The Mine Lead-Time Fallacy
In May of this year, the Marathon copper-palladium project received its final construction permit. I was floored to learn that this important critical mineral deposit is hosted in rocks that date from the Archean Eon, which means that it took the Ontario Government more than 2.5 billion years to issue this permit. Don’t they know we’re in a trade war? We need those bureaucrats to get out of the way and let us build!
Satirical absurdity of course, but in principle it’s no more ridiculous than starting the clock at “discovery”, which seems to be in vogue among mining lobbyists and consultants. In this article, I want to regale you with two of the major flaws in this fashionable pseudo-statistic, then suggest a systems thinker’s alternative perspective.
TLDR: it’s a residence time, not a lead time, because it’s a pool of projects, not a pipeline, and an over-filled pool is not your regulator’s fault.
So the first flaw is starting the clock at “discovery”. This term is so ambiguous that we cannot even agree whether it is a phase or a milestone in the exploration timeline. In some contexts, it relates to mere detection of mineralized rock; in others, to detection of a deposit worthy of further exploration. In law there is typically some vague notion of a “valuable deposit”, but it’s not usually tied to standards defining economic viability, and in any case “valuable” is ultimately decided by markets not proponents. In academic papers, discovery has been dated by press releases, but it is difficult to select a date; indeed, by that measure, deposits are sometimes “discovered” more than once. In mining folklore, discovery is often an accolade pinned to a geologist-hero like a medal – but usually for a sustained campaign, not a single moment of bravery.
Very few “discoveries” ever become mines, or even deserve to become mines. The tiny success ratio is worn like a badge of honour by explorers even as they complain about “lead times”. I won’t dignify the ratios by quoting them.
Imagine a healthcare system in which lead times for treatment are measured not from the first time the patient presents with symptoms, but from the approximate time a genetic test indicated some vague 1-in-10,000 predisposition to a condition. If we started beating up hospitals for their performance on the basis of such pseudo-statistics, we would be a laughing stock. But in junior mining, unfortunately the situation is even worse: the extended analogy, in Canada at least, is of governments giving generous tax breaks to big pharma to pay scouts to wander the streets with genetic testing kits, clogging up the system with low-risk patients.
The pseudo-statistics of this complex mess are being targeted at one specific but relatively minor factor: the speed of government permitting, analogous to surgery wait times.
The question in my mind is why an industry so hot under the collar about permitting lead times is not pummelling us with statistics about permitting lead times – which would be the time from acceptance of a complete permit application to permit issuance, adjusted downwards whenever permitting is not on the critical path. Perhaps it is because time-to-market only became a hot-button topic when minerals conveniently became “critical”, long after the “discovery” of any of today’s development-stage projects. Indeed, when a team of researchers led by Rosemary Collard published analysis of mines in British Columbia, concluding that “Project opening delays are common but rarely caused by regulatory barriers”, the industry condemnation - though swift and harsh – was notably lacking in counterfactual content.
My kindest interpretation is that the emergence of the time-to-market imperative has caught an inflexible industry on the back foot. Bogged down in bureaucratic investor-relations processes controlled by technocrats, and atomized into thousands of tiny exploration entities with dwindling investors, all it can do is deflect to the perceived source of the urgency – government – while trying to keep doing what it has always done.
Which brings me to Flaw #2 – time to market is not actually the goal.
The lobbying playbook creates the impression that the industry is, and always has been, focused on bringing metal to market rapidly; only government bureaucracy (or, if you mine oil, government ideology) stands in the way. But this is obviously not true in junior mining, not only at a practical level – as the research on delays shows – but also at a strategic level in terms of the structure of the industry.
What would the mining sector look like if its goal was time to market?
Indulge me another analogy. Imagine every exploration target as a slot machine in Reno, Nevada. Imagine that every senior mining company is a casino in Las Vegas, and that all their slot machines are bought from Reno, but only once they have paid out a jackpot in Reno so that their odds are known. Imagine now that you are the mayor of Vegas, visiting Reno to check on the “pipeline” of slot machines that will serve your visitors who aren’t allowed to visit Macao any more. Would you be a bit perplexed to find that there are not only 100x as many slot machines as gamblers in Reno, but that each one is in its own casino (exploration company)? Would you look kindly on the mayor of Reno giving tax breaks to deploy even more new slot machines? I doubt it. You would be asking some hard questions about focus and resource allocation. If the new punters were already showing up in your own town, you would get the Vegas casinos to take over the Reno ones pronto and shut most of them down.
If you’ve been to either of those cities, you will know that there are indeed far more machines than punters. That’s because the goal is to maximize cashflow through dizzying choice, not to progress rapidly through any one slot machine’s lifecycle. And so it is with junior mining. But at least the casinos of Nevada have the good sense to be somewhat consolidated. From a time-to-market perspective, the atomized structure of the junior mining sector is ludicrous. To quote Stafford Beer, “the purpose of a system is what it does”, and with 75% of new equity issued by Canadian juniors being donated immediately to charity (Peartree Securities, 2023 figures) it is very hard to argue that the purpose of junior mining has anything to do with time-to-market.
Which brings me to the systems perspective.
Stocks and flows are fundamental building blocks of systems thinking. Stocks are often represented as tanks of liquid, and flows as pipes. The industry narrative around “lead times” falsely presents a stock phenomenon as a flow phenomenon for lobbying purposes. In reality, exploration targets are independent, not sequential, candidates for investment for most of their lifecycle – and capital attraction is far more important than permitting processes for their speed of exit from the tank. Lead time is more correctly characterized as residence time. Furthermore, permitting processes are already becoming less sequential as projects “in the national interest” gain queue-jumping privileges. Permitting is a minor (at most) factor in residence time, and it may be declining.
The lead time fallacy is appealing because it transfers the burden of solution from the industry to its regulator (another systems thinking principle). But the industry needs to be careful what it wishes for. If geopolitical and energy-transition uncertainty remain elevated, there will be a very good case to move the entire exploration business into the public sector, by allowing Geologic Surveys to spawn state-owned enterprises. Such a move is only a short hop beyond the US Department of Defense taking large equity stakes in junior miners. And of course, in many jurisdictions, including some very successful ones, state-owned mining enterprises have been the norm for a long time.
In my view junior mining has reached a fork in the road. It can continue its moribund technocratic decline, selling geologic dreams, writing tax receipts for a dwindling group of aging investors, worshiping its entrepreneurial heroes annually at PDAC, and grumbling about government bureaucracy. Or it can join a new conversation around what the world needs in raw materials and how to focus investment and resources on delivering it in partnership with governments and communities.
Inspire Resources stands ready to support the latter choice, with novel business models, flexible mining methods, radical transparency, trust-building social technologies and inclusive design platforms.