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.