Editorial: No dilly-dally in Mali

Early February saw swift development in Mali’s civil war, with French elite troops and air power, aided by West African foot soldiers and American drones, retaking most of the northern half of the country through open combat. Players in the substantial gold-mining industry in the country’s south let out a sigh of relief.

With such a rapid change of fortunes and the French doing most of the dirty work, the Canadian government got off easy: it didn’t really have to decide whether it would embrace a kind of twenty-first century neo-colonialism and deploy significant military power to the country to defend Canadian investments in the mining sector, and the federal taxes they bring in.

While the victory was swift in the manner of all desert warfare, there were reports the Islamist rebels had “melted into the local population” (military-speak for “the movement has the support of the local population”), and so counterattacks are more than likely.

Sadly for Western miners who found places like Mali and Burkina Faso rare islands of goodwill and stability in a crazy continent, we’re looking at a militarization of the mid-western Sahara region as it becomes another theatre in the global “War on Terror.” The U.S., which already provided air support to besieged Mali government soldiers in a losing effort in early 2012, is reportedly setting up a major new drone base in northwest Niger, presumably to patrol the vast region and gather intel to prevent another deadly Islamist attack similar to the one launched on the Western-funded gas plant in remote eastern Algeria in January.

• Bond rating agency Standard & Poor’s hit another milestone of depravity in its corporate history, with the U.S. government filing a US$5-billion lawsuit alleging the company gave falsely high ratings to mortgage investments, thereby helping to trigger the global financial crisis. S&P’s parent McGraw-Hill says it is prepared to spend years fighting the charges, which it denies.

• Venezuela’s profound political troubles at least show the world the progress of a currency’s devaluation in real-time. With president Hugo Chavez in Cuba recovering from more cancer treatment, the Venezuelan government has devalued the bolivar by 32% to 6.30 bolivars to the U.S. dollar, its fifth devaluation since strict currency controls were imposed in 2003. The move lets the government reduce borrowing to fund its deficit-laden budget, which is reliant on U.S.-dollar denominated oil exports.

Currency devaluation seeps into every financial aspect of a citizen’s life, even the toothpaste squeezed onto your brush in the morning. NYSE-listed Colgate-Palmolive, which derives 5% of its sales in Venezuela, has already said it will incur a one-time, first-quarter loss of US$120 million because of the devaluation. Since 2010, Colgate has declared Venezuela as a “hyperinflationary” country to operate in. For accounting purposes, the company designates all currency fluctuations there as income or loss.

For mining’s long-term thinkers, it pays to stay on top on Venezuela’s woes. If South American history is any guide, Venezuela will crumble further under the current system, prompting in five, 10 or 20 years a dramatic lurch to a business-friendly government that will reopen the country’s gold-rich southeast to sorely needed mining investment from market-oriented countries like Canada and the U.S.

• Showing just how serious the problem of counterfeit heavy machinery parts can get, a Swedish court has sentenced a man to a one-year jail term and awarded damages to Swedish ball-bearing company SKF, after finding him guilty of violating law in relation to SKF’s trademark.

SKF said the court found he had bought counterfeit SKF products and resold them at a high profit to unknowing customers. The scheme came to light in March 2010 thanks to a raid by Swedish police of stores in Stockholm and Avesta, where they found thousands of counterfeit SKF products.

SKF has similarly summoned Bearing International Holland (BIH) to court for allegedly having sold counterfeit SKF products. The action stems from a November 2011 seizure by customs authorities in China of counterfeit SKF bearings on their way to BIH. SKF says that a June 2012 raid on a non-authorized distributor in Austria led to the seizure of counterfeit SKF bearings that were apparently bought from BIH.