Why? You wont believe the reason. Read on;
An Introduction to Mining Investment – Understanding the Risks
Part 2: Information Change Level Course Map Help
Information … | Experts … | Politicians and Spectacle … | Global Warming … | Sources … | Review #2 …
Investment Rule: Global Warming
Session Headings: Investment Rule 2.5
——————————————————————————–
Investment Rule 2.5
Do not worry about global warming affecting mining investing.
You do not have to read the paper, Climate Change Risk and Impact Assessment for Global Diversified Mining Group, for I summarize it below. The paper deals with the potential impact of global warming on mining. You can probably access the paper on the SME site OneMine. I note the paper here so that we can quickly dispense with the issue of global warming as a risk factor in mining investing.
The paper describes “a project undertaken for a multinational mining company to examine the physical risks from climate change across its international business operations. The study addresses 163 components of the business including operating sites (mines, smelters, and refineries), key transportation routes (road and rail) and port links.” It almost sounds like Rio Tinto, although the paper does not tells us which mining company commissioned the study.
The conclusions of this study:
“Examples of key risks identified include: (1) Flooding of key transportation networks; (2) Loss of glacial melt water in South America. and (3) Loss of permafrost. A considerable proportion of the risk was found to be borne by the transportation networks and ports… as they generally present much larger targets for extreme weather events than individual facilities.”
Ekati and Diavik lose their ice roads, Antamina runs out of water, the rail lines in Australia get washed out by flash floods, the ports need to raise their piers, and those mining-impacted glaciers that everybody is fighting about in South America simply disappear.
With uncanny prescience, the report notes these risks to mining in Australia resulting from global warming:
“Greater incidence of water stress; increased risk of wildfires; increased incidence of extreme events, i.e., hurricane, tornado; greater incidence of disease; increased risk of flash floods.”
What we do not learn from the paper is what the mining group will do with this information. Maybe their consultants will have to design for longer recurrence interval floods, provide more freeboard, go for thickened paste tailings, drill deeper into groundwater aquifers, and find a new way to get equipment to diamond mines in the far north of Canada.
Somehow these challenges seem very minor and trivial by comparison with the immediate issues of layoffs, no credit, takeover by the Chinese, and heavy snow blanketing London and Vancouver. I am sure that miners will find ways to cope with the small problems imposed by global warming, for they seem to be far less challenging than the day-to-day challenges miners deal with successfully all the time.
Thus stands my conclusion that global warming is highly unlikely to affect the value of any of the mining shares you or I are likely to buy in the short to medium time frame.
————————————-
So there we have it. Not too worry about global warming as it wont effect their short-term profits. Wow.
Sources of Information; BLM Course-work..
An Introduction to Mining Investment – Understanding the Risks – 15 October 2009;
http://premium.infomine.com/edumine/xutility/html/template.htm?category=xcourse&course=xinv101&session=doc0203.xml&level=text&lang=EN
