Global Vision for Mining Ventures


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Global Vision for Mining Ventures

  1. 1. Vision for Global Mining Ventures 1 Heinrich J Scheffer – 22 November 2012Index:Introduction: New Foreign Exchange directive for depleted and scarce minerals.Geographical Political system. (Geopolitical)DemandAbundance of resourcesRiskPossibilities in production and estimatesCountries which seem to be the hub of mining interest are: In no specific order.Scoring investment pointsScarcity of resources and recyclingVision for the futureLabor availability and restrictionsResponsible mining with the background of water ethics: EnvironmentTrade WarsStructures of InvestmentSummative Assessment--------------------------------*******************-----------------------------------
  2. 2. Summary Assessment:Mining in general is in a good position to unfold as the global fiscal savior of the Century.We are at the threshold of a super boom of mining exploration endeavors. Never before hasthere been so much activity with such a heavy or dense score in increased pulsemanagement. Not every investment by definition will bear the fruit of positive ROI. Everymining venture will however add to your speculating personality. Mining will never fail todemand your emotion in its arrival at the experience table contested. Whether that is a lossor profit do not count for much. It is seizure time, visualize the experience, of profiting frommining, but nothing encapsulates the true sense of gambling like the run of a loss excursionin a venture so desolate from your view and so close to a war zone. It resemblessunbathing on the deck of a schooner while landing at Normandy in the 1940’s.--------------------------------******************---------------------------------1. Introduction Mining is today one of the only visible means to overcome the fiscal condition of Fiat money. The reason for this is that it is the start of the page which continues toward profit. Without mining everything else will not be possible. The only next thing which is serviceable is food production. In the world, the things we get free have not been receiving a good valuation over time. It may be time now to tag these items and put value to them, real market values in line with scarcity modules. How will we decide what is a free product. That is quite easy. Everything which we cannot manufacture or make from existing technologies is free. Can we make gold, diamonds, lime, hydrogen, etc? Can we invent the growth which plants need to find maturity? The growth medium can be enhanced by products which are called fertilizers. We cannot improve on the seasons, water science, sun and heat, the way things grow and the speed with which they do it. We cannot make seeds. They have to be available else we are in trouble. Can we make a tree fully grown? No! We have to plant a seed which is free, then feed it water which is free, then wait for a seasons of some odd years to give free growth. There is nothing we as humans can include to
  3. 3. make free worth more until we harvest. This is true for anything that produce life, like humans,animals and other creatures.So all this is free. But some of it has limited availability, like resources.The amount of Mining prospecting licenses in circulation have escalated to such a height that itis almost impossible to believe that the commodities will bottom out at some time in the future.We are told about things like yield coupled to time scales and scientists suggests timelines forproduct severance to twenty and thirty years of production.Although this is true, it is true only for sites which have been surveyed. There are billions ofacres of land which has never been surveyed and not included in this forecast. The way theresearch is done is by means of seismic beams and based on distortion. Although this is fairlyaccurate, it is totally inaccurate when formations of matter are not static or predictable. Let uslook at an example: The way they decide the size of an oil field is to project a seismic beamthrough the crust and Mantle, beamed toward the other side of the world and they catch theseismic beam on the other side. If the compounds in the crust are the same, the beam travels ata certain speed. When it hits water the beam is skewed and travel changes. They compensatefor this by projecting this beam with water skew already programmed for the direction to be re-aligned and measure the time the travel takes to reach the target. This is usually the way to findthe size of an oil field. They even know how fast this beam moves through the sea water to beable to remove it from the calculated equation. It is however not hundred percent trustedbecause some other types of scientific compound lies between the seabed and the result, whichmay distort the quantifiable speed at which the interceptor represent the evidence. This couldresult in a skewed result and this method still has a reasonable chance of inaccuracy.Scientists also say that the earth’s crust has multiple supplies of every commodity, in all, theground formations are not selectively positioned in any particular country. It is true that thereare concentrations and these pockets which is the wealth we are extracting every day. We havebecome so accustomed to predict outcome on sites where there is abundance that we neglectto realise potential on sites, where maximum production is discernible. It is even in the groundunder waters, like the seabed where we find oil. It is then very probable that the scientists arecontradicting the flow of mining results and mineral flow charts, for the next Century. It isevident from this that we should not be alarmed at this as an obstacle to efforts in mining. Weshould however be alarmed to be careful about the quantities we extract. Inevitably, there willbe a result which would be zero.
  4. 4. Another conflict resolution is of course recycling. If the reserves have come to an end in the mining cycle there will be much for recycle because the other strange thing about commodities like gold, silver,. etc, is that we cannot change the chemical into anything else which could disappear or evaporate completely. There are exceptions though. One of these is Mercury Hg with Proton number 80. It is called a transition metal and can be vaporized and is used in fluorescent lamps. Yes, there are evaporation equivalents and these might not be redeemable for our use without serious scientific interventions, but it will never leave Earth’s atmosphere. From this you can believe that science says the 100,000 tons of gold which has been mined to date will always remain 100,000 tons, unless we add to it, or change it into a gaseous compound. This is also common sense. The only thing that might happen is that the item will become scarcer and cost more. As demand increase this will become a challenging factor. We will have to find alternatives. The complete deletion of commodities is impossible. The destruction of it is impossible as well. It is my conclusion that commodities will be revalued in the next ten years. This will bring new weight to investments and the only products which might not overcome market pressure to inflate in price are Iron and steel ore and products. Is this why the Buffett’s of this world is buying into gold right now? I think they can see a revaluating process coming to the table and could only favor their investments.2. Geographical Political system. (Geopolitical) The sun is shining over the mining world. Every Continent is reverberating with action and the global markets rely on supply of commodities from these mines. Globally there are many resources and the scale of mining in this Century has become significant. Water is scarce, especially some arid areas bordering desserts. This has been known to man for a very long time but have become so used to scientists finding a road around a breeched phenomenon that we just hope to escape the session in which the droughts are mounted. Mines cannot operate without water. This water is under significant stress and this is a platform of concern which mining operators in the world picture will have to address. Man has circumvented this with knowledge and ingenuity. Mines are now popping up like mushrooms, commercially intended, all the way down to prospectors fishing for a few grams of gold a month, in a river basin. If a survey of a Geological find shows credibility, the investors jump in to make a few Dollars from it. Demand for raw materials across all economical boundaries has surged in the last two decades. Providers have risen to factor in their levers and there is now an over-supply of certain base elements. Although the global economical output figures has an array of negative influences we
  5. 5. find that more and more Investors are turning to mining for the security they need in theirinvestments.The global glut in these selected elements is no reason to stop the exploitation of the reserves.As the inflation rate takes its toll on economies it will become more expensive to extract thosereserves over time. It is a point in question at the moment where we see that mining companieslike PHP Billiton, who is making preparations at their Australian and Brazil Iron ore extractionplants, to be leaders and excel in this field. They are broadcasting aggressive surges into Capexstructures which will make their extraction methods more equitable. They and the companies inChina are stock piling huge quantities of the ore (99 Million tons in reserve at Chinese Harbors)at the time of this paper.Politics play a huge role in the success of mining ventures. We find this in Counties like theDemocratic Republic of the Congo where strife and faction battling, has had little effect on themining industry. This is mainly due to the size of the Country. The DRC spans two to threetimelines and the warring elements are positioned on the East side of the country while mostmining activity is concentrated on the West Coastal regions. The companies involved in miningin these type countries are very exposed in the day to day surface conditions of political change.Fortunately the various countries who have a stake in global fiscal and humanitarian balance hasa feverish and sincere wish to make these warring countries stable and are consistentlyorganizing efforts to keep violence in check. Most of the warring is in fact the need of localgroups to take control of the mining purse. This seems to emulate the revolution in the ArabCountries where groups like the Brotherhood of Islam, are using the uprising to take control ofthe region, who are warring for control of the oil rich regions. Destroying the reserve andstructures are not in their best interest.
  6. 6. Global politics are changing to align with Western norms/standards and the emerging markets are under pressure to comply with global expectations. This is the policing factor which will provide for better security, as the profit of the bureaucratic system.3. Demand Why is mining and resource development in such demand even when the risks are great? It has been an economic fact that getting the resource as a free made vehicle, which only need scientific welding to conform it into our most needed commodities, is as cheap as oil is. If no oil was present and the technology of the car was, we would have had to make oil and fuel from nothing notable, to make a vehicle go. This would have been a significant feat without supporting elements like coal to make science work. So having the oil available made the cost to sale elements much cheaper. This is the same in the case with other commodities like Gold, Diamonds, silver, Copper, etc. The only actions which are forever haunting economic viability is political and religious stability. In countries where we find a truce in these climates there are no uncertainties. The progress can continue and has a ground breaking affect on prosperity of communities subjected to the wealth management. Mining usually brings technology to the shore of the construction site and is therefore a good income generator for everybody who participates. If a climate of political strife is in the envelope of the Country’s overall cycle of events, it becomes extremely difficult not to be hampered in the construction of the operation and dividends are seldom forthcoming.
  7. 7. 4. Abundance of resources We find in our latest surveys that there are more resources all over the world than we can dig up and spend in the next Century, even if we invite fifteen billion people to feast on it. This is actually amazing sins we always had the Geo knowledge-insert that there were limited supply. With the Industrial revolution making huge inroads into mining and its sustainability, we saw more investors enter into mining markets in the last two Decades than in the previous thousand years. As our populous exploded into a manifold of wealth, the demand for critical elements became a nauseating factor. We literally put the wagons in front of the oxen to get this approach, over the river of technological advance, and the obstructive selling markets. Although there is sufficient technology and knowledge, mining still has its bridge too far. Risk is always rather a probability than a possibility. The existence of mineable deposits and their frequency and abundance in nature, corresponds closely with the chemical composition of the earths crust. Silver, for instance, occurs in nature 19 times as frequently as gold. If we imagine a pyramid with high grade at the apex and low grade at the base, then we can easily see that as we lower the grade that is economic to mine, the available reserve tonnages goes up. We should not be surprised to find the world is awash in low-grade copper deposits that also include small amounts of gold and silver. Resource development in the 20th century has been marked by the growth of large-scale mining and technological development that enabled the use of economies of scale.5. Risk It is estimated that only 60% of all mining operations bring profit. THE total number of mines in the world is huge. However, the exact figure depends on how a mine is defined. If small-scale mines are excluded (of which there are 8,300 in China alone) and only industrial-scale operations are counted, there are some 2,500 metal-producing mines. The average life of these mines varies dramatically; a gold mine averages some eight years whereas a copper mine can soldier on for close to 30 years. In South Africa there are several diamond mines that have produced for 50 years, and are expected to produce for another 50 years. The fact is that although there are indications that we have abundant resources, mineable mineral deposits are few and far between, and still fewer people will bring a deposit into profitable production. The chances of bringing a raw prospect into production have been estimated at 1 in 5,000-10,000. Some deposits eluded recognition for several decades, despite intermittent exploration of the same showings by several companies and, in many cases, claims were allowed to lapse. There are many instances in which prospectors have revived old prospecting sites and induced companies to drill just one more time before a discovery was made. In a recent article from Bolivia the following came on the table:
  8. 8. Jindal Steel Bolivia, a subsidiary of the giant multi-national Jindal Group of India,has announced it will be abandoning its share of the largest iron ore deposit in theworld, El Mutún, and breaking off its contract with the Bolivian government aftermonths of fractious dialogue. Jindal announced that it will be initiating internationalarbitration against Bolivia. The government accuses Jindal of being behind scheduleand not making the investments it promised while Jindal insists that thegovernment’s investment demands are unreasonable and that it has refused tosupply the natural gas it had promised for the operation’s power needs. Local leaderAntonio Tudela believes that Jindal may sue Bolivia for 200 million dollars. TheBolivian government had previously estimated that the Jindal mining project wouldproduce 21,000 jobs and 200 million per year in revenue for Bolivia. This was thelargest investment in South America by an Indian firm and Bolivia’s already shakyreputation with foreign investors will be badly damaged. Jindal invested in El Mutúnin 2007, promising to spend 1.5 billion dollars initially and 2.5 billion over the nexteight years. The only winner in withdrawal of the mining giant is likely to be Bolivia’senvironment since El Mutún is located in the Amazon near sensitive wetlands.From this information we have to understand that politics in Bolivia has takenserious negative and positive turn for the country’s affluence in the past 50 years.Tug of wars for control seems to be doing more harm than good. There is a veryacute digestion of power from the Government aligned against regional indigenouspowers. This is after all part of the Amazon belt and all investors have to look attheir housekeeping demands. Investors cannot block their own view of the impactson the environment in favor of profits. There has to be balance. If these factorsare taken into account, the constant vehicle of change in legislation, which seesCommunist labor parties control mining in Bolivia now, makes it difficult to keep theeye on the ball of ROI. Can the authorities give some sort of guarantee that thefunding will receive risk free passage? If there are no guarantees of some sort,why do investors bother with the opportunity in Bolivia. There are surely betteropportunities in other countries.This was further article on the dangers of escalated violence from local indigenouspeople:Labor Minister, Daniel Santalla, has reached an agreement with the indigenousvillagers of Mallku Q’ota whereby all of their demands will be met including the
  9. 9. renunciation of a mining contract to the Canadian company South American Silver.The government also agreed not to press charges against anyone involved in thebeating, kidnapping and hostage-holding of five South American Silver employees. Avillager had died, apparently from gunshot wounds, after a confrontation with thenational police. The government had insisted that the police were not carrying guns,but a doctor later confirmed that several people, including the deceased sufferedgunshot wounds. The government has agreed to pay the medical costs of the fourwounded villagers and pay $1,150 for the death of the indigenous man that theyshot on July 5th.After reaching the deal at 1 a.m. on Monday morning, Santalla said, “This amount isan initial collaboration, afterwards we will see how much more we can collaboratewith this family, and also promise a job to the widow.” The minister also agreed notto prosecute any of the kidnappers, who had broken the arm of one of theirhostages, and to never press any charges. Santalla also agreed that the locals canuse “community justice” against two of the mine workers who had “infringed on thecustoms and traditions of the village.” Their trial is set to begin today at 8:30 a.m.and it remains unclear exactly what this is for or what sentence might be given.
  10. 10. 6. Possibilities in production and estimates Most dramatically, the mined output of bauxite (the raw material for alumina, and hence the new metal aluminum) soared from barely 100,000 t/y (tonnes per year) in 1900 to over 125 Mt/y (million tonnes per year) by the end of the 20th century. The rate of copper mined between 1900 and 1999 grew from around 0.5 Mt/y to 12 Mt/y. The rise in precious metals output has also been noteworthy, with gold production for example, rising during the 100-year period from 400 t/y (12.9 Moz) to 2,500 t/y (80.4 Moz). The total volume of ore produced globally is almost 17,000 Mt, excluding sand and gravel. Metals account for barely one quarter of this amount, while crushed rock (mainly limestone) is by far the dominating commodity (by volume), accounting for some 7,000 Mt/y (40% of the total). This is not to suggest that we are running out of metals just yet. Already-identified ore reserves, as a multiple of recent annual production rates, represent almost 200 years for bauxite, 30 years for copper and 20 years for gold. The recent natural disasters in Australia, Japan and New Zealand are expected to detract ¾ of a percentage point from Australias economic growth in 2010-11.The strong growth outlook is underpinned by unprecedented growth in resources investment and strong growth in non-rural commodity exports, which are surging in response to high global prices for Australias bulk commodity exports. The strong expected growth in the overall economy masks some significant divergences between sectors, with conditions outside of mining and related industries expected to remain challenging. Tighter macroeconomic settings and credit conditions, heightened consumer caution and the high Australian dollar are all weighing heavily on some sectors, particularly retailing, manufacturing and tourism. But globally, although economic conditions are challenging, mining seems to be in good stead. There is a real good reason why some countries attract more investments than others. The political climate and the potential stability of governments are the serious risk factors. If these risks could be assessed and the options generated from it could be tapped, mining will be one of the best earners for countries and investors. This is a key to investment opportunities.7. Countries which seem to be the hub of mining interest are: In no specific order. The Countries I select here are not the only ones viable. There may be many more. In the forums where I find the most comments on mining, these countries have either a crippling investor stage, or a genuine opportunistic label. If I insert a label of risk, there is a tendency for investors to put the pulse of their activity in areas of no risk.
  11. 11. Ghana, Zimbabwe (Risk: Regime), Namibia, South Africa (Risk: Nationalization), China, USA, Canada (Who together with Australia have the strongest economies in the world right now) Australia West Coast, New Zealand, Papa New Guinea, Bolivia, Brazil (Risk: Drug wars), Tanzania, Zambia, Malawi, Morocco, Afghanistan (Where the best deposits in the world has just been identified but where political unrest will be the tether which will determine investment), Democratic Republic of the Congo (Risk Nil where mines are situated and always been safe during conflicts: Ethnic wars on the East of the country, not West, spans two to three time zones), Argentina (Risk: Nationalization), Mexico (Risk: Drug wars), Russia and Balkan states, Croatia and some of the East European states (Risk: Politics), Nigeria (Risk: Corruption), Sierra Leone, Benin, Liberia, Gabon, Angola, Uganda, Mozambique, Burkina Faso, Fiji, quite a few smaller South American countries who are stable like Paraguay (Stable), Chile (Stable), Peru (Stable), Ecuador (Stable), Columbia (Stable), etc where the risk may be higher sometimes, Ivory Coast (Risk: Unstable political system), there may be African and European states which are well positioned but about which I do not have enough information for a credible assessment.8. Scoring investment points Few mining companies have the financial resources to delineate ore reserves too far into the future. Potash Corp of Saskatchewan is an exception, its mine reserves (at current production rates) are sufficient for 200 years; as close to an annuity for shareholders as it is possible to get. As a result, most of the worlds store of metals and minerals remain undiscovered. Moreover, as (or rather, when) the worlds reserves of a particular commodity become depleted, the price will inevitably rise (unless there is a readily available substitute). This, in turn, will make lower-grade ore economic, boosting the available reserves.9. Scarcity of resources and recycling Complicating the issue of scarcity is to what extent the extracted metal or mineral is actually consumed. With modern technology (and the increased value of the raw material) we are able to recover commodities that have already been used. This recycling is of increasing importance in the supply/demand balance of many metals. Mined metals and minerals (excluding oil and gas) have an annual value of some US$350 billion, split, roughly equally, between coal, metals and aggregates/industrial minerals.
  12. 12. Earths phosphorus reserves are expected to be completely depleted in 50–100 years and peak phosphorus to be reached in approximately 2030. Whereas in stark contrast the International Fertilizer Development Center in a 2010 report estimates that global phosphate rock resources will last for several hundred years. The predominant source of phosphorus comes in the form of Phosphate rock and in the past guano of bird species.10.Vision for the future The one says up, the other says down Caterpillar Plans Global mining capital expenditures will drop 14 percent through 2014 from a peak of $136 billion this year, JPMorgan Chase & Co. said in a Sept. 21 report. BHP Billiton Ltd., the world’s biggest mining company, last month delayed an estimated $68 billion of projects. Australian iron-ore producer Fortescue Metals Group Ltd. on Sept. 4 cut its full-year spending forecast by 26 percent to $4.6 billion. Chinese excavator sales have fallen 36 percent this year, according to JPMorgan. Caterpillar said last month it shut its main Chinese excavator plant for much of July. The company said Sept. 21 that it’s planning to temporarily idle a component plant in Illinois for a week, around Thanksgiving and a week around Christmas. GE Plans That contrasts with General Electric Co., which announced yesterday at MINExpo the creation of a new mining unit. The division is preparing to buy more mining-equipment and services companies and should reach $5 billion in sales “within a few years,” said Lorenzo Simonelli, CEO of GE Transportation, of which the business will be part. Oberhelman also said Caterpillar expects to be the “market share leader” in China by 2015 at the latest. The Caterpillar CEO’s comments on growth echo those of Michael Sutherlin, CEO of Milwaukee- based Joy Global Inc (Joy), the biggest manufacturer of underground mining machinery. Central- bank actions in China and the U.S. are removing some uncertainty from financial markets and have provided more stability, Sutherlin said in a Sept. 18 telephone interview. I see huge potential in markets. Strategy will have a say in the outcome but life is not an accurate science and mining is as inaccurate in assessment of the truth of the outcome as any roulette table can produce. The sciences have surely made the risk smaller and the investor definitely have a better chance than twenty years ago to catch a yearly dividend. As we are unable to predict the formations of ducts or declining crust structures, or water ducts and aquifer behavior, we can never tell what will happen on a mine. I’m sure all these elements
  13. 13. which take charge of the outcome, just make mining interesting and investors naturally accept this. We have to educate the various parties who wish to be party to this strategy so that the applicant of investment doesn’t decline into a defense position, if things do not work out as planned. The contingencies need to be detailed and packaged in much better form so that outcome based assessments can be secured. My outlook is very positive and taking into account the stock situations of commodities like steel, should not deter us from taking the next step into mining. We have to generate enthusiastic behavior and not succumb to the composition in markets, of despair and loss. The main lever to overcome the decline in markets is to create new avenues of pursuit.11.Labor availability and restrictions
  14. 14. Global employment trends 2012 tabled in Geneva on/wcms_171571.pdf Global growth has decelerated rapidly, increasing the threat of a prolonged jobs recession. Following the deepest global recession since the end of the Second World War, the recovery has been short lived and shallow, barely recovering to rates prior to the crisis and unable to close the gap that has opened up. In the meantime, the macroeconomic woes in some advanced economies have worsened, increasing global uncertainty. While only a few countries have been facing serious and long-term economic and fiscal challenges, the global economy has cooled down fast as uncertainty has spread beyond the advanced economies, moving the world economy even further away from the “pre-crisis” trend path. At the current juncture, even a double dip remains a distinct possibility. We can see that there will be a global over supply of labor. At the same time there are inequalities in salaries of top management and wages of poverty driven workers. This will put huge pressure on wage demands as we can see in places like South Africa in last three months. The economy of the RSA has been very stable for the last hundred years but global inequality and the Islamic wave of extremist behavior, is having the same affect that we saw from Wall Street Strikes. Some countries have been able to circumvent the currency meltdowns predicted, but suffered dearly in the crisis to defend its monetary stability. This is an ongoing process and Inflationary command structures in the economy of countries, battle to default on stable debt ratios.12.Responsible mining with the background of water ethics: Environment The mines in our not so distant past have a seriously complicated record of the destruction in environmental outlook. There was no governance and the money traveling from manufacturer to purse, did nothing to revamp the destructive nature of mining. The earth elements suffered dear consequences and the proverbial blood score, oozing from the ecological wounds, are more visible today than ever beforew, years after miners left the scenes. We must admit that poverty in mining regions made people hungry for money and when you are hungry you should never go shopping. The Governments where these mines were situated were so eager to get a few dollars into the state coffers that they accepted rather than prescribed legislation governing environmental issues. Today we are looking at a learning curve and different picture of disbursed appetites. Mines all over the world are being told to get their houses in order or brave the consequences of social action.
  15. 15. There is now pressure building up from small nations in Africa where taxes have seenimprovement from 5% to 30%. The trend has been set for profit but the legislation forenvironmental control is still lacking. I expect this topic to be broadened in the river of obstaclesin mine revenues and dividend payouts.Everybody in the mining sector and those investors who sponsor them will have to take intoaccount the fact that good governance in housekeeping of their environment will soften thedivide between the activists claiming rape and the investors’ mandate.Within the next ten years every mine will have to submit, within their projected operations, theobligatory Environmental Impact Studies/Assessments and provide their own legislation ofEnvironmental Management plans, complying with International social pressures.A comment in the press of Bolivia recentlyThe Coordinator of the Environment, Mining and Industry Foundation (MEDMIN),Félix Carrillo, explained to the press recently that the worst environmental impactsare actually not the widespread use of mercury but deforestation caused by goldmining in the Amazon. Where before miners had only been able to afford panningfor gold in rivers, many now bring in heavy machinery and destroy large areas ofjungle, altering the course of the rivers in search for gold.Carrillo said that of the over 600 gold mining cooperatives in Bolivia, 570 usemercury and dump it into nearby rivers and soils. Carrilles said that since mercuryis heavier than water, it sinks to the bottom of rivers where it mixes with plantsand fish, and thus arrives in humans. Carrilles said that it’s possible to substituteother chemicals and processes for mercury, but nobody wants to pay this addedexpense. Carrilles said that because gold mining camps are often so far removedfrom society that virtually no legal control exists over their operations. Heexplained that satellite photos can show how quickly gold mining is deforesting notjust Bolivia’s Amazonian region but Peru and Brazil as well. Carrilles also explainedthat most of this gold is never taxed or calculated by the government, but ratherleaves Bolivia on the black market.
  16. 16. 13.Trade Wars These could benefit or destroy the outlook of some investors. Chinas emergence as a major player in Africa is fueling an intense debate over the nature and motive of its involvement. China National Golds bid for Tanzanias largest gold mine adds kindling to this fire In August, the state-owned China National Gold Corporation announced a $3.9 billion bid to acquire African Barrick Gold, Tanzanias largest gold miner -- a wholly owned subsidiary of Canadas Barrick Gold Corp (ABX). If approved by regulators in Tanzania as well as in London, where African Barrick Gold is traded, it will become Chinas first gold mine outside its borders and will double China National Golds total production capacity. China seems to have the Midas touch in Africa, steadily turning vast natural resource wealth into gold through investments in oil, gas, and mineral projects around the continent. Last year, Chinese interests invested nearly $16 billion in African mining projects -- a tenfold increase from 2010 -- according to the China Mining Association. China likes to stockpile and such inventories as iron and steel exceeded one hundred million tons in the harbors of China for this year ending 2012. This alone has a non static effect on the markets in general. How will this sit with Countries like Canada the US and Australia who are traditionally heavily involved in the Africa mining regions? There is no answer, cash and capital determine the buyer of the day and Governments are unable to stop the advancement of Countries like China, from buying their recourses cheap. The next big bombshell will come in thirty years when the countryside’s are owned by foreign powers and when the labor content is harvested for the people of China. China has delivered a message; it is doing the Colonial thing that Europe did when they got out of their baby boots, except they are deploying friendly capital as their intruding tool and not warring capital like the CIA of the time. Who will stop this wave of power and demand which could take ten to twenty years to saturate? Many, but nobody is willing to power up this vehicle.14.Structures of Investment The concept has been challenged in the difference between emerging markets and first world economies. The type investor we encounter in the first world is commonly known as Hedge Funds and these funds are mostly generated by Pension funds and other base players who have huge deposits which makes it difficult to invest small portions. Developing Nations are either bouncing their capital ball into the playing field, like China and India does, or they rely on larger developed countries to secure funding. There are many types of funds, even from big banks like JP Morgan, Bank of America, Bonds, etc. Administering these funds become so cumbersome that the fund managers decided to split their risks by finding administrators which we could call Investment Bankers, Venture Capitalists, Angels, etc. to manage smaller sections of the pools of
  17. 17. funds. There are many of these pools and they expect a reasonable return on Capital of between two and four percent growth after tax. The fund managers who then manage funds sometimes take exorbitant interest, but increase their risks. In the field of investment we know that they proportionate their package to have elements of small risk for smaller returns and bigger risk for much better returns. Because they take the risk the difference in income is for their own pocket. There are also wealthy people who manage to do solitary investments but they are few and they prefer to either speculate the Forex markets or buy into big corporations where they find stability, like Sony, Samsung, JP Morgan, Sacks or Nike, etc. In the last Decade the success of these investment bankers have deteriorated significantly. News about disastrous decline in pricing, like Facebook with JP Morgan, scaled the position in market security to a serious negative gradient. This global banking pool has now reached the stage where they are between the rock and the hard place. On the one hand they have billions to invest, on the other; they are finding it more difficult to find profit bearing environments. It is therefore a very good time to find a serious investor who will look to invest at par plus two percent, rather than having the money in a fund where it is not working at all. The Pension funds can only keep their fund managing profiles stable if they have income on their capital. They will take risks in this climate and are now in favor of smaller interest income or ROI. A negative issue which I found in the industry is the packaging of the applications for funding. The packaging is poor because the applicants are almost never adequately trained to do it. They are forever short on cash because they manage their spread incorrectly. Their default administration skills are never up to scratch but at the time they are finding the need for a partner or investors; they seldom wish to pay for the services of a skilled professional like myself. The packaging of the application and the prescription actuated due diligence always have short comings, because there are very few properly trained incumbent advisers in the field.15.Summative Assessment There is no doubt that the mining industry has challenges. There is also no doubt that these challenges can be overcome. To find a harmonious alignment of the spindle which effectively incurs the auguring affect in the centrifuge of Capex structures we have to find balance of the incurring elemental device. Politics, religious extremity, inequality in suspension, focused view of state and equitable social activities/responsibilities are the bases for fluid motion in the equilibrium of the bearing in mining and other industry. There are many mining opportunities Globally and there is an oversupply of mining contractors, mine managers, Geophysicists, Geologists, Accountants, etc, worldwide. If we can bring the needs analysis of the applicant to the level of professional delivery in question, we will surface with a product possibility that investment bankers and applicants who needs capital exchange, can lever their profit under an umbrella of sustainability.
  18. 18. Heinrich Scheffer