Some large coal and iron mining operations, sustained by multiple deposits, approach the kind of stability that promotes a growing local economy, but even they are largely dependent on global market conditions that can fluctuate wildly.
State-owned Solid
Energy became insolvent after their debts climbed to $400 million while
coal prices dropped to half the 2011 price levels. Now, economists are warning of a slowdown in Chinese
growth and, as the saying goes – “When China sneezes – Australia catches a
cold.” So, with mining to the front and centre of the Far North Mayor's agenda as well as that of several Iwi Chairs', the questions need to be
asked: “Why mining?” “Why here?” and “Why
now?”
The answers lie with international banking, massive central bank money printing, and the inflow of offshore money making its way to New Zealand. Investors refer to this as the ‘carry trade’. Simply put, primary banks borrow money at near zero interest rates to invest in anything that provides a yield. Likened to ‘picking up pennies in front of a steam roller’, this is the reason real estate prices in Auckland are raising so fast. It’s also the reason why living costs continue to outstrip our incomes, and it’s the major force driving mining interests here.
Central and local governments encourage this. The mayor initiates an airborne sweep of Northland to identify geological areas of interest. Syndicates are then formed to purchase prospecting and mining licenses from the Crown. Junior partners are brought on board late in the game to help absorb the financial risk, provide the muscle needed to get resource consents, and offset potential protest and political disturbances.
Investors have long considered junior mining stocks to be a gamble in which fly by night resource cowboys promise jobs and huge returns. They work on a seven-year-boom-bust model that sees them long gone when the enterprise implodes, leaving investors and junior partners holding the bag. Their game is nothing more than a legal con. But to be effective, these ‘con-men’ must first gain your confidence.
The real artists among them are well into the middle stages of the seven year cycle. Their geological surveys are done; they got you to pay for them. Their syndicates are set up; the Crown already made its 2012 / 2013 block offers to them. All that remains is to get the public support of Iwi leaders; Simon Bridges (Minister of Energy and Resources) meets some of those in Kaikohe on 13th August 2013.
Industries like mining operate in secret, so when meetings get to the public stage, you can be assured that the big decisions have already been made and the selling job is about to begin.
And by the way, nominations for the Crown’s 2014 block offer are now open.
The answers lie with international banking, massive central bank money printing, and the inflow of offshore money making its way to New Zealand. Investors refer to this as the ‘carry trade’. Simply put, primary banks borrow money at near zero interest rates to invest in anything that provides a yield. Likened to ‘picking up pennies in front of a steam roller’, this is the reason real estate prices in Auckland are raising so fast. It’s also the reason why living costs continue to outstrip our incomes, and it’s the major force driving mining interests here.
Central and local governments encourage this. The mayor initiates an airborne sweep of Northland to identify geological areas of interest. Syndicates are then formed to purchase prospecting and mining licenses from the Crown. Junior partners are brought on board late in the game to help absorb the financial risk, provide the muscle needed to get resource consents, and offset potential protest and political disturbances.
Investors have long considered junior mining stocks to be a gamble in which fly by night resource cowboys promise jobs and huge returns. They work on a seven-year-boom-bust model that sees them long gone when the enterprise implodes, leaving investors and junior partners holding the bag. Their game is nothing more than a legal con. But to be effective, these ‘con-men’ must first gain your confidence.
The real artists among them are well into the middle stages of the seven year cycle. Their geological surveys are done; they got you to pay for them. Their syndicates are set up; the Crown already made its 2012 / 2013 block offers to them. All that remains is to get the public support of Iwi leaders; Simon Bridges (Minister of Energy and Resources) meets some of those in Kaikohe on 13th August 2013.
Industries like mining operate in secret, so when meetings get to the public stage, you can be assured that the big decisions have already been made and the selling job is about to begin.
And by the way, nominations for the Crown’s 2014 block offer are now open.
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