Resource World Magazine

a p r i l / m a y 2 0 1 5 www.resourceworld.com 17 • Permitted state-of-the-art heap leach processing facility • NI 43-101 compliant gold resource of 552,000 Measured and Indicated and 165,000 Inferred ounces of gold • Contiguous land package covering more than 25,000 acres PershingGold.com | PGLC FAST-TRACKED TO PRODUCTION world's iPads and 20% of its computers are manufactured), to Lodz, Poland. thE vast potENtial for coMMoDitiEs Since the beginning of the International Financial Crisis (IFC) in 2008/9, we have seen the huge impact on the commodities market of China's US $600 billion stimulus program. A very substantial part of the program was rail-related construction. It translated into an unprecedented surge in demand for iron and other commodi- ties that sent the commodities markets to its peaks and benefited mining companies around the world with record earnings in 2011. It is quite possible to calculate how much more impact this US $21 trillion project will have over the coming decades. This time around, the project is not in response to a crisis like the IFC, but it has a clear mission of building the infrastruc- ture conditions for developing countries to industrialize and urbanize for better living standards. The member countries will have their say in shaping how this project will benefit the participants. The accumulated solid experience of building infrastructure such as the railway network in China can be transferred across to the effective exe- cution of the project. The project is often compared with the US $13 billion (or US $160 billion in today's dollars) Marshall Plan which con- tributed to the successful rebuilding of industrialized Europe and Japan after the Second World War. The US $50 billion ini- tial capitalization of AIIB is already about a third of the size of the Marshall Plan. However, the Asian cost of construction will be lower, because there is an abundant supply of local cheap labour from develop- ing countries there, and Asia is one of the lowest-cost railway builders in the world. The project budget simply goes further than in the advanced economies. However, the much grander scale of impact from this project will be seen when the US $21 trillion vision is systematically executed over time, with the clear leader- ship of China, driving a recent successful model of economic development with both the capital and technical capability of mega-scale projects over extreme terrain and weather conditions. The long-term commodity demands during the initial decades of building the project and the proliferation of subsequent urbanization and post-urbanization will be enormous over the long term. The retreat of insti- tutions from the mining sector and the resulting lack of capital and project development will aggravate the normal shortage when the market recovers. There are tremendous opportunities for mining projects which are well-capitalized and developed in tandem with this project. There is much to reflect on in our own history of the Canadian resource and mining sector. As an unintended beneficiary of the Marshall Plan, even the Canadian iron ore industry and particularly in the Labrador Trough, located far from the rebuilding economies, benefited for decades from the rebuilding of Europe. There is no reason why Canada's iron ore industry and many other sectors in this resource-rich country, should not benefit in turn from this project and its almost unimaginable scale. n

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