Interesting article, Have a look!
Tuesday, March 07, 2000
Solomon, Smith and the mining lottery
Barry Posner
National Post
Re: Help Support the Mining Lottery, Feb. 22.
Lawrence Solomon's disingenuousness is broad as it is deep, as evinced by his opening salvo: "much of the worldwide mining industry is in financial difficulty ..." What he paints as the seemingly monolithic "mining industry" is composed of two separate and rather disparate factions: prospectors and operators, otherwise known as juniors and seniors. It is currently (and, it seems, eternally) true that many prospecting and exploration companies are barely scratching out an existence, but the seniors are, by and large, as profitable and stable as any industry that is slave to commodity prices can be. Speaking of prospectors in the same breath as mine operators is akin to lumping small cattle farmers and MacDonald's in the same industry; both have something to do with beef, but little else in common.
Mr. Solomon is correct when he observes that some (although far from all) juniors are established by shysters for the singular purpose of separating fools and their money. However, this phenomenon has no connection whatsoever to the seniors, whose primary goal is, in fact, to make a profit by separating ore from rock.
The primary theme of the lament, it appears, is the privileged position of miners at the public teat. The author cites no comparative statistics to show that the mining industry is a greater beneficiary of governmental largesse than any other, but even if one were to accept his ramblings prima facie, it is apparent that the blame lies at the foot of the governors. Surely Mr. Solomon cannot blame miners for simply being successful at wheedling concessions and favours out of our politicians? That is an activity every interest group, either social or commercial, partakes in. Mining firms only strive to do what every firm, in every line of business, is obliged by law to do: maximize shareholder value. It's the ministers' (and inevitably, the public's) responsibility to keep the keys to the treasury out of reach, and maintain the goals of society en masse as their primary focus.
Mankind has long found itself in need of coal, oil, iron ore, copper, gold etc., and as long as it does, firms and individuals will provide those commodities via the only method available: mining. Simply put, as long as mankind exists, so will mining.
(Please note: the aforementioned views are my own, and are in no way reflective of my employer.)
Barry Posner, slurry pipeline engineer, Rescan Environmental Services, Vancouver.
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Solomon, Smith and the mining lottery
H. Douglas Hume
National Post
The main problem with Mr. Solomon's tirade is that he has been somewhat cavalier with his facts and missed the entire point of Adam Smith's book, The Wealth of Nations. For instance, while he suggests mining properties could be occupied without leave or compensation for mining purposes in Peru, he deliberately omits Smith's comment that "a very small acknowledgement must be paid [to owner] upon working it."
Most of Mr. Solomon's quotations are highly selectively used and are from the earlier parts of the book which deal substantially with the various economic components that describe the diverse workings of a nation's productive resources. If he had fast-forwarded to page 459, he may have realized where Smith was heading.
In his Chapter Five, Smith defines the four different means of wealth creation and capital investment as follows: "In the first way are employed the capitals of all those who undertake the improvement or cultivation of lands, mines or fisheries; in the second, those of all master manufacturers; in the third, those of all wholesale merchants; and in the fourth, those of all retailers."
Smith goes on to say, "Each of those four methods of employing a capital is essentially necessary either in the existence or extension of the other three, or to the general convenience of the society. Unless a capital was employed in furnishing rude produce [raw materials] to a certain degree of abundance, neither manufacturers nor trade of any kind could exist."
In the succeeding 224 years, classic economists have reconfirmed Adam Smith's assertion that society can progress only through employment of its capital resources in productive and profit-making enterprises.
With this second display of "irrational exuberance," Mr. Solomon has dispensed some limited advice. Explorers and miners welcome and need the support they receive from society and its legislators, who understand and appreciate the benefits to our affluent society.
H. Douglas Hume, past president, the Prospectors and Developers Association of Canada.
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Solomon, Smith and the mining lottery
Tony Andrews
National Post
In your great wisdom you have made the ridiculous assertion that we are "a rogue industry that doesn't pay its share of taxes." The Canadian tax system is highly complex and defies debate by neophytes like you and me in these few lines. But a simple example will suffice to make my point. Diavik Resources, a soon-to-be diamond producer in the Northwest Territories, recently calculated what its resource income will be and how it will be distributed. Guess who gets the biggest chunk? A whopping 44% will be paid in taxes to government agencies at the federal, territorial and municipal levels, not only in the form of corporate taxes, but also as a plethora of non-profit-based taxes, levies and fees. No doubt about it -- we are definitely paying our tax freight and then some!
As "Canada's vanishingly small mining industry," we produce no less than 58 commodities worth $50-billion annually, contribute 15% of the country's export revenues and 26% of its trade surplus, directly employ 370,000 Canadians, many of whom live in our northern and rural regions, and our products constitute 56% of all rail freight revenue and 69% of all port volume. On top of all this, Canada's mining industry is considered a global leader! Now there is a fact worth remembering: Canada actually has a world-leading industry!
Tony Andrews, executive director, Prospectors and Developers |
