208 (28.02.19)


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Letters

Kindly provided by our well-travelled readers around the world

Newmont: Profitable

Your piece on Newmont's underground mines misses the mark (“Newmont's Gold Mine Giveaway). As the years pass, more of their production is coming from underground operations: half their mines at Carlin are underground and Tanami generates over $500m. They have also just invested $138m in an underground expansion in Ghana. It is one of Newmont's core competencies. As to managing 19 sites on different timezones, Newmont has built three new operations and pulled-off seven expansions in five years. It's a company with stable, profitable production, which none of the other producers have demonstrated. California, US

Sam Walsh

Good to see you put the record straight on Sam Walsh's legacy at Rio Tinto (“Walsh: 2020 Vision). His de-bottlenecking in the Pilbara generated billions of dollars of wealth for both investors and Australia, and has driven Rio's earnings for 15 years. Since his appointment as head of iron ore in 2004, Rio has produced more than it did in the prior four decades.
Revealing that your article called out Fairfax and Goldman Sachs for incorrectly criticising his strategy, though you omitted to mention Global Mining Observer's own comment from the time, calling him “short-sighted.” With 16 mines, 4 ports and 4 power stations, Rio's cumulative gains in its most profitable division show the opposite, and always have. Australia

Doughnuts

Thank you for the article on securitisation and streaming (Banks Eye $230bn of Mining Deals). Streams, in our opinion, are steadily replacing debt.
For clarity, I have converted your figures into doughnut equivalent. After a decade of growth, the streaming sector now generates enough revenue to buy 461 doughnuts for every professional in the mining industry, including those employed underground. Dividends generated by the largest streaming companies could buy everyone in New York a premium doughnut, almost every day, for most of the year. Hopefully that demonstrates the profitability of what still remains quite a new financing model. London, UK

W.I.N.A.

I read with some interest your comment on Glencore's grain division (“Glasenberg's Pasta Business). Having spoken to insiders your point on instant noodles and the idea that sales are inversely correlated to China's copper imports, is, to quote, “complete nonsense.”
Or is it? I checked with The World Instant Noodle Association (W.I.N.A.), which outlines the figures year-by-year, and clearly the pattern is there. When China grows, instant noodles decline. Arguably it gives a better reading than PMI and is certainly updated quicker than GDP.
W.I.N.A.'s recent “Osaka Declaration” is also worth reading in detail, a weighty document. London, UK

Inside Fort Knox

Looking at your piece on the World Gold Council (“Inside the World Gold Council), as a mining company originally from India, I wanted to share our experience. We hate gold. We just don't do gold at all. It's a financial asset, it's not a mining asset, it's an option. Go to copper people and they are talking about the price of acid. Go to iron ore people and they are talking about the price of truck tyres. Go to gold people and they are talking about how Fort Knox was abducted by the Martians. It's a different game. London, UK

Birdwatching

I'm enjoying the series on China (“Every Day in China), though you've made an obvious error on birdwatching (6th-Feb). It’s unlikely the US Navy would really get a chance to spot the Yunnan Nuthatch. I had to venture 1,300km inland.
It could interest you to look further at overlaps between birdwatching and the resources industry. Colombia, Peru, Brazil, Indonesia, Ecuador, China, Venezuela and the Democratic Republic of Congo (countries with strong bird populations) also have plenty of promise as geological frontiers. New York, US

The Deficit Hoax

You mention in your article on copper (“How Chile Trounces China at Trade) that the USA has “a painfully large deficit of $365bn in 2017” with China. There is nothing painful about the largely invented trade deficit number. Another name for the deficit is the current account surplus, which is beneficial to the deficit country, gaining much inward investment.
The deficit means the deficit country has better terms of trade: taken to an extreme it would mean selling no exports in return for all the imports desired. The more a country can afford to import, the better it is doing in the long term. If other countries will sell it their goods, as well as invest in the importing country, you have the best situation. This is much as the US has found itself for the last 40 or 50 years or so, long enough to prove the point? The deficit hoax is just another in a long line of errors made by governments. Colorado, US


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