Heightened Consciousness, Mechanization & The Future of Precious Metals Mining
When measuring the likelihood for specific direction in the modern precious metals secular bull market, most analysts point towards destructive government printing and hyperinflation as key reasons to anticipate gains. Indeed, hyperinflation has not come to fruition, yet an incremental devaluation in the value of fiat currency across the board (because an abundance thereof) has led to an increase in the price of goods that can not be magicked by the MK Ultra servant running the Federal Reserve at any given time. But, there are sporadic and decentralized human actions at the grassroots level sowing the seeds of tomorrow’s precious metals paradigm right alongside bloated bureaucrats. Namely, this vector has manifested itself in the form of strikes, which have hampered precious metals mining operations on multiple continents, although South African skirmishes have stolen the spotlight.
In past centuries, the skirmishes might have led to prolonged movements across sectors of the economy, leading to a new paradigm of the “social contract.” But, instead, the plebes do not even receive platitudes about a “responsible” or “moral” democracy, but, instead, mechanization. For the near term, the strikes have given the precious metals bull market – especially in platinum and palladium – a solid footing with which price wise to move into the new year. In the medium term, police state antics will ensure the mines are productive. Un-work is punishable by death.
The new wages demanded by the workers would drive up the bottom line of miner’s, thus driving up the cost of production of the metals, thus driving up price.
As Bloomberg reports:
Employees at mines in Zambia, Africa’s biggest copper producer, are demanding pay increases of as much as 50 percent for 2013, the nation’s biggest mineworkers’ union said.
Talks with companies began in October and are set to conclude by the end of the year, when the current wage agreement expires, Mineworkers Union of Zambia President Chishimba Nkole said in a Nov. 23 interview. The talks affect Glencore International Plc (GLEN), which owns the Mopani copper mine, Vedanta Resources Plc (VED)’s Konkola Copper Mines unit, and Jinchuan Group’s (2362) Chibuluma mine, he said.
While pay demands at most operations are for increases of less than 50 percent, “we feel there is the justification in some cases, where the wages are very low,” for raises of that percentage, Nkole said by mobile phone en route to Kitwe, about 360 kilometers (224 miles) north of Lusaka, the capital.
Zambia produced 668,000 metric tons of copper last year, ranking it the world’s sixth-largest miner of the metal, according to the U.S. Geological Survey’s website. Output of cobalt was 6,600 tons, placing the southern African fifth in the world, it said.
Zambia’s economy will probably grow 7 percent next year and inflation won’t exceed 6 percent by the end of 2013, Finance Minister Alexander Chikwanda said Oct. 12.
First Quantum
Power supplier Copperbelt Energy Corp. (CEC) and China Nonferrous Metals Co.’s (8306)Luanshya mine are also involved, Nkole said. The talks don’t apply to First Quantum Minerals Ltd. (FM), where the Zambian Industrial Relations Court in September awarded workers a 13 percent increase this year and 12 percent in 2013, Nkole said. Frederick Bantubonse, the general manager of the Chamber of Mines of Zambia, declined to comment because his organization isn’t involved in the negotiations.
“It’s not anything, it’s the usual way we proceed,” Nkole said of the wage demands. Management will make an offer, and negotiations will follow, he said, declining to give reasons for the demands.
At the Chibuluma copper operation, about 370 kilometers north of Lusaka, workers proposed a 40 percent raise, the Zambian Post reported Nov. 20. Mine management later denied that, and Nkole said the union had demanded a 25 percent increase there. The wage bill accounts for 32 percent of the mine’s total cost of producing copper, the company said in an an advertisement published in the Zambia Daily Mail on Nov. 23.
Miners at Chibuluma, which Jinchuan bought through its $1.36 billion takeover of Metorex Ltd. last year, secured a 17 percent increase in March. Mopani awarded its employees the same percentage increase the previous month.
In South Africa, there have been at least 11 different corporations directly affected by the strikes, costing hundreds of thousands of ounces of, namely, platinum, but also gold. The nation recently was home to a record trade deficit in October due to the mining strikes. The gap widened to $2.4 billion US (21.2 rand).
“South Africa’s trade performance will remain weak in the coming months on the back of the unfavorable global and local environment,” Dennis Dykes, chief economist of Nedbank Group Ltd. in Johannesburg, said in a note. The nation’s account deficit has risen to 6%.
Africa’s largest economy depends upon foreign investment in stocks and bonds, inflows that have not been as dependable this year due to the turmoil. According to Johnson Matthey, the supply of platinum from the region was to fall by 12% to an eleven year low.
“At this point , the outlook of the South Africa supplies in 2013 is extremely uncertain but it is difficult to expect an increase in South African output of any great magnitude from the 4.25 million ounces we are forecasting for the year,” Johnson Matthey principal analyst Alison Cowley said.
Palladium is expected to be in worst shape because of the strikes, anticipated to shift to a 915,000 ounce deficit this year from a 1.26 million ounce surplus last year, according to Johnson Matthey. A 400,000 ounce platinum deficit is supposed to be the ultimate 2012 effect of the mining strikes.
The clashes have ended bitterly, with the entire mining industry now looking towards mechanization for the future. Why deal with “meddlesome outsiders?” Just push for mechanization. There will be a bubble then in that portion of the economy - technology that aids mining – and the miners will then be free to pursue their interests for pay. I know what you’re thinking: but, they’re from South Africa! It is different there. They can’t just get back onto their feet after losing work…
But,that’s where the presumption that the mining strikes are not part of a greater phenomenon is tested. With the world changing as wantonly as it is in this century, anything seems possible, and people are freer than ever to test the limits of their own personal existences. We’ve reached a point beyond working about the day-to-day, because the near-future is just too grim. Now is the day to seize the day and do the unimaginable through the power of free association and free markets.
In dystopian fiction, mechanization is usually boasted as a gray procession into the future. But, that is because the story that is told is that of the victors: a state-managed movement into a mechanized society, in which the parts of the economy which would otherwise thrive because of this revolution in time are not allowed to do so due to regulation.
Heightened consciousness and mechanization go hand-in-hand. Mechanization is a technique escaped into by a ruling class too frightened to take on the people. So, they use mechanization in order to impoverish the people (strip them of their jobs). But, this actually goes towards working against them by freeing their workers up to explore and become entrepreneurs in their own regards, the biggest fears of the ruling oligarchs.
