Dear All,
I am writing this report on a very wet day, in a motel somewhere between Townsville and Cairns, while trekking from one Gem Show to another. It is a case of "deja vu", as we travelled the same route in heavy rain this time last year and stayed in the same motel, also in very wet conditions. The fishing lines will stay dry --- again!
Despite all of our promises to ourselves, and to others, it seems that the world conspires to ensure that we are flat out, day in and day out - but I'm sure that many of you are experiencing exactly the same problems, if only in trying to survive the rigors of the uncertainties of the world around us.
Farewell to John "Bushy" Manton
Many of you who have visited us at the Gemfields will have met our 'caretaker', John Manton, known to all locally as Bushy. He was a big man, with a huge white beard nearly down to his waist, and always a twinkle in his eye. He had drifted to the Gemfields nearly twenty years ago, loved the place, and has lived here ever since.
Bushy was a man who would go out of his way to offer advice and assistance to anyone needing it, and would drop his own work to help others. He had little in the way of material wealth, but would cheerfully give anything he had to help others and, as a result, was widely respected by the Gemfields community. His willingness to help anyone divine a run of sapphire bearing wash, to assist 'new chums' in understanding the required mining techniques, and his general cheerful and helpful attitude, ensured that he was always offered a feed, a beer, and a chat at any of the camps in the mining area.
He died suddenly on Friday 4 July 2008 at Sapphire, and will be very much missed by all of us. We think that it is most fitting that he died with a shovel in his hands - and I personally am grateful that his death was apparently instantaneous, without any evidence of suffering or pain, as he would not have been a good candidate for being cooped up in some hospital or nursing home. It is to the great credit of the local people, and an indication of the respect they had for him, that a considerable sum of money was very quickly raised, in order for Bushy to have a "proper send-off" at the Sapphire Cemetery on Wed. July 16th. The photo attached was taken in August 2001 and published in the "Australian Geographic" in July 2002.
Unfortunately, although he lived in our midst for nearly two decades, none of us knew a lot about Bushy's upbringing and his past - which encompassed some of Australia's mining history. His grandfather led an expedition to find Lassiter and his father led another expedition to find the fabled Lassiter's Reef. His parents were dead, he had no brothers or sisters, and had never been married. It took some time to track down his closest relative who is a 76 year old pensioner lady living in Sydney.
When we return to the Gemfields next week we are faced with the complicated task of preparing the contents of his two very full caravans for a "garage sale", while retaining any items of family interest for the few remaining relatives and items of historical interest for local mining museums or historical societies. The sale of his two vehicles and two caravans will also need to be organized and at this stage we are hoping to hold this sale in the yard of our Sapphire house on Saturday August 2nd.
Mining - and The Economy
I find these days that it is almost impossible to discuss the present problems of mining without the state of the economy coming into the discussion - and I suspect that the same would apply if we were in the jewellery trade, or probably any other business for that matter.
I have looked back over the predictions I made in my Report at the end of 2007 and, despite the fact that I was 'running against the general tide of opinion' at that time, I don't think that I could have been clearer and more accurate in what I said.
Even now, when the Governments are pushing for more and more mining development and are offering huge incentives to try to bring this about, I still urge all my friends in the mining game to exercise great caution and to consider any major future commitments very carefully. I said almost a year ago that I expected a downturn in our booming mining industry by about the end of this year or early 2009, and I still believe that this is a very distinct possibility - if not a definite probability.
We have exercised this approach ourselves, and have cut back our sapphire mining operations to a very low level in order to minimise our exposure to debt. Unless there is a very significant reduction in imposed costs of fuel, parts, government charges, etc., I cannot see us ever going back to the level of mining activity of previous years.
While the larger mining industries have re-written their contracts with huge price increases for their products, the costs in the small mining sector have risen at such a rate that it is impossible for miners to recoup these increased costs. We have calculated that we would need to multiply all our prices by approximately 260% to 270% if we were to sell at a price which would recover today's costs. We have already been forced to increase our prices slightly, and we can only keep them to this level because of our significant stockpiles, which were mined at historically much lower production costs - which our accountant tells us is not good business practice!!
Almost all other sapphire miners and, I understand, many miners in other gemstone industries, have either dropped out of production altogether or have also cut back their operations - which will eventually affect the availability and price of many gemstone products.
The hell of it is, while everyone is aware of the fuel price increases, I do not think that the average citizen in the big cities is aware of the enormity of the cost burdens which this places on the primary producers, the miners, and even their own employers. Many consumers may be considerably inconvenienced by the price increases, but most are not really hurt - and I do not think that the situation can right itself until there is widespread hurt, and consequent recognition of the problems faced by all bosses in all industries. The announcement today that inflation in the June quarter is up by 1.5 % should surprise no one. When the price of diesel fuel is consistently 20 to 30 cents higher than that of unleaded fuel, and EVERYTHING we eat, wear, or indeed use, has a huge "diesel component" built in to the price, how can the inflation rate be otherwise?. I would like to ask some clever economist to calculate how much diesel is in a loaf of bread!!
Where are the Governments in relation to this?? I just happen to think that the Federal Government, and all the State Governments, either have their heads so deep in the sand (or perhaps so far up their backsides?) that they cannot see what is going on in our once great country - and I hope that they wake up before we are forced to revisit the ills of the post Whitlam/Keating era, or worse still, the Great Depression of the 1930's!
Gem Shows
In keeping with our policy to try to restrict our travels somewhat in order to allow Jenny to spend more time with her aging parents who are in the local (Calliope) nursing home (a 93 year old Dad and 91 year old Step-mother is a fair indication that she is likely to live to be an elderly chook herself! ), and me to talk to my cows, we have had a fairly quiet couple of months. We were unable to attend the Lismore Gem Show due to a visit by regular overseas clients, but we heard from other exhibitors that it was a very good show.
The Gem Show at Hervey Bay two weeks ago was uncharacteristically quiet ---- possibly a portent of things to come as the (I think) inevitable belt tightening takes place, particularly by those folk who are on fixed or declining incomes.
The Townsville Gem Club Show last weekend was a great one, and ran against all my predictions of a tightening economy - but then Townsville, with its diversified mining, rural, industrial and army background, has a much broader economic base than most other areas.
We will be in Cairns for their Club Show this coming weekend, and that could be a real test as from recent reports it seems the tourist based economy of the North has slowed significantly. We can only hope!! Has QANTAS cut the number of their international flights because of the high fuel prices or because not enough overseas visitors want to fly to Cairns?? It looks like a classic "chicken and egg" situation.
Gemfest
Our next major show is the Annual Queensland Sapphire Producers Show and Sale which showcases gemstones direct from the miners, and which is held in conjunction with the Gemfest Festival each year. Our QSPA event will be at the Multi Purpose Centre in Sapphire from Tuesday 12 to Sunday 17 August, and the Gemfest itself is centred at Anakie from Thursday 14 th to Sunday 17 August.
As I said in my last report, Gemfest has a new group of organisers this year who are working hard to reinvigorate the Festival and to reinforce the "Gem" side of the Gemfest. They have gained the support of the whole community and have worked to make it a festival for the whole of the Gemfields.
We, Coolamon Mining, will again show our chrysoprase in a tent at the Anakie Gemfest site and this year we have invited Steve and Debbie Haigh from Hervey Bay, and Narelle Banning, secretary of the Queensland Boulder Opal Association based in Winton, to exhibit with us. The Haighs will be showing their lovely Fraser Island pearls along with other related jewellery material, and Narelle will be bringing some of the Opalton miners (and their product) with her. I think that it will be great to have three of our natural Queensland gem products all together at the one show, being exhibited by the people who produced them.
Faceting Courses
These very popular courses were initiated by the Sapphire Producers Association in an effort to train more people to facet sapphires within Australia. The current series of courses started last Monday at Sapphire, with John Broadfoot and Peter Stringfellow, who are both highly qualified faceting instructors for the Australian Lapidary Association.
Interested people should contact John Broadfoot direct: Phone: 07.4159.3087
Mobile: 0429.692904
E-mail: geminfo@bigpond.com
Chrysoprase
As reported previously, we have not been able to get permission to go back into the Marlborough deposit to mine any more chrysoprase as the area is now leased by a major nickel producer (GPNL)
whose primary control, I understand, rests with Chinese interests.
We do have small stocks of polished gem material, beads, and some very interesting carvings which we will continue to present for sale while stocks last. The several very large chrysoprase boulders (up to 16 tons) are still lined up along our driveway at Calliope, but I have no plans to cut these up, as they should be sold as major carving pieces.
Zeolite
As I said in my earlier Reports, the number of people asking for details on how to access powdered zeolite continues to increase, due to the expanding knowledge about its benefits in the treatment of people suffering from cancers, blood disorders, kidney and liver problems, heavy metal poisoning, etc. I therefore provide again the contacts for the new owners of the Queensland Zeolite Pty. Ltd. mine which is located just west of the Gemfields.
Please note that, after being stuffed around by his internet provider for some time, Mick has a new e-mail address:
Mick Delroy Phone: 07.4995.1178 Mobile: 0428.951178
e-mail mdelroy6@bigpond.com.au
Neal Delroy Mobiles: 0447.363063 or 0429.181930
e-mail nealctc@bigpond.com
Philosophising
At a time when the stock market has finally had a few days of positive growth and the world price of crude oil has actually dropped slightly, many people could be forgiven for thinking that the worst is over and that our economy might actually improve - but my thoughts run totally against this sentiment.
For a start, while the effects of the recent fuel hikes might be very widespread, I believe that there is one other principal commodity which has even greater potential to have a dramatic effect on almost all developed economies, as well as affecting all developing economies, and that is steel.
While the Australian economy has been boosted by the huge and growing demand for iron ore and coal, both for metallurgical use as well as a heat source in the power generation and smelting industries, we now no longer have our own steel industry - and so the higher prices paid for our raw commodities will come back to bite us as higher costs of the finished articles, whether they be in the form of building materials, machinery, vehicles, boats, white-goods or even bicycles.
The media recently announced that there had been an increase in the price of iron ore from the West Australian mines of almost 100%. While there have been many increases in steel costs over the last year, the ore to which this new price applies has probably not even left our shores yet, so it stands to reason that there are future huge price increases still in the pipeline, and this level of increase in steel prices will have a very damaging effect on many industries which will have to be passed on to consumers of a wide range of products. The other big problem is that the steel products we import have the potential to be of much poorer quality than those once produced by BHP in Australia. My own recent unpleasant experience with Chinese produced barbed fence wire is a good case in point!
I also struggle to understand how our political leaders can propose a system whereby an industry can be taxed for the amount of pollution produced, and that this can then be offset against credits gained by growing trees to absorb the 'greenhouse gases'. This procedure will do nothing to reduce the actual level of pollution, but may just give a 'warm and fuzzy' feeling because it looks as if something is being done. The overall effect is nothing but increased taxes!
I believe that the issues of pollution and of climate change need to be separated. Pollution is pollution, no matter what the cause or the effect, and needs to be minimised. However, to say that climate change is a result of man's pollution flies in the face of geological history, as the earth has been subject to many climate change events over millions of years, long before man ever walked here or had a chance to pollute.
We have already seen such scientific conflicts over the dire predictions about the "hole in the ozone layer" and the later research which denied the accuracy of this. Scientists have hit upon the "climate change" issue as a way of obtaining research funds and protecting their jobs, but the scientists who postulate the theory that climate change is a result of man's interventions run the risk that, when this is eventually discredited, the public may develop an attitude that 'pollution doesn't matter'.
Of equally great concern is the fact the the Federal Governments (of all political persuasions) have perfected the use of fuel as a liquid tax. State Governments have used all public utilities as "milking cows" and now are using water as their liquid tax. It would appear that both levels of government are eager to take on the issue of "carbon credits" as another all-encompassing tax - for which there is currently little understanding and no definition of its boundaries, despite the undeniable fact that on a global scale the ultimate effect of Australia's effort will be miniscule, but potentially at a huge cost to our economy.
Add all this to my long held belief that there will be some form of a "correction" or slowdown in the Chinese economy after the Beijing Olympics - probably starting by the end of this year or first quarter next year - and I still remain very worried about our short term future. Where we end up in the long term will depend on the actions of our Federal leaders and their highly paid advisers, and I still don't think that they have much more idea of what is going on and how to deal with it than do rank amateurs like us living in the more remote areas of the country.
I know that many may disagree with me about my concern for the future - but I remain willing to bet a bottle of good scotch that we will face a further downturn before a year is out. While many industries may suffer their ups and downs, there will always be a demand for the production of food and energy.
However, since Australians have ruled out the obvious benefits of nuclear power, the quest for low emission energy production must inevitably see a move to more reliable and cost efficient power production from sources like geothermal energy, rather than from the (currently) very high cost of solar, wind or wave power systems.
In all industries, including the jewellery industry, those who are purveyors of lower quality goods are dealing with customers at the lower socio-economic levels who will be most vulnerable to any downturn in our economic situation - and they will end up competing strongly with each other (and the mass of poor quality jewellery available on the internet), and many will suffer the economic consequences. It remains of great concern to us that some of these 'lower quality' jewellers bring discredit on the jewellery industry because of the deceit they practice on their customers by failing to provide clear certificates or other forms of sale identification to disclose the true nature of the synthetic, chemically modified or artificially coloured gems - examples of which are shown to us at almost every gem show and fair we attend.
Jenny and I remain totally committed to the genuine Australian manufacturing jewellers, and to the sale of guaranteed genuine, natural gemstones - preferably Australian, wherever possible.
Those who trade in higher quality products involving genuine, natural materials, deal with customers who are best able to withstand any significant downturn - and, providing they watch their finances, will survive and may actually prosper. The common complaint amongst all our jeweller clients dealing in genuine, natural gemstones is that they are flat out, have months of work committed in front of them, and cannot find suitable qualified jewellers to employ, to assist them with their work.
We are already practising the principles we preach. After much serious thought, Jenny and I have chased up outstanding monies owing to us, and have even cashed in our invested superannuation funds (at a loss!) in order to discharge all our debts, so that we could be in a much better position to ride out the bad period which we believe is ahead of us.
It is my unsolicited advice to everyone that they should think hard about their own positions and do everything they can to secure their futures. This is not a time for frivolities, but for serious contemplation and action.
If I am wrong, but I do not expect to be, you can all 'rubbish' me as an 'ignorant scrubber' - but, as I have said above, I am willing to bet a bottle of good scotch on a further downturn over the next year, which will hurt a lot of people, so try not to let it be you.
I apologise for the long winded nature of this 'Report', but it reflects the depth of my concern for the future of the Australian gem and jewellery industry, and for all other Australian industries. The sky has cleared today as I finish this missive, and the sun is shining brightly. I hope that the dark clouds on the horizon of our economy clear as quickly.
Regards, Jim Elliot. Coolamon Mining Pty. Ltd.
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