Frontier Locations: Know What You’re Getting Into | Australian Markets
Frontier areas: weighing up the risk versus reward. Have a firm understanding of what you’re moving into.
Mining will be harmful.
But it may also be catastrophic for the native surroundings if it isn’t executed proper.
That’s what one of the world’s most important copper areas is discovering proper now.
In February, a Chinese-owned firm within the coronary heart of Zambia’s copper belt did not diagnose a looming risk at its tailings dam close to Kitwe.
A spot I visited now and again back in my exploration geology days in Zambia.
According to current sources, at the least 1.5 million tonnes of toxic waste escaped a failed tailings reservoir on the Chinese-owned Sino-Metals operation.
Over the previous couple of months, this tailings waste has flowed into native waterways, killing fish and contaminating ingesting water.
You can see the size of the impression beneath:
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Source: AP |
The mining accident has made worldwide headlines. But to this point, not a lot has been executed to handle the issue.
The US Embassy in Zambia escalated its concern in regards to the scale of this catastrophe final week, ordering the instant withdrawal of its officers from the realm.
The US Ambassador to Zambia stated its own investigations pointed to widespread contamination that included poisonous substances like arsenic, cyanide, and uranium.
And believes the Zambian authorities hasn’t totally disclosed the extent of this catastrophe.
Mining Memo’s Take
There’s no scarcity of mining managers and shareholders grumbling about Australia’s strict environmental legal guidelines.
‘Mining permitting delays are holding back the industry’ is the common catch-cry when provide points begin to floor.
But I don’t find out about you, however I’d hate to see what occurred in Zambia happen in Australia.
This accident serves as a humble reminder to buyers why Australia has strict legal guidelines in place.
Just take into consideration the choice?
What would occur to the mining industry right here if a related tailings catastrophe occurred?
In phrases of Zambia, I count on there’ll be main group pushback towards any future mining developments after this.
Agricultural land throughout this area will stay unviable for many years, and streams will likely be poisonous for years. Zambians dwelling right here have misplaced their livelihood and food source.
Ultimately, the Chinese-owned miner may lose its mining rights, because it ought to.
But take into consideration the problem that awaits some other company that wishes to advance a project on this half of the world? A essential copper-producing area.
This catastrophe may probably impression quite a few ASX-listed explorers working right here.
The mining disaster in Zambia is a lesson in why allowing issues.
Ironically, I feel it really helps buyers and the broader sector… Without sufficient safeguards, that is what occurs.
And it’s why Australia stays a selection vacation spot for useful resource buyers.
So, Should You Avoid Frontier Locations?
Full disclosure: I’ve really useful two mining stocks primarily based in Africa for my paid investment advisory.
But that comes with additional due diligence.
If you’re going into less-regulated areas, you need to know what you’re moving into.
Frontier areas can offer benefits, like West Africa, one of the final areas the place mineable gold nonetheless exists close to floor.
In phrases of exploration potential, areas on this half of the world look more just like the WA Eastern Goldfields from 100 years in the past…Underexplored!
It all comes down to weighing the extra dangers towards the potential upside.
I’ve labored in Africa and perceive some of the pitfalls to keep away from. However, that doesn’t remove the risk fully.
For essentially the most half, Australia and North America stay our focus for core long-term positions.
If that pursuits you, yow will discover out more right here.
Until subsequent time,
Regards,
James Cooper,
Editor, Mining: Phase One and Diggers and Drillers
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All advice is normal advice and has not taken under consideration your personal circumstances.
Please search impartial financial advice concerning your own scenario, or if doubtful in regards to the suitability of an investment.
James Cooper has been a working geologist in mines throughout Australia, Canada, and Africa for the reason that early 2000s. He’s led the operations of tiny explorers by to very large producer outfits. He’s seen booms and busts firsthand and he additionally understands the cyclical nature of particular person commodities. For instance, James was proper there when Barrick Gold launched an huge $7.5 billion takeover bid for Equinox. That was the height of the final cycle.
With his background as a geo and finance skilled, he brings a distinctive insight and expertise to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One.
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