Well, stuff like this would deter investment:
Although we are definitely not a mining blog, preferring instead to explore the longer-term implications of using semi-variance as your risk measurement, the fact is that the UNocrats and other powers-that-be want to halt mining before we have a replacement for the internal combustion engine:Flashback November 2021—"COP26: U.N. Secretary-General Calls For An End To Mining—“we face a stark choice – either we stop it or it stops us”"That's exactly what they did with electricity production, shutting down fossil fuels and halting nuclear, before there was a replacement in place for the production lost or forsworn. Leading to blackouts in California and the de-industrialization of Germany. And that is crazy. So we look for ways to circumvent the stated aim of the self-annointed....
And the whole "once bitten twice shy" thing in the headline story from The Economist, February 18:
The energy transition requires vast quantities of metals. But miners are reluctant to invest
Mining companies have spent much of the past decade in investors’ bad books. Throughout the 2000s and early 2010s the industry, betting that the surge in commodity prices brought on by China’s economic rise would persist, splurged on investments and racked up hefty debts in the process. At the height of the frenzy in 2013 the combined capital expenditure of the world’s 40 largest mining firms by market value reached $130bn, according to pwc, an advisory firm, nearly four-fifths of their earnings before interest, tax, depreciation and amortisation (EBITDA). That spending spree left mining bosses red-faced as economic growth in China slowed, causing commodity prices—and the industry’s profits—to plummet.
Miners spent the years that followed cleaning up the mess. In 2015 more than $50bn-worth of assets were written down. BHP, the world’s most valuable mining firm, spun off its least-loved sites to raise money and simplify its sprawling business. Others followed suit. Cash was used to pay off debts instead of financing new projects.
Since then, profits and commodity prices have recovered. But investment has not. In 2022 the 40 largest miners together invested $75bn, equivalent to a mere quarter of EBITDA (see chart 1). BHP, which on February 20th reports its results for the second half of 2023, invested some $7bn last year, analysts reckon—a third as much as it spent in 2013.
That is a problem. Decarbonising the global economy will require 6.5bn tonnes of metal between now and 2050, according to the Energy Transitions Commission, a think-tank. Although much attention has been paid to the lithium and nickel needed for batteries, that is only one part of the picture. Fully 170m tonnes a year of steel, comprising mostly iron ore, will be needed for everything from wind turbines to electric vehicles (EVs)—more than ten times current global production. Vast amounts of copper will be required to expand and upgrade electricity grids. Demand for aluminium, cobalt, graphite and platinum will rise substantially, too. That will require a lot of blasting and drilling, which must begin now. Why isn’t it happening?
One reason miners are reluctant to loosen the purse-strings is that they are still trying to win back the confidence of investors. The value of the MSCI world metals and mining index, which tracks share prices in the industry, has risen by about 10% in the past decade, compared with a doubling in the world’s stockmarkets as a whole (see chart 2). Returns on new projects in the industry are currently around 7%. That is hard to sell to investors when the yield on investment-grade corporate bonds in America is above 5%....
....MUCH MORE
