It is said by Treasury and our GreenLabor Govt in their justification for extra taxes on the mining sector that minerals are non-renewable – and to be sure once you dig out a ton of mineral – nothing grows in its place.

But this GreenLabor view is very simplistic and misleading way to see mineral resources – like a buried treasure chest of coins with the mining company in possession of some secret code which leads them to the chest where they proceed to wreak great profits by selling the property of the people.

In reality metal orebodies tend to be zones with higher grade sections surrounded by haloes of successively lower grade ore.

If the lower grade orebodies are not adjacent they might be further distant along a known mineral belt. So the history of mining shows that in practical terms we are never going to mine minerals out. While a defined orebody will be depleted by mining – history tells us that mineral exploration on average will more than replace this from somewhere – albeit at a slightly lower grade.

The simplistic and harmful Govt view also completely overlooks the facts of huge advances in mining technologies – using copper as an example history tells us that globally we have more copper reserves than we did in 1900. – And of course mined ore grades have declined over a century but technology has enabled us to produce copper at a lower real price.

All rather contrary to the Govt & Club of Rome dogmas that resources will run out at some specified year.

This publication has some excellent graphics – of which I have picked three linked below.

Schodde RC, “The key drivers behind resource growth: an analysis of the copper industry over the last 100 years”, Presentation to the Mineral Economics & Management Society (MEMS) session at the 2010 SME Annual Conference, Phoenix, Arizona March 2010.

p10 of 26 – Copper endowment has grown 25 fold in 100 years
p 14 of 26 – Copper grade mined has fallen for 100 years
p 21 of 26 – Over the last 100 years, the real price and cost of copper has halved

So to sum up – I am saying that there is no rational case for higher taxes on mining compared to any other industry.

Extra taxes on mining will only tend to drive investment offshore.

There is no free lunch – the Govt might grab extra taxes to redistribute to its constituencies – but unless all countries enact identical extra taxes – overall Australia will end up weaker with a proportionally smaller mining industry.

I have just read “Boom is not yours, PM tells miners” – as if the industry is not aware that State Govts own the mineral rights and issue leases/licences under various terms to competent companies/organizations to explore for said minerals.

Then if payable minerals are discovered – mining leases are negotiated to develop same and royalty payments are made back to the State. That is the basic system the great majority of nations use to develop their mineral resources.

There are examples of where Governments form State owned mining companies – the old USSR of course comes to mind – China – and I think in Chile Codelco is State owned – PNG owns OK Tedi Mining – and South Africa has recently launched a state-owned mining company – Namibia has made moves in that direction too.

I am sure readers might suggest other examples. I have no issue with States who invest in minerals alongside the private sector.

I would say to the PM and her Govt – why not form Aussie GreenLabor Mining Ltd if you think there is so much easy money to be made – pay off some of the huge debts you are building up on the Aussie Bankcard.

Another quicker way to get mining would be to buy some beaten down mineral exploration companies on the ASX – some are selling for only the value of their cash – then you get a structure, staff, ongoing projects basically for nix.

See how easy it is to find another Broken Hill, Mount Isa, Kalgoorlie, Cadia, Hammersley Iron or the next great coal-field.

Remember your own Labor history from the Whitlam years – recall the example of Rex Connor who trod a nationalist path with mineral resources – learn from the disaster that overtook him.

In not even two weeks the sentiment in the South Australian Government has changed from

BHP likely to meet Olympic Dam deadline: Weatherill – 18 May 12

to

SA warns BHP over Olympic Dam approval – 29 May 12

I note the SA Mines minister speaking tough about not bluffing – but I wonder if a more cooperative and quiet relationship between Govt and BHP is needed at this time of global financial uncertainty and turmoil.

The Olympic Dam mine expansion could make South Australia into a minerals superstate. Deadlines set with the best of intentions in 2011 should not get in the way of BHP and SA getting this thing up when the time is right.

Does the SA Labor Govt have to emulate Canberra Labor ?