November 2014

President's notes

Mining: it’s a tough business

By Sean Waller

Sean_WallerMineral deposits are rare occurrences that are extremely difficult to find. Once discovered, a mineral deposit has at best a one in 1,000 chance of being developed commercially.

Mine development is an intensive undertaking, and the road to production is long and challenging. More often than not, mineral deposits are located in remote areas that require development of extensive services including road access, site preparation, and power and water supplies. The technology to extract the ore and recover the valuable minerals is complex, and the environmental design and operation must meet stringent requirements. None of this comes cheaply; large projects routinely cost several billion dollars.

Add to this the extended period of time from discovery to return of capital and funding for construction can be difficult to obtain. Once in production, mine operators have no control over the prices of their products and long-term revenue forecasts can be rough estimates at best. There are significant environmental and social impacts, which commonly incur public opposition to development. These two aspects alone often command the most-intensive efforts during the development of a mining project. Mining companies are often susceptible to the political winds of the day. In many countries, governments and citizens consider natural resources as property of the state, and as a result tax rates may be higher than other industries and prone to increases on short notice.

This has been my experience over the last 30 years and, I do not think I am alone when I say this is what makes mining an extremely challenging yet very interesting and rewarding career. It has certainly kept me fully engaged all this time. Our industry requires highly skilled people in a wide range of disciplines. It is essential that our universities provide the educational programs and our industry supplies the opportunities to make mining an attractive career choice. The future of mining depends on it!

In September of this year we were saddened to learn that Rick Hutson had passed away unexpectedly. Rick was a dedicated member of the CIM Council who, along with his other duties, took a very special interest in working with students entering our industry. On behalf of all of us here at CIM I pass on our sincere and heartfelt condolences to Rick’s family.

Sean Waller
CIM President

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