August 30/2014
The bad news just keeps coming. The iron ore price has sunk below $90 per tonne, and hopes of the Smithtonites and now Tullanese for local jobs with good wages just down the road have been dashed with the end of operations for Venture Mining at Riley Creek. I can't say I told you so on that one, I had just sadly shaken my head over cynical or brain dead opportunists exploiting community divisions because it too, like any little marginal base metal operation was doomed to fail on this side of the commodity cycle. At least it was on the surface and MAYBE some Chinese angel might have come in or still might to take a controlling stake in the tin prospect. Whichever, it goes to show the business case trumps everything else even if Richard Colbeck ignores it in his calculations. And well he might. He and his party stirred up enmity, garnered support, and arrived safely at their electoral destination. That it was an ugly hoax for all sorts of investors hardly matters. Their misplaced resentments will run long, broad and deep until next time, the bread having been snatched once again from their mouths by the environmentalists.
This may be far-fetched
but if some Zen master say had spent years giving classes in the
community, flummoxing, beating and humiliating people and
enlightenment had eventually flared in a few minds: We aren't
just honest working people desirous of bread; WE ARE THE BREAD!
Then they could go back to cutting firewood or whatever they usually
do, and would thereby know the answer to another famous koan:
A wood-chopper
studies long and hard with his teacher. After years of anguish he
attains satori. What does he do?
Hint: these things always
have an internal clue. The answer is not a holiday in Bali, or a new
second -hand car like I might do.
Unity Mining is to close
the Henty gold operation after a $52 mil loss. This company has
never been a favourite of mine. When they were Bendigo Mining a
relative who lived there filled me in on their activities. That
nothing was happening but they were burning lots of cash with an
office full of administrators. But like a fool I had ignored that
and the due diligence of Harmony Mining, who had walked away from it
in their efforts to diversify out of South Africa and then I had
taken part in a capital raising from investors– they managed to get
$90 million together, were building and due to start up their mill.
But when they had the money they shut it down, stiffing their
investors and walked away to greener fields which was a pertinent
comment on the business they had been promoting; first to
Beaconsfield where bad ground is legendary and the orebody is a lot
like Mt. Lyell – which is to say there is a lot left but it is
getting too dangerous and expensive to access. That was a disaster
too and they took up the Henty mine from gold mining giant Barrick,
(who was shutting it down) on a punt that the mine wasn't depleted
after all, which is to say the unlikely event that Barrick's
geologists were wrong. That worked out for them despite it having
been an especially dumb and desperate thing to do. I was long gone –
a name change after you have been screwed over is one more good
negative indicator. Which is a nicer term for a kick in the a****.
I mention my involvement
as a speculator or employee in these things to highlight that this is
an ugly and risky and short-term industry, definitely not a place for
elected know-nothings to be throwing money around -YOUR money, in
forms of government assistance, or getting involved in subterfuges to
attract capital from investors who are definitely going to do their
dough; ninety- nine times out of a hundred is enough to say
'definitely.' And they run interference for these companies at all
times. Recently Brian Green put on one of those weak Tony Abbott
mouth-only smiles as he explained there had been a 'sulphur spill'
from the tailings ponds at Savage River. That expression was used on
the news several times; there had obviously been an agreement to use
that particular term – sulphur; its that yellow powder, isn't it?
Wouldn't hurt a fly that grandma used to mix with black strap
molasses as a cold remedy. All's well. Actually it was acid
drainage; sulphurous acid if you want to be technical; from
weathering sulphides in all those millions of tonnes of waste and
tailings. It will be leaching into the river until it is all washed
into the sea in a global warming catastrophe or scraped there in the
next ice age.
Its a nice mill at Savage
River. And I have seen the pit and talked to people who actually
know things and listened to the news. The ground is broken and
there will never be an underground operation. The pit was designed
with a grade that optimized recovery, but when you converge at the
bottom there is nowhere left to go without stripping such a huge
ratio of overburden you have no choice but to walk away. A landslip
is a major disaster because the trucks have to drive out round and
round. Another pit has been opened and its claimed they will be
viable for another 10 or 20 years. But the clincher is probably the
price of natural gas used in the pelletizing operation at Port Latta.
Australia is unique in the
developed world in that we have no domestic gas reserves, our
companies have been contracting it all for the export market as fast
as it is being drilled. Prices on the Asian market are double what
we want to pay and Australian manufacturing is shutting down at a
horrific speed; if you want long term supply you have to match
international prices. So I give them another three years. And yes,
I have worked there too occasionally on shutdowns, nary a speck of
sulphur in the house.
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