Financing the Burra Burra Mines, South Australia: Liquidity Problems and Resolutions

Although acclaimed as the richest copper mine in the world during the late 1840s and 1850s, the early years of activity at the South Australian Mining Association’s [hereafter SAMA] Burra Burra Mine were fraught with problems, especially those associated with maintaining liquidity. This, despite copper content in the ore averaging between 22 and 23 per cent over the first 25 years of activity from 1845 to 1869, and with some commentators suggesting that the working of the mine was more akin to quarrying than conventional mining.i While the outcome saw prodigious dividends that averaged 300 per cent per annum over the first 21 years of activity, problems associated with distance from markets in Britain and India proved especially problematic during the early years of mining activity. While the liquidity problems were largely overcome after 1850, nevertheless strategies continued to be adopted so as to reduce costs in order to maintain liquidity and to ensure efficiency in the marketing of ores and copper. The story which emerges is that even the owners of the richest mine in Australia, and indeed for a period of time the richest copper mine in the world, had great problems in both maintaining liquidity and in seeing that they served their main goal of looking after the interests of shareholders. Various strategies were adopted by SAMA to overcome problems associated with marketing of produce and the controlling of costs, especially in light of it being the largest employer of labour in Australia in the 1840s. This proved a challenge to the directors and says much for their achievement in overcoming the financial problems in such a large enterprise. As part of their strategy, the Association helped to maximise its returns through adoption of strategies that exploited labour through adoption of wage systems and selling of materials to miners that guaranteed advantage to the employers.