Resource World Magazine

MINING Author-commentator Diane Francis bullish on Canada's mining future by Peter Caulfield Diane Francis. Photo courtesy AME BC. Diane Francis doesn't like state-owned enterprises (SOEs) and says Canada shouldn't let them pressure us into giving up control of our natural resources. Francis, who is Editor-at-Large at the National Post and a director of Aurizon Mines Ltd. [ARZ-TSX; AZK-NYSE MKT], was the keynote speaker at the Association for Mineral Exploration British Columbia's (AME BC) November 2012 Speaker Series at the Sutton Place Hotel, Vancouver. Her 40-minute presentation was entitled Managing in Uncertain Economic Times. Francis spoke to attending exploration industry executives about the completed takeover of Calgary-based oil and gas developer Nexen Inc. [NXY-TSX] by China National Offshore Oil Corporation (CNOOC), Francis said sovereign-owned or controlled enterprises from "questionable countries" have no business in the boardrooms of Canada. "Undesirable SOEs are those that serve political, not commercial, agendas; they do not offer reciprocal investment privileges to Canadians in their countries; they believe they enjoy immunity from Canadian laws," said Francis. "SOEs are a form of colonization. They're disruptive and destructive to Canadian companies." DECEMBER 2012/JANUARY 2013 Foreign investment from the United States, the United Kingdom or the European Union, however, should be allowed into Canada if it is in the national interest. "In addition, we should allow investments by Statoil [a Norwegian oil and gas company in which the Norwegian company is the largest shareholder] or other government-owned entities in which the laws of transparency, cooperation and ownership reciprocity exist." Canada should be open for business, Francis says, but not at any cost. "Canada has much going for it," she said. "It's a huge country with great geological potential. We're still the prettiest girl at the ball and we can be fussy. We don't need to accept the first guy who asks us to dance." Francis says the current period of uncertainty began more than 20 years ago saying that, "The big inflection point was 1989… That was the year communism fell and former communists started becoming consumers." 1989 also marked the start of the commercialization of the Internet. "E-commerce, iPhones, iPads – all of the electronic things we take for granted today – were unknown 20 years ago," Francis said. The next important milestone was 2003. "That was when the commodity depression ended and the super cycle began," Francis said. "Demand for commodities started to take off, which led to a burst of mineral exploration in Canada." Francis says most of the increase in world demand for minerals comes from China and the former communist countries in Eastern Europe. "Those economies are emerging from a long period of inactivity and taking a growing share of world GDP [Gross Domestic Product] and world exports," Francis said. China, especially, is booming. "China's goal is to urbanize quickly," Francis said. "It wants to bring 400 million people from the countryside into cities over the next 20 years. That's the equivalent of creating one new Chicago per year for the next 20 years." India is on the move, too. "India is behind China, but it's catching up," she said. Although demand for minerals is up, world supply has been unable to keep pace. "There are a number of constraints affecting supply," Francis said. "First, the world's readily accessible low-cost deposits have already been exploited and it's become more expensive to explore and mine. Second, there are political risks in some parts of the world, such as Africa and Latin America where there is a chance your project might be confiscated. And finally, there is the environmental movement, which has been a major force since the 2009 Copenhagen Conference, which helped environmentalists coalesce and create a powerful transnational movement. In the minds of many environmentalists, fossil fuels and mining companies are enemies who need to be fought." Francis says mining and exploration should follow the example of the oil and gas industry and make use of new technologies. "The mining industry needs to learn how to produce in-situ, like the oil sands," she said. Francis ended her presentation on a high note. "The super cycle is not yet over," she said. "Recent history is just a pause before it starts up again." Francis spoke at the second of three installments of the 2012/2013 AME BC Speaker Series. AME BC is the selfdescribed voice of mineral exploration and development in British Columbia. Established 100 years ago, in 1912; the association represents 4,500 individual and almost 400 corporate members. n www.resourceworld.com 69

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