Archive for the ‘mining boom’ Category

Proximity premia and proximity fuses…

June 24, 2011

You don’t often (well , *I* don’t often) think about the distances involved, the money paid etc etc. Interesting…
Vale stakes out ore giants’ backyard
A fleet of ore carriers and a Malaysian hub are part of the Brazilian’s plan to erode the ‘proximity premium’ that benefits BHP and Rio, writes Ayesha de Kretser in the Fin, May 26 or 27 2011…

Once the Malaysian centre is completed in 2013, Vale will send ores from its high-quality Carajas mines and lower-quality Southern Systems mines for blending in Malaysia and then for sale to steel makers throughout South-East Asia and China.
“This is the Australians’ worst nightmare,” said a Shanghai-based industry analyst. “At the moment they get away with selling crap to China because people are also buying high-quality Brazilian stuff and blending it in the blast furnace.
“So the Brazilians reckon if they don’t sell China the high-quality stuff, the Australians will have to massively discount all that rubbish high-alumina, high-silica stuff because the Chinese can no longer wear the poor productivity without the nice Brazilian stuff.”
Vale executives have openly expressed contempt for BHP Billiton’s push to extract a “proximity premium” from Asian customers while being forced to discount Vale’s own higher-quality ores because of China’s unwillingness to pay more for it, particularly given the higher cost of freighting goods from Brazil.


Defence? It’s a gas…

June 23, 2011

Defence focus shifts to oil, gas
John Kerin and Peter Kerr
Australian Financial Review 23 June 2011
More of Australia’s soldiers, fighter aircraft and warships will probably be moved to Western Australia and the Northern Territory to refocus the country’s defence on Asia and to protect oil and gas fields driving the resource boom….

[Western Australian Premier Colin Barnett] downplayed suggestions that the United States would piggyback on the move to develop a greater military presence in the area – possibly basing warships at Perth’s Garden Island.

Too much luck? The Mining Boom and Australia’s Future

June 21, 2011

So, this is from a promo sheet for a new book –

Chile, a less affluent resource-rich country, has shown just how inept our politicians and economic experts really are. Several years ago Chile put in place a mechanism to ensure that its politicians didn’t blow the proceeds of the country’s lucrative copper mines. Any revenue above a set threshold went straight into tightly controlled sovereign funds. When the GFC came along, Chile was able to use the fund to deliver an even bigger stimulus to its economy than Australia did, without racking up a single peso of debt. Other resource-rich countries have similar policies. Norway, a country of only four million people, has saved more than $450 billion in just fifteen years. When its oil is gone, Norway will be able to live off the interest, thereby maintaining its enviable standard of living into the future. There are many other examples. The essential idea is to turn non-renewable resources into a financial asset that will last forever….

The Australian economy is now sinking hundreds of billions of dollars into expanding mineral and energy production. Our state and federal politicians have become so bedazzled by the prospect of even greater mineral riches that they are eagerly facilitating a resources stampede while giving less regard to long-term ecological and financial consequences. Increasingly, resource development in Australia involves weak and inept governments up against muscular multinationals that are prepared to go as far as removing political leaders to secure their interests. Such were the dynamics of the mining companies ‘ spectacular defeat of the super-profits tax. Without a fairer tax, Australia will continue traveling at breakneck speed towards the bottom of the quarry, a journey that will wreak havoc on the non-resource sector and potentially leave many people far worse off. As the resource boom accelerates, it will drive the dollar sky-high, forcing up the cost of doing business for everybody. Industries such as tourism and education – industries that, unlike mining, involve many jobs – will fade away. But what happens if commodity prices suddenly collapse, as they did with the GFC in 2008; or worse, when the resources run out?…. without a resources fund, we are stealing from future generations. Without such a policy, this mining boom amounts to theft on a scale never before seen in this country’s history.

Paul Cleary
Too Much Luck: The Mining Boom and Australia’s Future
Black Inc Books
August 2011
See also Laura Tingle’s brilliant “Falling Down the Miners’ Shaft.” “Mine, all mine, bwahahahaha”

And Guy Pearse’s Quarterly Essay “Quarry Vision”