With so much bad news being delivered simultaneously it’s easy to understand why the mining industry is starting to look like a war zone.

What started with the wholesale clean-out of the chief executive officers of the world’s major miners, including BHP Billiton, Rio Tinto and Anglo American, has spread down into the operating hubs such as North Sydney and West Perth.

Office vacancy rates have risen sharply, parking bays which were once scarce are suddenly available, geologists who once commanded high salaries are back driving cabs and an alarming number of small explorers have a market capitalisation which is less than their cash backing per share.

If mentioning all that bad news is seen as another example of Dryblower’ poor taste (or black humour) then you probably haven’t been around as long as he has because the outlook for the mining world is actually a lot brighter than you might imagine – even if the light is struggling to break through.

What’s happening – and it is painful – is a process that might be called “stable-cleaning”, with the mess left by the boom being pitch-forked out the back door of the barn.

Failed (and failing) companies are being buried or slipped into cold storage for a later awakening.

Marginal projects are being kept alive for better times and only the most skilful earth scientists are keeping their jobs while those who should have been driving cabs during the boom can now return to what they do best.

Consider some of last week’s events in a little more detail, such as:

• The gold price slipping into an official “bear market” because it is now down by more than 20% from its previous peak
• The government of Western Australia offering a 50% royalty discount to new iron ore miners trying to make a profit from processing low-grade magnetite ore
• The call by Ramelius Resources CEO Ian Gordon for greater government exploration incentives.

Those developments can be layered on the evidence from the stock market where there are now more than 200 small explorers with alarmingly low cash balances in an investment market where capital is hard to find and where there is a growing list of project cancellations or funding failures.

The collapse of gold producer Navigator Resources was an unpleasant end to a courageous attempt to redevelop the historic Bronzewing gold mine.

The failure of Gunson Resources to lock in a Korean funding partner was a sign of how tough the financial markets are – a point very well understood by long-term Gunson CEO David Harley, who is facing a no-confidence move by angry shareholders.

But the two events which send the clearest signal yet that Australia’s mining sector has made the transition from boom to bust were:

• The magnetite royalty discount offer to a sector of the iron ore industry which desperately wanted to be seen as the sector leader, not the poor man of iron ore; and
• The call for government exploration incentives, a preliminary step in dredging up a request from busts past for a “flow through” share investment scheme.

The magnetite royalty discount repeated all that Dryblower has been saying for several years – that magnetite is not an industry leader, it is a business based on marginal economics using an ore that the major miners have discarded for decades.

To have ever argued in the past that magnetite was a superior form of iron ore is now officially exposed as a furphy that would have made Joseph Furphy proud – and if you don’t know who Furphy was think about a man telling marvellously tall stories.

As for the flow-through share scheme which Ian Gordon has not suggested but which someone else will soon enough, then also think of the reaction of the Australian Treasury, the Australian Tax Office and the shortest word in the English language: “NO”

All this sounds pretty grim but it’s really only as grim as you want to make it because Dryblower’ view of the world is that we are actually now in the final stages of the plunge to the bottom.

The dead wood is being swept away.

The stables are being cleaned.

Before Christmas (fingers crossed) all the bad news will be out, the blood let and the bottom reached – an essential process which is not so much the end of the bust as the beginning of the next boom.

Dryblower’ advice for the rest of 2013: hang on because the bust will soon be over and the new boom getting ready to go.