John N. Murphy: An Interview With The 2011 SME President

What is your assessment of the status of the mining industry as we see some evidence of an economic recovery? I am optimistic about the short and midterm prospects for the industry and, hence, for the professionals in the industry that constitute the majority of the SME membership. All who will read this interview recognize that the quality of life we enjoy today is largely a result of our achievements in the mining and minerals processing sectors. I believe that the sustainability of that quality of life and the aspirations of other sectors of the global community to attain that same lifestyle will significantly depend on the continued successes of these industries. Looking at some of the traditional economic indicators, we see predictions of continued increases in gold prices during the next 12 months as a new round of quantitative easing keeps real interest rates low and drives excess capital flows from countries with trade surpluses - who have traditionally parked their money in U.S. government bonds - into other investable assets, such as gold. On the fuel side of the industry, we have during the last decade seen a steady rise in the cost of coal, and some of the recent spot prices have seen dramatic increases. Some suggest that coal prices may rise sooner than anyone expects, as global reserves are revised downward. This is based on the hypothesis that some of the main coal-producing countries are overestimating supplies and that coal prices could start rising far sooner than anyone thinks - with obvious serious implications for energy policy. Those forecasters note that, for the past couple of decades, global supply has been dropping at a faster rate than consumption.