Australia’s Mining Monthly — December 2017

T

is the season of goodwill – of oi ce

Christmas parties and long lunches

and drinks as the year careers

towards a close and all manner of

odds and sods decide it is necessary to “catch

up” before December 25.

Stuf ed if I know why, other than to give

restaurants and taxi and Uber drivers a

chance to make money. h e tempo starts to

build from Melbourne Cup day – itself an

excuse for excess – through to the traditional

Australian close down.

You are not going to see your colleagues/

contacts/competitors for a few weeks over

summer holidays – who cares? Bah humbug!

It would be far better for the ei cient use

of resources if the season of lunching and

parties was phased through the year, if more

use was made of the end of the i nancial

year rather than the calendar period and

if various sectors were allocated dif erent

calendars.

Our most common day counter, the

Gregorian, is but one of many and a rather

recent arrival anyway, being a 16th century

thing.

It would be much easier to get a restaurant

booking and avoid an unoi cial Christmas

surcharge if, say, the i nance sector was

working on the Julian calendar which is still

the choice of Orthodox churches.

Mining would obviously go with the

Chinese calendar, a splendid thing that has

years ranging in length from 353 to 385 days.

h e next Chinese New Year is on February

8 – another whole month to take all the rush

out of the present rush.

It might also be good to have the extra 39

days to build in a safety margin for the most

worrying aspect of this particular season

of goodwill: too much goodwill towards

mining.

I am happy to be cautiously optimistic

when everyone else is miserable, but right

nowthereisawaveofuniversaloptimism

that is enough to make me worry.

Every other day, some piece of optimistic

research or forecasting or mere newspaper

blathering comes luttering across my desk.

What’s worse, I’ve written some of it.

Global economic growth is on the up,

drilling rigs are drilling and even those

inherently miserable sods, the nation’s chief

i nancial oi cers, seem to be loosening their

purse strings a tad for more investment.

BDO Capital Markets – the investment

banking arm of Canadian Bank of Montreal

• is making the now-usual warnings about
  miners needing to be sensible for a change,
  but then betting that it’s time to spend.
  “h e mining industry still needs to earn
  the right to invest following the debacle of

the post-GFC cycle,” BDO says.

“From a commodity perspective, this

means long-run prices matter again. he

cloud of value destruction and persistent

writedowns from misplaced investment

strategies has driven natural mistrust about

the ability to make value-accretive decisions.

However, global mining expansion capex

is now running at less than half of the level

seen in 2012, and yet is supporting market

sizes more than double that seen at the turn

12 AMM December 2017 http://www.miningmonthly.com

A Christmas carol

9KVJVJGCKOQHDQQUVKPIGHsEKGPE[Michael PascoeTGEQOOGPFU

RJCUKPIVJG%JTKUVOCUHGUVKXKVKGUVJTQWIJQWVVJGGPVKTG[GCT

Michael Pascoe

[email protected]

@MichaelPascoe

’

+VYQWNFDGOWEJGCUKGTVQIGVCTGUVCWTCPVDQQMKPI

CPFCXQKFCPWPQHsEKCN%JTKUVOCUUWTEJCTIGKHUC[VJG

sPCPEGUGEVQTYCUYQTMKPIQPVJG,WNKCPECNGPFCTYJKEJ

KUUVKNNVJGEJQKEGQH1TVJQFQZEJWTEJGU/KPKPIYQWNF

QDXKQWUN[IQYKVJVJG%JKPGUGECNGPFCTCURNGPFKFVJKPI

VJCVJCU[GCTUTCPIKPIKPNGPIVJHTQOVQFC[U

Image: iStock.com/fortyforks