Minerals are a shared inheritance. In most countries of the world, minerals are owned by the state as a trustee for the people and future generations. We, as custodians, must ensure future generations inherit at least as much as we did, either the minerals or their value. The key objective then is protection of inherited wealth for future generations.
Mining is the sale of mineral wealth. Extractive companies are outsourcing service providers converting mineral wealth into cash. Royalties and other proceeds are received in exchange for the mineral wealth sold. How much is our fair share?
If the mineral extracted is worth 100 after all extraction costs, as owners we must receive 100. That is our fair share.
We argue that Zero Loss is only fair. The goal of the Mines Minister must be to achieve Zero Loss. Any loss is a loss to the people and all future generations. Safeguarding wealth against theft, loss, waste or consumption demands a change in thinking.
If states produced balance sheets, then losses would result in a decline in public sector net worth. Global estimates of Loss Rates is a collection of studies from which loss rates can be calculated. We have used government data to estimate that Australia lost 82% of the value of the minerals extracted over 2000-2010. Similarly, others have estimated that the UK lost 35-39% of the value of the North Sea oil extracted. Statistics Canada for years has published data suggesting enormous losses, largely ranging between 60% and 80% with a median of 73%.
Three shocking cases of public wealth destruction extracts from recent studies by the IMF on public sector net worth of the Gulf Cooperation Countries, the UK and Norway, showing how all three are currently destroying public wealth.