report last week (http://www.foxbusiness.com/news/2012/04/19/rio-tinto-ceo-no-interest-in-pebble-project-as-open-pit-mine/).
“I’m interested in looking at it from an underground perspective; I have no interest in looking at it from an overground perspective,” Rio Tinto’s CEO Tom Albanese told his shareholders at the company’s annual general meeting here.
“An open pit mine is not the way to go…in my opinion,” he added.
Read more: http://www.foxbusiness.com/news/2012/04/19/rio-tinto-ceo-no-interest-in-pebble-project-as-open-pit-mine/#ixzz1szVwGaIs
Open pit or underground, this doesn’t change the composition of the deposit, or the fact that the massive amount of tailings will need to be stored from now until the sun burns out.
[...] review will be essential. And none of those thus far employed are candidates. I once listed in a posting on this blog the people whose opinion I would trust. Commenters on that posting accused me of [...]