“Goldcorp’s generous gift, secured through the hard work of VO’s Board of Directors, will help VO to continue to maintain the highest artistic standards in all that we present, introduce students to the world of opera, engage diverse audiences, and – importantly – give back to the community that has supported us for 50 years,” says James W. Wright, General Director of Vancouver Opera. “We’re thrilled that idea of the Community Connections program resonated with Goldcorp. It’s an extraordinary sponsorship, and fitting for our milestone Golden Anniversary.”

   Nixon in China gets a rave review from the Vancouver Sun:

With a bit of help from the Cultural Olympiad, Vancouver Opera offered the first of four performances of John Adams’s 1987 opera Nixon in China at the Queen Elizabeth Theatre Saturday. The demanding work’s very first Canadian production is a brilliantly effective one.

Sadly some of the comments on this complimentary review are shallow and some are downright silly.  Clearly not everyone in Vancouver enjoys opera or even has the capacity to appreciate it.

   Which makes Goldcorp’s sponsorship so much more impressive.   Corporate spending on opera is most unlikely to buy favor with the great majority of people out there.  I bet such expenditure won’t change the mind of a single opponent of mining–they are too busy writing shallow, ill-researched articles and reports. 

For what it is worth, I record that I have done about a week’s consulting to Goldcorp–the income was less than I spend on opera each year, so I believe I am able to be as prejudiced as only an opera lover can be in these opinions.   I am confess to being so mad about opera, that I will wax lyrical about anybody with the courage to go to the opera, enjoy opera, and do their bit to support more opera.   I have found few.  The lady with whom I went last night cut herself out from further courting when she remarked in exasperation at the end of the second act: “You mean there is more?”

   I am not sure why I like opera.  Maybe it is the music–indeed it is always the music.  But it is more than the music–it is the story, the drama, the tension too.  Last weekend I watched a DVD of Haydn’s opera Orlando Paladino: 

Joseph Haydn composed Orlando Paladino for the theater at Esterháza, in honor of the expected visit of dignitaries from Russia in 1782. The guests never showed up, but the opera was performed on the name day of Haydn’s employer, Prince Nikolaus Esterházy.

The fact is the music is superb, but the story and dramatic bits are plain junk soap opera stuff.  So this is not good opera and demonstrates why it is music, story, and tension.  Plus a certain insight into human nature that words and drama alone cannot achieve.  Music opens up chambers we cannot otherwise access.  And this happened with Nixon in China.  The music is infinitely fascinating as it segued from romantic to monotonic.  Like all operas of old, we saw inside the minds of the powerful, the rulers, and the villains.  We were left believing we had seen a deeper insight and truth even as the music engulfed us in sound and emotion.

These ideas are not common in mining; some would brand them antithetical to a rugged miner.  Which only makes Goldcorp’s sponsorship of opera so much bolder, braver, and impressive.   I would love to meet the people of Goldcorp who had the courage and commitment to opera sufficient to support this sponsorship.  In the meantime all I can do is blog about them, and admire them from afar, while wishing selfishly that more mining companies would come out and do something that may just bring a few sparks of high pleasure to a small minority.  

Thanks, Goldcorp. 

   PS.   For the record, I do not care if I never see another Puccini opera, except Tosca.  My favorites are the bel canto operas.  Then Verdi–more, more, more.   Then Richard Strauss, Elektra, Salome, and the melodies that arrest and demand attention.   A good bottle of brandy and Wagner mesmerizes.  But for sheer fun, watch Handel–his are the bawdy operas of sex.

The Expert Expert:  The danger in any mining undertaking, and any human undertaking for that matter, is the problem of the expert Expert.  By this I mean the person who is so skilled in their area of expertise and so admired because of past successes that they dominate every meeting and mislead the meeting to incorrect decisions by sheer force of personality.  Beware this person and make sure you set up opposition in the project to the overwhelming force of such persons, for they will lead you and your project astray.

The Scientists in Practical Matters:  Equally dangerous is the person who is a scientist by instinct and who will seek to explore the fundamentals when all you need is a practical answer.  Keep them at bay; or at least keep them in the research arena and do not let them stray into practical matters where their insidious influence will bog things down in minutia when all you need is a practical approach that works, even if you are not one hundred percent sure why it works. 

The Meeting Negative:  This is my favorite hate—the person who excels in being a Meeting Queen mainly because they are skilled in the art of disagreeing with any statement made in any meeting.  They delay progress, and should be summarily evicted from all meetings convened to find a way forward.

The Consultant Seeking More Work.  This dangerous individual predicates consulting advice on the concept of  “more work” rather than on the concept of what is cost-effective and in the best interests of the mine.  They are difficult to weed out, for they are smart at underestimating the effort involved, persuasive in their concerns for continuity of investigation, and frightening in their predictions of what “will” go wrong if work is suspended to the cessation of their billable activities. 

Can’t Make a Decision Clients:  This is a basics mining inertia person who has a secure job on the mine, but is basically stupid and lazy and justifies their existence by demanding more meetings, more studies, more evaluations, more expenditure, but can never quiet get down to deciding, leading, or even managing.  They are good for venial consultants but bad fo shareholders and upper management.  Measure such people by the action that results from their activities and kick them out if they achieve too little to justify their existence.

Conversely, we have been blessed  this week , because we have interacted with smart, intelligent, decisive, and committed mining folk.  Some are even friends and all will go down in our books as admired people.  We thank them for a good week, and the opportunity to be productive while increasing the mine’s profits and our income.

As the week winds down, here are some of the more way-out postings I have encountered this week on the subject of mining:

Gold Mining for Dummies, writes of an uncle who bought a California gold mine, failed to find gold, and sold the mine to another who found the gold and grew rich.  A funny little story that is hard to believe is true.  This is the thrust of the story: 

The new mine owner walked through the mine to have a look at what he’d purchased. When he got to the area where the water was dripping steadily from above into the pools below, he shined his flash up on the ceiling to see where the water was coming from.  What he saw changed his life and made him fabulously wealthy. He had found the ‘mother lode’ just by looking up!

Envisioning the future of the mining industry takes a surprisingly positive look at mining in an age of global warming, saying:

Mining is now a crucial part of our every day lives. Even when we most likely are not associated with the industry we use materials that are derived from mining everyday. A world without minerals would have been a world without cars, trains, airplanes etc. We would struggle to do what exactly we now have without those important minerals. We won’t manage to reside in secure buildings/structures as everything will likely then have to be made out of wood.

     Avatar in India tells of the upcoming Oscar awards and the real-life simulacrum being played out in the jungles of India, where:

In India’s impoverished but mineral-rich state of Orissa, hundreds of indigenous tribespeople are battling to stop London-listed Vedanta Resources Plc from extracting bauxite from what they say is their sacred mountain.  “The fundamental story of Avatar — if you take away the multi-colored lemurs, the long-trunked horses and warring androids — is being played out today in Niyamgiri mountain in India’s Orissa state,” said Stephen Corry, director of the British charity, Survival International.  “Like the Na’vi of Avatar, the Dongria Kondh tribe are also at risk.”  Vedanta says its mine would not violate the rights of indigenous tribespeople, saying that all its projects are conducted within the law and using international best practices.

    Mining in the Winelands, meanwhile tells of a similar situation playing out in the South African wine farming area where mining threatens to affect the quality of the wines rich people drink.   Now that would make a great movie–kind of like Blood Diamonds, for it is on the same wine farms that the nasty people of that movie lived.  Talk about turning the tables!

In a statement issued yesterday, chairman of the prestigious Cape Winemakers Guild, Johan Malan from Simonsig, was strongly opposed to any such development at all. He pointed out that not only would the proposed mining activities destroy the UNESCO registered Bottelary Hills Renosterbos Conservancy and the vineyards that attract large numbers of tourists to South Africa every year; it would also result in the loss of employment and income for a great many families working on the wine farms in these areas.

Copper Slides as analysts conclude the Chile earthquake won’t affect the supply or the price of copper:

Benchmark copper for three-month delivery on the London Metal Exchange fell to $7 525/t from $7 580 at the close on Wednesday and compared with a session low at $7 445.  “Perhaps the market has feared that the damage caused by the earthquake in Chile last weekend, was more severe than it turns out,” said Peter Fertig, a consultant at Quantitative Commodity Research.  Copper prices hit five-week peaks on Monday after Chile temporarily shut down nearly a quarter of its mine capacity.  Supply worries appear to be easing slightly, as Codelco, the world’s top copper miner, said it was exporting normally after Saturday’s quake, and Anglo American said affected copper mining operations were able to resume full production by Wednesday.

Canada’s new budget purportedly will benefit the mining industry:

In the budget document presented by Finance Minister Jim Flaherty Thursday, the Canadian Government declared, “Canada’s rich mineral resources represent significant economic opportunities. Promoting the exploration and development of these resources offers important benefits in terms of employment, investment and infrastructure, especially for rural and remote communities.”   Budget 2010 proposed to extend the temporary 15% Mineral Exploration Tax Credit (METC) to March 31, 2011. The credit is designed to assist junior mining companies in raising new equity through the issuance of flow-through tax shares.   The program only applies to preliminary mineral exploration activities conducted from ground level or above ground level. Expenses for underground exploration or for the purpose of bringing a mine into production are also excluded.  The estimated net cost of extension of the credit will be $65 million over the next two fiscal years.

   Plus it has been sunny and warm in Vancouver all week, prompting the Provincial Premier to bewail the onset of global warming that gave us the warmest winter in 100 years at the same time as the Olympics were under way and we would have prefered snow.

Recently in Guatemala I was amazed to see a half-built hotel in a remote village near the mine.  One of my hosts assured me it was probably a way to launder drug money.   The other host assured me it was a local entrepreneur looking to accommodate NGOs come to attack the mine.   I suggested maybe the hotel was being built so that a mine widow could house the mine workers and maybe marry one twenty years hence.

   We will probably never know the truth about the hotel.  But my grandmother in Brakpan and the half-built hotel in Guatemala came to mind when I read the following about investing in Australian mining towns;

There is no question that Australia is a country which is rich in natural resources.  Hence it is no surprise that mining towns are in abundance and can be a good investment opportunity for those willing to take the risk.  Of course the first thing to look at is how long a mine will last.  For those with the right information on future mining sites, or mines with long lasting deposits that may take many years to fully extract, investment in mining towns is a good idea.  Where the mine is just about to start then buying a property and renting out accommodations to the many transient visitors to the mine will make a good investment.  The problem is this may be a risky prospect since the profitability and life span of mines may vary greatly. For example, where there was a projection of a mining project of 10 years, the project can suddenly cease due to situations which are not within your control.   This means that research should be done, and feasibility studies should be made before thinking of investing in the mining town.  Good loan rates should also play a key factor, as your return on investment would also depend a whole lot on how good a deal your loan is.  Where your loan is one of a low interest rate, then your return on investment should be easily recoverable, and your investment in the mining town would be less of a risk.  For more information and advice on mining towns, do not hesitate to consult the experts on home loans.  They can get you a good deal on getting a loan to start your mining town investment, or can help you to decide if such an investment is feasible.

    To be fair, I have never been to Australia, so can offer no sound advice on investing in houses for miners.  I have heard of Perth which is wonderfully describe in Australian English in this piece:

Perth may be the capital town from the state of Western Australia with a populace of over 1.6 million and a recent growth rate which has regularly exceeded the average in Australia. The city itself was founded back again in 1829 and is frequently referred to since the “city of lights” because of the occasions when residents switched on all of their house lights and street lights when American astronauts passed overhead in 1962 and 1998. The city itself is situated on the west coast of Australia and also the port of Perth is of a size that it is actually a town in its own right named Fremantle.

The climate in Perth is known as a “Mediterranean climate” with hot dry summers commonly lasting among December and late March with comparatively cool and wet winters among May and September. The hottest temperature ever recorded in Perth was 46.7 back again in 1991 using the coldest coming back in 2006 at -0.7C. Unlike numerous summer seasons across Australia, there is some rainfall during the summer period, but not much!

Perth is comparatively isolated as far as Australia’s biggest urban centers go even though the town itself is really a focal point for business and government despite the fact that numerous industries such as mining, petroleum and agricultural exports are located elsewhere within the express of Western Australia. Like so many of Australia’s more notable urban centers there has been a shift from the manufacturing business to the providers business, which has been ongoing because the 1950s. Due towards the big port associated with Perth the vast majority of manufactured goods required within the area are imported from either other places of Australia or overseas.

The vast majority of employment opportunities are available in wholesale trade, retail, business services, health, schooling, community and personal providers and public administration. While perhaps not as well-known as the likes of Sydney and Melbourne within expat circles, Perth is really a town which continues to grow at a far greater rate than the average Australian town, offering new and interesting employment and investment opportunities.

Clearly there is also a local vernacular or an absence of schools teaching the Queen’s English.  Still it would be fun to see, particularly with all the light on flashing at passing satellites.

   Here is a story that tests the limits of sympathy and puts a spotlight on one’s attitude to tearing up farms, forest, and innocent lifestyles so that we may develop a zinc mine.   This is the story, written about in detail at this link:

A major row is brewing between some Western Cape wine estate owners and African Exploration Mining & Finance Corporation (AEMFC) over the state-owned company’s plans to start mining on farms in the Stellenbosch and Cape Town municipal areas.  News last  week of an application by AEMFC for rights to prospect for and possibly mine tin, zinc, lead, lithium, copper, manganese and silver on the farms angered wine farmers, residents and environmental groups.  They have voiced concern that mining could disturb ecodiversity, and affect tourism and the quality of wines produced in the region.

Like all such stories from primitive nations, this story pits the innocent farmers, mostly of a different color and a different tribe against a rapacious and probably corrupt government composed of people of a different tribe and color.   As is so often the case, we see a greedy governments ready to deprive the locals of a way of life they love and value, some would say hold sacred, just so the central government and its cronies, can get their hands deeper into the honey pot. 

     One part of one’s instinct say “there go the locals again, resisting the benefits of mining; can’t they yield for the greater good so we can all enjoy the benefits that flow from mining.”    Read this and tell me if it does not sound like all those reports coming out of Peru, Chile, India, and the deep forests of Africa:

Jordan said there were seven major wine estates that stood to be affected by the state mining company’s move, and these included prominent farms such as Hooggelegen, De Grendel, Langverwacht and Haasendal.  All of these farms were members of the Bottelary Renosterbos Conservancy, a United Nations Educational, Scientific and Cultural Organisation biodiversity site.  The Worldwide Fund for Nature (WWF) said the areas affected formed part of landowner conservancies, established by wine farmers to conserve and promote awareness of the region’s biodiversity.  Inge Kotze of WWF’s Biodiversity & Wine initiative, said these landowners had invested significantly in removing invasive vegetation and rehabilitating the area for the past decade, and were among the first to be recognised as Biodiversity & Wine members.  “Not only would mining in this area have a massive impact on the conservation of biodiversity, but it would have major economic impacts on on booming wine tourism, along with significant job losses,” Kotze said.

    There go those vine huggers again.  Better get out and stock up on their wines before they make way for the bulldozers.   Although I am ready to join the NGOs this time as a consultant to go out and test the wines both before and after mining. 

Maybe this is just the thin edge of the wedge in nationalization of all South African mining and wine farms.  Why expropriated the mines and/or the wine farms, when you can scare the whites away with threats of zinc and tin mines of your own?  And the good thing is that here the government is both the proposer and judge of the permit.  So very African. 

I cannot help but wonder if the fact that the potentially dispossesed are white wine farmers living in a near perfect place producing luxury goods, does not influence me in thinking differently than I sometimes do when the potentially displaced are primitives living a brutal life and producing nothing but drum beats by way of culture.  Call me a racist if you will.  My response to this kind of scares me, I admit.   But I ask you to face your own reflection and ask how you initially respond to this news and ask if you should be permitted to respond differently to tribes in the winelands as compared to tribes in the jungles. 

Here are links to two other reports on this story:

Environment News and Forums South Africa

Cape Town Wine

The report is written by a Professor Richard Steiner who is listed as a member of the International Union for the Conservation of Nature and the Commission on Environmental Economic, and Social Policy.   The professor pulls no punches in reviewing plans by Pacific Rim to open a gold mine in El Salvador, the government’s ineptitude in permitting, or failing to permit, the mine, the deaths of many who opposed the mine, and the general corruption that prevails in El Salvador.  This document contains many stark facts and many hard-hitting recommendations.

    The professor starts by pointing out that El Salvador is “geographically small (about the size of New Jersey) and has a population of about 6 million people.  It is one of the most densely populated, poorest, most violent, and environmentally degraded countries in Latin America.  The country has only 3% of its original forest left, and in the past 20 years has lost approximately 20% of is subsurface water resources, 95% of the remaining surface water is reportedly contaminated with industrial chemicals and fecal wastes.  Rural villages and communities are comprised primarily of subsistence farmers who live on less than $2 per day, with low literacy and health indicators.”

    Into this volatile and ugly mess came Pacific Rim and they attempted to open a mine.   We will never know the truth, and the report makes no attempt to establish the truth, but at this point, as the report documents, there are law suites between Pacific Rim and the government of El Salvador, corpses of murdered opponents of mining, and ongoing poverty and despair. 

Pacific Rim stands accused of “attempting to buy a social license to operate through providing up to $1 million a year to various local initiatives aimed at winning local consent for the project.”   Can you blame the local mayor of a poor village from accepting money from Canadians when his constituents live on less than $2 per day?  I suppose you can if he ordered the murder of those who opposed him.  But as the professor points out, this is a violent society—it was thus long before the miners arrived. 

The report makes the obvious recommendations:

• Pacific Rim should leave the country
• The government should audit Pacific Rim and the mayors to see who paid whom and how much was paid.
• The police should investigate the murders (something they have not done to this point)
• The Director of the Office of Organized Crime should be removed from the investigation as he has conflicts of interest and has failed to undertake an impartial or thorough investigation.
• El Salvador should ban mining outright, if that is what they want.  
• El Salvador “should enhance it efforts towards reducing corruption at all levels of government.”
• Aggrieved parties should file class action law suites in the USA or Canada.

   The silliest part of this report, and yet the most optimistic is this: 

The present debate in EL Salvador regarding mining is a good platform for the country to discuss and develop an “El Salvador 2020″ plan, to chart a path toward a green, sustainable future.  The plan would direct government and international resources towards the planning horizon of year 2020 and include sustainable energy (solar, wind, geothermal, etc.) and a nationwide reforestation and environmental restoration program.  Reforestation is absolutely essential to solve the growing water crisis in the country, as well such effort could provide thousands of jobs in rural areas.  El Salvador should explore the potential for selling carbon credits to northern industries through its nationwide reforestation efforts.”

    In other words, import metals from other mining countries to build windmills and solar power plants—where the money comes from is irrelevant.  Maybe Canadian NGOs will come up with the cash.  Next put the peasants to work planting trees, and then lay them off to starve while the trees grow.  Well maybe they can grow drugs in the shade of the trees.  Then sell your reforestation credits to the nasty rich countries that you despise and seek to make poor by denying their rights to mine. 

   Do not get me wrong.  I am all for reforestation, clean water, jobs for everybody, an honest government, and nuclear power plants.  I can understand how a poor society that has over exploited its environment can degenerate to violence, corruption, poverty, and mortality.  That has happened a number of times in the past—even to the Maya if we believe the archaeologists.  The problem is that if another Maya collapse sets in as a result of an El Salvadorian deforestation and overpopulation, the call will be to Canada and the USA to help out and sustain an unsustainable situation.  No thought will be given to the sources of wealth of these countries that are supposed to help the poor, who are too poor to help themselves.

   Clearly El Salvador must act before it becomes just another of those failed states like Zimbabwe, run by a despotic old man and his henchmen and avoided by the rest of the world.

As a matter of record, here is what Pacific Rim post on their website about the accusations:

Pacific Rim Mining Corp. and its subsidiaries (collectively, “PacRim”) are environmentally and socially responsible gold mining and development companies with significant assets in El Salvador.

PacRim has recently been the target of false accusations made by certain anti-mining groups, which wrongfully suggest PacRim’s involvement in a series of murders in the area of Trinidad, El Salvador. PacRim unequivocally denies these accusations.
PacRim has no knowledge in relation to the Trinidad murders other than what has appeared in the mainstream Salvadoran press, which reports that these tragic incidents are apparently related to a longstanding feud between two local families.

More broadly, the same anti-mining groups that have wrongfully implicated PacRim in the murders have portrayed the incidents as the result of an allegedly hostile conflict related to the debate over mining in El Salvador. However, there is no evidence indicating these violent acts bear any relation whatsoever to the debate over mining in the country. PacRim encourages all parties affected by the recent violence in Trinidad to rely on the appropriate legal processes to determine the true facts of these cases.

PacRim takes this opportunity to reiterate its support for open dialogue in relation to all events affecting the communities in which it operates, and to unequivocally condemn the use of violence and threats of violence as part of such dialogue. Furthermore, PacRim condemns attempts to incite violence through the deliberate dissemination of misinformation about PacRim and its activities in El Salvador

For the sake of completeness and balance, here is the press release that accompanied the report to my inbox. 

February 22, 2010—A new report released today by the International Union for the Conservation of Nature (IUCN) Commission on Environmental, Economic, and Social Policy (CEESP) concludes that the region of Cabañas, El Salvador is facing “a strategic campaign of domestic terrorism targeting mining opponents.”  The report El Salvador: Gold, Guns, and Choice states that police investigation into the recent rash of attacks, murders, and threats in Cabañas has been ineffective, and the lack of security in the region is unacceptable.  The report further indicates that Pacific Rim Mining Corporation shares responsibility for the situation in having failed to conduct business consistent with the OECD Guidelines for Multinational Enterprises, specifically those guidelines regarding transparency and bribery of foreign officials.

 Pacific Rim Mining Corporation has come under fire in El Salvador and internationally since a wave of violence, abductions, assassinations, and death threats escalated against community leaders, mine opponents, and local journalists last summer.  The international media has directly or indirectly linked these acts to Pacific Rim’s presence in the region.  Local residents insist that Pacific Rim be included in as-yet unfinished police investigations for each of the crimes.

 The new report is based on meetings in January with Cabañas residents, Salvadoran attorneys, representatives from several ministries of the Salvadoran Executive and the Legislative Assembly, and top officials at the United States Embassy in San Salvador.  “The current security situation for mine opponents in Cabañas is unacceptable.  The report provides an overview of the situation, and makes several recommendations for resolving the conflict,” said the report’s author, Prof. Rick Steiner.  “A full investigation by Salvadoran authorities into these crimes is imperative, and the international community awaits its outcome.” 

 “From a general perspective, it is entirely irresponsible for Pacific Rim to operate in flagrant disregard for the OECD guidelines, and without intervention or reprimand by the U.S. or Canadian governments for these reported violations,” continued Steiner.

 The report also comments on the impacts gold mining would have in Cabañas, specifically on shortcomings in Pacific Rim’s Environmental Impact Assessment for the El Dorado project, and on the classification of the El Dorado tailings dam as “high risk”.  

 This report is the latest of several independent investigations that include criticism of Pacific Rim’s comportment in El Salvador.  A 2005 report by U.S. hydrologist Robert Moran reviewed Pacific Rim’s Environmental Impact Assessment for the El Dorado project and determined that it “would not be acceptable to regulatory agencies in most developed countries.” 

 “It’s been crucial to have independent reviews of Pacific Rim’s activities in El Salvador,” said Emily Carpenter, director of U.S.-El Salvador Sister Cities.  “We see just how much is missing from the company’s public disclosure.  The “Gold, Guns, and Choice” report should be taken seriously by government officials and industry leaders.”

 Following the Salvadoran government declining to grant the company mining exploitation permits for the El Dorado project, Pacific Rim filed a lawsuit under the Central America-Dominican Republic Free Trade Agreement (CAFTA), suing the government of El Salvador for the amount of their investment in the country as well as lost future profits, seeking “hundreds of millions of dollars.”

The quake forced temporary suspension of up to a fifth of Chile’s mining capacity — estimated at around 4.5 million tons of copper in concentrate annually — after Codelco and Anglo American halted operations at four mines in total.  The government officials said exports would continue unhindered, but analysts expect prices will rise on Monday because of the possible disruption in infrastructure, power and transportation to the mines.   “While it appears that a modest proportion of production has been halted, the major impact may come from the disruption on deliveries from the mines and from the disruption of power supplies to the mines,” said Citi analyst David Thurtell. 

   The effect to individual mines is summarized thus: 

State miner Codelco halted operations at its El Teniente and Andina mines — which together had a combined annual output of 614,000 tons last year. Mining Minister Santiago Gonzalez said it could take two days for production to resume. Other Codelco operations were unaffected.   Anglo-American’s Los Bronces and El Soldado mines, which together produce about 280,000 tons of copper annually, also halted operations, but other major mines were running as usual. 

It seems almost immoral to seek to profit from the earthquake while we express sympathy with those who died, whose homes were damaged, and with a country that will now have to reconstruct.  

   Yet we grow almost tired of reports of damage from earthquakes and yet more pictures of cars crushed and inadequately constructed buildings collapsed.  I was in Guatemala City last week when a 5.5 struck the city.  The seventh floor of the hotel where I was just awakening swayed and shook.  I am told the epicenter was closer to the Marlin Mine which I had just left, and we are looking at the information from monitors on the abutment of the tailings impoundment to see what forces shook the embankment and by extension the ridges that surround the mine and on which there are houses of adobe and concrete block. 

  Comparison of the damage in Chile, Haiti, Los Angeles, and San Francisco persuade us that people in earthquake prone regions just have to build to higher standards.  I was in the Loma Prieta quake and spent two days in San Francisco before finding a flight home.  I saw the brick veneer peel off buildings crushing the homeless sitting innocently on the sidewalk.  I saw the twisted old buildings and the sidewalks heaved up.  But all in all few died and the city recovered quickly.  I was in Pasadena the morning of the Northridge earthquake.  The fridge slid across the kitchen and ruptured the water mains flooding the apartments below.  Years later I inspected some 400 houses, part of a 1,600 house reinspection program to ascertain the liability of an insurance company to pay for earthquake-induced damage.  In about half the cases we determined the house owners were simply mistaken about damage–they claimed that pre-existing damage and decay was the result of the earthquake.  In about half the cases, simple inexperience had lead to adjusters denying payment when, in our opinion, the earthquake had caused damage.  The point is that most houses we looked at were not particularly well designed or built to resist the normal forces of soil movement, slope creep, or the ravages of time.  Add an earthquake to these inherent defects, and you get cracking, collapsed houses, and death.    And a great deal of self delusion about what the house looked like before the damage. 

   I recognize that 8.8 is a large earthquake and one that causes considerable damage.  But it is not beyond expectation or prediction.   Of course some bridges will fall.  There will always be unattended houses with soft stories that collapse and crush the cars.  There will be homeless.  Mines will be affected; although in this case it appears the Chilean mines were less affected than we might fear.  At least that is the preliminary conclusion.  We will have to await detailed reports to confirm this.   For example, were buildings on and adjacent to the mine affected; did the slopes of the open pits stand up; are the tailings embankments uncracked; were there underground rock bursts; are the roads in and out of the mine traffickable? 

Meanwhile, read all you can and consider your investment strategy and if you make money donate generously to the relief effort.  Here is one link that is insightful and here is a summary of what they say: 

The 8.8 magnitude which decimated Chile on Saturday morning knocked out 27% of the world’s copper supply. Of the 19.7 million tons of the red metal produced globally in 2009, Chile accounted for 5.3 million tons. The earthquake was the fifth most powerful in history, and was the same magnitude that flattened San Francisco in 1906. While the epicenter is several hundred miles away from the main copper mining regions, Chile’s infrastructure has sustained major damage. There is no way to get the ore to smelters, or ingots to the market. Mines can’t operate without fuel or electric power. Roads, rail lines, bridges, and ports have been damaged. Banks can’t carry out trade finance without communications . If you haven’t unloaded your copper yet, this is an ideal chance to do so. If the markets really get the bit between their teeth and make it as high as $4.00/pound there could even be a shorting opportunity in copper setting up. With the global economy coming off of last year’s sugar high, base metals are looking to go sideways at best in the near future, and possibly down. 

You can also expect Chile’s stock market to get slammed when it reopens, whenever that is. If we get a major sell off, it could create a great buying opportunity for one of the few countries in Latin America that is doing everything right. I’ll be doing more research on this in the near future. 

   Here is another take that is bold enough to predict the price changes: 

Jonathan Barratt, managing director of Commodity Broking Services, said: “People will start to build in a risk premium early on Monday. That will remain for as long as uncertainty exists and things like assessing the impact on fuel supplies and so on will take some time.”  On Friday, the main three-month copper contract closed at $7,195 a tonne.  One Singapore trader was quoted saying the price could rise to $7,400. 

As we end writing this piece, the radio reports a greater number of deaths, tsunamis washing people out to sea, greater damage than the web reports, and more aftershocks.  The mines will be affected; be sure of that; and so will the price of copper.  Let us hope this does not further affect a fragile world economy.  Meanwhile send some cash to Haiti and Chile.  But better still, send the engineers to make sure structures are rebuilt properly in those countries and elsewhere where earthquakes could and will occur.

A Social License to Mine does not imply social peace.  There appears to be much confusion on these two concepts –  see this link which states:

We are not opposed to mining itself, but to its consequences, starting with the social conflicts that have left our families divided,” Maudilia Cardona, a local leader in the municipality of San Miguel Ixtahuacn, where the Marlin mine operates, told IPS.

This simple statement, coming from the heart, focusses our attention on two emotion-prompting issues: democracy and the family.

   Democracy comes in many forms.  There is direct democracy of the type so prevalent in California where interested voters may cast a majority of votes to deprive fellow citizens of fundamental rights, and set of a storm of law suites regarding the right of the majority to impose their prejudices on a minority.  Then there is representative democracy where we vote for representatives to deliberate and decide on our behalf; an example is the Canadian Parliament where a mere thirty percent of the representatives rule with the grudging support of the seventy percent who are divided into three mutually antagonistic minority parties.  Then there is the democracy of ancient Greece where only upper class males were allowed to influence the course of the state. 

The point is that democracy does not necessarily imply the will of the majority, which can turn very nasty in a multi-ethnic state of many minorities.  It is for that reason that we have constitutions that are supposed to protect the fundamental rights of minorities from the vicious prejudices of the majority.  It is why we have courts, sometimes composed of impartial judges, to sort out the disputes that arise, and the compromises that must be made, for a multi-tribal society to function in the real world.  It is why we must have a free press staffed by informed and educated journalists who can report on abuses of power by the politicians and the people who lobby them. 

Democracy implies that we must have environmental impact statements for new mines so that society can evaluate the impacts of a new mine in a comprehensive way.  But we must never forget that a successful EIS does not mean that every person in the potentially affected community will agree to develop the mine—or that every person in the region of the mine will benefit.  The EIS means only that there is transparency of process and a consensus to proceed.

Then we must face the fact that an EIS and a Social License to Mine (whatever that means or implies) does not guarantee that families will agree within themselves.  Inevitably one or more members of every family will hold views different from other members of the family.  And you can be sure neighbors will disagree.  This inherent tendency for family members to come into conflict and for neighbors to argue occurs whether the mine is there or not.  I cannot conceive how anybody can correctly blame a mine for family and un-neighborly conflicts.  I was born and brought up on a mine.  My parents held very different views on the mine and the mining company: my father supported their every action.  My mother claimed they were heartless and worked my father to death.  My grandfather was grateful for the job that took him out of the poverty of Ireland; my grandmother knew the mine was negligent when my grandfather was killed in an underground rock burst.

As a child, speaking English learnt from my mother, I was part of a nasty little clan that taunted the kids who spoke Afrikaans, even though my paternal grandmother spoke only Afrikaans to me.  I had not the perspective to note the silliness of my prejudices.  As neighbors we benefitted from the same mine, but we found tiny differences to justify childish clashes.  I cannot conceive how “sensitivity training” by Union Corporation (the company that owned the East Geduld Mine) would have turned us into nice kids playing with those Dutchmen up the road. 

Times have changed since those days of the mid 1950s.  But human nature has not changed substantially: we are still tribal & and paternal by instinct.  Family members still do things their parents or spouses may not like.  Yesterday I heard that my ex-wife is about to divorce her second husband.  I never liked him, or could understand what she saw in him.  I fought the divorce, but the law gave her leave to leave.  And now she is an emotional wreck but a financial success.  None of this silly family mess is the result of action or inaction by the companies I have worked for–unless you try to argue that they caused us to move around following the mining project instead of staying put in our birthplace. 

   I have been in mining communities all over the world.  In every one there are winners and there are losers.  There is always a mine worker who makes enough money to buy his kids a better bicycle and to buy himself a faster motorcycle.  There is always a wild local with business instincts sufficient to build a new hotel to house  NGOs come to protest the mine.  There is always a widow left distraught at a husband killed in the mine, or left alone by kids gone to work on the mine.  There is always a priest of the old, failing religion who looks with envy at the crowds flocking to the noisy music of an evangelical service across the road.  The may even be a drug dealer who revels in the increased population and money to spend—and then there is his rival who opposes the mine for bringing order to a region he controlled as a quiet trade route.

   Thus I submit: the world is always changing.  Families are always in flux.  Some grow rich and some grow poor.  People will argue and envy.  The mine is not to blame for these all to obvious natural tendencies and human emotions.  The mine may indeed add money to the community that redistributes the basic interests and opinions, but it is not the underlying cause.  Opponents of mines do themselves no service by making spurious claims that the mine disrupts the community.  All they prove by such claims is that they are conservatives who fear the inevitable changes that make life so interesting.  We may pity them, but we cannot take them seriously as they bleat at the inevitable that would occur in the absence of the mine—the only difference being that the mine gives them an excuse for their own shortsightedness and prejudices.

The basis of the Longwave Principle is the Kondratieff Cycle. Russian economist Nikolai Kondratieff developed his thesis on this in the 1920s. The cycle lasts approximately 50 to 60 years. I call it a lifetime cycle, because we live only one cycle in a meaningful way. For that reason, it is also very difficult for anyone to recognize where we are in the cycle because we haven’t lived it that period before.

   This is the essence of non-sense religion:  believe me, for only I have the insight to guide you.  Along with “poetry” about spring, summer, autumn, and winter cycles, Ian Gordon believes we are in the winter of despair and things are going to get a lot worse.  So he recommends buying share in junior gold mine companies in Vancouver.   I fail utterly to see the logic in this.   But if you dig deep enough, you will find out why he likes the Vancouver junior gold miners.  Of one, he writes:

There’s a little company, Golden Goliath Resources Ltd. (TSX.V:GNG), that’s been out of favor for a long time that I really like, and feel could do really well for investors. I did the IPO for this company in 2000. We had committed to raising $3.5 million at 50 cents based on a group of properties in the Uruachic Mining District in Chihuahua, Mexico. It was a real struggle for me. If you can believe, no one had an interest in gold stocks in 2000. Then Agnico-Eagle Mines (TSX:AEM) became an investor, and as a result we were actually able to raise the IPO from $3.5 million to $4.5 million. That was one of the things that I felt very proud about.

So it boils down to the usual: they paid me, I gave them life, and now I love them. 

To counter all this pernicious nonsense about cycles and objective reality, I recommend reading The Black Swan- The Impact of the Highly Improbable.  I blogged about this book yesterday and I return to it today, for it provides a hefty dose of reality and a grand antidote to the likes of Ian Gordon.   I quote from the Wikipedia take on the Black Swan and silly springs and winters:

Before Taleb (citation needed), those who dealt with the notion of the improbable, such as Hume, Mill, and Popper focused on the problem of induction in logic, specifically, that of drawing general conclusions from specific observations. Taleb’s Black Swan Event has a central and unique attribute, high impact. His claim is that almost all consequential events in history come from the unexpected—yet humans later convince themselves that these events are explainable in hindsight (bias).  One problem, labeled the ludic fallacy by Taleb, is the belief that the unstructured randomness found in life resembles the structured randomness found in games. This stems from the assumption that the unexpected may be predicted by extrapolating from variations in statistics based on past observations, especially when these statistics are presumed to represent samples from a bell-shaped curve. These concerns often are highly relevant in financial markets, where major players use value at risk models, which imply normal distributions, although market returns typically have fat tail distributions.    More generally, decision theory, based on a fixed universe or a model of possible outcomes, ignores and minimizes the effect of events that are “outside model”. For instance, a simple model of daily stock market returns may include extreme moves such as Black Monday (1987), but might not model the breakdown of markets following the September 11 attacks of 2001. A fixed model considers the “known unknowns”, but ignores the “unknown unknowns”.  Taleb notes that other distributions are not usable with precision, but often are more descriptive, such as the fractal, power law, or scalable distributions and that awareness of these might help to temper expectations.^[6]   Beyond this, he emphasizes that many events simply are without precedent, undercutting the basis of this type of reasoning altogether.

This is heavy stuff; but then your money invested in a failing mining company is heavy stuff—you need to read and think hard before you put your hard-earned money into the pockets of somebody who believes in fifty-years cycles we do not live long enough to document. 

An easier way to prove the silliness of fifty-year investing cycles, is to ask how these events. amongst many, can be reconciled with cycles as opposed to black swans:

• The shooting of  Archduke Ferdinand –  hence the First World War.
• The fall of apartheid and the fall of the communist state. 
• The debacle at Toyota. 

    Now you may ask if a black swan is a bubble.  Sometimes it may be, but bubbles have the advantage in that it at least some smart investors are smart enough to make money out of bubbles;  they are smart enough to recognize the signs and to to ride the waves.  Most do not of course, and get burnt like the rest, but that is their stupidity and greed, not an inherent property of the system.  Black swans, by comparison, come out of nowhere and hurt bad.  The only way to avoid the worst is to be vested in many activities and to have the backup cash to survive  the coming and going ot the Black Swan.  You may have to sell your Toyota and buy a Honda.   Or you may put some of your cash into the Black Swan Mine in Australia.

First it is an outlier, as it lies outside the realm of regular expectation, because nothing in the past can convincingly point to its possibility.  Second, it carries an extreme impact.  Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable. 

I submit that the development of a mine in a far away place qualifies as a black swan event.  What indigenous folk expect a mine to arise in their community? The new mine carries an extreme impact.  And once the mine is there, everybody can explain why it is there and why we should have predicted its success and impact. 

Of course not everybody is glad the new mine is there.  Just like peoples of all times, they claim, usually incorrectly, that things were better before the mine appeared.  On the other hand, there are always some who will say as was said to me yesterday: “Life was short, brutal, and nasty in this area before the mine came.  Life is still brutal and nasty now, but at least the people have food to eat and the kids can get an education.”

Sad truth is that most communities, before the coming of the Black Swan Mine, are not as peaceful and pleasant as the life lived by those blue people in Avatar.  In most cases, life in remote areas is indeed short, brutal, and nasty.  Most often the mine alleviates some of the afflictions of life in remote and primitive places.  In the nature of things, no mine can alleviate all the sufferings to which indigenous communities are heir.  Even after the coming of the mine, people still have a nasty tendency to steal from and kill one another.   The mine can hardly be blamed for human nature.  The mine can hardly be expected to become the paternalistic police force or government of a “failed state.”   Although the snakeoil humanitarian may claim so.

New mines in remote places seem to act as a magnet for well-meaning, but misguided people.  Just like those so-called church people who thought well to take many kids across the border of Haiti in the belief that they were guided by God’s word.   Or the professional engineers who come to write reports claiming the mine has caused cracking of houses, and make these claims in the absence of elementary science or engineering.  Their intentions may be good.  Their methods and professionalism may be suspect and open to question.

New mines arouse opposition from the church and from the drug dealers alike.  I recall many years ago the story that repeatedly circulated in the company I then worked for that they could not get support to use an old mine’s open pit as a landfill: the folk growing hemp around the mine did not want activity around their fields.  And of course the church has always feared any activity that might bring people new ideas, money, or independent attitudes.   Thus it has been for centuries and thus it continues today.

Traveling around mines from Alaska to Alberta to South Africa to South and Central America I am more than ever convinced of the fact the mining done well is to the benefit of society; but mining done badly is detrimental to human health and the environment.  I recall my own experiences in support of this opinion:

• The Cannon Mine besides Wenatchee is now reclaimed and a beautiful riding stable and recreation area.
• Money for my first car was earned working on subsidence induced by the gold mines of the Cartonville area of South Africa that resulted in the destruction of a brick kiln.
• Money for my second car was earned doing the leg work to explain the failure of the Bafokeng tailings impoundment.
• Reclamation of oil sands tailings is costing a great deal but will establish that it is practical to reclaim such impoundments.
• I was educated by money from the gold mines of the Transvaal.

The point is that we need good national laws, educated and committed professionals, and open dialogue to achieve the necessary balance between human greed, human need, and the natural tendency to ignore the coming of the Black Swan Mine.  Read the book to delve deeper into these issues.