On the 20th November, 2020, Mannkal was pleased to host the fast-growing “Mates for Mining” morning tea established in order to recognise those in the sector, especially those who are literally on the coal face. I spoke a few words of tribute as follows:
I often remind people that the industry of mining exploration and production is the most creative industry in the world. We often forget this. It is true because you start by going out-back where there is nothing.
The terrain is harsh and even the trees do not grow in areas like Laverton or the back of Newman. However, despite this, the mining industry combines human ingenuity, capital, and science to gather the necessary information and knowledge before taking a risk and drilling a hole.
Then, the odds are about one chance in 10,000 that you might strike something of interest. Consequently, it is high risk, and this is also often forgotten. When the bureaucrats, sitting behind their desks, look at mining studies they calculate that the value of the tenements increases with more expenditure. Now, this is true if it is a building project, a block of apartments, or an office block, but with mining – it is the opposite. Often, the more you spend, the more worthless it becomes, as you often find nothing.
Try and explain that to a bureaucrat – they do not get it. Try and explain to a bureaucrat that if they lowered the rate of tax they will collect more tax. How could that be? However, it works. Countries that lower their tax, raise more tax, and there are many examples of this.
The other thing I will mention today is that there are two different sets of decision making.
One set is the “business type of decision” making. The mining industry, particularly in Western Australia, is a classic example. If there is a risk and problems occur, such as the Coronavirus crisis, what is the first thing on your mind? It is to maintain your cash flow. That is the key to it all.
The “political type of decision”, on the other hand, is to absolutely ignore the importance of cash flow and make everyone feel good by paying them to do nothing. Honestly, there is no future in paying anyone to do nothing (even if you dress it up with fancy names like “JobKeeper” and “JobSeeker”). It is demeaning, it robs people of dignity, and it plugs them into something they find difficult to get off because they get so darned comfortable with it.
I can speak with experience of other examples of where it does not work to pay people to do nothing. In 1988 I visited Scotland, the old shipbuilding areas, and the land of my ancestors, where I found that the youth unemployment rate in that area was 38%. An appalling rate. I asked if it had been this rate for very long? They advised, “for about 50 years”. That is when the shipbuilding industry disappeared out of Scotland.
Then I asked what they were all waiting for? The answer was, with a straight face, “we are waiting for the shipbuilding industry to come back.”
Now, all those young people were still on government funding to make them feel better and yet the shipbuilding industry was not coming back as it went to Korea! (There were many reasons for it going to Korea and not going back to Scotland.)
So, this is a classic example of how the comfort-stuff of giving people something to do nothing just becomes permanent.
Thank you Tiggy (Rogers, Roy Hill) for reminding us of the importance of cash flow. Now, if we had not been mindful to get the cash flow right, particularly in Western Australia, could you imagine the accounts figures for Australia?
Could you imagine our national accounts if you deducted the input from the resources industry? We would be just another third-world country without the input from resources.
Thanks very much for creating the opportunity to just pause in our daily work, to celebrate what a wonderful industry mining is.
Thank you all for being here and thank you for being part of the productive sector.
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