Seven habits of a kick-ass minerals economy
- By: John P Sykes
Posted in: Blog, Commodities, Exploration, Media, Mineral Economics, Mineral Policy, Mining, Publications
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How do you build an economy based on mineral resources?
Allan Trench and I tried to answer this last week in our Strictly Boardroom column on MiningNewspremium.net. We came up with a seven-step framework:
- Identify the endowment, i.e. make a decent estimate of what the undiscovered mineral potential is.
- Make new discoveries, i.e. incentivise exploration so that more mineral discoveries are made, and some new mines can be built, thus growing the industry – a surer way to increase government revenues from the resources industry than heavier taxation, which shrinks the industry.
- Aim for deposit quality, because not only do the best mineral deposits contain most of the ore and most of the economic value, but also also pay most of the tax – marginal deposits pay little tax as they make little profit, operate at small scale, and often do not last long.
- Design and manage good mineral policy, i.e. striking a balance between a competitive business environment encouraging foreign investment and a fair redistribution of the proceeds of natural resource exploitation back to the people.
- Manage corporate conduct, i.e. help companies develop a social licence to operate.
- Manage government conduct, i.e. saving most of the resource revenues, investing slowly and carefully, reducing corruption, increasing transparency, working with other regional countries and encouraging the diversification beyond the mining sector.
- Factor in the market – new supply will only come on stream when it’s required, so think ahead and get the timing right.
The full article is entitled “Seven habits of a kick-ass minerals economy” and can be read by subscribers on MiningNewsPremium.net. Or contact me for a copy.
For keen followers of the Strictly Boardroom column, our book “Strictly (Mining) Boardroom Volume II: A Practitioners Guide for Next Generation Directors” was published last year and is available as a paperback or e-book from Major Street Publishing or Amazon. We’re pleased to say that the book received a very positive review in the AusIMM Bulletin.