All together now: China forever!

Find below the new “Aussie Mine” report from PWC, an annual assessment of the landscape and prospects for the mid-tier Australian miners.

I don’t recommend reading this for any other reason than the good laugh available in the assessment of China from pages 3 to 7. If ever there was a report that captured the feeble analysis of a country’s fading hopes, it is this one.

Aussie Mine 2012

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

Latest posts by Houses and Holes (see all)


  1. Hey, the guys in M&A don’t make their money out of telling the bulls to put on the brakes!

    Might be a tad one-sided, but still some interesting stuff mixed in there…. I skipped through, mainly looked at the charts. Few things that got my interest:

    *Commodity intensity – I love this chart. Seen it wheeled out at probably half a dozen conferences in the past year. It really does paint a picture of what the prospective demand could be, and in all likelihood will be, it every emerging nation follows the path of the US et al. Mid term I am less convinced.

    *Gold – gee, I wish someone could explain to me the attraction of gold! This report is great for the gold bulls, but in my opinion gold is a redundant commodity… sure it might be pretty, but given that 40-something percent is used in jewellery, and 40-something percent last year’s traded supply came from second hand gold (jewellery etc)…. I just don’t get where this demand & prices come from…. On so many levels I just don’t understand why anyone would hold gold.

    *Interesting the slightly “advertorial” nature of an interview with Atlas

      • I see it in the same context, which is maybe why I don’t understand the attraction of it. There seem to be a lot of gold bulls out there, yet I’m yet to be convinced of it really has much “value”. Even as an inflation hedge I’m unconvinced. ….quite seriously though, it would be good if someone could provide 5 good reasons we should hold gold (talking mid/long term here, “picking” the next month or 3 is essentially pointless)

      • Down, but that all depends on..when the USD, GBP, Euro, Yuan, and Yen STOP printing, undervaluing, ‘stabilizing’ etc their respective currencies.

        In the mean time….UP. Downward blips, tend to occur when the market has its blinkers on and ignores the first paragraph.

        My humble opinion.

  2. It will be a mistake to underestimate the aggregate demand from Asia for our minerals. Demand and prices may ebb and flow, but they won’t go away.

    • Yes, that’s true – we shouldn’t expect a collapse in demand, but if for instance it was to stay more or less static, or continue on with a fairly slow growth rate prices will fall as further supply comes online.

      I don’t understand why everybody seems to have forgotten about industry/commodity cycles.
      Investment and the resulting capacity tends to overshoot in pretty much every industry and commodities are the best example of this.

      Increasing demand -> high prices -> investment boom -> oversupply -> slump and consolidation -> demand catches up and spare capacity is taken up
      rinse and repeat.

      The volume probably isn’t going anywhere, but that doesn’t mean there’s going to be rivers of gold for miners, particularly for more marginal miners like fortescue.
      This is why productivity is so important, yet it’s basically been ignored by the government, especially in this sector. The super profits tax would have helped take the edge off of this and made the cycle a lot more gentle, as well as cushioning the rest of the economy – you know, the bit that will need to take up the slack later on.