One Hundred Percent of Nothing

Economics, FREEPOM, Premium POM

By JC Collins

The Association for Mineral Exploration British Columbia, AME BC, is holding its annual Round Up Conference in Vancouver this week.  One of the attendees is Rick Rule of Sprott Asset Management, who sat on  a discussion panel this morning for Aboriginal Engagement.

The topic was how to promote a responsible relationship between aboriginal groups and the mining industry. Each speaker presented their case as an obligation which the mining industry owes to the aboriginal companies.  In a session where everyone was glad-handing each other on ‘socialized” development and obligations, it was refreshing to see Rick Rule step to the podium and present the reality of the situation.

The focus of his short presentation was about understanding and promoting “opportunity” as opposed to the suggested entitlement loaded within the word “obligation”.  Rick Rule was very straight forward about his comments being confrontational and spoke of how there was a broader competition in the world for the investment capital which would be needed to grow the mining sector in British Columbia.

This competition speaks of the growing multilateral structure of the international financial system which we discuss here.  With a multilateral framework the opportunities in other regions of the world for a return on capital employed, such as investing in mining, are growing and creating a changing dynamic when it comes to how the industry sector interacts with indigenous groups around the world.

Rule also openly stated that aboriginal groups are confrontational with each other and this will also hamper constructive dialogue on opportunistic international investment into the regional mining industry.  He suggested that an attitude of confrontation and obligation could very well see the industry with less international investment.

“One hundred percent of nothing is still nothing” he stated.

Rick Rule was the de-facto multilateral representative taking part in the regional “pat each other on the back” session and brought the competitive realities of a changing world with him.

Whether globalization and a multilateral framework is agreeable to you or not, there is no denying the changing reality of the flow of capital into emerging economies and the inevitable adjustments to the balance of payments system which will come.

As we’ve discussed here many times, the micro regional policies of countries will have to align with the macroprudential policies of a growing multilateral framework which will demand competitiveness. The sovereignty which will have to be traded for such an alignment will force governments and indigenous groups to adjust their perspective from one of “obligation” to one of “opportunity”.

The world doesn’t need to be forced into change.  The business dynamics between international investors and sovereign entities will simply insinuate an environment of competitive opportunity.  – JC