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Sector Note -
This quarter’s topic: We consider the impact of the reluctance of investors to fund the exploration work that is needed in order to discover the next generation of mines. One of the fundamental truths about the mining industry is that all mines are based on finite resources, as that is how geology works. Therefore, all mines that are currently in production have a finite life – in many cases less than 10 to 20 years from now. Indeed, the great majority of the mines that I have visited or worked in during the 40 years since I first became involved in the mining industry have now closed. Recycling is obviously an offset, but this is far from being a complete solution and the reality is that unless significant new mining capacity is discovered and put into production in the near future, then many mined commodities are going to become scarce and hence very much more expensive.