Durban, Kyoto, mining, and global warming in perspective

The most interesting question asked of me regarding global warming is:  As a consultant, how can I make money providing advice to the mining industry relevant to global warming?   Here is my simple mining answer.

First work with your existing clients to help them reduce water consumption.  I suspect that water use will get more and more contentious.  Any act that reduces water consumption will be good engineering and good politics in the warmed globe.  In addition, I suspect that at most mines, a reduction of water consumption will result in a reduction of costs.  Maybe only a reduction of NPV (net present value) but still an overall cost savings.  Save money and save the environment—that is a deal that your community relations folk will love.  And it’s true.

Next work with your existing clients to deal with reduction of gas emissions.  I am not an expert in that area so I say no more, but this seems like such an obvious opportunity.

A third opportunity as a consultant to the mining industry to make money out of global warming, is sequestration of carbon.  I know that the chemistry of freshly crushed rock is such that it loves to absorb atmospheric carbon.  The tailings impoundment is a huge source of freshly crushed rock at most mines.  Just imagine what the mine could do to reduce green house gas emissions for its own emissions.  And just imagine if your client could get into selling gas credits on the open market.  Maybe there is still “gold” in them thar tailings after all.

I heard the other day of tapping into the heat in old mines shafts and underground workings as a source of energy.   Difficult as it is to believe that this way of tapping into the earth’s energy will be a significant source of cheap energy, it nevertheless is another opportunity for consulting services to the mining industry.

A more difficult consulting “opportunity” lies in keeping open the access ice-roads to the mines of northern Canada.  Then of course if these ice roads melt entirely, many a consultant will be needed to devise alternative ways to transport goods to the many mines now in the north and certain to be opened up in the warming north.

How can mines benefit from global warming?  Greg Easterbrook, in the April 2007 Atlantic Monthly notes that in economics there are no zero-sum games; somebody will benefit from global warming.  His top nominees are the Inuit who rule Nunavut, a place that will change from a frozen waste land to a nice warm place.

Then there is Greenland waiting to be clear of the ice.  Both places probably contain ore bodies just waiting to be mined.  Is the mining industry ready?  The obvious action is to go exploring and stake claims.  This all seems like trivial, trash-press talk.  But just maybe it is not, and global warming may just be for real.  Rationale people might as well discuss how we are going to benefit from the inevitable.

Easterbrook points out that the nations of the northern hemisphere, already blessed with resources, will probably benefit most from global warming.  He speculates that real estate prices in Buffalo will rise to levels now common in Florida.   He faces with equanimity the need to rebuild cities inundated by rising seas.  Can you imagine how much mining of sand and aggregate and metal will be needed to rebuild New York and New Orleans?  He notes that Canada, of all nations, stands to gain most from global warming—a possible explanation for its current blase attitude to emissions control and Kyoto implementation (in spite of the protestations of ambitious politicians relegated to opposition benches.)

On the issue of whether planning to profit from global warming is immoral and a case of throwing in the towel, Easterbrook in an interview on the Atlantic website notes:

I think at this point some form of mandatory greenhouse gas restrictions are justified; the sooner the United States enacts them the better, as long as they are wisely written. I’m an optimist on this issue and I think that control of greenhouse gases will turn out to be cheaper than predicted and will turn out to work faster than predicted and that human ingenuity will be much more creative than people think. So within a realistic length of time—say, your lifetime—this problem of artificially triggered climate change will be brought under control. But even if reforms are really successful, as long as greenhouse theory is correct, a warming world is absolutely cast in stone—the armies of the world could not prevent it at this point. And even really successful programs of greenhouse gas reduction in the developed nations will not stop increasing accumulation in the atmosphere for at least several decades, and maybe longer. And unless greenhouse gas theory is totally wrong, in which case we don’t have to care about this, the world is going to get warmer and the climate is going to change and we must make our peace with it because we can’t stop it. That’s not capitulation, that’s pragmatism.

Hence let us be pragmatic about the opportunities for the mining industry.  We leave the issue of curbing emissions in China and India (really the only way to achieve any real carbon emissions reductions) to the environmentalists, their Chablis and brie (to lift a phrase from Easterbrook.)   We leave the issue of carbon credits to the economists.  There must be a rationale free-market way to do this before we get stuck with ill-conceived government pie-in-the-sky emissions standards.

General Electric, GE, is singled out as the company most likely to succeed in a warming world.  They build power-generating windmills.  They are developing clean coal-powered plants and getting ready to build nuclear power plants.  How can the mining industry emulate this. Clearly investment in clean-coal, uranium, and platinum mines is a winner for the future.  Clearly investment in the quarries and pits that will be needed to build dikes to control rising waters and to rebuild displaced cities is logical.  Clearly exploration of the northern parts of Canada, Greenland, and Siberia make sense.

The people to make these mines in currently ice-covered places, are now in the hotter parts of the world from which they will want to flee.  So mines should stop trying to solve the problem of future workers by making schoolhouse presentations.  Rather we should be seeking people of merit in other countries and bring them in rapidly, now, and proactively in the future.  And just maybe a mining industry group or association will fund somebody to write the other side of Gore’s story—not an attack, not a rebuttal, but a realistic analysis of what demands global warming will make on the mining industry and how we can meet the challenges of ensuring the continuation of societies that we can be proud of and benefit from, and I do not mean societies where we all ride bikes and eat tofu.

This piece would not be complete if I did not also note that global warming is now causing, and will cause great social change.  The April 2007 Atlantic Monthly also has an article that ascribes the tragedy in Darfur to global warming:  drought changed the relationship between the farmers and the pastoralists.  They no longer share resources, of which they are few to none.  Now they fight and kill and clear the land in the hopes of grabbing what little remains.   There will be vast movements, or attempted movements, of people from hot, desertified regions to more temperate climes.   Already Canada and Denmark are squaring off over distant islands in the north.  Can you imagine what will happen when heat-parched Brazil invades the cool parts of southern Argentina?  Maybe you had better get your mining in that part of the world done before the conflict begins.

It is scary to postulate that miners will be in great demand to create new cities below ground in cool, deep caverns.  Just like those around Kansas City, dug into the limestone and even now places where there are universities and offices.   Maybe the SME should keep on with the specialty sessions on urban mining, for that kind of mining may be key to many a city’s survival.  Just imagine how bad Houston and Phoenix could get.  The good news is that Iowa will become warm; we will have two growing seasons.  Maybe you should sell your mining stock and invest in Iowa farm land.

I recognize this topic incites and inflames.  I recognize I am talking about potential changes bigger than those resulting from past global wars.  I recognize I may have been frivolous (this is a blog.)  In defense, please accept that my underlying purpose is to cut through the rhetoric, cut to the chase, and shake us all into an awareness and profound discussion of something we can cost-effectively ameliorate before it is an international tragedy.  I know that mines will continue and be but a tiny part of a much bigger debate.   But I believe that mines and the mining industry can and must do its fair share to prepare for changes we currently do not see clearly.  Join me in this debate, for in so doing we may stumble on the answer.

    Regardless of your opinion of the reality and/or causes of climate change, I suspect these are the relevant questions for the mining industry:

• What will climate change mean to the mining industry?
• How can the mining industry avoid negative impacts of climate change?
• How can the mining industry benefit from climate change?

I speculate that the first issue arising from climate change that may affect the mining industry is a growing shortage of water, or at least an increasing cost to getting the water needed to operate a mine. There may be greater social conflict involved in securing access to water between the mine and the surrounding inhabitants. Do we need increased research on minimizing water consumption in mining and processing?

Somehow I am sanguine. I cannot but believe that mankind will respond with normal resolution and enterprise. I must believe that free markets in democratic countries will make money making people comfortable. Even if that money-making involves selling research reports on the technologies needed to survive, succeed, and prosper.

Opposition won’t impress anybody. Only positive suggestions based on reality are of any potential value. This clarion call for leadership is prompted by the news that Caterpillar and the National Mining Association are at odds over global warming. Or at least over the need for a market-based approach to emissions control and hence over amelioration of global warming.

Let me clear the air by confessing my sins. I grew up where it was almost always sunny and warm and I like the sun. I will never appreciate rainy days like my colleagues who hail from the north of Scotland. To me the thought of a warmer place is a pleasant thought. I concur with the farmers of Iowa who welcome global warming on the basis that it will give them two crops a year like they get in California. I view with equanimity changes in global climate—it has all happened before. Just pass through any roadside cutting with the sediments from the vast floods of yore exposed to the casual glance. Two major extinctions are fact: one to set the stage for the dinosaurs and one, some 250 million years later to end them off. There have been others, so geology marches its course if another comes. I am not plagued by illusions of human inevitability and superiority. We are just another species, and in all likelihood will go the way of most species—straight to extinction.

That is a gloomy prospect, I know. And it is a difficult one to embrace when I watch grandkids playing on the grass, swinging on the tire strung from a high branch, and fighting over the newest GameBoy.

But I know that one of the most endearing human characteristics is the desire to survive. And we have the intellect and power to fight to survive. Sadly this sometimes takes the form of sectarian violence and ethnic cleansing. But for all that our most basic instinct is survival. And to those who are foremost in the fight over global warming, it is a fight over survival tactics. We can readily pass over the squabbles about the Hummer, the Mini Cooper, the hybrid, organic versus genetically altered, and emissions caps and trading mechanisms, if we see this as but a side-show in the bigger battle over a philosophy of survival.

Thus I must view the difference of opinion that characterizes the Caterpillar versus National Mining Association debate as a mere side show in a much greater fight to survive. We must admire the courage and verve of Caterpillar’s Chairman and CEO Jim Owens in supporting calls for a market-based approach to develop future clean technologies to reduce emissions and sustain the environment. We must admire his intentions in stating clearly “reducing greenhouse gas emissions can—and should—provide more economic opportunities than risks for industry and the economy.”

But then we turn to the statement by the National Mining Association President and CEO Kraig R. Naasz who says with equal conviction and force: “NMA is convinced that a real and sustained commitment to development of carbon management technologies can achieve meaningful improvements in energy efficiency and emissions of greenhouse gases—domestically and internationally—at less cost to our economy and energy security than will arbitrary caps on emissions.”

Jim Owens appears to acknowledge that government has to act to protect the commons for the good of society—if everybody grazes their sheep on the grass in the town square, soon enough there is no grass, and no sheep, and nobody has a warm woolen sweater. Naasz is a believer in the ur-power of the free market place. I have no idea personally what a “real and sustained commitment” is, but assuming it happens, Naasz assures us there will be “less cost to the economy”. I confess he sounds just like those folk in the 1970s who said we would ruin our economy by passing the Clean Air Act. I just do not believe him. Maybe we should award him the 2007 Club of Rome award—you remember those pessimists who predicted we would run out of everything before now.

I am a Libertarian in spirit for I believe that less government is good. I believe, however, that government should do what we cannot do alone and that includes restraining the evil and wicked, protecting us from common enemies, succoring the weak and afflicted for the common good and decency of society, and setting goals and objectives which involve compromises we would never reach individually. Thus I must throw my vote for some form of government cap on emissions and the establishment of a free-market system for divvying them up. We do that with the national budget and the tax system all the time. It is not a new idea. And conservatives and liberals alike manage to benefit.

Of course we should debate most vigorously the need for caps, the magnitude of the caps, and the market system for the caps. So maybe the news item about dueling CEO is good news: debate is alive and well on a topic that is at once obscure, complex, visceral, emotional, and at the core of our future survival as a nations, as a civilization, and as a species.