Miners Have Three Potentially Serious Problems

The physical ETFs are looking better all the time

Three things are happening in the mining business, all of them bad.

Inflation is hitting hard

The cost of energy, labor, and equipment is rising, in some cases faster than the price of what is being mined. (More on this below.)

Governments are demanding a bigger piece of the action

Chile, the world's top copper producer and second largest producer of lithium, is raising taxes on its miners. Starting in 2024, companies that produce over 80,000 tonnes of copper a year will pay a maximum tax rate of around 47%, versus the current 41%-44%.

Mexico’s Senate recently approved a wide range of mining reforms, including a requirement that companies pay 5% of profits to local communities.

Australia just unveiled labor reforms that miner BHP claims would cost it A$1.3 billion a year. Said a company spokesman: “This cost is equivalent to the labour cost of approximately 5000 full-time employees across our operational workforce … In order to address a cost impact of this magnitude, we will clearly need to review its implications for our Australian operations and the workforce that supports it.”

Last but not least, Canada is scaring its junior miners: