Posts Tagged ‘Mining’


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Excellent piece on the silver run. 

Facts on Silver

Bob Moriarty
Archives
Apr 25, 2011

For those who missed my piece of March 25, 2011, here is the link. I asked the question, “Is Silver Topping?” I may have been right about silver topping, only time will tell. For certain I was dead wrong about the timing and the price. Silver has rocketed from $38 and change when I wrote the piece to over $47 now.
But lots of people get lots of things wrong about silver. So here are some facts.
1. Silver is going parabolic.
According to Jim Rogers all parabolic moves end badly. I have seen similar charts in all kinds of commodities and they always correct. Parabolic charts mark tops. So when silver bugs start suggesting, “This time it’s different” I know better.
Study the chart below. Ignore the commodity. When charts go parabolic, it ends badly. I was an investor in the 1970s in both gold and silver. I started buying gold at $35 and silver around $5 an ounce. I sold out all my silver in January of 1980 a week too early at $35 as it rocketed to $50.25 an ounce at the open on January 21, 1980. It went parabolic and basically that’s all you need to know.

Those investors who want to buy at new all time highs almost always are the same investors who want to sell at all time lows. Naturally as a guy running a metals site, I think $46 silver is wonderful for all my readers that I was telling to buy at $4 and $6 and $10 and $20. Is silver a good buy today? No, it’s a good sale… to those who insist on buying at tops.
2. The actual ratio of silver to gold in the earth’s crust is not 16 to 1.
It’s more like between 20 or 26 or 64 to one. This is not an absolute fact, these are opinions from experts but no experts conclude the ratio is 16-1. Go to Wikipedia and do the math for yourself.
What happens on the web is that one guy starts a rumor saying there are tens of thousands of gold-plated tungsten bars out there. Some other fool adds a few “facts” to the rumor and all of a sudden hundreds of sites are writing about fake gold bars.
Alas, years later not a single tungsten bar has showed up. It was rubbish and anyone who understood anything about metalworking would understand that technically it would be very hard to do. All 400 ounce gold bars are tracked and if by some strange process someone managed to counterfeit one, he would be caught at once. But you can sell a lot of subscriptions to those who pay to have their fantasies catered to.
It doesn’t matter how many people claim the ratio of silver to gold is 16-1, it simply isn’t true.
3. There is no shortage of silver. There never has been a shortage of silver. Until the laws of supply and demand are repealed, there never will be a shortage of silver.
The first person I ever read that claimed there was a shortage of silver was Ted Butler. He claimed in May that according to his figures the world was going to totally run out of silver by December. This was on the Kitco forum. I wrote and told him he was dead wrong, there were billions of ounces of silver above ground. His response was that according to his numbers, we would be out of silver bullion and that would drive the price of silver all by itself to between $50 and $100 an ounce. In a vacuum. Without gold going up or oil or anything else going up because of inflation. Silver was that rare.
My retort was that with billions of ounces around, prices would soon turn Grannie’s silver service into silver bullion. He insisted I didn’t know what I was talking about; he was the silver “GURU.” The exchange took place in May of 2001 and by December of 2001 I had correctly called the bottom in silver while he was insisting that it would be $50 an ounce. One of us was dead right.
But then he was also the guy claiming that silver was the most critical war material and if we ever go into a war, that would drive silver prices to between $50 and $100 an ounce and it was so rare that you should, “never, never, ever sell silver.” With the US engaged in three different wars at the same time, you would think that silver would be $300 an ounce. It’s not.
My question is, “If you were smart enough to buy 100 ounces of silver at $4 an ounce, a 5000-year low in real terms, how much profit have you made if silver goes to $50 or $100 or $300 and you never, never, ever sell? The answer, of course, and ignored by all the silver “GURUS” is that if you buy low and don’t sell ever, you don’t make any profit. That may be the dumbest investment advice I have ever heard.
Silver is a commodity like any other. If you are smart enough to buy it cheap and you are smart enough to sell it when it gets expensive, you will profit. If you want to buy at all time highs, good luck with that.
There are 19 billion ounces of silver above ground today. People talking about silver “bullion” inventories are being misleading. Silver is silver is silver and it only takes a day to turn a few 200 year-old-tea pots into a boring 1000 ounce “bullion” bar.
Just how accurate is the 19 billion ounce figure? We can figure that out with simple logic. I think the figure accepted by more people for total silver production ever would be about 45 billion ounces. A favorite argument of the permabulls is that silver is consumed, not recycled. Let’s think about that. Silver is used in computers, iPhones, aircraft, and lots of commercial purposes where it isn’t recycled. But that use of silver wasn’t common until perhaps 1960. Silver before that time was recycled. Yes, silver coins did wear but they didn’t wear out, they might lose 20% of their original weight.
If 45 billion ounces were produced, it’s more logical that a good percentage of it is still around. I was in my coin dealer’s shop a week ago. He bought 2800 ounces of silver on Saturday. Not a bar of bullion in the bunch but 2800 ounces of real silver in other forms. The numbers on silver are not hard numbers; we simply don’t know how much silver is around. But we do know there is a lot of silver and with the exception of a short period between the end of November of 1979 and January 21 of 1980, a mere six weeks later, silver has been well under $10 an ounce on average for the last 40 years. How rational is $46 silver? Not very.
I’d guess most silver mines have cash costs between $3 and $10. A market price of $46 an ounce will suck silver out of grannies’ closets and out of the ground at the same time. Every silver refinery in the world is running at capacity right now, if you want silver, there is a lot of it around.
4. The most illogical thinking and worst use of “facts” is common among the silver uberbulls and the parrots that follow them.
Someone just posted the most incredible theory on the validity of SLV. That’s the silver ETF that has been trashed for years by a small group of uberbulls with an agenda. One of their supporters came up with a brilliant argument. Since we don’t really know and can’t prove that SLV actually has all the physical silver, the proof that it is a scam is when they deny it being a scam. Read that carefully. The proof that it is a scam is when they deny it.
So, apparently, if you ask the people behind SLV if it is a scam and they admit it, that means we know it’s a scam since they admitted it. And if you ask the people behind the SLV if it is a scam and they deny it, that also means it is a scam because the proof is when they deny it.
I think that’s circular logic. No matter what the people behind SLV say, it’s a scam.
I have said in the past I have reservations about ETFs and I think investors should be aware of those reservations. If we have a total economic collapse and the financial system freezes, all ETFs could be frozen or worse for months. That includes Sprott’s paper silver, the CEF and SLV and all ETFs of all sorts. What happened in Argentina could happen in the US, it could happen all over the world. It’s entirely possible that all banks close for a good period of time, after all they are insolvent now and have been since September of 2008. But a financial freeze would affect all forms of paper silver including Sprott’s silver trust.
The CEF fund and the SLV have done more to improve the price of silver and gold than any other single action in the last 50 years. Silver bugs should be grateful SLV holds 366 million ounces of silver instead they are whining and posting simply absurd articles totally lacking in either facts or logic.
When someone posts something that ridiculous and lacking in logic, you may safely presume they don’t know what they are talking about. That’s real common when people write about silver and it’s going to cost investors a whole lot of money.
The daily bullish consensus on silver is 96% as of Wednesday the 20th of April. On January 21st of 1980, the very day of the top, the bullish consensus was 94%. How many of the silver uberbulls are suggesting that maybe the record high bullish consensus is suggesting a very dangerous time to start buying? The answer is damned few because they have an agenda and their agenda doesn’t involve them knowing what they are talking about. As long as they tell investors what they want to hear, they will be very popular.
5. There cannot be a run on Comex. The rules do not allow the chance for a run.
For years I have watched as each time silver runs up, certain people start spreading rumors that silver is in such shortage that there will be a run on Comex. The only problem with the rumor is that it can’t possibly happen. There cannot be a run on Comex. I repeat, there cannot be a run on Comex.
Part of the reason for the rumor is that most investors confuse the purpose of the exchanges. The purpose of the exchanges is not to exchange commodities. The purpose of the exchanges is to determine price. But certainly the possibility of a run on an exchange is possible so early on the exchanges adopted rules that called for cash settlement if necessary.
Most people don’t know this because they don’t read the small print but if you have a savings account, the bank has the right to withhold payment for up to 90 days. And all mortgages are essentially 90 notes at their heart. That’s right, the bank can demand full payment within 90 days if they wish and during the 1930s that’s how thousands of Americans lost their homes even when they were paying their mortgage.
I don’t write the rules and you don’t write the rules and they are what they are if you like it or not. There cannot be a run on silver, it’s impossible. So anyone writing about it is spreading disinformation. Of course anyone who ever passed a Series 7 exam know this but you will never hear the silver uberbulls mention it. I wonder why.
There are three guys in the mining business that are so smart and have such great track records that for 70% of investors in metals, they should buy into their mutual funds and stop trying to outsmart the market by picking stocks. The top three guys in the industry are Ken Gerbino, Eric Sprott and Frank Holmes. If you like metals and shares in resource stocks, stop trying to be so smart yourself, it’s difficult work. Hand your money to them to invest in one of their funds and you will do just fine.
That said, Eric Sprott seems to have done something that hasn’t happened to the market since the days of Johnny Carson. You have to be getting on in age to remember it but back in 1973 Johnny Carson started a toilet paper shortage that lasted a month. He was making a joke. He said that there was a toilet paper shortage. The next day, millions of rolls of toilet paper flew off the shelves of every store in the US and by noon there was no toilet paper to be had. It was nothing but a joke.
Don’t let anyone convince you that supply and demand doesn’t work. They do work and that’s far more important for you to know than belief in some mysterious manipulation conspiracy theory. I’ve heard all the stories and know all the arguments. No one in history has made a cent from a belief in market manipulation.
If gold has gone up 4100% since 1950, higher than any other commodity, anyone manipulating it down has done a piss poor job. And who cares if 4 guys have sold more silver short than exists in the known universe? Those are all interesting theories but that’s all they are. If you don’t buy low and sell high, you can’t make money. End of story.
Eric Sprott started his own paper silver fund called the Sprott Physical Silver Trust. It’s still paper silver like SLV or the CEF fund. It has some unique features, not benefits but features. He has done a brilliant job of promoting it.
Recently he purchased $300 million dollars more physical silver to put in the closed fund. As a result of his excellent promotion, as of last Wednesday, silver was selling for $46. If you bought the CEF silver fund, you paid $47.88 for silver. If you bought SLV, you paid $46 with no premium but if you bought PSLV, the Sprott Silver Trust, you paid an incredible $57.73 an ounce for silver.
I’d say that Eric Sprott buying $300 million dollars more silver lately was incredible timing. He pocketed probably $60 million in profit. Is Eric Sprott bullish on silver? I’d say so. He has 60 million reasons to be bullish. He can buy at the exact top of silver and watch a 25% decline and still make money.
How wise was it for investors to pay a 25% premium for silver? I’d like to believe my readers are smart enough to figure that out for themselves. Eric Sprott is both brilliant and rich but paying 25% over spot is not wise investing.
The Hunt Brothers investing in silver drove silver to $50.25 an ounce for a few minutes on January 21, 1980. I think it would be fair to credit the silver boom of 2011 to Eric Sprott. He’s not really saying anything new about silver, though, Ted Butler was claiming that we were about to run out of silver 10 years ago and claiming that silver was the most manipulated of all metals long before Eric Sprott bought his first ounce of silver for a fund. But Eric Sprott adds credibility. But we weren’t running out of silver ten years ago. We aren’t running out of silver now.
One of two things is going to happen. Either we are at a top and silver is about to crash both hard and long, or the world’s financial system is about to fall apart. I have been an advocate of a total financial crash for a lot longer than most writers. I was writing about the dangers of derivatives in 2002 when they were 15% of what they are now.
But I don’t believe the world’s financial system is going to crash next week. As in January of 1980, the silver bulls are going to be the ones losing money. You can’t profit if you don’t sell and all the permabulls are screaming “Buy, buy, buy.” As they will at every top. Buying at record high prices is rarely profitable. But perhaps this time it really is different.
Here’s what all potential investors in silver need to know.

  1. The chart of silver has gone parabolic. Parabolic charts mark tops no matter what the commodity.
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  2. The bullish consensus on silver is at a record high. Record high bullish consensus on any commodity is common at tops.
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  3. When the most credible guys in an industry start explaining why supply and demand don’t really work, it’s a top. With 19 billion ounces of silver above ground we aren’t about to run out any time soon.
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  4. When guys start writing about silver that didn’t have a clue as to what it was or what it was used for at the bottom, you are at a top. I’m astonished at both the ignorance and the arrogance of the newly invented silver “Gurus.”
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  5. When the smartest guys in an industry start telling you, “This time it’s different,” it’s not. It’s just a top.
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Bob Moriarty
President: 321gold


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The annual payout will rise at a rate of 20 cents per share for each $100 per ounce increase in the average realized gold price.
Newmont plans to link dividend to gold prices

(Reuters) – Newmont Mining Corp (NEM.N), the world’s second-largest gold producer, plans to link its quarterly dividend to the price of gold it realizes for the preceding quarter.
The annual payout will rise at a rate of 20 cents per share for each $100 per ounce increase in the average realized gold price. The current gold price of about $1,450 an ounce will mean Newmont’s annual dividend would be $1.00.
“With our strong balance sheet and cash flow, we are positioned to fund profitable growth and to pay a new gold price-linked dividend,” Chief Executive Richard O’Brien said in a regulatory filing before its investor day.
The first quarterly dividend under this policy is expected to be payable on June 29. The company paid a quarterly dividend of 15 cents per share on March 30.
Newmont continues to see 2011 attributable gold production of 5.1-5.3 million ounces.
Newmont shares closed at $56.45 on Wednesday on the New York Stock Exchange.
(Reporting by Krishna N Das in Bangalore; Editing by Maju Samuel)

Newmont plans to link dividend to gold prices | Reuters


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Reviving Codelco

“During last year’s election campaign, Sebastián Piñera, who became Chile’s president in March, often criticised Codelco, the country’s state-owned copper company, for its inefficiency, griping over its stagnant output and climbing costs.

Yet it was engineers from Codelco who stood beside him this month as the 33 miners trapped since August 5th in the privately […]

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October 25, 2010

Rare earth metals draw attention

By RICHARD BLACKWELL
From Tuesday’s Globe and Mail

The elements required in many technologies face a supply crunch as China – the world’s main producer – cuts back exports

Among the hottest commodities these days are the rare earth elements – obscure metals used widely in key technologies such as smart phones, televisions, hybrid cars, lasers and military equipment.

These elements aren’t actually rare, or earths, for that matter. They are metals that are found readily on Earth’s crust, but not in concentrations that make them easy to mine.

Geopolitical trade issues have shone a light on them in recent months. More than 90 per cent of rare earths are produced in China, and there are worries the country will cut back exports to ensure it has enough domestic supply, leaving technology producers in Japan and the West in the lurch. Those concerns were heightened last month when it was reported that Chinese rare earth exports to Japan might be trimmed after a diplomatic incident in which the captain of a Chinese trawler was detained by the Japanese in disputed waters.

Worries about the security of supply has boosted the prices of rare earth metals, and lit a fire under producing companies or those exploring for new mines. But the possibility of an investment “bubble” is itself a concern, as some institutional investors are retreating from the sector.

It takes years to get a new mine up and running, so even if the flurry of activity results in new production in the West, there could still be short-term shortages.

What they are

Of the 17 most commonly used rare earth metals, 14 appear on one of the lower rows on the periodic table – the part you probably paid no attention to in high-school chemistry class.

Many have unpronounceable names, such as dysprosium, praseodymium, ytterbium, and neodymium.

In combination with other elements, they form compounds that are highly useful as pigments for glass and ceramics, or as components in electronic products that require high heat resistance.

Where they are used

Hybrid cars: In batteries, catalytic converters, electric motors and LCD screens.

Miniature electronics: In the batteries that make devices such as iPods and Blackberrys work, and in the tiny magnets needed for mini-motors and speakers.

Wind power: Used in the magnets that are key components of wind turbine generators.

Television screens: They provide a bright red phosphor that helps make television pictures sharp.

Canadian players

Quest Rare Minerals Ltd., Montreal: Exploration projects in Quebec, Ontario and New Brunswick;

Avalon Rare Metals Inc., Toronto: The Nechalacho project in the Northwest Territories is set to begin production in 2014.

Great Western Minerals Group Ltd., Saskatoon: Properties in Canada, the U.S. and South Africa

Neo Material Technologies Inc., Toronto: Production in China, Thailand, North America.

Rare earth metals draw attention – The Globe and Mail

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In Peru back in 2008, junior miners – those companies who rely largely on capital markets for finance – proved to be the canaries down their own mines who warned of the credit crunch.
Juniors had flooded into the market to join a frenzy of exploration, attracted by a heady mix of soaring commodity prices, cheap credit, China-like rates of economic growth and Alan Garcia’s pro-investment policies. But, true to hot money form, they had already begun a rapid exit by the time Lehman Brothers fell and the commodities boom ended.
Now juniors are coming back, in a more orderly fashion.
They have been attracted, in part, by Peru’s economic recovery: GDP growth has hit double figures in recent months, and is forecast to be as high as 8 per cent for 2010 as a whole.
Credit is also attainable once more. Gonzalo de Rosa, junior-mining analyst at Banco de Credito, told beyondbrics:

As the crisis passes, [juniors] have been more actively getting more credit facilities; they can do private placements. I don’t think that’s going to be an issue for them in the next few years.
As prices begin to present a positive trend they’re going to be gain more appreciation in the market.

Some juniors have a headstart now, with social and environmental impact assessments approved before the downturn. Yet the increase in junior investment is not as steep as it was two years ago.
Alonso Segura, chief economist at Banco de Credito, points out the juniors’ challenge:

One thing is betting on the sovereigns of an investment grade country which is a star performer in the region, a medium-sized economy, or buying bonds of a very well rated company – a very different issue is buying bonds of a junior company, which is basically going to a casino.

Casinos or not, junior miners are certainly back in vogue

Peru: junior miners are back | beyondbrics | FT.com

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DRC: Independent Audit Of First Quantum Mining Firm To Be Launched

The Democratic Republic of Congo plans to audit the operations of First Quantum Minerals Ltd. in the country to examine “suspected wide-scale misconduct,” Bloomberg reported Aug. 31, citing Mines Minister Martin Kabwelulu. A body engaged in financial auditing will carry out the investigation, which will look into allegations that First Quantum illegally exported copper ore without fully declaring it.

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Underground Dreams: Beer, Hugs and Weddings

By MATTHEW MOFFETT


SAN JOSÉ MINE, Chile—Claudio Yáñez wants beer and a hot dog. Esteban Rojas wants to finally have a real church wedding with his wife of 25 years. Raúl Bustos wants to hug his five-year-old daughter.



For Chileans, these men and their colleagues are known simply as “Los 33″—the 33 miners who have been trapped half a mile below ground since the Aug. 5 collapse of the San José mine. The men have captured the attention of the world by surviving longer underground than all but a handful of mine accident victims.

The Miracle of the San Jose Mine

Zuma Press


Ranging in age from 19 to 63, they include a former professional soccer player, a Bolivian immigrant in his first week at the mine, a salty former seaman who had premonitions about an accident and a man in his 50s who is still waiting to see the grandson born just before the cave-in occurred.

What Chileans are calling the “Miracle of the San José Mine” is the tale of how unthinkable adversity turned this motley collection of miners into a doggedly disciplined unit, how a recently elected billionaire president risked his reputation in spearheading their rescue and how family members never lost hope.

The story isn’t by any means over. It will take three to four months for a 30-ton drill to gouge a 2,200-foot tunnel down to the chamber where the men are holed up. The plan is to hoist the men out one-by-one, a journey that could take about 40 minutes for each miner.

Footage released showing trapped Chilean miners in good spirits, as they come to terms with their months long wait to be freed.
In the meantime, rescuers send food, water and letters to the miners in tubes that whoosh down the four-inch shaft that serves as the miners’ umbilical cord. Doctors are gradually ratcheting up the caloric intake of the men who each lost an average 20 pounds on rations, according to health workers. On Thursday the miners got their closest thing to a full meal in weeks: stewed apples and bread with quince jelly.

In a video released Thursday, the men—shirtless, scrawny, with scraggly beards, but big smiles—showed the world their temporary home. “This is the famous shelter,” said one of the men. They pointed to a makeshift “casino,” where they played dominoes, and demonstrated how they had divided tasks needed to keep the refuge running. One miner was keeping a journal on all that had happened. “Get us out of here soon,” said another, in the spectral lantern-light of the mine.

The men can walk a distance through some unblocked tunnels, but spend most of their time in a couple of shelters that are relatively well ventilated and protected from cave-ins.

Physiologically and psychologically, the miners have entered seldom-explored territory, says Jeff Dyche, a James Madison University psychologist, who studied submariners when he served in the U.S. Navy.

Without sunlight serving as a regulator, the human body clock runs about 24 and a half hours, Mr. Dyche says, which means the miners are “going to be completely disengaged from what time it is in the outside world.” To make sure the miners are alert on the day of the rescue, he says, doctors will have to try and re-sync the men’s body rhythms by putting them on the same sleeping and waking schedule as people above ground.

Rescue planners at the state copper company, Corporacion Nacional del Cobre, have been discussing whether it would be necessary to blindfold the miners during the extraction or or conduct the operation at night, so they aren’t overwhelmed by the light when they come out.

More immediately, government rescuers are grappling with the question of how much control to place on the miners’ communication with loved ones. Earlier this week, family members said government psychologists had asked to review the letters they send down to the miners to make sure they avoided potentially upsetting issues, such as the fact the men may not be getting out of the ground until Christmas. Luciano Reygada, whose father is in the mine, said a psychologist told him, “Don’t say that we hope you come out soon. Just say that we’ll be waiting for you when you come out.” Rescuers have since said they gently told the 33 of their estimated time of departure, and the miners seemed to take it in stride.


Sergio Donoso, the uncle of Raúl Bustos, feels responsible for his nephew’s predicament. Six months ago, after one of the biggest earthquakes in a century along with a roiling tsunami smashed the southern shipyard where Mr. Bustos worked, Mr. Donoso suggested he travel north, to the mines. “He was worried about future catastrophes, so I told him there were stable jobs in mining,” said Mr. Donoso, who has been keeping vigil above the mine.

Miners trapped underground for three weeks in Chile are offered unusual help from the space agency NASA as they prepare to endure further weeks below ground. Video Courtesy of Reuters.

Mr. Bustos’ mother, Rosa Ibañez, came to the mine right away from her home in far-off southern Chile. It was the first time she’d flown on a plane. In Mr. Bustos’ first letter to his family this week, he said that he’d come up with a nickname for the diamond-tipped drill that rescuers had used to locate the men’s underground shelter: He called it “María Paz,” in honor of his five-year-old daughter, who relatives say is a handful.

Gregory Belenky, director of the Sleep and Performance Research Center at Washington State University, says the Israeli military found during the 1973 Yom Kippur war that the wrong kind of communication with family could add to stress. But Mr. Belenky, who served 29 years in the U.S. Army working on combat stress and other issues, thinks he would level with the miners about the rescue strategy “so they can plan, adjust expectations and so everyone is on the same page.”



The plight of the 33 men has been an eye opener for many Chileans. One of Latin America’s most advanced economies, Chile has been a darling on Wall Street for its free-market ethos. Its capital, Santiago, is clean and modern, with a scaled-down version of the Chrysler Building. But despite the emergence of other industries, including finance and construction, mining remains the bedrock of the economy, accounting for the biggest share of exports and output. The accident and rescue have allowed Chileans to get acquainted with people who are responsible for much of the country’s prosperity, but remain largely hidden from view due to the very nature of their work.


When the miners broke out into a ragged chorus of the national anthem after the first telephone contact was made with them on Monday, it was as “as though we couldn’t believe that some countrymen are still that way, of that caliber and that timber,” wrote Daniel Mansuy, a professor of political philosophy, in the Santiago newspaper La Tercera. Family members holding vigil above the mine said it more simply on a message emblazoned in marker on a Chilean flag: “Chile without miners isn’t Chile.”


The miners had no way of knowing what was in store for them when they showed up for their shift that fateful Thursday, Aug. 5. Like many of the miners, Mr. Yañez, who had worked eight months in the mine after leaving a low-paying construction job, “was just desperate for a paycheck” says his half-brother Pablo Lagos.


Twenty-four-year-old Bolivian Carlos Mamani, who emigrated to Chile to find work, was only in his first week at the mine, his brother Cesar Mamani told Chilean television.
While Chile on the whole has a good mining safety record, smaller to mid-sized mines like San José often escaped scrutiny by the understaffed mine regulator, according to unions and workplace-safety experts. After the accident, Chile President Sebastián Piñera cleaned house at the regulatory agency and announced the government would take a tougher line in the future.

The 121-year-old mine, operated by Chile’s Compañia Minera San Esteban Primera, had been shut down for about a year by regulators in 2007 after an explosion killed a miner. Mario Gomez, a former sailor who at 63 is the oldest of the trapped San José miners, had a nephew who lost a leg in an accident at the mine several years before that. Mr. Gomez’s wife, Lilian Ramirez, said her husband told her he was afraid of going to work not long before the collapse.


The collapse occurred at around at around 2 p.m., sending up a massive dust cloud. “We felt like the mountain was coming down on top of us and without knowing what was happening,” Luis Urzua, one of the leaders of the trapped men, would later say in a phone hookup with Mr. Piñera. “Then came the dust cloud, like four or five hours in which we couldn’t see anything.” The men lost a chance to escape through a ventilation duct in the first days of the crisis because mine managers hadn’t installed an emergency ladder, as required by law, Chile’s mining minister, Laurence Golborne said.
Firemen weren’t alerted of the accident by the mine managers until about six hours after it had occurred. The delay in reporting the collapse is part of a wide-ranging investigation into the mine by regulators and Chile’s Congress. Minera San Esteban Primera’s owners have said they tried to run a safe operation. They didn’t respond to requests for comment for this story.
The day after the cave-in, civil defense officials had mustered a 40-man rescue crew to go in after the missing miners. But the mission nearly wrought another tragedy, as the rescuers confronted a cascade of falling rock and buckling walls. “Rocks, dust, darkness, heat,” said fire captain Rafael Gonzalez Perez. “It was impossible.”
The mine collapse presented a challenge for President Piñera, a billionaire airline and television mogul, who took office in March. Chile’s first conservative president in two decades, Mr. Piñera has promised to run Chile as efficiently as he had his businesses. In a gamble that might have backfired if the rescue had failed, he cut short a trip to Colombia to go to the mine and has made three follow-up trips since. “It was a big bet but also a very important one at the core of his political message” of competence, said political scientist Patricio Navia.
Unable to send in rescuers to fetch the miners, the government shifted to Plan B: Drilling down from the surface after the trapped men.
But after a couple of days, the effort was looking like a geological shot in the dark. Engineers were finding the maps of mine weren’t accurate. “The situation is very complex,” President Piñera said at the time. “The mine continues collapsing. It has a geologic fault. The mine is alive and that enormously obstructs rescue work.”

Families at the site started hunkering down for a long haul, putting up tents or crude lean-tos made of garbage bags stretched above poles. Dubbed Campamento Esperanza, Camp Hope, the place took on a somewhat surreal air. The government started trucking in water and food, as well as sending counselors, cooks and kindergarten teachers. Shrines with votive candles and statues of baby-faced Saint Lorenzo, the patron saint of miners who is often decked out in a hard hat, sprang up alongside television satellite trucks and portalets. Other iconic figures were called on for luck. Relatives of 34-year old Edison Pena put the miner’s picture on a placard along with Elvis Presley, assuring him that “you will be bigger than Elvis” after emerging from the mine.
Below ground the 33 miners were also getting organized. Mr. Urzúa, a soccer coach in his spare time, was one of the leaders. He oversaw the rationing of their food stores, so that miners could have a couple of mouthfuls of tuna, along with a canned peach and some milk every 48 hours. But after two weeks the miners had almost exhausted their provisions, Mr. Urzúa said.


Worry also spread through the camp full of families. Ana Funes, a social worker from a nearby town, organized art classes for children as a diversion. But some kids’ anxieties consumed them, says Ms. Funes. On a bulletin board, along with crayon drawings of Spiderman and a fairy princess, was a self-portrait of a pig-tailed girl with tears streaming down her cheeks. “I love you, cousin,” was the caption.

By the end of last week, a number of the families were losing faith in the government drilling strategy. They pressed Mr. Piñera’s rescue team to let 10 volunteers into the bowels of the mine to bring out their loved ones. Government officials said that was foolhardy.

“We have done and will continue doing what’s humanly possible,” President Piñera said. “But not everything is in the hands of our engineers and technicians. It’s also in the hands of God.”

A little after 6 a.m. last Sunday the probe broke through an underground chamber, a short distance from the miners’ main shelter. The 28-year-old drill operator, Eduardo Guerra, thought he felt some vibrations coming from below. Some engineers came over with stethoscopes and said they heard something, too. When Mr. Guerra pulled the probe out of the ground, a plastic bag had been attached to the drill tip with cable and rubber bands.

Inside the bag was a note painted in red: “We are well in the shelter the 33.”

Write to Matthew Moffett at matthew.moffett@wsj.comCopyright 2009 Dow Jones & Company, Inc. All Rights Reserved

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In Chile, Trapped Miners Dig in for the Long Haul – WSJ.com





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