(Kitco News) - The mining industry should stop apologizing and do a better job of educating pundits and politicians on mining's importance, says Nicole Adshead-Bell, director of Cupel Advisory.
Adshead-Bell spoke to Kitco Mining last week.
"You can choose to be a vegan, but you cannot choose not to be associated with the products of mining, and so why are we apologizing for this? Why are we not pushing back, and this is the thing that I don't understand," she quipped.
Adshead-Bell noted if all coal production stopped today, a third of thermal electricity production would cease to exist.
"Let's start being positive about what we do and also educating not just the average pundit but politicians and investors as to what our sector brings to the table," she said.
Kitco's Paul Harris asked Adshead-Bell about the biggest mining M&A of the year to date, BHP's (NYSE:BHP) USD$39 billion bid to buy Anglo American Plc (LSE:AAL). The offer would have made BHP the largest copper producer, with about 2.5 million tonnes per year, but it was rejected by Anglo American shareholders.
"I think BHP is starting to grasp the significance of what will happen in copper over the coming months and years," said Adshead-Bell, opining that the incentive price for new copper mines must rise to between $6 and $8 a pound from the current ~$4.50.
"The easiest way to grow your business isn't to build it; it's to acquire it, and so it makes a lot of sense," she said, adding, "Anglo American is now in play."
Adshead-Bell thinks the bid could have implications further down the chain. "Are we starting to see an opening up of extensive M&A in our sector? I think we will, particularly focused on copper."
Also last week, Ross Beaty's Equinox Gold (TSX:EQX) agreed to buy Orion Mine Finance's 40 percent stake in Orion's Greenstone gold mine in Ontario, thus consolidating 100 percent ownership. The deal was worth USD$995 million in cash and shares.
"It seems expensive, I think, but if gold goes to $2,500-$3,000, and we seem to be moving in that direction, we'll probably look back on this and think it looked relatively cheap, so it really depends on your outlook on gold," said Adshead-Bell.