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A long history of weak political will towards the mining sector is the key reason why the mineral sector is so small relative to the opportunities available, says John Kidd of McDouall Stuart. While the sector is highly productive in terms of the use of land, labour and capital, its current level of activity is “only a fraction of its potential,” Kidd says. Substantial and continuing investment in exploration and development is needed to allow the sector to make a greater contribution to reducing our wealth gap as compared with Australia. Political uncertainties have meant explorers “will continue to operate at a competitive disadvantage to many of their counterparts overseas” until they’re sorted out, and a central government leadership role is “fundamental” to that. In a separate paper presented at the Aus-IMM conference, Warren Head, the principal of financial services firm Head Consultancy, told the conference that commodity-based stocks will be the ones to lead the global economy out of recession, with the emphasis being on equity raising as an alternative to debt. Head contrasted the 30 percent fall in equity values since 2007 with the rising investment demands for gold, but noted that as the global credit crisis retreats the succeeding inflation crisis, driven in large part by government fiscal stimuli, should drive prices for other commodity minerals higher. “The gold price is now underpinned by an expectation of inflation as a consequence of the bailout packages,” which should greatly improve the market climate for issuers of minerals equities, he says.
Q&M Vol.6 No.5 October-November 2009 All articles on this website are copyright to Contrafed Publishing Co. Ltd. |