Key points:
- Beowulf Mining needs a political victory at Kollok
- They're hired a political technocrat to run the company for them
- This may work, might not, but that's the question
Beowulf Mining (LON: BEM) is clearly entering the political game as it attempts to get the Kallak mine off the ground. Given that the barrier to exploitation of the mine is purely and only politics this looks sensible. The big question is whether this is going to work – politics being something of a funny game where logic and good sense don't necessarily win.
As we've pointed out before about Beowulf shares there's nothing wrong with the basic deposit that they're looking to mine. Swedish iron ore has been known for it quality and purity for centuries now. There is a considerable market for iron ore within Europe, we can see how putting those two together will work.
The actual deposit at Kollock is somewhere between fine and good. Asuming that iron ore prices stay somewhere within recent market bounds there would be a good profit from mining it.
Also Read: The Best Nickel and Nickel Mining Stocks to Buy
But this is where politics comes into it. We might think that Sweden's frozen north is a great place to dig a big hole. Unfortunately, certain of the Sami who live up there don't quite think so. They're also gaining support from the likes of Greta Thunberg in their battle against the mine. For example, on Friday Beowulf reported on their latest letter and how they wish to make a big announcement this week. Effectively, we're going to fight this international capitalism so we can keep herding our reindeer.
Whih is something that all can have opinions on of course. But that's the fight that Beowulf has on its hands. Which is why today announcement matters:
appointment of Ulla Sandborgh as CEO of Jokkmokk Iron Mines AB (“Jokkmokk Iron”), Beowulf's wholly owned Swedish subsidiary which is developing the Kallak Iron Ore Project (‘Kallak”).
The point about Ms. Sandborgh not being her technical skill at mining at all. Rather:
Her most recent role was a Director General, Ministry of Enterprise, The Government of Sweden, in which role she was responsible for issues affecting the limestone and cement industries
Yes, she's got a technical background but a reasonable description would be a political bureaucrat. Which is exactly what is needed of course. For the problem with Kallak is nothing to do with the mine or mining, it's the political will to allow the mining to go ahead.
It's possible to look at this from outside and insist that this is obvious – but it's surprising how may natural resource projects do get tripped up by the political game. Just think of Ineos and Cuadrilla over fracking in the UK.
Trading positions in and valuations of Beowulf shares really need to concentrate on this specific political battle that is. It is, by far, the definition valuation point. Can they overcome the Green objections, or not? They've certain amount of support from within the Swdish government at present, Greta and the Greens have quite a lot outside it. Beowulf really depends upon being able to gain that licence to mine without too, too, many green restrictions. Whether they'll be able to do so, well, that's the trade, isn't it?