All the talk at mining meetings this week was of the potential impact of the U.S. Government shutdown on mining. The opinions differed depending on whether the opinion was from an American, a Canadian, or a Brazilian. Another factors was the political leaning of the commenter: liberals of all countries decry the shutdown, conservatives are in a dilemma, and the more hard-core the more the sympathy is with the Tea Party but disparaging of the wisdom of effecting and economy that seemed to be recovering.
Here is what Mining.com reports:
A group of major international banks and ratings agencies have forecast the economic cost of the US government shutdown over the course of 1 week and 1 month.
The negative impact predictions, courtesy of the US Committee for a Responsible Federal Budget, range from -0.2% to -2.0% of annualized Q4 GDP – potentially dangerous given the fragility of the US economic recovery (Q4 GDP growth is expected to be between 2.3-2.5%).
How this damage will affect the price of gold is unclear. Gold markets in the past few days have been highly volatile: leading up to the Oct. 1 budget deadline, gold enjoyed a mini rally, only to drop $40 on the first day of shutdown. Gold has since recovered about 75% of its losses since Oct. 1.
Wall Street business leaders are increasingly siding with the president and losing patience with many House Republicans, who are using their opposition to Obamacare – legislation already passed by congress and upheld in the Supreme Court – as justification for the budget standoff.
If the Congress is unable to reach a budget deal before October 17, the US would default on its debt, potentially receiving a further downgrade to its credit rating.
The worst impact i could offer is this: review of mining-related documents for new projects may be put on hold. Given the glacial pace of such activities, we will probably not notice the no-work effect for a while; the differential rate is probably not significant.
The miners with mines to develop were less optimistic: they fear that the economic impact will significantly affect the demand for and price of their product—a bad economy is bad for mining, plain and simple.
The Canadians, miners and consultants shook their head in disbelief that an issue like universal health care could bring a government to a standstill–afterall Canada has it and it has a vibrant mining sector. As one wise old man asked: “Why can’t the Americans craft a decent health plan and a decent mining industry? Is it possible the rich, old, retired people with investment incomes and living in over 55 gated communities can truly bring the U.S. to its knees because of meanness regarding health care and new mines? Will it take the death of all the old, rich, white, conservatives to get both health care and mining going again in the U.S. I can understand how they don’t want to be taxed to pay to keep the poor healthy; but i cannot envisage how they can oppose mining when they rely on investments for their incomes.”
The Brazilians bemoaned the state of their own economy, and the potential neative fallout from a spluttering U.S. economy. They did emphasize the complexity of their own medical system. Apparently if you are rich, you can afford good private care. If you are poor, you use government services at your peril.
Only one optimist said he hopes the shutdown goes on fore-ever. The basis is his belief it will push up the price of gold, and he can sell his excess holdings at near something he paid for the gold in a rosy, golden past.
So we watch with interest and some personal emotions: my son in the Navy is OK for now; the consulting engineers have good company medical plans; the indigent in Iowa depend on public medicine. Thus it probably is with most; good on one side; bad on the other.
If you can discern other potential impact on mining of the shutdown, pleae psot a comment. I am sure it is more complex than i post here.
PS. Here is another perspective from Credo Mobilize:
Our federal lands are being mined, drilled, logged and just about everything else you can name – but because of the Republicans’ reckless and irresponsible shutdown of the federal government, we can't be there to hike or camp, and our park rangers can't be there to respond to emergencies. We need to get our priorities straight. I just met a furloughed National Park Service employee the other day on my way to the Capitol. He told me he knows there are bigger issues at stake than his paycheck, and he wants us to stand up for our public lands and our democracy instead of giving away the store. I'm asking you to tell Secretary Jewell and Secretary Vilsack the same. There are about 800,000 furloughed federal employees all over the country. National Park Service, Bureau of Land Management, Fish and Wildlife Service and other land management experts are at home instead of tending to trails, eliminating invasive species and protecting our wild lands from pollution. While they wait for the shutdown to end, mining, drilling and logging are going ahead. Fossil fuel and logging companies shouldn't have special access to our federal lands while rangers, hikers and the rest of us are locked out. Sign my petition to Sally Jewell and Tom Vilsack today to say we expect the same treatment as mining and logging companies when it comes to public lands and resources that we, as Americans, own and protect for the future.