The International Resource Journal: A word from Diggers & Dealers

A word from Diggers & Dealers
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admin on 26 August, 2010 12:57:00
 
When the 2000-plus strong crowd of Australia’s mining industry came
together at the 2010 Diggers & Dealers conference, held from August 1—3 in
Kalgoorlie, Western Australia, there were a couple of key subjects on
everyone’s agenda—most notably the threat of the MRRT (Mining
Resource Rent Tax) and ongoing resource demand from China. It goes without
saying that these sorts of events always draw a large and vocal crowd, both
industry-wide and in terms of media attention, and without further ado IRJ
presents some of the key topics, speakers and comments garnered from this
year’s momentous gathering.
The opening address
Diggers and Dealers chairman, Barry Eldridge, wasted no time in commencing
discussion on the MRRT in his opening address. The media has since described his
comments as a direct attack on the proposed tax; an approach likely reflected by
the majority of the industry and conference attendees this year.
“A change in Prime Minister does not necessarily mean a change in
motivation and while we hear the words compromise and negotiation, we as an
industry must continue to be aware and alert as this tax remains, in my view, a
form of economic terrorism,” Eldridge told the crowd.
“We must take a political stance against the proposal to rape essential
resources from companies that allow them to grow and continue to entice
investors which drives the ability to develop assets. The tax grab will
unfortunately deliver what will be, at best, a superficial benefit to the
community as this proposed resources rent tax is unsustainable in the long
term.”
His sentiment was echoed by key note speaker and Harvard professor Niall
Ferguson who also added that there is “a large degree of cautious
optimism,” as a recovery in global demand for stocks such as copper, lead
and zinc is predicted despite a recent ease in the market. In brief, the
conference was, as expected, dominated by discussion on the MRRT, but by no
means a wholly negative affair.
Comment from Andrew Forrest, CEO of Fortescue Metals
Ever an individual to draw a crowd, Forrest keenly highlighted the wider
industry concerns faced with the MRRT. He talked about a need to cater to
smaller mining companies as much as the more prominent in this,
Australia’s backbone industry.
“The tax has been reduced to just coal and iron ore and that’s all
cool and groovy,” he told onlookers. “But it tilts the playing field
in favour of the big three.”
Forrest also announced that he would award 5,000 Fortescue shares — worth
a total of A$21,600 at Fortescue’s closing price that day —to the
person who came up with the company’s print and broadcast slogan for its
anti-MRRT campaign. The winning slogan later unveiled was ‘Monster Rort
Rushed Through’ and was offered by GE Capital’s Justin Van Ast.
Speaking on the iron ore market, Forrest said that Fortescue, Australia’s
third largest iron ore producer, expects to sell the metal at around $100 per
tonne this quarter; pricing down from $130 per tonne for the June quarter.
However, Forrest also noted that prices will “probably rise” by the
fourth quarter.
The China connection and demand
The Australia—China resource demand equation offered more optimistic
discussions and numerous speakers highlighted how the surging Chinese economy is
relied upon by the Australian mining industry, but also how best it can be
enjoyed.
“The economy of China has free cash today in excess of $5 trillion and
that’s an economic powerhouse that just keeps on going and going for a
long, long time,” Gavin Thomas, CEO at gold miner Kingsgate Consolidated,
told the conference-goers.
“We see China growing maybe at volatile rates, but they will still need
commodities. They’re still building a Manhattan once a year, okay, they
make three quarters of Manhattan.”
James Wilson, a resource analyst at DJ Carmichael, said that there was little
about Chinese demand to pose worry today, but stressed the importance in keeping
a watchful eye and understanding that the current situ cannot last forever.
“We have significant reliance on the Chinese economy, so any kind of
slowing will affect us, but to what end is uncertain. But it couldn’t be
that material such that we will be worried about it at this stage,” he
said.
“The Chinese economy is still coming very strongly, but there’s also
a concern of how strong it can be and how long that can be maintained before it
runs into exhaustion.”
Further comment
Among the speeches to gain great attention since the conference closed, is Gary
Halverson, President of Barrick Gold for the Asia Pacific Region, who told the
crowd that, “When you add up all the basic ingredients, from our
perspective, it certainly says there’s more driving the gold price up than
down.”
“Even with increased exploration, there’s a pressure that overall
gold production in our industry is going to continue to shrink because
we’re depleting faster than we’re finding new things on a global
basis.”
In looking at regional promise further afield, Mark Calderwood of gold explorer
Perseus Mining, of Western Australia, spoke excitedly about the company’s
focus on under-explored gold belts in West Africa and the company’s strong
track towards production there in 2011.
“We see a much more promising future in Ghana and other parts of Africa
than we would have in Australia,” he said.
“Perseus is aiming to produce over a quarter million ounces of gold
annually from a mine under development in Ghana.”
The yearly updates
Since the conference was formed back in 1992, drawing around 150 attendees, the
Diggers & Dealers Forum Awards have gotten plenty of attention. This
year’s winners are no exception:
- G.J. Stokes Memorial Award — David Moore, CEO of nickel miner Mincor
Resources NL,
- Digger Award —Newmont Asia Pacific, received for its development of the
Boddington copper-gold mine in Western Australia
- Dealer Award — Gindalbie Metals, received for its deal with Ansteel
(Angang Steel Company Limited of china) to develop the Karara mine
- Best Emerging Company — Royal Resources Limited, of Western Australia
It is a pivotal and high-profile time for Australia’s mining industry in
the lead up to the nation’s federal elections where the industry takes
centre stage in proposed wider tax reform. The Diggers & Dealers conference has
shown an industry unity and support structure in the face of the MRRT, delivered
forward-thinking and optimistic views for many a market future, and clarified a
lot of sought-after personal views from the most outspoken in the mining
industry. This year marks another highly successful event for conference
organisers— may they long continue to provide this highly successful
yearly gathering.
www.diggersndealers.com.au