Sir Arvi offers words of wisdom

MINING industry doyen Sir Arvi Parbo, visiting Perth last week, had a few words of caution for those are enjoying the current boom but perhaps in danger of losing their sense of perspective. He said forecasting was an extremely hazardous profession, citing a recent change of heart by the Economist Intelligence Unit, which had "the very best expertise and information at its disposal". It had been tipping a 26 per cent slide in metal prices in 2006 but was now expecting a 53 per cent increase, with a further 2 per cent gain in 2007. Sir Arvi, who was chairman of BHP, Alcoa and Western Mining Corporation during the 1980s and 1990s, said the problem with booms was that nobody could predict when they would end. He noted three events in the past 40 years that brought a sudden end to booms – the five-fold increase in oil prices in 1973-74, the collapse of the Soviet Union in 1991, and the Asian financial crisis in 1997-98. All were unexpected, with even the CIA failing to tip the collapse of the Soviet Union. "This is perhaps not unreasonable because it also took president Gorbachev by surprise," said Sir Arvi, who was born in the Baltic nation of Estonia. While acknowledging many risk factors currently prevailing, including global terrorism, high oil prices and rising inflation, Sir Arvi retains a positive outlook, which must have been a reassuring for his hosts from Ernst & Young’s newly launched mining advisory group. "There are very good reasons to be optimistic about the high demand for minerals continuing," he said. "If and when a downturn comes, the fundamentals are such that this is likely to be a temporary interruption rather than a permanent weakening of the world demand for metals and minerals."

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