Dryblower on the Great Pre-christmas Clean-out
Dryblower on the great pre-Christmas clean-out
CHRISTMAS cannot come fast enough for Dryblower. Not because he craves the idea of unwrapping presents under a tree, or indulging in too much food and booze, but because the annual holiday season will break the circuit of gloom which pervades the global mining industry.
Last week was, hopefully, as bad as it gets. Not only did Dryblower's horse come last in the Melbourne Cup, but the news flow from mine fields around the world was awful.
Whether it was made better, or worse, by the election of a Democrat as the next US president remains to be seen.
Barack Obama has the credentials to pull America out of its recession by launching national infrastructure re-building schemes, which will boost demand for minerals and metals. That is the good long-term news. In the short term not much will change, and might even get worse, as the US Titanic tries to dodge an economic iceberg.
As well as Mr Obama's acceptance of the modern-day version of Mission Impossible there is a glimmer of hope contained in the speed at which events are happening.
This might be wishful thinking, but there is something to be said for getting the bad news out quickly so the repair phase can start, and last week produced a classic rollcall of the failed, postponed, delayed, and the mothballed.
It actually happened so quickly that most of Dryblower's readers were probably so busy watching the Cup and the US election that they missed the astonishing flow of news, which was certainly not confined to Australia.
In Canada, an already long list of mine closures and construction delays saw the addition of Thompson Creek Metals postponing its Davidson molybdenum project, Birch Mountain Resources slipping into insolvency, HudBay Minerals canning its Fenix nickel project in Guatemala, and Tahera Diamond failing to sell its Jericho mine in Nunavet.
In Zimbabwe, Metallon Gold closed five mines because the country's Reserve Bank has failed to pay for gold compulsorily delivered to it ' a case of government theft of the first order.
In Peru, Inca Pacific delayed its Magistral copper and molybdenum project, along with two proposed iron ore mines of Strike Resources.
In Venezuela, the rotten government of that country has seized control of the Las Cristinas gold mine from its Canadian owner, Crystallex.
In Russia, the country's richest man, Oleg Deripaska, has been forced to cancel the float of his Strikeforce Mining and seek a government financial bailout.
The list goes on, with Dryblower's readers hardly needing reminding that it is longest of all in Australia where companies such as Fortescue, Mt Gibson, Consolidated Minerals, Alliance Resources, CBH Resources, Dragon Mining, Brockman and Stonehenge Metals put assets on ice last week.
It might be a slight exaggeration but if last week's pace of closure and delay was kept up for a month there would be a global shortage of mothballs.
The silver lining, if it is possible to imagine one at such a grim time, is that the speed of events means that most of the damage should be done by Christmas ' hence the Dryblower's wish that we get there a.s.a.p.
After Christmas we have a checklist of important dates, and as we clear each one the future becomes a little clearer.
New Year will come and go with most of Dryblower's readers still suffering a modern-day version of shell shock. Then comes the January 20 inauguration of Mr Obama, followed by a whirlwind of changes to US policies.
As these critical dates come and go the financial pump-priming started last month by the governments of the western world will start to have an effect on industry.
Funds will make their way out of rescued banks into the hands of consumers. Asset price falls will stabilise. Bargain hunters will re-enter the stock market. Orders for new equipment will start to flow, slowly at first, but flow they will because the equipment will be needed and because it will carry a financing interest rate tag reading 0%.
The great unknown, and the one which is causing the greatest worry, is how long the downturn will last, and that is where there might be some good news.
There is now such a global effort to kick-start economic activity with vast amounts of government money being thrown at the banks, and with interest rates tumbling, the recovery reaction could be as sharp as the collapse.
But, to find that out we must first get to Christmas, then to the New Year, then to Mr Obama's swearing in ' and then (and only then) will we know what 2009 will really look like.
Roll on Christmas!
