All going to pot

THE growing exoticism of the mining sector is exposing another skills shortage – in investor knowledge. Robin Bromby tries to fill in some of the gaps.

Over the past decade, we have seen an explosion of skills and knowledge within the mining sector. Once it was all about gold, base metals or iron ore. There were a few exotic stories around, but the Australian mining scene was basically meat and potatoes.
Not only has the mining sector become international over the past 20 years, we have mining executives who can hold their own around the world when it comes to uranium, rare earths, tungsten, zircon, molybdenum and so on. And now, of course, potash and phosphate.
The great gap of knowledge comes at the next level down – the investors.
Those who buy and sell shares can read the “investor presentations” that exploration and mining companies work up for brokers and fund managers and others who already have (one hopes) considerable knowledge about the specific fields in which those companies operate.
There are, too, some very well informed retail investors. But, I suspect, there are also some who only have a grasp of the rudiments.
You get a sense of this from share price movements.
Just mention “heavy rare earths” and that particular share is off to the races. Lithium, too. Of course, we saw it most acutely a few years back with uranium. Suddenly every gold explorer or base metals explorer found some indicators on their ground for uranium, and in the punters went.
So few of them realised that uranium is found widely but that is a lot different from finding it in economic quantities. Ditto rare earths and even manganese.
Some companies have taken the time to include on their websites an information section on the particular commodity they deal in. Lynas Corp, for example, has a large section explaining all about rare earths.
This is something that all companies should consider. They should have it done by someone who is not in the inner circle but who comes to the subject fresh, will ask the basic questions – and answer them.
This thought came to me when I stumbled over an article written by Fred S. Mohme, a geologist at the University of Illinois in 1929.
I have written a number of articles about potash and the growing demand for fertilisers. We also have a nascent potash sector with a number of companies seeking or developing potash projects.
This is a shiny new investment story, and we are all excited about it.
It may be new for Australia and Australian investors, but it is a pretty old story for the Canadians (who produce 62% of the world’s output) and even older for the Europeans.
Mohme, explaining the European potash industry to his readers in 1929, reminded them that Germany had begun producing potash 70 years before that. It wanted the product to make fertilisers to help feed its growing population. Incidentally that is the same rationale as present, except this time it is about feeding the world.
Eighty-five years ago, Germany and France between them supplied 95% of the world’s potash, with the rest coming from the US and Poland. Germany was the biggest player and, like Canada, its potash was at depth – between 365 metres and 1000m in Germany’s case.
The Germans kept the potash industry on a tight rein. Every producer had to belong the potash syndicate, which had sole selling rights and could order the closing of any mine it deemed unprofitable.
Interestingly, in 1929, the world’s known potash resources were concentrated in Germany and France’s Alsace region, with the next biggest deposits in Nebraska and Abyssinia. Ethiopia, as it is known these days, is about to emerge as a large potash producer with Canada’s Allana Potash gearing up to develop a very large deposit.
The first big changes came in the 1950s when the US and the then USSR stepped up exploration to break the European cartel. Today Russia is the second largest producer after Canada.
To my shame, considering all that I have written about potash, I was unaware of all this back story.
So here is the message to mining companies: don’t assume investors know much about your commodity.
Most of you spend a great deal of time getting up Powerpoint presentations for the big end of town.
Think about using your website to educate your smaller investors, giving them an understanding both of the attributes of your commodity and your project, but also some deeper understanding of the history. The payoff should be that more investors will stick with you for the long haul.
This article first appeared in the October 2010 edition of Australia's Mining Monthly magazine

China Mining equipment CO.,Ltd is a professional manufacturer of mining crusher equipment and industrial grinding mill in China.
Mian Site: http://www.ucrushers.com

small crusher industrial crusher ore crusher feldspar crusher Aluminum ore crusher stone crushing plant mineral crusher concrete crushing plant sand making plant chrome crusher Mobile crusher Symons cone crusher