Quote of the day

“I find economics increasingly satisfactory, and I think I am rather good at it.”– John Maynard Keynes
Showing posts with label mining. Show all posts
Showing posts with label mining. Show all posts

Monday, 10 March 2025

Can we mine our way to growth?

 

Britain cannot repeat its fracking mistake in the race for critical minerals

Whitehall must overcome its disgust at ‘dirty’ industries or risk missing out on a genuine industrial renaissance

Chief surveyor Allan Reynolds in South Crofty mine, near Camborne, Cornwall
South Crofty mine, near Camborne, Cornwall. The south-west county is home to a plentiful supply of lithium and tin Credit: Jay Williams

Sir Humphrey has learned to hold his nose. After decades of official disgust at mining, refining and petrochemicals, Whitehall is learning to love the dirty stuff again – the very things we need to defend ourselves and grow a modern economy.

The vibe shift is palpable in Westminster and reflected in the booming share prices of mining and defence companies. And about time, too. In a collective spasm of shame, we stopped digging up and working with the most vital materials of the modern world.

Our policy class considered these industries to be filthy, and at Davos, the elite toasted itself for its high standards of moral hygiene by making a new, cleaner, “weightless” world. But we were becoming strategically dependent on China for the basics of modern life.

“China has realised they can dominate the world,” says Jeremy Wrathall of Cornish Lithium, which opened a £15m demonstration plant last autumn, producing battery-grade lithium hydroxide for batteries as a by-product.

“Most of the West has been asleep at the wheel and China is now laughing all the way to the bank.”

Today, China controls the supply chains for many of these critical minerals, and in December, the PRC turned the screws further. “So, you want to hurt our semiconductor industry?” asked Beijing. “Well, get a load of this”.

It promptly blocked the United States from receiving any antimony, gallium or germanium. The message was clear: we can hurt you far more than you can hurt us, because only we have what you need, and you don’t.

Donald Trump’s indulgence of Vladimir Putin may look craven in European capitals, but it’s an entirely rational strategic response to China’s critical minerals monopolies.

The US can secure supplies from mineral-rich Russia and Ukraine to buy time for its own domestic refining to grow. If this peels Russia away from its alliance of convenience with Trump’s real enemy, China, then that’s a bonus.

But the British minerals story remains largely unappreciated. There’s lithium and tin in Cornwall, copper and gold in Northern Ireland, and nickel, cobalt and rare earths in Scotland.

“For modern warfare, you need metals such as lithium, caesium and rubidium for atomic clocks and night goggles,” says Wrathall. “We will be producing them in Cornwall as a by-product of what we do.”

Not long ago, Whitehall had one official dealing with critical minerals, now there are 50 across five departments. The paybacks for tiny strategic investments are huge: one £15m scheme captured £170m of investment.

“We’re starting to see the green shoots of an industrial foundation for which we can build a strong critical minerals supply chain,” says Jeff Townsend of the Critical Minerals Association. With an integrated petrochemicals centre and freeport on Teesside, the parts are falling into place.

Sky-high industrial energy prices need to come down, but what’s really missing is a wider sense of the genuine industrial renaissance before us.

We can not only dig the stuff up but apply science to it to create a higher-value product: what’s called “midstream processing”. And we can also start exploiting the resources that we think are there, but haven’t bothered to look for since the Macmillan era.

Re-shoring makes us more secure and enables us to apply scientific innovation to add value.

The UK Critical Mineral Intelligence Centre at the British Geological Survey has just published its critical assessments. Gavin Mudd, its director, explains how we export 2,000 tonnes a year of tungsten, a metal vital to our defence industry.

But we could export 15,000 tonnes thanks to ingenious new recovery techniques: that’s about 20pc of the world’s production.

Most tantalising of all are the untapped riches under our soil. We’re pretty sure they are there but haven’t had to look for them for decades.

“The last national geophysical surveys were done in the 1950s and 1960s,” explains Mudd.

Wratham has unearthed archives that even the British Geological Survey (BGS) didn’t know it had. And the strategic and commercial imperative is now urgent.

For example, monazite is an ore that is described as a “pathfinder” to rare earths, yielding cerium, lanthanum, and neodymium. It is incredibly expensive, and Wales is full of it. (It’s a common misconception that rare earth metals are rare.)

wales
Wales is full of monazite, an ore described as a ‘pathfinder’ to rare earths

But we haven’t tried to assess those monazite resource deposits for more than 30 years. Resourcing the geologists at the BGS could be the smartest investment any government makes, for who knows what else they will find.

So many times, this column often rues, the UK has found itself with a winning lottery ticket only to throw it away.

For example, in 2013 fracking was popular across the country, particularly in communities that stood to benefit from it. However, a campaign was then launched equating the process to “tiny explosions”, a highly misleading description of spraying rocks with water.

This activated the environmentalists, and politicians got nervous. The Colvile-Wolf authored Conservative Manifesto of 2019 killed shale gas for a decade.

The revulsion against mining and industry culminated in Boris Johnson’s speech to the United Nations in 2021, which talked about the derangement of the “natural order”.

We can’t afford to make that mistake again – to capitulate to wild, bourgeoisie fears of getting dirty, and using our natural riches.

What we have is better than gold.

Friday, 24 February 2017

Need some evidence for govt holding back growth? Try this:

Take snippets from this to use as evidence to back up evaluation points - e.g. how well-intentioned intervention can reduce growth, thus leaving the workers it was the intention to help worse off.

23 February 2017

Why South Africa is no longer such a gold mine

South Africa started as an unassuming way-station for Dutch ships sailing to the Dutch East Indies, but it rose to prominence thanks to its immensely rich mineral deposits.

Beneath the country’s sweeping landscape lies 80 per cent of the world’s platinum, 48 per cent of its palladium, 17 per cent of its manganese and 17 per cent of its gold. The coal and iron deposits are said to be among the best in the world, along with a wealth of tin, chromium, titanium and vanadium.

Citigroup has valued South Africa’s mineral resources at $2.5 trillion – more valuable than Russia’s, Australia’s, and Canada’s. It is questionable, however, whether that wealth will ever be exploited.
My first column for Cato Institute, in 2002 was titled Well-Intended South African Mining Charter Is Recipe for Disaster. It dealt with a recently agreed charter of understanding between the African National Congress government and the mining industry. The measure’s stated goal was to “empower the previously disadvantaged” groups through racial quotas in both employment and the ownership of mining companies’ stock.

In my column, I argued that the charter wouldn’t work. Instead of helping the poor, it would drive down profit margins and the mining companies would be forced to cut their costs by hiring fewer employees.

South Africa’s inflexible labour laws, I argued, would further exacerbate the concerns of potential investors, as would the recent nationalisation of South Africa’s mineral rights. Both these factors would make long-term returns on investment more uncertain.

I concluded that the expansion of South Africa’s mining giants into Canada, Latin America and Australia, needed to be seen in the light of that increasing uncertainty. Though they were far too cowardly to admit to it publicly, the mining companies were hedging their bets.

In January 2003, the South African Chamber of Mines took out an advertisement in the Southern African edition of the Time Magazine. The advertisement quoted heavily from my article, attacking both me and my conclusions.

Dr Iraj Abedian, a director and chief economist of the Standard Bank Group of SA, described the charter as “a significant step toward normalizing the socio-economic environment – dealing boldly with South Africa’s skewed distribution of wealth and income… it will be a giant step towards reduction of investment risk in South Africa.”

Roger Baxter, chief economist of SA Chamber of Mines, noted that as a result of the charter, “mining companies …[could] operate in a framework of certainty” and anyone thinking otherwise “has not done his homework”.
I still cherish those comments. Then, last week, I came across a new report from the South African Institute of Race Relations (SAIRR), the country’s oldest think-tank, entitled Mining in SA: Then, now, and into the future. It made for a depressing reading.

According to John Kane-Berman, the much-respected scholar who wrote the report, “the South African mining industry shrunk between 2001 and 2008 by 1 per cent a year, whereas the top 20 mining exporting countries averaged growth of 5 per cent a year. The mining industry … was smaller now than in 1994. Roger Baxter [yes, the same Roger Baxter who accused me of not doing my homework] of the Chamber said the industry’s real GDP had shrunk by 2.9 per cent between that year and 2015… [This decline] coincided with one of the greatest bull runs in commodities, starting in 2002 and ending in 2012, that the world had ever seen.”

While I do not have data to calculate the drop in the mining sector employment between the signing of the charter and the present day, Berman notes that the number of jobs in mining decreased by almost 30 per cent between 1990 and 2015. Revealingly, the ANC government is aware of the job losses that occurred on its inept watch.

As Jessie Duarte, deputy secretary general of the ANC, said in 2014, “Lost employment in the mining industry, considering the low skills base of labour it employs, translates into a further burden on the country’s social wage. It adds to the depression in the labour-sending areas that are already destitute.”

Given its wealth of resources, surely South Africa should  benefit from future commodity price increases. But it might not, according to the SAIRR report. “Very few of the mineral rights awarded in recent years to junior mining companies were being utilised by their recipients. There was next to no exploration happening. There was also a risk that most of the assets would remain in the ground because there was no funding, investors having been kept away by government policies, regulatory uncertainty, and a hostile labour regime.”

Since the ANC came to power in 1994, the private sector has brown-nosed the government. Instead of cooperation, however, it has earned the ANC’s contempt. And each time the private sector gave in to the government’s demands, those insatiable predators who govern South Africa came back for more.

Today, Berman writes, “The mining industry is at a crossroads. It has spent considerable sums on social and labour plans and also on empowerment, but this has not satisfied the government. There are even suspicions in the industry that some of the government’s demands are designed to make life so difficult for mining companies that they will sell out to chosen political favourites.

“One former executive of a major company told the writer of this paper [i.e., Berman] that he and some of his colleagues believed from the early days of the Mining Charter that they should take a tougher stance towards government demands. However, he said, theirs was a minority view. Now, however, some mining executives believe the time for appeasement is over.”

I sure hope so, but fear that it might be far too late.

Marian L. Tupy is the editor of HumanProgress.org