In reviewing our third year as a listed company, at a time when half the country’s population appears to have declared civil war on their fellow Australians, my normally buoyant optimism is somewhat tempered.
Australia has been grounded by striking pilots and striking teachers locking students from schools. Striking power workers are cutting off our electricity. All in a state that is becoming known for its high cost and unreliable power supplies.
Atlas Shrugged in 1989
It is reminiscent of Ayn Rand’s 1957 book Atlas Shrugged were she describes a society suffocated by the weight of government regulations. Greedy and lazy people discover it’s easier to distribute wealth than to create it. Eventually there is little wealth left to distribute.
Rather than working harder to create more wealth, bureaucrats establish an increasing number of regulations aimed at distributing the remaining wealth. These regulations repress all incentive to be productive. The few people interested in developing new methods of production are driven out of business. Fed up with regulations, they walk out on society. Atlas, who had created and carried the wealth of society, finally ‘shrugged’.
Rand’s scenario is not unlike the current situation in Australia. Our free-lunch mentality has created huge budget deficits. Government spending has made us one of the greatest debtor nations in the world. Nevertheless, while our elected officials look on, the appointed bureaucrats continue to establish regulations that stifle incentives for creativity and hard work.
Instead of exploring efficient mining and treatment methods, mining company executives are tied up elsewhere. We are spending more time researching reactive submissions to various government departments. We are in constant self-defence mode.
Increasingly, we find that transactions, joint venture documentation and implementation of production schedules consist of time-consuming reviews of legal advice. This is to determine alternatives where capital gains tax, stamp duty or other government-made impositions do not quite kill the project.
The daily practice of exploration and mining is becoming increasingly inefficient. Without a major revolt and some sign that the industry is getting up off its knees, it will become an endangered species.
Optimism and the mining industry
Only optimists persevere and succeed in the mining industry. So how do we remain optimistic? It is heartening to know that the spirit of free enterprise is not entirely lost in Australia. If we take positive action we will progress to a system which rewards endeavour. Until the last 15 years, this system was a hallmark of Australian society.
When Croesus was hit with the triple ‘whammy’ (falling gold price, rising A$ and rising cyanide/reagent costs) last November, we quickly amended our goal of increased gold production as there is little point in continuing unprofitable ventures.
Technically, our efforts have been extremely successful. Our challenge now is to transform these technical successes into longer term financial benefits, giving your company a very strong hold on the future.