Anglo American and the Pebble Mine make investment history. Can you make money?

Another orebody that will define the landscape of mining investment is the Pebble Mine in Alaska. The orebody certainly exists, at least that much we can be sure of. But whether it will ever be a mine is an open question. The answer is impossible to predict. In twenty years time this orebody will be as famous as Bre-X for the way it sculpts the landscape on mining investment risk. If you play this one carefully you could make a lot of money. Conversely you could loose your shirt. .

A few facts about the orebody. It is reputed to be one of the biggest for gold and related minerals ever found. The junior partner is Northern Dynasty of Vancouver. They knew they could not do it alone, so they brought in Anglo American.

Anglo American, in spite of its name was a South African mining company. It is now headquartered in London and run by American/Canadian Cynthia Carroll. Anglo American no doubt sees the Pebble orebody as a future flagship to profit and glory.

If you agree with them and respect their judgment, go buy shares, as many as you can afford. Anglo American has made many people rich.

But there is a cloud in the silver lining of potential riches from the Pebble deposit. It sits in a part of Alaska where a rich man from Anchorage has his hunting lodge. He has vowed to stop the mine ever developing. He is joined in this determination by the fishermen, the people who live off the land, and every environmentalist imaginable.

Their valid question is "how can you develop this mine without polluting the salmon streams and dooming us to perpetual cleanup and care of the vast waste piles you will leave behind." My opinion is that it has not yet been done successfully elsewhere.

But along the way Anglo American is pumping $15 million a year into public relations to promote the mine. On the other side the opposition is pumping energy into publicizing Anglo American’s faults and failures. The most recent appeared on Friday of last week. The report is is Anglo American’s Track Record: Rhetoric or Reality?

Here is a summary that came with the e-mail announcing publication of this provocative report:

"A new investigation into Anglo American’s environmental and social record released today describes toxic mine waste spills, air and water pollution, workplace fatalities and uprooted communities at mines owned by the London-based corporation and its subsidiaries. As a result, Alaska community leaders are raising new questions about what may be in store for Bristol Bay’s wild salmon and local communities if the Pebble mine, in which Anglo American holds a 50 percent share, is developed.

"The report shows that regardless of where Anglo American operates, what rules it plays under, and who is at its helm, there have been problems, including worker fatalities, polluted water, fish kills, and uprooted communities, said Bobby Andrew, a board member of Nunamta Aulukestai, a group of eight Native Bristol Bay corporations and villages. "We can’t afford to risk our wild salmon on the slim promise that Anglo American might do things differently in Alaska."

In a press release issued last August, Anglo American said it was "committed to the highest international standards for community relations, environmental protection, and health and safety." Yet the report, "Anglo American: Rhetoric or Reality?" by veteran corporate researcher and former journalist Phil Mattera, documents major spills, water and air pollution, damaged fish habitat, and local conflicts at Anglo American mines."

As a potential investor in this venture, I can only advise you to consider the fact that humans can promise, but cannot guarantee delivery. We can sin, and reform, and promise to be good ever after, but we cannot guarantee delivery.

So to question Anglo American’s past sins or to doubt its current protestations of goodness, is totally irrelevant. As a potential investor, I would advise you to carefully watch Anglo’s response to this report. Here are some of their options::

1. Deny: The report tells of times past, of a company that is not the company it is today.

2. Refute: Those were aberrations in standard practice, long since rectified.

3. Over-rule: Point to the many good things they have done—and there are many.

4. Say sorry: Like so many born-again sinners, politicians, and governments, say sorry and move on to glory.

5. Emphasize the new: They now have enlightened Canadian partners & leaders and intelligent Alaskan regulators who will keep them on the shining path.

6. Do a South African: Co-opt the Alaskan native companies; make them shareholders; and soon we will see casinos ringing the slime dams.

7. Sell to India: An Indian/British magnate will fire back with an alternative religion and all will quake at the coming.

8. Sell to China: They will ban all opinion pieces like this one. So no more insight, comment, or delay.

Depending on how you judge the vigor and honesty of Anglo’s response, and the validity of the opposition’s charge, you may choose to sell or buy. Be careful because there is nothing certain in this one, and the outcome will define the future of mining in Alaska and maybe even the western world for a long time to come. That is a lot of history in the making to invest in.