Dec 082015
 
 December 8, 2015  Posted by at 7:17 pm Finance Tagged with: , , , , , , , ,
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Poached baby gorilla, Virunga Park

Anglo American, a British company, and one of the world’s biggest miners, and a ‘producer’ (actually just a miner, how did those two terms ever get mixed up?!) of platinum (world no. 1), diamonds, copper, nickel, iron ore and coal, said today it would scrap dividends AND fire 85,000 of it 135,000 global workforce (that’s 63%!).

Anglo is just the first in a long litany line we’ll see going forward. Commodities ‘producers’ are being completely wiped out, hammered, killed, murdered. They’ve been able to hedge their downside risks so far, but now find they can’t even afford the price of the hedges (insurance) anymore. And then there’s all the banks and funds that financed them.

And they’ve all been gearing up for production increases too, with grandiose plans and -leveraged- investments aiming for infinity and beyond. You know, it’s the business model. 2016 will be a year for the record books.

Just check this Bloomberg graph for copper supply and demand as an example. How ugly would you like it today?

And what’s true for copper goes for the whole range of raw materials. Because China went from double-digit growth to shrinking imports and exports in pretty much no time flat. And China was all they had left.

Iron ore is dropping below $40, and that’s about the break-even point. Of course, oil has done that quite a while ago already. It’s just that we like to think oil’s some kind of stand-alone freak incident. It is not. With oil today plunging below $37 (down some 15% since the OPEC meeting last week), it doesn’t matter anymore how much more efficient shale companies can get.

They’re toast. They’re done. And with them are their lenders. Who have hedged their bets too, obviously, but hedging has a price. Or else you could throw money at any losing enterprise.

But there’s another side to this, one that not a soul talks about, and it has Washington, London and Brussels very worried. Here goes:

These large mining -including oil- corporations most often operate in regions in the world that are remote and located in countries with at best questionable governments (the corporations like it like that, it’s how they know who to bribe to be able to rape and pillage).

The corporations de facto form a large part of the US/UK/EU political/military control system of these areas. They work in tandem with the CIA, MI5, the US and UK military, to keep the areas ‘friendly’ to western industries and regime.

This has caused unimaginable misery across the globe, in for instance (a good example) the Congo, one of the world’s richest regions when it comes to minerals ‘we’ want, but one of the poorest areas on the planet. No coincidence there.

Untold millions have died as a result. ‘We’ have done a lot more damage there than we are presently doing in Syria, if you can imagine. And many more millions are forced to live out their lives in miserable circumstances on top of the world’s richest riches. But that will now change.

Thing is, with the major miners going belly up, ‘our’ control of these places will also fade. Because it’s all been about money all along, and the US won’t be able to afford the -political and military- control of these places if there are no profits to be made.

They’ll be sinkholes for military budgets, and those will be stretched already ‘protecting’ other places. The demise of commodities is a harbinger of a dramatically changing US position in the world. Washington will be forced to focus on protecting it own soil, and move away from expansionist policies.

Because it can’t afford those without the grotesque profits its corporations have squeezed out of the populations in these ‘forgotten’ lands. That’s going to change global politics a lot.

And it’s not as if China will step in. They can’t afford to take over a losing proposition; the Chinese economy is not only growing at a slower pace, it may well be actually shrinking. Beijing’s new reality is that imports and exports both are falling quite considerably (no matter the ‘official’ numbers), and the cost of a huge expansion into global mining territory makes little sense right now.

With the yuan now part of the IMF ‘basket‘m Beijing can no longer print at will. China must focus on what happens at home. So must the US. They have no choice. Other than going to war.

And, granted, given that choice, they all probably will. But the mining companies will still be mere shells of their former selves by then. There’s no profit left to be made.

This is not going to end well. Not for anybody. Other than the arms lobby. What it will do is change geopolitics forever, and a lot.

Home Forums Plunging Commodities Interfere With The New World Order

This topic contains 8 replies, has 8 voices, and was last updated by  Chris M 7 months, 2 weeks ago.

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December 8, 2015 at 7:17 pm #25501

Raúl Ilargi Meijer

Poached baby gorilla, Virunga Park Anglo American, a British company, and one of the world’s biggest miners, and a ‘producer’ (actually just a miner,
[See the full post at: Plunging Commodities Interfere With The New World Order]

December 8, 2015 at 7:51 pm #25502

Ken Barrows

Good article. Maybe you’re joking about “efficient” shale, but they’re not efficient at all. Bakken barrels per day per well has been dropping for a year or more; I doubt Texas is much different.

December 8, 2015 at 9:58 pm #25504

Nassim

If the premise of this article is correct – that lower profits abroad will compel countries to leave these places alone – I would be very glad. However, I can’t help thinking that they are prepared to start WW3 in order to keep the Russians out of the Middle East.

December 8, 2015 at 10:09 pm #25505

SteveB

Ken, there was an article a month or so ago (maybe Ilargi included it) that reported that shale companies had increased efficiencies such that extraction (not production–yes, where did that confusion come in?) has increased recently. But then does that just shorten the life of the well without increasing the output?

December 8, 2015 at 11:31 pm #25506

Greenpa

Yes, yes; but keep your eye on the magician’s OTHER hand; the one not obviously doing anything.

All above true; but also true- are the slight smiles on the faces of the Über Owners; who have been planning, all along, to now acquire these bankrupt mines, companies, banks, countries, and serfs- for hundredths of pennies on the dollar. The mines/wells/countries – will all re-open; with entirely new owners, lower volumes, but very fat profits. In time. As planned.

See the lovely magician’s assistant there? Yes, we do.

December 9, 2015 at 12:16 am #25507

Ken Barrows

SteveB, I guess it depends on what you consider “efficiency. But adding 1,600+ wells over 12 months and having lower production doesn’t seem “efficient” to me:
https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf
Is the Bakken so much worse than everywhere else?

December 9, 2015 at 1:19 am #25509

Professorlocknload

And war it will be. Heck, read the other day the US is experiencing a bomb shortage?! :-/

War= mining boom, oil boom, manufacturing boom, hiring boom and a boom in the undertaker business,,,not to mention, it all needs to be financed. Enter it’s enabler, Wall Street.

Thing is, these children are playing with destructive forces unimaginable in wars past.

December 9, 2015 at 2:04 am #25510

Jacob de Lacey

Hello Raúl,

While I do agree with the general message of this article Anglo American are not actually firing all 85,000 of the staff you mention as some of those jobs will remain intact but with new pay masters.

“A company spokesperson said the job cuts would be made through asset sales and internal cuts: “Bear in mind that these include assets that we will sell, so the 85,000 jobs don’t [all] disappear as many will be employed by new owners of those mines that we sell.””

December 9, 2015 at 2:28 am #25512

Chris M

Greenpa,

What you say is congruent to the comments often made by TheTrivium in this discussion. The bust/booms are engineered to concentrate the wealth into fewer and fewer hands. As TheTrivium says, “the cabal…systematically enriches themselves while it systematically impoverishes the..ignorant masses.”

It is disputed whether Thomas Jefferson actually said this, put the point is well taken:

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

But as TheTrivium says, the currency monopoly will fight you to the death to retain their monopoly. They know where the power lies. Might makes right..and if you issue the currency, you can issue the guns.

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