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18 Comments

  1. Rod – Welcome back! I missed your posts, but it’s good to hear you’re still digging into resource business stories. This story reminded me of one of the Thorium Energy Alliance Conference presentations. IIRC it was Joe Sestak (Joe Sestak – Governing, Logistics, Rare Earth Minerals & Thorium @ TEAC5 ) who said “Doing good is not a business plan.” Your work shows that claiming to do good can certainly derail business plans.

    The charts of commodity prices reminded me of Gail Tverberg’s analyses at her blog, Our Finite World, and specifically her post Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.). Specifically:

    What happens is that economic growth eventually runs into limits. Many people have assumed that these limits would be marked by high prices and excessive demand for goods. In my view, the issue is precisely the opposite one: Limits to growth are instead marked by low prices and inadequate demand.

    She’s built this into a complete thesis, and argues that one of the major problems is declining EROEI in our conventional fuels. We know what to do about that, of course, but Tverberg still doesn’t acknowledge nuclear fission, probably for a variety of reasons.

    I would hate to see us lose our civilization because the existing players are getting increasingly defensive of their ever-diminishing turf. But it’s very interesting to watch them do it, thanks to your research and insight.

    1. Your post reminded me of my reaction to something that was floating around the internet a couple years ago – someone wrote an anti-economic-growth article, based around the premise of, “Gee, what happens to the surface temperature of the earth if economic growth (and thus, energy consumption), were projected to grow at 3% per year” or something along those lines. The article was trying to argue that growth can’t be infinite. Well, no duh – growth can’t be infinite. The conclusion of the author of the article was that in a century the surface temperature of the earth would be so hot that it couldn’t sustain life, and that, if you ignored that, and kept economic growth going at the rate of 2 or 3% per year or whatever rate he used, in another century or two the temperature of the earth would be hotter than the sun.

      All of that is ridiculous of course – the natural limit to economic growth is when you reach the point where every person living on earth has their needs sufficiently met, at which point, we would expect the economy as a whole to reach, hopefully, some sort of equilibrium. But, with 1/2 the world’s population living in poverty, there’s still plenty of room for growth.

      1. @Jeff S

        Exponential growth curves bear no relationship whatsoever to any kind of reality. In every case I can think of, growth more closely resembles an ‘S’ curve because there are always some kind of feedback mechanisms that cause the rate to slow and then flatten out.

        Ehrlich and other neo-Mathusians were famous for doing the simple math of using a fixed exponent and showing how terrible things could get if that rate of growth continued. It is a meaningless proposition whose only utility is to spread FUD.

  2. I too missed your posts, but guessed that you were devoting your time to a book or family or some such. This is another interesting story demonstrating that the environmental NGOs do not have the interests of the general public at heart.

    The habitual penetration of the EPA by ENGOs is especially alarming, but not particularly surprising. We can hope that Tom Collier has the connections and knowledge and desire to pursue this and actually do something effective about it. It’s sad that if the people involved did not have strong political connections/experience, that there would probably be no hope at all.

    Rod, do you have any indication that Mr. Collier is aware of the shenanigans that went on in the state by state CO2 rule making? If not, you may wish to drop him a line. It can be helpful to establish a pattern of (mis) behaviour in cases like this.

    Most of the citizenry assumes that the ENGOs are acting in their best interests. In any story/situation, it seems that the vast majority of people, and all main-stream journalists, assume that ENGOs are acting to further the public interest, rather than looking for other more nefarious motivations.

    I have had little to no success at convincing people of this or even just getting them to question the ENGOs’ motivations. Anyone have any suggestions on the proper presentation to get this idea across without alientating people by too explicitly goring their sacred cow?

    Oh, sure there are some folks I talk to who leap straight to ENGOs being evil, but they paint the whole situation with a Tea Party sort of patina. They aren’t open to a more nuanced interpretation and specifically, they don’t get that the true evil behind the ENGOs are those big corporation those conservative folks are in love with.

  3. So Rio Tinto not only chose to no longer be a player in the project, but to give its stake, worth millions, to an opponent of the project? That seems perfectly normal.

    1. @Ross

      Are you being serious? Irony is often hard to express through the written word since it’s impossible to see body language or hear tone of voice.

      1. Sorry, thought the sarcasm was clear, one of the side effects of being an operator.

        1. It seemed pretty obvious to me. Maybe Rod’s time off-line has caused his e-sarcasm meter to be rusty.

          Good to have you back, Rod. I am looking forward to reading the (likely even more interesting and intriguing) tale that you have been working on. Also, I am very glad to know that you are putting in a concerted effort to improve telling stories like this in a manner that will avoid the instant dismissals from some folks who are way too quick to cry “conspiracy theorist”.

        2. I saw it as sarcasm, but it never hurts when using sarcasm (in this communications medium) to add a flag at the end of the comment such as “/ sarc off”, “end sarc”, or something like that.

  4. You deserve a break, however I was afraid that I had lost two of my favorate blogs in the space of a month.
    The weather channel bought the weather unground. Then on May 4, 2015 they shut down the “classic” weather underground. The classic version make it easy to research the recent climate history of just about any area. It’s another case of acting against the public interest for economic reasons.

  5. Rod,

    First, welcome back – been awhile since you published anything. 😉

    Next, I just have one question – if companies wanted to limit supply, why wouldn’t they retain their control over the project? Wouldn’t it make more sense to retain a controlling interest in this parcel of land, in order to make sure that it is not mined until prices are more favorable (for example, eventually their other mines must start to run low on resources, and won’t they want waiting resources ready to start digging?)

    1. @Jeff S

      There are several reasons why a company might prefer taking action that more permanently takes a potential asset out of play.

      1. If the asset is mineable and remains on the books of a competent mining company, investors and traders will count at least some of the resource base as material that can enter the market at some time and some price. That would certainly not keep a lid on spot prices, but it would tend to restrict the magnitude of any price increase in long term markets.

      2. Neither of the companies that withdrew from the project held a controlling interest. Rio Tinto, the company that very publicly provided $6.5 million to a dedicated opposition group, only held a 19% share.

      3. “Eventually” is a long time when it comes to resource companies. If a mining company already has sufficient mineable resources to last for a few decades, it has no real motive for finding and developing any more.

      4. Finally, mining companies know that minerals in the ground aren’t going anywhere. They can “give up” on a particular deposit and allow it to be taken out of the market by regulators. They know that if push comes to shove sometime in the distant future and the material is in high enough demand, they can work their way through the political actions required to enable the resource to be mined. While they are waiting, there are virtually no costs associated with allowing the material to stay where it has been for millions of years already.

      1. Rod,

        I suppose most of your points are good, but regarding #2, you wrote, “In September 2013, Anglo American gave up its 50% ownership in the property,”

        As the single largest shareholder, holding 50% of the company, Anglo American was certainly in a position to keep the deposit from being mined. They effectively controlled the company, even if they didn’t have a 50.001% ownership of the company. Between them, Anglo and Rio Tinto controlled 69% of the project.

        Regarding #4 – you seem to be contradicting your own point and arguing in favor of mine, which is that if the companies just held on to their positions in the project but mothballed it, then it costs them very little to keep the resource in the ground, under their control, and they can in the distant future, start mining it. The one thing they CAN’T do is ever start mining a resource ever again IF THEY DO NOT OWN IT. You talk about political actions – I agree, they can certainly restart any project in the future, but only if they own the rights to the resource.

        1. @Jeff S

          The total market capitalization for the entity that owns the resource is now under $50 million.

          It’s an easy takeover target for any of the major players.

  6. Rod,

    What you describe seems to be a clear case of ex parte communication that has materially damaged the remaining shareholder. Are there no attorneys in the US willing to sue the EPA and the environmental organizations responsible?

  7. “I don’t believe ideology is a significant motivating factor in government decisions and I’m pretty cynical about the motives that drive the decision makers at large, well-funded, pressure groups like the NRDC. Thirst for money and the power that it gives those who control it is a more common motive, even if it often takes a little more digging to identify it.”

    Yet the huge and obscene flow of money into our electoral process is an issue of “free speech”?

    I can’t really think of any powerful special interest groups that don’t collude with our politicians and our regulatory agencies in pursuit of legislation thay benefits whatever special interest you choose to discuss. NRA, religious groups, fossil fuel entities, the auto industry……on and on. Heck, AIPAC actually drafts the language of many Israel related bills and resolutions that land before Congress.

    Just because someone disdainfully rejects a premise as a “conspiracy theory” doesn’t mean an actual conspiracy doesn’t actually exist.

  8. The Pebble festivities are what the RICO statutes were designed to punish. Collusion between environmental lawyers, EPA officials, green groups has been rampant. Discovery so far has led to the requisite failure of the EPA to produce e-mails during discovery. They were somehow lost.

    Add one of the richest men in the state funding the opposition and multiple state and local ballot initiatives attacking the mine, and we have had a lot of fun up here for a while.

    The only good thing about the Pebble opposition is that it may put to rest once and for all the perennial salmon vs jobs argument used by greens up here since logging in the Tongass was shut down by Bill Clinton in the late 1990s.

    Total value of the find at Pebble is within an order of magnitude what has been pumped out of the Prudhoe Bay oil fields since 1970. Total number of new jobs is about the same as the total number of people who work for the State of Alaska. Interestingly enough, while large, this may not be the largest mineral find in Alaska. Most of that is on the southern flanks of the Brooks Range, locked up by Jimmy Carter in 1980. Cheers –

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