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MODERN MANAGEMENT IN THE
GLOBAL MINING INDUSTRY
MODERN MANAGEMENT IN THE
GLOBAL MINING INDUSTRY

ROBIN G. ADAMS
assisted by Christopher L. Gilbert and Christopher G.
Stobart

United Kingdom – North America – Japan

India – Malaysia – China
Emerald Publishing Limited
Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2019

Copyright © CRU International Limited. Published under an exclusive license by Emerald

Publishing.

Reprints and permissions service

Contact: permissions@emeraldinsight.com

No part of this book may be reproduced, stored in a retrieval system, transmitted in any
form or by any means electronic, mechanical, photocopying, recording or otherwise without
either the prior written permission of the publisher or a licence permitting restricted copying
issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright
Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst
Emerald makes every effort to ensure the quality and accuracy of its content, Emerald
makes no representation implied or otherwise, as to the chapters’ suitability and application
and disclaims any warranties, express or implied, to their use.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-1-78973-788-2 (Print)

ISBN: 978-1-78973-787-5 (Online)
ISBN: 978-1-78973-789-9 (Epub)
 Contents

List of Figures
List of Tables
About the Authors
Foreword
Acknowledgements

1. Introduction
2. Commodity Price Forecasting
3. Recycling
4. The Marketing of Commodities
5. The Role of Commodity Exchanges in Pricing
6. Price Risk Management
7. Shareholder Value
8. Measuring Mine Production Costs
9. Performance Improvement and Capital
Productivity
10. Risk and the Cost of Capital
11. The Mining Cycle
12. The Myths and Realities of Resource Depletion
13. The Environment: Cost or Constraint?
14. Unfinished Business

Last Day’s Work

Index
 List of Figures

Fig. 2.1. The Theory of Perfect Competition.

Fig. 2.2. The Theory of Monopolistic Competition.
Fig. 2.3. Commodity Supply Chain Examples.
Fig. 2.4. The Classic Market-clearing Model of Commodity Prices.
Fig. 2.5. CRU’s Compass Forecasting Methodology.
Fig. 2.6. Per Capita Steel Intensity.
Fig. 2.7. Steel Intensity Per Unit GDP (kg/$ bn GDP at 2005
Prices).
Fig. 2.8. Gap Analysis – Hard Coking Coal Example.
Fig. 2.9. Long-run Marginal Cost Curve – Phosphate Rock
Example.
Fig. 3.1. Conceptual Overview of Metals Recycling.55
Fig. 3.2. The Importance of Scrap Increases When Consumption
Slows or the Recycling Rate Increases.
Fig. 3.3: Any acceleration in growth of total demand has to be
met from primary supply sources; deceleration in total
demand growth reduces the need for primary supply.
Fig. 4.1. The Copper Supply Chain.
Fig. 4.2. The Aluminium Supply Chain.
Fig. 4.3. The Iron and Steel Supply Chain.
Fig. 4.4. The Geography of Potash Prices.
Fig. 5.1. Three Hypothetical Price Forecasts, Each Right on
Average.
Fig. 5.2. LME Versus Bank Finance, Aluminium.
Fig. 5.3. Options for Producers, Consumers and Traders.
Fig. 5.4. Aluminium Premiums for Physical Delivery, 2006–2015.
Delivered Price as % of LME Cash Price.
Fig. 6.1. Key Elements in the Risk Management Process.
Fig. 6.2. Basic Hedging Programme Design.
Fig. 7.1. Three Key Elements in Value-based Management.
Fig. 7.2. The Efficient Frontier.
Fig. 7.3. Strategic Characterisation of Processes – The Steel
Example.
Fig. 8.1. The Four Basic Value-based Costing Concepts Are
Designed to Be Compatible with the Typical Corporate
Structure.
Fig. 9.1. There Are Two Halves to the Operating Excellence Part
of Shareholder Value.
Fig. 9.2. The Three Elements in Capital Productivity Can Be
Quantified Using a Small Number of Simple Concepts.
Fig. 9.3. Milling Is the Most Intensively Utilised of All the
Elements in the Production Chain, and So the Bottleneck
in the Whole System.
Fig. 9.4. Machine Productivity Is a Concept That Can Be Readily
Communicated at the Operator Level.
Fig. 9.5. Analysis of Drills Showed Scope for Better Utilisation and
Operating Efficiency: Thus Fewer Drills were Required.
Fig. 10.1. Real Equity and Bond Returns, 1956–2015.
Fig. 10.2. Weighted Average Cost of Capital in Mining, 1991–2015.
Fig. 11.1. General Evolution of Value in the Mine Development
Process.
Fig. 11.2. International Standards for Quantifying Resources and
Reserves.
Fig. 11.3. The Gateway System for Mine Development.
Fig. 12.1. Real Metals Prices, 1950–2015.
 List of Tables

Table 1.1. Value of Global Mine Production, $bn, 2015.

Table 1.2. Value of Production of Extractive Industries, $bn, 2015.
Table 2.1. Herfindahl Index, Iron Ore, 2015.
Table 2.2. Herfindahl Index, Steel, 2015.
Table 2.3. Herfindahl Index, Aluminium, 2015.
Table 2.4. Herfindahl Index, Nickel, 2015.
Table 2.5. Commodity Market Characterisation.
Table 4.1. Typical Commodity Marketing Activities.
Table 4.2. Benchmark Prices for Major Commodities.
Table 5.1. Commodity Exchange Business Model Drivers.
Table 5.2. LME Contract Volumes and Liquidity 2015.
Table 5.3. Price Volatility Trends for Selected Metals.
Table 5.4. Key Functions of Commodity Exchanges.
Table 5.5. Three-month Futures Price as a Forecast (Absolute
Errors, $/t).
Table 5.6. Three-month Futures Price as a Forecast (Percentage
Errors).
Table 5.7. Three-month Futures Price as a Forecast (Bias, $/t).
Table 5.8. Three-month Futures Price as a Forecast (Percentage
Bias).
Table 5.9. LME Contangos and Backwardations, 1981–2015.
Table 5.10. LME Warehouses Are Very Expensive by Competitive
Commercial Standards.
Table 6.1. Roles of Members of a Price Risk Management
Committee.
Table 7.1. Different Sources of Comparative Advantage Exist in
Each Sector.
Table 8.1. The VBC Nomenclature.
Table 8.2. Hypothetical Cu-Au Mine Production and Market
Assumptions.
Table 8.3. Hypothetical Cu-Au Mine Cost Assumptions (Typical
Year).
Table 8.4. Cost Estimate Reconciliation.
Table 11.1. Key Criteria for Determining Project Progress in Relation
to the Gateways.
Table 11.2. Work Required by Discipline for Passing Each Gateway.
Table 12.1. Major Metals: Annual Average Price and Volume
Changes.
Table 12.2. Major Metals: Production and Reserves (Million Tonnes),
2015 Versus 2000.
Table 13.1. Components of the Policy Potential Index.
 About the Authors

Robin G. Adams was born in England in 1946 but was brought up

in Bulawayo, now in Zimbabwe. He studied at Oxford where he
gained a double first in PPE and was Treasurer of the Oxford Union.
He spent most of his adult life working as a Minerals Economist with
Citibank, his own company Resource Strategies and the CRU Group
both in England and the United States. His work included consulting
to mining companies, to fabricating and manufacturing companies as
well as to international organizations. He also helped to facilitate
investment agreements between host governments and
multinational companies, resolve commercial disputes between
companies and governments, and was also called upon to provide
expert witness testimony on environmental issues related to mining
and processing. He died in 2014.

Christopher L. Gilbert is Adjunct Professor at the Bologna Center

of the Johns Hopkins School of Advanced International Studies. He
previously held professorial positions in London, Amsterdam and
Trento. He is a Non-Executive Director of CRU International Ltd.
Christopher G. Stobart worked in the publishing industry and then
as a financial journalist before joining CRU International in 1976. He
has worked for that company in a variety of capacities since that
date.
 Foreword

Robin Adams was an exceptional man and an inspiring force. Our

paths first crossed in the 1970s when Robin came to join CRU back
in its fledgling days. One could not help being struck by this tall
impressive fellow. He had a top first from Oxford in PPE, was self-
taught in advanced statistics and maths, and widely read in history,
politics and sociology. One of his great gifts was his ability to bring
insight and enrichment from many other subjects to his application
of economics.
This interdisciplinary approach is in evidence throughout the book
you hold in your hand. It forms an introduction to the approach
Robin and CRU adopted in different types of assignments; how we
applied our methodologies to gain understanding and use the results
to help clients manage risks more effectively and better assess likely
developments and future trends. Robin was also keenly interested in
the forces that engender change in society, industries and markets,
both national and local.
CRU was established in 1969 and was the first research company
to specialise in metals, minerals and mining, advising governments
and corporates active in these sectors. Much of that advice came
from applying principles of economic analysis to deal with business
challenges that are typical to natural resource industries. In the
extractive industries, for example, issues can arise from the
immovability of assets such as mines or reserves, or the occurrence
of rent and consequently the generation of super-normal profits.
Other issues include the susceptibility of primary commodities to
market cycles, severe short-term price volatility and, not least, to the
impact of innovation and substitution in changing demand for raw
materials offering similar properties.
Robin spent some 25 years with CRU. After an initial period, he
left to work for Chase Manhattan Bank (now part of JP Morgan)
before establishing his own company in Pennsylvania, Resource
Strategies, which CRU acquired in 1995 as part of its expansion in
North America.
Robin made his distinctive presence felt across the spectrum of
CRU’s activities. Initially the focus was on non-ferrous industries
such as copper and aluminium but, by the time Robin re-joined, CRU
had expanded its coverage to the steel complex, energy industries
and agricultural sectors. As our client base grew so our challenges
became more diverse. Robin played a leading role in that expansion
process and helped to develop new methodologies that had the
breadth of scope and sophistication needed for our new markets.
Robin for instance pioneered applying systematic econometric
modelling to competition between materials in electricity, transport,
construction and packaging markets. He was also instrumental in
developing what we called CRU’s Compass methodology and
applying it to long-term forecasting. Similarly, he was involved in
improving the company’s risk-adjustment methodologies and its
value-based costing system for competitive analysis as between
mining operations. Robin also led CRU in developing its value-in-use
models for negotiating ironore and metallurgical coal off-take
agreements between western producers and Chinese counterparties.
He particularly enjoyed applying analytical economics to resolve
disputes between parties active in natural resources industries. He
would facilitate negotiations by identifying what he called Bargaining
Zones to achieve win–win outcomes. Robin would frequently be
retained to help resolve fiscal differences between host governments
and foreign investors in connection with existing or planned mining
and infrastructure developments, the merits of more downstream
processing, and on matters relating to transfer pricing.
The book draws on all this work, focussing particularly on the
characteristics of primary commodity markets and the political
economy of extractive industries. Robin puts great emphasis on the
range of talents that a mining company executive needs to be able
to deploy if he or she is to deal with the complex issues that mining
throws up. These can be geological, metallurgical, management,
economic, political, social, environmental, regulatory and financial.
He states that mining companies need to be led by Renaissance men
and women. There is no doubt that Robin Adams was such a person.
Robin was greatly respected and admired by his colleagues. All
who worked with him gained from the experience and benefitted
from the thoughtful and considerate way he interacted with others.
He is remembered as a person who was generous with his time and
enjoyed sharing with others what he knew. He was a great mentor
both in the office and when it came to outdoor activities, especially
deep-snow skiing which he did frequently and expertly in the
mountains near CRU’s offices just south of Seattle. CRU’s US West
Coast offices were located on Whidbey Island next to where Robin
and his wife Judith, a writer and poet, chose to build their home.
Theirs was a deep and fulfilled marriage that thrived on the
complementary combination of their talents and strengths.
Robin often took it upon himself to act as advisor to parties who
had been disadvantaged by contamination or pollution resulting from
mining and processing operations. In one such case his clients,
mainly bondholders and environmental agencies, had been
defrauded into bearing heavy costs which should rightfully have
been borne by the shareholders. Only two weeks before he died, in
spite of his deteriorating health, Robin made an extraordinary effort
to give a deposition which was crucial to the cause he felt so
strongly about. (This book concludes with one of Judith’s poems,
reprinted with her permission, that memorialises Robin’s deposition.)
As a result of the deposition the shareholders were found guilty and
required to pay out over $215 million. They were refused appeal to
the US Supreme Court.
To me personally, Robin was a close colleague and greatly valued
friend. He was a source of sound and impartial advice and a person I
valued for his warmth and integrity as much as for his brilliance.
Even today at CRU one of our key steps in resolving analytical
problems is to ask: “How would Robin have approached this?”
Well, this book provides some answers.
Robert A. Perlman
Chairman, CRU Group
 Acknowledgements

It is a privilege for me, as Robin’s wife, to write this acknowledgment

on Robin’s behalf. I know Robin was immensely grateful for all the
help he received while writing this book. I know that he would wish
to thank also those who helped him during his entire career in the
field of mineral economics which was, in fact, much wider than the
material he covers in this book. He met many interesting people who
cared about the industry and the ethics of working in the mining
industry.
Robin started to write this book after he received his terminal
diagnosis of a period of only a few months. He worked on the text
while undergoing treatment and the book was completed the day
before he died. The hospice overseeing his care administered Ritalin
to enable him to finish. Robin was keen to pass on what he had
learned during his career which he told me again and again he found
fascinating, rewarding and always interesting. It would have
distressed him not to acknowledge all those who helped him get this
book to print and, as his wife, I am deeply honored to write this on
his behalf.
Robin would first have wished to thank Linda Jennings, his
remarkable assistant, who dealt with the management of the office.
Linda had inexhaustible patience and exercised a calming effect on
Robin who at times felt so strongly about things that he could almost
levitate. He would also have particularly wanted to thank Stephanie
Ryan, a dear friend of ours, who despite having plenty of her own
work to do, sat by his bed during the last days taking dictation on
her computer as his voice became weak and less distinct. I am not
sure he knew who would take on the Herculean task of editing his
book but he would have been both thrilled and relieved that two
brilliant colleagues would make sure it was finished and in a
publishable form. Thanks then to Christopher Gilbert, who was at
Oxford with him, and Christopher Stobart, who worked with Robin
for a very long time. This book would not be with us if it were not
for them. Most importantly, he would like to thank his long-time
friend, also his boss, Robert Perlman, who was so much more than a
boss and a colleague but a true friend. They had an exceptional
bond for they both felt deeply about ethics both in the work place
and in their lives. They shared a special relationship both at work
and as friends. I also know that Robin would like to thank Taylor
Shively who came to work for Robin out of graduate school. Robin
would bounce his ideas off Taylor and get reliable feedback. He
would also have thanked the young people he mentored from time
to time. The promise they showed gave him hope for the future of
the mining industry. Robin would also thank the liberal community
on Whidbey Island who surrounded him with encouragement,
accepted his eccentricities and challenged his ideas.
Lastly, I know deeply that he would have thanked me for putting
up with his sometimes very late arrival home, his booming voice
waking me from sleep when he enthusiastically announced his latest
idea and for loving him in the way that I did; his elder daughter,
Laura, who challenged every idea he had, and was like him in her
debating acuity; his son William who, unlike his father, was less of a
student but much more of a party guy, who inherited his father’s
free spirit and occupies himself in saving lives jumping out of a
helicopter on a rescue team; and lastly his younger daughter,
Rachel, who taught him about so many things including flamenco
dancing, how to handle his emotional Portuguese heritage, and who
for a while worked for him. One day Rachel reported to me “Mum,
dad is an absolute power house at work. I don’t how anyone keeps
up with him.” Robin was proud of his children especially because
they, as Carl Jung once said, “lived their parents’ un-lived lives”!
I know I have missed out many people in the industry who
influenced him, taught him and who touched him over the years. I
know he would have wanted to thank the publishers for taking on
his book so that his thoughts did not go unheard into his grave on
the hill on Whidbey.
Judith Adams

Praise for Modern Management in the Global

Mining Industry:
‘Robin Adams was one of the great mineral economists of our
times. Drawing on his many years as an industry consultant
and his strong knowledge of economics and business
administration, Robin has, with the help of Christopher Gilbert
and Christopher Stobart, given us a book that provides a
wealth of information on mineral commodity markets. Anyone
striving to understand the behavior of mineral commodity
markets and gain an insight into the mining industry should
read this book’.

John E. Tilton, Emeritus Professor, Colorado School of Mines, USA

‘This book is a must read if you are planning a career in the

minerals industry. Its author, Robin G Adams, with more than
20 years’ experience at CRU, one of the world’s most
prominent consulting firms in the field, exhibits mastery in
disentangling the intricacies of this important industry to the
lay reader. Complex issues like metal price formation,
measurement of production costs, or the myths of resource
depletion are straightened out so as to be accessible even to
my grandkids, yet with no loss of realism. I am full of
admiration’.

Marian Radetzki, Professor of Economics, Luleå University of

Technology, Sweden
 ‘Robin understood the mining industry better than most of
those working in it. In these pages, he tells, with characteristic
clarity and vigour, of his personal journey to uncover the
economics of the mining industry, to establish where it differs
from other industries, and to develop the intellectual tools
required to pinpoint where value can be found and how it can
be extracted in an effective and responsible fashion’.

Dr David Humphreys, Former Chief Economist of Rio Tinto and

Norilsk Nickel
 1
Introduction

I have spent most of my working life as a mining industry

consultant. In this book, I put forward my views on the efficient
organisation of the world mining industry. I do this as an industry
insider and based on my personal practical experience. The views I
express are therefore likely to differ from those of academic
industrial economists who will view the mining industry from a
theoretical or policy perspective.
Despite this qualification, my account is informed both by my
undergraduate degree in economics and by subsequent reading in
business administration. Over the past half century, business
administration has succeeded in establishing itself as a recognised
academic subject at the world’s major universities. It offers a range
of techniques and methodologies that are equally applicable to every
sector of the economy, ranging from the local convenience store to
the world’s largest corporation. This body of knowledge has been
commercialised by leading management consulting firms who stress
that one of their key advantages is their ability to capture business
insights obtained in one sector and transfer them to other sectors.
To such companies, the development of industry expertise and
know-how is something that may be obtained from the client, or
acquired by hiring experts with specialist knowledge, or contracted
out to third parties as a last resort.
I take a different view. Sound general management, accounting
and reporting principles are as important in the mining industry as in
other sectors but they will be insufficient. The mining industry
presents a number of challenges that require a different approach
for the following reasons:

Demand volatility: As was apparent in 2014–2019, the demand

for mined commodities is much more volatile over the business
cycle than demand in most other sectors of the economy. This
is because mined commodities are disproportionately consumed
in sectors such as construction, capital investment, and
consumer durables which are dependent on the discretionary
spending decisions of businesses and consumers.
Long cycles: Construction of a new mine takes years, sometime
more than a decade. Once built, mines typically remain
productive for at least 20 years and often longer. Finance for
new developments is most easily available in periods in which
prices are high and existing mines profitable but the production
from these mines will weigh on prices for an enormous time.
Under-investment in mining during the 1990s left the industry
unprepared for the massive growth in Chinese metals demand
from 2004 onwards. Over-investment over that ‘super cycle’
period resulted in a fall-back in prices. These long cycles
complicate investment decisions.
Price volatility: Mineral commodities are homogeneous, or at
best only mildly differentiated from one another. Prices are set
in global commodity markets and are affected by supply and
demand events that take place all over the world, and also by
speculative and investment decisions of all kinds. The resulting
price volatility adds to the demand volatility, with the result that
the industry’s revenue stream is far more volatile that of other
sectors of the economy.
Geographical specificity: Mining is a captive industry in the
sense that it cannot relocate in response to adverse economic
or political developments in a host country, as can other
industries such as textiles. Mining takes place where metal-
bearing ore is found. This means that mines bear exceptionally
 high exposure to social and political risk, including potential
increases in special taxes once a project is up and running;
Environmental impact: Mining has an unavoidable and
intrinsically high environmental impact that requires extremely
careful management. Careless actions by some mining
companies can trigger widespread opposition to mining in all its
forms, which in turn contributes to project delays, cost overruns
and, in extreme cases, the inability to continue production.
Lack of sustainability. In the final analysis, any mining operation
is an unsustainable activity. Although the world is far from
running out of resources, each individual mine does have a
finite resource base and sooner or later will close. This creates
an obvious source of social tension. (Sustainability, in the sense
of minimising the impact of mining on the environment, is a
separate concept which is correctly given high priority by all
responsible mining companies.)

Such factors are individually present in other industries. All are

present in oil extraction. What makes mining unique and a book on
mineral economics worthwhile is the intensity with which these
factors often combine. They have given the mining industry a unique
character that powerfully influences business decisions at both a
strategic and an operational level. Miners are not a representative
cross-section of society and mining companies are not representative
of business corporations. Rather, miners are a largely self-selected
brotherhood of rugged and self-sufficient individuals capable of living
and operating in remote and sometimes hostile environments and
contending with job hazards that are simply not present in the
mainstream economy. Miners do not respond well to micro-
management or top down direction. Failure to understand the
culture of any industry can frustrate implementation of even the
most brilliantly conceived programme for strategic change. The need
for cultural change in an industry or a company is often a target of
performance improvement initiatives. However, it is unlikely that any
change programme will succeed unless change agents understand
and respect the deep historical reasons for the industry’s current
culture.
Thus, the development of industry knowledge and an
understanding of its culture become the key requirements of the
successful manager rather than a detail to be out-sourced. Industry
knowledge includes not simply the obvious – understanding how a
commodity is produced, where and why it is used, who the major
companies in the industry are, and so on – but also what might be
called the ‘deep history’ of the industry so that the mistakes of the
past are not repeated unnecessarily.
It is much more difficult to acquire this deep history, in my
experience, than simply to acquire generic management consulting
skills. An effective mining industry executive needs to become what I
choose to call a ‘Renaissance Man’ and acquire skills from, or at least
develop a high comfort level with, many disciplines ranging from the
obvious technical ones such as geology, metallurgy and engineering,
to economics, finance, sociology, anthropology, politics and
communications. For most people this requires many years, if not a
lifetime, of experience. By contrast, the latest techniques in business
administration can be acquired quite quickly through the many
excellent Executive Management programmes offered by the world’s
business schools.
I have been engaged in providing mining consultancy services for
most of my working life, and in recent years with a leading mining
consultancy company, CRU International. CRU and similar companies
are firmly committed to the development and retention of industry
expertise, which, defined in the broadest possible cultural, technical
and business terms, is the core requirement for successful
management in the industry. CRU’s mission is to help mining
industry stakeholders make higher quality and more robust business
decisions by deeply understanding and managing the risks involved.
Industry expertise is our core asset.

Mining in Perspective
My goal in writing this book is to summarise some of the industry
know-how and related analytical techniques that, with the help of
colleagues at CRU and other companies, I have managed to acquire
and use in 40 years of consulting. I have chosen to do this by
providing examples taken largely from a small subset of the 200-odd
minerals used by the twenty-first century global economy – coal,
iron and steel, aluminium, copper and the fertiliser minerals. These
are high-volume mined commodities with the largest environmental,
social and political consequences for society. The affairs of the
companies that mine them are reasonably transparent. A huge
volume of academic studies, technical conference proceedings and
business reports about these commodities is also available. Readers
who are interested in digging deeper into information that I am
necessarily presenting in a highly summarised form can, therefore,
readily do so.
Any sampling bias found in this book has to be seen in context.
When I became Research Director of CRU International in 1973, my
first task was to advise management on the potential diversification
of the company’s interests. At that time CRU’s business was primarily
related to market research and price forecasting in the copper
industry. However, the company was fielding inquiries about many
other commodities and was looking to expand the scope of its
business significantly. Unencumbered by any prior knowledge of
metals and minerals, I therefore began my analysis with a clean
sheet.
My approach at that time was simple and I will follow the same
approach in writing this book. I listed as many minerals as I could
identify and looked up world mine production and the prevailing
market price in order to calculate the global revenues associated
with the production of each commodity. This analysis revealed that
75% of the value of the world’s non-fuel mineral production was
accounted for by just four commodities – gold, iron, copper and
aluminium. As an economist, I understood that gold was a currency
rather than an industrial commodity. As a transportation expert, I
could see that the importance of logistics cost in the overall price
made nonsense of the London Metal Exchange (LME) warehouse
delivery business model for iron ore. Consequently, my
recommendation was that CRU should diversify into aluminium,
which appeared to me to be similar to, and a partial substitute for,
copper. I am happy to report that this advice was accepted and that
aluminium forecasting and consulting quickly became a core
business for the company. (A few years later, the LME also diversified
into aluminium, which has become its most valuable contract.)
Table 1.1 shows the results of a similar exercise 40 years later. To
provide a complete perspective of mining, I have added coal, which
is the world’s largest mined product by volume, and I have
separately identified steam coal (mainly used in power stations) and
metallurgical coal and coke (used mainly to produce steel). Table 1.1
includes all metals and minerals where annual production exceeds
$1bn, but excludes gemstones. It shows that in 2015 54% of all
mining efforts1 are related to providing electricity and steel, two
absolutely essential building blocks of urban industrial society.
Without them, it is inconceivable that the planet could support its 7
billion inhabitants.
Steam coal represents approximately one-third of the value of
global mine production. Coal is still by far the dominant fuel for the
generation of electricity, and its market share has increased.
However, it is also the single largest contributor to carbon emissions.
Alternative ways of generating electricity reduce these emissions by
half in the case of natural gas and almost entirely in the case of
renewable sources of power, both of which are growing strongly.
However, despite the most optimistic projections for alternative fuels,
the world will need coal in today’s quantities (or more) for at least
the next 30 years just to keep the lights on, particularly in high
population, low income economies such as China and India where
power consumption per capita is far below western levels.
A further quarter of the global value of mine production relates to
iron ore and metallurgical coal, which are the essential raw materials
in the production of steel, the most commonly used material in the
modern industrial economy. Indeed, global consumption of steel is
approximately 30 times larger than the consumption of aluminium,
the second most widely used metal. Steel is widely used in the
construction of residential, institutional and industrial buildings of
every kind, bridges and highways, railroads and mass transit
systems, water and sewerage plants, power transmission towers,
and almost all other forms of infrastructure. Another major use of
steel is in the production of machinery and other capital goods that
are required for the operation of manufacturing industry. Without
steel, there is no urban industrial economy.

Table 1.1: Value of Global Mine Production, $bn, 2015.

Source: Author’s calculations from CRU data.

A further quarter of the value of production reflects the

production of gold, aluminium and copper. Eight other commodities
– phosphate rock, titanium, zinc, nickel, potash, silver, lead and
platinum – take the cumulative share to 97.5% of total value. For all
practical purposes, everything else extracted from the earth’s crust
can be considered as a niche business. Individually, none of them
account for more than 0.5% of world mine production.
Minerals produced and used in small quantities can, of course, be
crucial to some manufacturing processes, but at the same time the
volume and value of world production may be insignificant compared
to the major minerals from which I draw my examples in the body of
this book. As an example, it may be helpful to reflect upon the
concern expressed in recent years over the potential dominance of
China in the supply of rare earth oxides (REOs). In 2014, China is
estimated to have produced 95,000 tonnes per year of REOs out of a
world total of 111,000 tonnes. These minerals (there are 17 of
them) are critically important in automotive pollution control
catalysts, permanent magnets and rechargeable batteries. Demand
is expected to grow strongly as future global demand for
conventional and hybrid automobiles, computers, electronics and
portable equipment increases. Expanded rare earths usage is also
expected in fibre optics and a wide range of medical equipment
applications. In other words, REOs play a crucial role in modern,
high-technology growth sectors of the economy.
However, the value of global production of all 17 REOs was just
$1.65 bn in total, using 2012 prices. Thus, all REOs collectively
represent only 0.1% of the value of world mine production. It is
worth adding that REOs are not all that ‘rare’ either. According to the
US Geological Service, world reserves are 1,000 times greater than
current production, and only half of them are in China. In other
words, a hypothetical Chinese attempt to squeeze international
consumers by restricting exports would have only a short-term
impact. The resulting price increases would be very likely to
stimulate additional supply from other countries, and the absolute
size of the investments required for this transformation would be
modest when judged in terms of the industry’s global financial
capacity. To put this in perspective, a single new iron ore mine, the
Roy Hill project in Western Australia, which came into production in
2016, is expected to have an ultimate capital cost of $14 bn and will
have an output worth over $6 bn per year at current prices.
Table 1.2: Value of Production of Extractive Industries, $bn, 2015.

Source: Authors’ calculation using data from Table 1.1 and BP: Statistical Review of World
Energy, June 2016 (oil and natural gas production); IMF: International Financial Statistics
(oil and natural gas prices).

Another perspective can be obtained by comparing the value of

non-fuel mineral production with the value of the production of
various fuels. From an overall economic perspective, the energy
industry is far more important than the mining industry. Non-fuel
minerals account for less than 20% of the total value of all extracted
minerals whether mined or pumped. Oil accounts for more than 50%
as set out in Table 1.2.2

Steel-related Minerals
Within the universe of non-fuel minerals, iron ore is clearly the most
important mineral because it is the raw material base for the steel
industry. A number of other minerals are also tied to the steel
industry. These include the bulk ferroalloys such as ferromanganese,
ferrosilicon and ferrochrome as well as more specialised alloys such
as nickel and molybdenum. The use of alloying materials imparts
special properties to carbon, alloy and stainless steels, including
resistance to rust, improvements in ductility and strength, resistance
to chemical and environmental corrosion and so forth. When these
additional materials are taken into account, as much as 40% of the
value of the global metals and mining industry’s output must be
considered as steel-related.
 From a business perspective, a key economic issue is that iron ore
has a low value to weight ratio and is required in enormous
quantities. The management challenge is therefore as much about
logistics as it is about mining and beneficiation. Similar challenges
arise with other so-called bulk commodities such as the bulk
ferroalloys, bauxite and phosphate rock. Another feature of these
bulk commodities is that quality varies from one producer to the
next, which introduces significant complications in any analysis of
markets, prices and competition.

Power-intensive Industries
The next most important commodity in the industrial economy is
aluminium. Its main uses are in the construction, transportation and
packaging sectors. A key driver of aluminium demand is its very light
weight, which makes it an ideal material for transportation
equipment, as reduction in the weight of vehicles is a key to
improving fuel economy. Aluminium is now making significant
inroads into the previously dominant position of steel in the
automobile industry as vehicle manufacturers strive to meet
government-imposed fuel economy standards without sacrificing the
interior size of their vehicles or the amenities they offer. Another
strategic advantage enjoyed by aluminium is the plentiful nature of
bauxite, the main source of raw material. Aluminium is the third
most common element in the earth’s crust after oxygen and silicon.
While it is very energy-intensive to smelt aluminium in the first
place, once in service the material can be recycled far more easily
than any other metal with a small fraction of the energy required for
its initial production.
From a business perspective, aluminium really involves two
commodities, one a mineral and the other energy. The extraction of
bauxite, aluminium’s raw material, is an example of (usually quite
simple) bulk commodity mining. However, bauxite mining represents
only 5–7% of the total value of primary aluminium. Bauxite must
first be converted into alumina in a chemical process plant, at which
point the alumina represents 25–30% of the value of aluminium
metal. The alumina must then be reduced to pure aluminium in an
electrolytic smelter, which requires huge quantities of electricity.
Thus, aluminium smelters tend to be located in places where
relatively cheap power is available. The insights obtained from a
study of aluminium can readily be transferrable to other power-
intensive industries such as silicon and magnesium.

Hard Rock Mining

Another metal of critical importance is copper, the world’s pre-
eminent conductor material. Approximately 70% of copper ends up
in wire and cable products that facilitate the distribution and use of
electricity and support communications networks. Aluminium is an
alternative conductor material and is widely used in high voltage
overhead transmission cables. However, copper remains the
preferred material for most electronic products and major electrical
appliances, as well as for wiring inside buildings. Without copper, the
world would revert to the pre-electricity age and would not be able
to support current population levels at anything resembling today’s
standard of living.
Despite periods of temporary surplus, resource scarcity is the key
business issue in the copper sector. Resource scarcity may be a
reflection of the absolute scarcity of the mineral within the earth’s
crust, or it may reflect the fact that the mineral has been mined for
many centuries, and consequently all the very high grade deposits
have already been exhausted. Copper is an example of the latter.
Copper ores currently being extracted grade at about 1%, compared
to grades of 5–10% that may have been mined in past centuries,
and typical grades of 30–65% for iron ore, 30–50% for bauxite and
10–30% for phosphate rock, all of which occur naturally in much
greater quantities.
This means that the key challenges in copper are related to the
mining process, which are now locating, extracting and beneficiating
extremely low-grade ores in increasingly remote locations. Economic
considerations in copper are therefore similar to those encountered
in other relatively scarce minerals such as cobalt, nickel,
molybdenum and, arguably, lead and zinc. This group of metals is
sometimes known as the ‘base metals’. The term ‘hard rock mining’
has also been used to describe the extractive process in these
sectors, and to differentiate them from bulk commodities such as
bauxite discussed above. Most of these metals are smelted and
refined to virtually pure standardised forms and many of them trade
on organised commodity exchanges.

Fertilizer Building Blocks

The final group of minerals discussed here are phosphate rock and
potash, which are essential to the world’s food supply. Advances in
agricultural yields have made it possible to feed a global population
in excess of 7 billion people. In turn, the application of nitrogen (N),
phosphorus (P) and potash (K) fertilisers has been one of several
factors that have made this possible.
The world obtains most of its nitrogen from the essentially
limitless supply in the earth’s atmosphere. The key input is not the
raw material itself but the energy (usually in the form of natural gas)
required to convert atmospheric nitrogen into ammonia, the basic
building block of nitrogen fertilisers. The P and K components of
fertiliser come from mined products. In the absence of these
fertilisers, agricultural yields would almost certainly decline, even if
natural fertilisers were a partial replacement. Although we might be
able to mitigate part of this in various ways, one result would almost
certainly be higher food prices and probably widespread hunger in
some countries. Another outcome might be to require that even
more land be converted for agricultural use.3
This sector raises business issues similar to those found in other
parts of the mining industry, but it also has to contend with a far
more complex set of marketing issues in an economic sector that is
becoming increasingly exposed to critical review from an
environmental and health perspective, while still being expected to
supply cities with extremely cheap food. Fluctuating crop prices and
a bewildering array of governmental support, taxes and regulation
leave farmers exposed to potentially unstable incomes, which
obviously affect their capacity to invest in the subsequent growing
season. On top of this, the optimal fertilisation is a complex function
of the kind of crop planted, the soil type and the equipment
available. Effectively, the fertiliser sector presents affordability and
substitution issues in a manner that is far more intense than for
metals.
I have not drawn many examples or anecdotes from the other
group of economically significant minerals, the precious metals. By
far the most important is gold, the vast majority of which is used as
an investment product. As a result, at least 90% of all the gold ever
mined is still available in above-ground stocks. There are some
industrial uses of gold in the electronics and dentistry sectors, but
these require small quantities compared with annual mined
production. The main consumer use of gold and other precious
metals is in jewellery and other decorative objects. Substitutes are
readily available for gold’s industrial and consumer uses.
While the mining of commodities such as iron, bauxite, copper,
phosphates and potash is clearly fundamental to the living standards
of the world in which we live, the same cannot be said of gold.
There are many alternatives to luxury consumer products that
contain gold. Moreover, it is hard to make the case that mankind is
achieving a great deal by digging up gold in places such as Africa
and Latin America and then burying it in bank vaults in Dubai,
London, New York or Zurich so that it can be used as backing for
investment products. Finally, gold no longer plays any real role in the
international monetary system. The famous British economist, John
Maynard Keynes, has been credited with describing the gold
standard as a ‘barbarous relic’.4 It is a sentiment with which I concur
as much today as when I first encountered the proposition at
university.
However, the other precious metals do have significant industrial
uses. Over half of all silver usage is in industrial applications. More
importantly, platinum catalysts have allowed auto manufacturers
greatly to reduce the pollution emitted by vehicle exhaust systems.
They are thus instrumental in reducing the adverse environmental
impact of vehicle use.

Identifying the Core Issues

While the emerging ‘Renaissance Man’ will face a wide range of
issues, I have tried to identify those issues of most importance and
those with which most mining company personnel feel least
comfortable. First and foremost is price, which is extremely volatile
from one day to the next. The trend seems to be down more often
than up and engenders a sense of helplessness. Price appears
utterly outside the influence of management, whether by producer
or consumer. This uncertainty permeates almost every action in a
mining company from the nature of the dialogue with shareholders
and financial institutions at the top of the company to borderline
obsessive micromanagement of supplies in the maintenance
department of a mine.
For this reason, the first section of this book is an attempt to de-
mystify the fundamental problem of commodity price risk.
Understanding why markets produce certain prices is the starting
point for forecasting prices. This leads naturally to a discussion of
what is involved in commodity marketing and the role of commodity
exchanges, and ultimately a discussion of managing price risk, once
it has been quantified and its materiality has been determined. If we
can then understand commodity prices and to some extent forecast
them, we can at least plan in a meaningful way. Mining companies
can also earn marketing and trading premiums, and in many
instances at least partially manage price risk. Improving a company’s
comfort level on price will reduce the feeling of helplessness and
open the door to other initiatives for taking control of its destiny.
The second section of this book directly addresses what I think is
the single greatest cultural obstacle to more effective management
in mining, namely that the only viable business strategy in a
commodity sector is to build or acquire low-cost operations in the
first or maybe second quartiles of the supply curve. This thinking
stems from the cultural impact of price uncertainty. Managers know
they cannot do anything about price but think they can do
something about costs. They think getting costs down means not
only earning a higher profit margin over the cycle but, more to the
point, improving job security in a high-paying, but also high risk,
occupation. I try to correct this bias by showing how it is at odds
with modern concepts of business strategy. I discuss the basics of
value-based management that many mining companies say they
have adopted. I introduce a number of techniques developed by
CRU to allow companies to reorient themselves from a narrow
technical focus on cost of production to a broader focus of delivering
value. I also discuss more specific techniques such as benchmarking
and out-sourcing, and the pitfalls involved.
The third section of this book addresses mine development, the
life blood of the industry. This is where the demands on the
‘Renaissance Man’ combine in their most intense form and where
there is still major unfinished business in the relationship between
the industry and the societies and environments in which companies
operate. I cover the rewards and pitfalls of the mine development
process, because we need new mines, not simply to meet growth in
demand for commodities but also to replace mines that have
depleted their resource base. The capital investments involved are
very large, the decision-making process is complex and extended
over long periods of time, and exposure to risk is typically at its most
acute at this point. Moreover, this is where the industry has its most
immediate impact on the environmental, social, and political health
of the societies that provide these resources for the benefit of the
rest of the world.
This book is not intended to supply answers. It is intended to
improve the reader’s comfort level with the three most important
topics in mining – dealing with commodity price risk, maintaining a
competitive position and effectively managing the mine development
process. If readers come away with the notion that there are often
more dimensions to a problem than meets the eye and that most of
them require a multidisciplinary approach for their solution, I will
have at least made some small contribution to improving the quality
of business decisions. If I stimulate even one person to decide that
he is going to become a ‘Renaissance Man’ and lead a mining
company from this perspective, the time I have spent writing this
book will have been justified.

1I consider that the value of mine production is a reasonable proxy for mining effort,
because in the final analysis costs strongly influence price and are a function of effort.
2Calculated using average crude oil price and average of United States and Russian natural
gas prices.
3Agriculture has a far greater impact on the environment than any other industrial activity.
For example, the conversion of native forest into arable land has been identified as a key
factor in the increase of carbon emissions and the reduction of biodiversity.
4Keynes, J.M. (2003). A Tract on Monetary Reform. London: Macmillan.
 2
Commodity Price
Forecasting

I received my first real exposure to commodity markets in the early

1970s while engaged on a feasibility study and business plan for the
establishment of Air Mauritius. At the time, round trip economy
airfares between Mauritius and France and the UK, to which many
Mauritians had emigrated, were over $1,000, a figure totally
unaffordable for family travel at the income levels that prevailed
then. Charter flights could be organised for around $250, but these
were legal only if they were so-called ‘affinity group’ charters.
Hence, organisations such as the ‘Curepipe and Tunbridge Wells
Gardening Club’, in which instant membership could be obtained for
a nominal $5, sprang up to organise such flights.1
The economics for the promoter were that by selling 95% of the
seats for $250 round trip, they could cover the cost of the charter.
Thus, it was the last eight to 10 seats on the plane that constituted
their profit, and inevitably some of these seats would still be
available on the departure date. Prospective travellers who could not
afford $250 showed up at the airport with passports and baggage
and bargained directly with the promoter in the airport check-in
area. There was a large bargaining zone available. The would-be
travellers did not know exactly how many seats were left, and if
there were more travellers than seats, the price would not fall very
far below $250. The opportunity cost to the promoter was near zero
– effectively the cost of the airline meal. Moreover, unsold seats had
zero value as the departure time arrived. Would the promoter lose
his nerve before the passengers? Once one passenger agreed a
price, would this trigger a frenzied auction in which prices for the
remaining seats rose rather than fell?
This may have been a primitive and unregulated commodity
market but it certainly delivered price discovery, and it always
cleared. These flights invariably departed 100% full. On one
occasion, I witnessed the market clearing for $50 about 15 minutes
after the plane was scheduled to depart! This taught me that
commodity markets are not rocket science and that you do not need
a PhD in mathematics and computer science, a six-digit salary and a
seven-digit bonus in order to participate. Commodity markets are as
old and varied as mankind itself and should be neither mysterious
nor intimidating.
This chapter describes how prices are formed in a commodity
market and what steps participants can take to forecast the likely
direction of future trends, or at least understand the relative
importance of the different forces at work.

Theoretical Background
Most mineral products are sold into markets that approximate the
assumptions underlying the classical economic theory of perfect
competition. The most important of these are the following:

There is a large enough number of producers and consumers

that participants, acting on their own, cannot exert significant
market power.
Products are homogenous to the point where consumers do not
have a material preference for the products of one supplier
compared to those of any other; transaction costs are so low as
to have negligible financial significance.
Exit and entry barriers for suppliers are low or negligible.
There is a high level of transparency associated with the
commodity so that all market participants have complete and
 equal knowledge of potentially relevant facts about
consumption, production, trade, inventories, price, new
projects, production methods and so forth.
All market participants are acting independently and rationally
in seeking to maximise profit.

Clearly, there are no markets in which all of these assumptions

are unambiguously valid. Markets such as aluminium and copper
clearly have homogenous products, high levels of transparency, low
transaction costs and large numbers of participants. However, for
most commodities there are significant entry and exit barriers, and
some commodities such as iron ore, bauxite and phosphate rock are
produced to specifications that vary from mine to mine.
Nevertheless, assuming that commodity markets approximate the
model of perfect competition is a reasonable starting point for
analysis in the great majority of cases. There is currently significant
market concentration in iron ore production. This was also true in
the past of aluminium and nickel. In these cases, we may need to
move away from the competitive paradigm. There are also other
exceptions such as diamonds, which are highly heterogeneous, and
relatively scarce metals such as rare earths, where there are only a
few producers.
At any given moment in time, the theory of perfect competition
suggests that prices will be set at the intersection of the supply
curve and the demand curve, as illustrated in Fig. 2.1. The demand
curve normally goes from the upper left to the lower right. At very
high prices the quantity demanded will be low, because, wherever
possible, potential consumers will try to find ways of doing without
the commodity or substituting some other commodity. Societies do
not demand aluminium, copper or steel as such. They demand the
products made from these metals such as buildings, vehicles and
machinery. High prices will encourage alternative ways of making
these products. Conversely, no matter how low the price goes, at
some point the demand will stop increasing, simply because society
does not want any more of the products made from the commodities
in question.

Fig. 2.1: The Theory of Perfect Competition.

The supply curve, which is equivalent to the long run cost curve,
goes from bottom left to upper right. This reflects the marginal cost
of producing increased quantities of the commodity. Some producers
have lower costs than others and are therefore willing to supply the
commodity even if prices are quite low. As prices increase, more
producers are able to profit by offering product. However, supply
constraints eventually emerge, usually in the form of a capacity
bottleneck at some point in the supply chain. At that point, even
large increases in price result in very small changes in the quantity
supplied.
The point of intersection of the two curves determines both the
price, P1, and the quantity, Q1, that will prevail in the market. Price
gives rise to what economists call consumer and producer surplus.
Any consumer with a position on the demand curve that lies to the
left of the intersection enjoys a price, P1, that is actually less than
the price they were theoretically willing to pay. This confers a benefit
that economists describe as a surplus that is equal to the difference
between the price that the consumer would have been willing to pay
and the market price they actually are required to pay multiplied by
the quantity involved.
Likewise, any producer whose position on the supply curve lies to
the left of the intersection enjoys a price that is higher than the
minimum price required for the operation of his facilities. The
difference between the market price and this price represents a
profit or surplus. The combined producer and consumer surplus
represents a ‘win–win’ for the economy as a whole and is the
fundamental reason why most economists believe that competitive
markets constitute the most efficient way of establishing prices.
Consumers and producers positioned to the right of the
intersection of the demand and supply curves do not participate in
the market. Those consumers requiring a lower price than that
offered in the market decide to do without the commodity in
question or substitute some other commodity. Those producers
whose costs exceed the price choose not to operate their mines or
refineries, because to do so would result in a loss.
Consumers and producers who occupy the point of intersection of
the curve are known as the marginal consumers and producers. The
marginal consumer pays a price that is exactly equal to the
maximum price he can afford and therefore does not benefit from
any consumer surplus. The marginal producer is receiving a price
that is equal to his cost of production and therefore does not capture
any profit from those units of production. This leads to the following
general conclusion: in perfectly competitive markets, price (marginal
revenue) equals marginal cost equals marginal utility. ‘Utility’ in this
context is a technical term used by economists. Its equivalent in
layman’s language is ‘affordability’, and I have adopted this
terminology for the remainder of this discussion.
It is important to note that ‘marginal cost’ includes only those
costs that a producer has to incur now and in the future to produce
output. It does not, therefore, include past capital costs, often
referred to as ‘sunk costs’. Nor does it include operating costs of a
fixed nature such as corporate overheads. This does not mean that
capital costs are unimportant. This depends critically on the
timeframe involved. When deciding whether to continue producing
tomorrow, capital costs will not be a material factor. What matters is
whether the price exceeds the variable operating costs. If it does,
then the mine is better off continuing to produce because it is
making at least some contribution to fixed operating costs and
historical capital costs. However, fixed costs become variable over
the longer term. A mine can choose to close completely and lay off
all the associated management, whose costs are treated as fixed in
the short term. More fundamentally, mining companies can decide
not to invest in new projects or expansions. What really matters is
not whether the costs are capital or operating but whether they
occur in the future rather than in the past. All current and future
costs, regardless of their character, are part of the marginal cost.
This gives rise to the important distinction between short-run
marginal cost (SRMC) and long-run marginal cost (LRMC). SRMC is
relevant to supply decisions next week, next month, or next quarter
and does not include overheads and capital costs. LRMC is relevant
to supply decisions 5, 10 and 20 years out and includes not only the
future capital costs involved but also reasonable corporate
overheads. Otherwise companies will not be willing to devote scarce
management resources to the oversight of these projects. The
supply curve drawn above is the LRMC curve.
The model of perfect competition must be modified in the case of
a market where a monopoly exists, or where a small number of
companies have a large market share and are in a position to exert
market power. The goal of the monopolist is to maximise the
absolute size of his producer surplus. This surplus can be increased
if a producer, or group of producers, is able to exert market power in
a manner that transfers at least part of the consumer surplus to the
producer surplus. Fig. 2.2 illustrates one possible outcome.
Suppliers with market power exert it by restricting output to a
level that is less than that which would prevail under perfect
competition. Thus, instead of Q1 being co-determined with P1, the
quantity is restricted to Q2, which then gives rise to a new price, P2.
This process is not without cost to producers. As the chart shows,
they sacrifice the surplus associated with production units located
between Q1 and Q2. However, this cost is more than offset by a
transfer of part of the consumer surplus to the producer surplus.
Part of the consumer surplus is also lost, as distinct from being
transferred to the producer, so consumers suffer a double blow when
market power of this kind is exercised.

Fig. 2.2: The Theory of Monopolistic Competition.

The combined producer and consumer surplus that is lost

represents a reduction in welfare to society as a whole, which is why
economists generally regard monopolies as a source of inefficiency
and why governments adopt competition laws designed to
discourage monopolistic behaviour. The reality, of course, is that
most markets are neither perfectly competitive nor totally
monopolistic but lie somewhere between. Economists refer to such
markets as being monopolistically competitive or, if there are
strategic interactions between the firms, as oligopolistic. Some
resource markets, such as potash, are oligopolistic but most major
metals and minerals markets are close to being perfectly
competitive.
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out to the last extremity. On the present occasion I found much of
that tone of mind among the various brigades which lay before St
Sebastian. They could not forgive the French garrison, which had
now kept them during six weeks at bay, and they burned with anxiety
to wipe off the disgrace of a former repulse; there was, therefore,
little mention made of quarter, when the approaching assault
chanced to be alluded to.
The governor of St Sebastian was evidently a man of great energy of
mind, and of very considerable military talent. Everything which
could be done to retard the progress of the siege he did. The breach
which had been effected previous to the first assault was now almost
entirely filled in. Many new works were in course of erection; and,
which was not, perhaps, in strict accordance with the laws of modern
warfare, they were erected by British prisoners. We could see these
poor fellows labouring at their tasks in full regimentals; and the
consequence was, that they were permitted to labour on without a
single gun being turned against them. Nor was this all that was done
to annoy the assailants. Night after night petty sorties were made,
with no other apparent design than to disturb the repose and to
harass the spirits of the besiegers; for the attacking party seldom
attempted to advance farther than the first parallel, and was
uniformly beaten back by the pickets and reserve.
During the last ten days the besieging army had been busily
employed in bringing up ammunition, and in dragging into battery
one of the most splendid trains of heavy ordnance which had ever at
that time been placed at the disposal of an English general. On the
evening of the 26th these matters were all completed. No fewer than
sixty pieces of artillery, some of them thirty-two, and none of lighter
metal than eighteen-pounders, were mounted against the town;
whilst twenty mortars, of different calibres, prepared to scatter death
among its defenders, and bade fair to reduce the place itself to a
heap of ruins.
These arrangements being completed, it was deemed prudent,
previous to the opening of the batteries, to deprive the enemy of a
little redoubt which stood upon an island in the harbour, and in some
degree enfiladed the trenches. For this service a detachment,
consisting of a hundred men, a captain, and two subalterns, was
allotted, who, filing from the camp soon after nightfall, embarked in
the boats of the cruisers. Here the soldiers were joined by a few
seamen and marines, under the command of a naval officer; and the
whole having made good their landing under cover of darkness,
advanced briskly to the assault. The enemy were taken by surprise;
only a few shots were fired on either side; and in the space of five
minutes, the small fort, mounting four guns, with an officer and thirty
men, the whole of the garrison, fell without bloodshed into the hands
of the assailants.
So trifling, indeed, was the resistance offered by the French garrison,
that it disturbed not the slumbers of the troops in camp. The night of
the 26th, accordingly, passed by in quiet; but as soon as the morning
of the 27th dawned, affairs assumed a different appearance. Soon
after daybreak, a single shell was thrown from the heights on the
right of the town, as a signal for the batteries to open; and then a
tremendous cannonade began. The first salvo was one of the finest
things of the kind I ever witnessed. Without taking the trouble to
remove the slight covering of sand and turf which masked their
batteries, the artillerymen, laying their guns by such observations as
small apertures left for the purpose enabled them to effect, fired
upon the given signal, and so caused the guns to clear a way for
themselves against future discharges; nor were these tardy in
occurring. So rapid, indeed, were the gunners in their movements,
and so well sustained their fire throughout all the hours of daylight on
the 27th, the 28th, the 29th, and the 30th, that by sunset on the latter
day not only was the old breach reduced to its former dilapidated
condition, but a new and a far more promising aperture was effected.
In the mean time, the enemy had not been remiss in their
endeavours to silence the fire of the besiegers, and to dismount their
guns. They had, indeed, exercised their artillery with so much
goodwill, that most of the cannon found in the place after its capture
were unserviceable; being melted at the touch-holes, or otherwise
damaged, from too frequent use. But they fought, on the present
occasion, under every imaginable disadvantage; for not only was our
artillery much more than a match for theirs, but our advanced
trenches were lined with troops, who kept up an incessant and
deadly fire of musketry upon the embrasures. The consequence
was, that the fire from the town became every hour more and more
feeble, till it dwindled away to the discharge of a single mortar from
beneath the ramparts.
I have said that by sunset on the 30th the old breach was reduced to
its former dilapidated state, and a new and a more promising one
effected. It will be necessary to describe, with greater accuracy than
I have yet done, the situation and actual state of these breaches.
The point selected by Sir Thomas Graham as most exposed, and
offering the best mark to his breaching artillery, was on that side of
the town which looks towards the river. Here there was no ditch, nor
any glacis; the waters of the Urumea flowing so close to the foot of
the wall as to render the one useless and the other impracticable.
The whole of the rampart was consequently bare to the fire of our
batteries; and as it rose to a considerable height, perhaps twenty or
thirty feet above the plain, there was every probability of its soon
giving way to the shock of the battering guns. But the consistency of
that wall is hardly to be imagined by those who never saw it. It
seemed as if it were formed of solid rock; and hence the breach,
which, to the eye of one who examined it only from without,
appeared at once capacious and easy of ascent, proved, when
attacked, to be no more than a partial dilapidation of the exterior face
of the masonry. Nor was this all; the rampart gave way, not in
numerous small fragments, such as might afford a safe and easy
footing to those who were to ascend, but in huge masses, which,
rolling down like crags from the face of a precipice, served to impede
the advance of the column almost as effectually as if they had not
fallen at all. The two breaches were about a stone's-throw apart.
Both were commanded by the guns of the castle, and both were
flanked by projections in the town wall. Yet such was the path by
which our troops must proceed, if any attempt should be made to
carry the place by assault.
That this attempt would be made, and that, too, on the morrow, every
man in the camp was perfectly aware. The tide promised to answer
about noon, and noon was accordingly fixed upon as the time of
attack; the question therefore arose, who, by the morrow's sunset,
would be alive to speak of it, and who would not. While this surmise
very naturally occupied the minds of the troops in general, a few
more daring spirits were at work devising means for furthering the
intended assault, and securing its success. Conspicuous among
these was Major Snodgrass, an officer belonging to the 52d British
regiment, but in command, on the present occasion, of a battalion of
Portuguese. Up to the present night only one ford, and that at some
little distance from both breaches, had been discovered. After
carefully examining the stream through a telescope, and from a
distance, Major Snodgrass had conceived the idea that there must
be another ford, so far above that already known as to carry those
who should cross by it at once to the foot of the smaller breach; and
so entirely had this persuasion taken possession of his mind, that
though the moon was in her first quarter, and gave considerable
light, he devoted the whole of the night of the 30th to a personal trial
of the river. He found, as he expected, that it was fordable at low
water immediately opposite to the smaller breach, for he crossed it in
person, the water reaching but little above his waist. Nor was he
contented with having ascertained that fact; he clambered up the
face of the breach at midnight, gained its summit, and looked down
upon the town. How he contrived to elude the vigilance of the French
sentinels, I know not; but that he did elude them, and that he
performed the gallant act which I have just recorded, is perfectly well
known to all who served at this memorable siege.
So passed the night of the 30th, an interval of deep anxiety to many
—of high excitement to all. Many a will was made, as soldiers make
their wills, ere sleep closed their eyes. About an hour before day the
troops were, as usual, under arms; and then the final orders were
given for the assault. The division was to enter the trenches about
ten o'clock, in what is called light marching order—that is, leaving
their knapsacks, blankets, &c., behind, and carrying with them only
their arms and ammunition; and the forlorn-hope was to move
forward as soon as the tide should appear sufficiently low to permit
their crossing the river. This post was assigned to certain
detachments of volunteers who had come down from the various
divisions of the main army, for the purpose of assisting in the assault
of the place. These were to be followed by the 1st, or Royal
Regiment of Foot; that by the 4th; that by the 9th; and it again by the
47th; whilst several battalions of Portuguese were to remain behind
as a reserve, and to act as circumstances should require. Such were
the orders issued at daybreak on the 30th of August; and all who
heard prepared cheerfully to obey them.
It is a curious fact, but a fact it is, that the morning of the 31st rose
darkly and gloomily, as if the elements had been aware of the
approaching conflict, and were determined to add to its awfulness by
their disorder. A close and oppressive heat pervaded the
atmosphere; lowering and sulphureous clouds covered the face of
the sky, and hindered the sun from darting upon us one enlivening
ray, from morning till night. A sort of preternatural stillness, too, was
in the air; the birds were silent in the groves; the very dogs and
horses in the camp, and cattle on the hillside, gazed in apparent
alarm about them. Moreover, as the day passed on, and the hour of
attack drew near, the clouds gradually collected into one black mass
directly over the devoted city; and almost at the instant when our
troops began to march into the trenches, the storm burst forth. Still, it
was comparatively mild in its effects. An occasional flash of lightning,
succeeded by a burst of thunder, was all that we felt, though this was
enough to divert, in some degree, the attention of many from their
own more immediate circumstances.
The forlorn-hope took its station at the mouth of the most advanced
trench, about half-past ten o'clock. The tide, which had long turned,
was now fast ebbing; and these gallant fellows beheld its departure
with a degree of feverish anxiety, such as he only can imagine who
has stood in a similar situation. Not on any previous occasion since
the commencement of the present war had a town been assaulted
by daylight; nor, as a necessary consequence, were the assailants in
a condition to observe distinctly beforehand the preparations which
were making for their reception. There was, therefore, something not
only interesting but novel in beholding the muzzles of the enemy's
cannon, from the castle and other batteries, turned in such a
direction as to flank the breaches; while the glancing of bayonets,
and the occasional rise of caps and feathers, gave notice of the line
of infantry which was forming underneath the parapet. And that no
evidence might be wanting of the vigilance wherewith all ranks
among the enemy were animated, officers might be seen, here and
there, leaning their telescopes over the top of the rampart, or through
the opening of an embrasure, and prying with deep attention into our
arrangements.
Nor were our own officers, particularly those of the engineers, idle.
With admirable coolness they exposed themselves to a dropping fire
of musketry, which the enemy at intervals kept up, whilst they
examined and re-examined the state of the breaches—a procedure
which cost the life of as brave and experienced a soldier as that
distinguished corps has produced. I allude to Sir Richard Fletcher,
chief engineer to the army, who was shot through the head only a
few minutes before the column advanced to the assault.
It would be difficult to convey to the mind of an ordinary reader
anything like a correct notion of the state of feeling which takes
possession of a man waiting for the commencement of a battle. In
the first place, time appears to move upon leaden wings; every
minute seems an hour, and every hour a day. Then there is a
strange commingling of levity and seriousness within himself—a
levity which prompts him to laugh he scarce knows why, and a
seriousness which urges him from time to time to lift up a mental
prayer to the Throne of Grace. On such occasions little or no
conversation passes. The privates generally lean upon their
firelocks, the officers upon their swords; and few words, except
monosyllables, at least in answer to questions put, are wasted. On
these occasions, too, the faces of the bravest often change colour,
and the limbs of the most resolute tremble, not with fear, but with
anxiety; while watches are consulted, till the individuals who consult
them grow weary of the employment. On the whole, it is a situation
of higher excitement, and darker and deeper feeling, than any other
in human life; nor can he be said to have felt all which man is
capable of feeling who has not gone through it.
Noon had barely passed, when, the low state of the tide giving
evidence that the river might be forded, the word was given to
advance. Silent as the grave the column moved forward. In an
instant the leading files had cleared the trenches, and the others
poured on in quick succession after them. Then the work of death
began. The enemy having reserved their fire till the head of the
column gained the middle of the stream, opened with deadly effect.
Grape, canister, musketry, shells, grenades, every species of
missile, in short, which modern warfare supplies, were hurled from
the ramparts, beneath which our gallant fellows dropped like corn
before the reaper; insomuch that, in the space of two minutes, the
river was choked up with the bodies of the killed and wounded, over
whom, without stopping to discriminate the one from the other, the
advancing divisions pressed on.
The opposite bank was soon gained, and the short space between
the landing-place and the foot of the breach cleared, without a single
shot having been returned by the assailants. But here a very
alarming prospect awaited them. Instead of a wide and tolerably
level chasm, the breach presented the appearance of an ill-built wall,
thrown considerably from its perpendicular, to ascend which, even
though unopposed, would be no easy task. It was, however, too late
to pause; besides, men's blood was hot, and their courage on fire; so
they pressed on, clambering up as they best could, and effectually
hindering one another from falling back, by the eagerness of the rear
ranks to follow those that were in front. Shouts and groans were now
mingled with the roar of cannon and the rattle of musketry; our front
ranks, likewise, had an opportunity of occasionally firing with effect,
and the slaughter on both sides was dreadful.
At length the head of the column forced its way to the summit of the
breach, where it was met in the most gallant style by the bayonets of
the garrison. When I say the summit of the breach, I do not mean
that our soldiers stood upon a level with their enemies, for this was
not the case. There was a high step, perhaps two or three feet
perpendicular, which the assailants must needs surmount before
they could stand face to face with the garrison, and a considerable
space of time elapsed ere that object was attained. For bayonet met
bayonet here, and sabre sabre, in close and desperate strife, the
one party being unable to advance a foot, the other making no
progress in the endeavour to force them back.
Things had continued in this state for nearly a quarter of an hour,
when Major Snodgrass, at the head of the 13th Portuguese
regiment, dashed across the river by his own ford, and made for the
lesser breach. The attack was made in the most cool and
determined manner; but here, too, obstacles almost insurmountable
opposed themselves; indeed it is highly probable that the place
would scarcely have been carried at all but for the adoption of an
expedient never before tried in modern warfare. The general
commanding ordered the guns from our own batteries to fire upon
the top of the breach. Nothing could exceed the beauty and
correctness of the practice. Though the shot passed within a couple
of feet of the heads of the British soldiers who stood nearest to the
enemy, not an accident occurred; while, from the murderous effect of
the fire, the French suffered terribly.
The cannonade had been kept up but a few minutes when a sudden
explosion took place, such as drowned every other noise, and
apparently confounded, for an instant, the combatants on both sides.
A shell from one of our mortars had burst near the train which
communicated with a quantity of gunpowder placed under the
breach. This mine the French had intended to spring as soon as our
troops should have made good their footing, or established
themselves on the summit; but the fortunate accident just referred to
anticipated them. It exploded while three hundred grenadiers, the
elite of the garrison, stood over it, and instead of sweeping the
storming party into eternity, it only cleared a way for their advance. It
was a spectacle as appalling and grand as the imagination can
conceive, the sight of that explosion. The noise was more awful than
any which I have ever heard before or since; while a bright flash,
instantly succeeded by a smoke so dense as to obscure all vision,
produced an effect upon those who witnessed it which no powers of
language are adequate to describe. Such, indeed, was the effect of
the whole occurrence, that for perhaps half a minute after not a shot
was fired on either side. Both parties stood still to gaze upon the
havoc which had been produced, insomuch that a whisper might
have caught your ear for a distance of several yards.
The state of stupefaction into which they were at first thrown did not,
however, last long with the British troops. As the smoke and dust of
the ruins cleared away, they beheld before them a space empty of
defenders, and they instantly rushed forward to occupy it. Uttering an
appalling shout, the troops sprang over the dilapidated parapet, and
the rampart was their own. Now then began all those maddening
scenes which are witnessed only in a successful storm, of flight and
slaughter, and parties rallying only to be broken and dispersed; till,
finally, having cleared the works to the right and left, the soldiers
poured down into the town.
To reach the streets, our men were obliged to leap about fifteen feet,
or to make their way through the burning houses which adjoined the
wall. Both courses were adopted, according as different parties were
guided in their pursuit of the flying enemy; and here again the battle
was renewed. The French fought with desperate courage; they were
literally driven from house to house, and from street to street; nor
was it till a late hour in the evening that all opposition on their part
ceased. Then, however, the governor, with little more than a
thousand men, retired into the castle, whilst another detachment, of
perhaps two hundred, shut themselves up in a convent.
As soon as the fighting began to wax faint, the horrors of plunder
and rapine succeeded. Fortunately there were few females in the
place; but of the fate of the few which were there, I cannot even now
think without a shudder. The houses were everywhere ransacked,
the furniture wantonly broken, the churches profaned, the images
dashed to pieces; wine and spirit cellars were broken open; and the
troops, heated already with angry passions, became absolutely mad
by intoxication. All order and discipline were abandoned. The officers
had no longer the slightest control over their men, who, on the
contrary, controlled the officers; nor is it by any means certain that
several of the latter did not fall by the hands of the former while
vainly attempting to bring them back to a sense of subordination.
Night at last set in, though the darkness was effectually dispelled by
the glare from burning houses, which one after another took fire. The
morning of the 31st had risen upon St Sebastian as neat and
regularly built a town as any in Spain: long before midnight it was
one sheet of flame; and by noon on the following day, little remained
of it except its smoking ashes. The houses being lofty, like those in
the Old Town of Edinburgh, and the streets straight and narrow, the
fire flew from one to another with extraordinary rapidity. At first some
attempts were made to extinguish it, but these soon proved useless:
and then the only matter to be considered was how, personally, to
escape its violence. Many a migration was accordingly effected from
house to house, till at last houses enough to shelter all could no
longer be found, and the streets became the place of rest to the
majority.
The spectacle which these presented was truly shocking. A strong
light falling upon them from the burning houses disclosed crowds of
dead, dying, and intoxicated men huddled indiscriminately together.
Carpets, rich tapestry, beds, curtains, wearing apparel—everything
valuable to persons in common life—were carelessly scattered about
upon the bloody pavement; whilst, from the windows above, fresh
goods were continually thrown, sometimes to the damage of those
who stood or sat below. Here you would see a drunken fellow
whirling a string of watches round his head, and then dashing them
against the wall; there another, more provident, stuffing his bosom
with such smaller articles as he most prized. Next would come a
party rolling a cask of wine or spirits before them, with loud
acclamations, which in an instant was tapped, and, in an incredibly
short space of time, emptied of its contents. Then the ceaseless hum
of conversation, the occasional laugh and wild shout of intoxication,
the pitiable cries or deep moans of the wounded, and the
unintermitted roar of the flames, produced altogether such a concert
as no man who listened to it can ever forget.
Of these various noises the greater number began gradually to
subside as night passed on; and long before dawn there was a
fearful silence. Sleep had succeeded inebriety with the bulk of the
army. Of the poor wretches who groaned and shrieked three hours
ago, many had expired; and the very fire had almost wasted itself by
consuming everything upon which it could feed. Nothing, therefore,
could now be heard except an occasional faint moan, scarcely
distinguishable from the heavy breathing of the sleepers; and even
that was soon heard no more.
 CHAPTER IV.
That the connection of the narrative might not be interrupted, I have
detailed, in the preceding chapter, the events attendant upon the
assault and capture of St Sebastian, instead of drawing the reader's
attention to the movements of the particular corps to which I chanced
to be attached. These, however, are soon related. On the evening of
the 26th an order arrived, by which we were directed to march on the
following day, and to join that division of the army which occupied the
pass of Irun. It was promptly obeyed; and after an agreeable journey
of four hours, we took up our abode in a barren valley, surrounded
on every side by steep and rugged mountains, where we found huts
already erected for our accommodation.
We remained here in a state of quiet till the morning of the 30th,
when, at three o'clock, an aide-de-camp arrived in the camp with
directions for us instantly to retrace our steps, and to join the army
before St Sebastian. We were perfectly aware that the town was to
be stormed on the following day, and, of course, were not reluctant
to obey a command which led us to the assistance of our comrades.
The ranks were accordingly formed with goodwill, and by seven
o'clock we had reached our ground.
It was the design of Sir Thomas Graham to embark a detachment of
troops in the boats of the fleet, who should assault the castle at the
moment when the main body moved from the trenches. The corps to
which I belonged was selected for this purpose. But on reconnoitring
the face of the cliff, it was at once perceived that, to make any
attempt of the kind, would only devote to certain destruction the
luckless detachment which should be so employed. This part of the
plan was accordingly abandoned; and a few boats only being
manned, for the purpose of making a feint, and for causing, if
possible, a diversion, the remainder, with the exception of such as
were chosen to accompany the storming party, returned, by the
morrow's dawn, to the front.
I have already stated that the morning of the 31st rose darkly and
gloomily, and that, just as the besiegers had begun to fill the
trenches, a storm burst forth. It continued to increase in violence and
sublimity every moment; so that, when our leading files emerged
from their cover, one of the most fearful thunderstorms to which I
ever listened had attained its height. Nor was this the only
circumstance which added to the terrors of that eventful day. Marshal
Soult, aware of the importance of St Sebastian, and full of that
confidence which a late appointment to command generally bestows,
made on the 31st a desperate effort to raise the siege. At the head of
a column of fifteen thousand infantry he crossed the Bidassoa near
Irun, and attacked with great spirit the heights of St Marcial. These
were defended only by Spanish troops, which gave way almost
immediately, and were driven to the tops of the hills; but here, seeing
a brigade or two of British troops in reserve, they rallied, and
maintained their ground with considerable resolution. By this means
it so happened that, whilst one division of the army was hotly
engaged in the assault of St Sebastian, the divisions in front were in
desperate strife with the troops of Marshal Soult; while the heavens
thundered in an awful manner, and the rain fell in torrents. In one
word, it was a day never to be forgotten by those who witnessed its
occurrence—it was a day which I, at least, shall never forget.
It is impossible to describe, with any degree of fidelity, the
appearance which St Sebastian presented when the dawn of the 1st
of September rendered objects visible. The streets, which had lately
been covered with the living as well as the dead, were now left to the
occupation of the latter; and these were so numerous, that it puzzled
the beholder to guess where so many sleeping men could have
found room to lie. The troops, however, returned not, with the return
of light, to their accustomed state of discipline. Their strength being
recruited by sleep, and their senses restored, they applied
themselves with greater diligence than ever to the business of
plunder. Of the houses few now remained, except in a state of ruin;
but even the ruins were explored with the most rapacious eagerness,
not so much for jewels and other valuables as for wine and spirits.
Unfortunately, many cellars were this day discovered, which, in the
hurry and confusion of last night, had escaped detection; and the
consequence was, that in the space of a very few hours intoxication
once more prevailed throughout the army.
Of St Sebastian, and the proceedings within it, I can say no more
from personal observation, my post being now with the advance of
the army; but I may as well add, that the castle still held out, and
continued so to do, till the 8th of September. It was, however, as we
afterwards discovered, wholly unprovided with shelter against the
shells which were unintermittingly thrown into it; and hence, after
suffering every possible misery during a whole week, the governor
was at last obliged to surrender. About nine hundred men, the
remains of a garrison of four thousand, became by this measure
prisoners of war, and such British prisoners as had escaped the
horrors of the siege were recaptured; but the place itself was utterly
valueless, being in a state of the most complete dilapidation.
The whole of the 1st of September was spent under arms, and in a
state of deep anxiety, by the troops which occupied the pass of Irun,
inasmuch as various movements in the French lines appeared to
indicate a renewal of hostilities. Many bullock-cars, laden with
wounded Spaniards, passed in the meanwhile through our
encampment; and the groans and shrieks of these poor fellows, as
the jolting of their uneasy vehicles shook their wounds open afresh,
by no means tended to elevate the spirits, or add to the courage of
those who heard them. Not that there was any reluctance on our part
to engage: I believe a reluctance to fight was never felt by Britons
when the enemy were in sight; but a few of the real effects of war,
contemplated in a moment of coolness and inaction, seldom has the
effect of adding fuel to the valorous fire which is supposed at all
moments to burn in the breast of a soldier; and, in truth, this was a
piteous sight.
Of all the classes of men with whom I ever had intercourse, the
Spanish surgeons are, I think, the most ignorant and the most
prejudiced. Among the many amputations which during the war they
were called upon to perform, about one-half, or more than half,
proved fatal. Their mode of dressing other wounds was, moreover, at
once clumsy and inefficient; and hence the mangled wretches who
passed us this morning were not only suffering acutely from the
natural effect of their hurts, but were put to more than ordinary
torture on account of the clumsy and rude manner in which their
hurts had been looked to.
Though I have no intention of writing a history of the campaigns of
1813 and 1814, it is necessary, for the purpose of rendering my
journal intelligible, to give, in this stage of it, some account of the
relative situations of the British and French armies.
The two kingdoms of France and Spain are divided, towards the
shores of the Bay of Biscay, by the river Bidassoa—an
inconsiderable stream, which, rising about the centre of the
Peninsula, follows the winding course of one of those many valleys
with which the Pyrenees abound, and falls into the sea near the
ancient town of Fontarabia. The Bidassoa is perfectly fordable in
almost all places, at the distance of ten miles from its mouth; whilst
immediately opposite to Fontarabia itself there is one part where, at
low tide, a passage may be effected, the water reaching only to the
chest of him who crosses. About two or three miles from Irun, which
is distant something less than a league from Fontarabia, is another
ford, across which a bridge had been built, but which, at the period of
my narrative, was in ruins; consequently, there were two separate
fords leading to the pass of Irun, by both or either of which an army
might advance with safety.
On either side of this little stream, the mountains, except at the
passes of Irun, Roncesvalles, &c., rise so abruptly as to form an
almost impassable barrier between the one kingdom and the other.
The scenery of the Bidassoa is, in consequence, romantic and
striking in the extreme; for not only are the faces of the hills steep
and rugged, but they are clothed, here and there, with the most
luxuriant herbage; whilst frequent streams pouring down from the
summits, form, especially after rain, cascades that are exceedingly
picturesque, and in some instances almost sublime. The river itself is
clear, and rapid in its course—winding, as mountain streams
generally do, where hills come in to impede their progress; and that it
is not deficient in excellent trout, I am still a living witness, having,
with my friend Captain Grey, more than once fished it.
At the period of which I am now speaking, the armies of Lord
Wellington and Marshal Soult occupied the opposite banks of this
little stream. Our pickets were stationed on the rise of the Spanish
hills; those of the French on the faces of their own mountains; whilst
the advanced sentinels were divided only by the river, which
measured, in many places, not more than thirty yards across. But the
French, whatever their faults may be, are a noble enemy. The most
perfect understanding prevailed between them and us, by which not
only the sentries continued free from danger, but the pickets
themselves were safe from wanton surprisal; no attack upon an
outpost being under any other circumstances thought of, unless it
was meant to be followed up by a general engagement.
For myself, my situation was, as I have already stated, in a bleak
valley, distant nearly three miles from the river, and surrounded on
every side by bold and barren precipices. In such a place there was
little either to interest or amuse; for of the French army we could see
nothing; and of game, in quest of which I regularly proceeded, there
was a woeful scarcity. There, however, we remained till the morning
of the 5th, without any event occurring worthy of notice, unless a
fortunate purchase of two excellent milch-goats, which I effected
from a Spanish peasant, be deemed such. But on that day our
position was changed; and the glorious scenery to which the march
introduced us far more than compensated for the fatigues
occasioned by it.
It is by no means the least pleasing circumstance in the life of a
soldier upon active service that he never knows, when he awakes in
the morning, where he is to sleep at night. Once set in motion, and,
like any other machine, he moves till the power which regulates his
movements shall call a halt; and wherever that halt may occur, there,
for the present, is his home. Such a man has not upon his mind the
shadow of a care; for the worst bed which he can meet with is the
turf; and he seldom enjoys a better than his cloak or blanket. Give
him but a tent—and with tents the commander of the forces had
lately supplied us—and he is in luxury; at least as long as the
summer lasts, or the weather continues moderate; nor had we as yet
experienced any blasts against which our tents furnished not a
sufficient shelter.
The sun was just rising on the morning of the 5th of September when
our tents were struck, the line of march formed, and ourselves en
route towards the base of one of the highest hills which hemmed us
in on every side. Along the face of this mountain was cut a narrow
winding path, for the accommodation, in all probability, of goatherds
or muleteers, who contrive to transport articles of luxury and clothing
into the wildest districts where human inhabitants are to be found. It
was, however, so rough and so precipitous, as effectually to hinder
our men from preserving anything like order in their ranks; and thus
caused a battalion of little more than six hundred bayonets to cover
an extent of ground measuring, from front to rear, not less than three
quarters of a mile. Of course the fatigue of climbing, loaded as we
were with arms, ammunition, and necessaries, was great; and as the
heat of the day increased it became almost intolerable. But we toiled
on in good spirits, hoping that each vale or level at which we arrived
would prove the place of our rest, and not a little delighted with the
romantic scenery to which every turning in the road introduced us.
We had continued this arduous journey during five hours, when, on
reaching the summit of an isolated green hill, at the back of the ridge
already described, four mounted officers crossed us, one of them
riding a little ahead of the rest, who, on the contrary, kept together.
He who rode in front was a thin, well-made man, apparently of the
middle stature, and not yet past the prime of life. His dress was a
plain grey frock, buttoned close to the chin; a cocked-hat, covered
with oilskin; grey pantaloons, with boots, buckled at the side; and a
steel-mounted light sabre. Though I knew not who he was, there was
a brightness in his eye which bespoke him something more than an
aide-de-camp or a general of brigade; nor was I long left in doubt.
There were in the ranks many veterans who had served in the
Peninsula during some of the earlier campaigns; these instantly
recognised their old leader, and the cry of "Duro, Duro!" the familiar
title given by the soldiers to the Duke of Wellington, was raised. This
was followed by reiterated shouts, to which he replied by taking off
his hat and bowing; when, after commending the appearance of the
corps, and chatting for a moment with the commanding officer, he
advised that a halt should take place where we were, and rode on.
As I had never seen the great Captain of the day before, it will be
readily imagined that I looked at him on the present occasion with a
degree of admiration and respect such as a soldier of seventeen
years of age, devoted to his profession, is likely to feel for the man
whom he regards as its brightest ornament. There was in his general
aspect nothing indicative of a life spent in hardships and fatigues;
nor any expression of care or anxiety in his countenance. On the
contrary, his cheek, though bronzed with frequent exposure to the
sun, had on it the ruddy hue of health, while a smile of satisfaction
played about his mouth, and told, more plainly than words could
have spoken, how perfectly he felt himself at his ease. Of course I
felt, as I gazed upon him, that an army under his command could not
be beaten; and I had frequent opportunities afterwards of perceiving
how far such a feeling goes towards preventing a defeat. Let troops
only place perfect confidence in him who leads them, and the sight
of him, at the most trying moment, is worth a fresh brigade.
In compliance with the recommendation of Lord Wellington, the
corps halted on the beautiful green hill to which it had attained; but
two full hours elapsed ere the baggage came up. In the mean time,
by far the greater number among us, myself included, threw
ourselves down upon the grass, and fell fast asleep; from which we
were not roused till the arrival of the tents summoned us to the not
less agreeable occupation of boiling our kettles and preparing
breakfast. This was quickly commenced; and having satisfied the
cravings of hunger, we dispelled every source of annoyance to which
we were subject.
 CHAPTER V.
I have seldom looked upon scenery more romantic than that which
surrounded the spot where we were now halted. For the last four or
five hours we had been gradually ascending the mountains, and at
length found ourselves on the top of a green hill, which, when
contrasted with the bold heights that begirt it, might be deemed a
valley, though itself many thousand feet above the level of the sea.
One side of this grassy platform appeared perfectly perpendicular. In
this direction it was separated from a steep ridge by a narrow ravine,
so deep and so rugged that all attempts to trace its base were
fruitless. On another side it connected itself with the Quatracone; on
a third, that by which we had advanced, it sloped gradually
downwards till the view became lost in hanging forests; whilst behind
us, only a little green declivity divided it from other similar hills, which
afforded a comparatively smooth passage to the Foundry of St
Antonio.
It was here that, during the succession of battles which Soult had
hazarded about a month before, one division of the French army
made several daring efforts to break the Allied line; and where, in
truth, the line was for a time virtually broken. To this the appearance
of all things around bore testimony. Not only the ground of our
encampment, but the whole of the pass, was strewed with broken
firelocks, pikes, caps, and accoutrements; whilst here and there a
mound of brown earth, breaking in upon the uniformity of the green
sod, marked the spot where some ten or twelve brave fellows lay
asleep. In the course of my wanderings, too, I came upon sundry
retired corners, where the remains of dead bodies—such remains as
the wolves and vultures had left—lay still unburied; and these, by the
direction in which they leaned towards one another, led me to
conclude that the contest had been desperate, and that the British
troops had been gradually borne back to the very edge of the
precipice. That some of them were driven beyond its edge is indeed
more than probable; for, at one place in particular, I remarked a little
group of French and English soldiers lying foot to foot close beside it.
I need not inform my reader that eagles, vultures, and kites are
faithful followers of an army. They were particularly abundant here—
whether because a more than ordinary supply of food was furnished
to them, or that their nests were built among the rocks of the
Quatracone, I know not; but they wheeled and careered over our
heads so daringly as almost to challenge a pursuit. I took my gun
accordingly, on the morning after our arrival, and clambered up the
face of the mountain; but all my efforts to get within shot of these
wary creatures proved abortive. The fatigue of the excursion was,
however, more than compensated by the glorious prospect which it
opened to my gaze; and which, though it may perhaps be equalled,
cannot, I firmly believe, be surpassed in any quarter of the world.
From the top of the Quatracone the traveller looks down, not only
upon the varied scenery which all mountainous districts present, but
upon the fertile plains of Gascony, the waters of the Bay of Biscay,
and the level fields of the Asturias. The towns of Bayonne, St Jean
de Luz, Fontarabia, Irun, St Sebastian, Vittoria, and many others, lie
beneath, diminished, indeed, into mere specks, but still
distinguishable; whilst, southward, forests of pine and groves of cork-
trees, rugged precipices and dark valleys, present a striking contrast
to these abodes of man. The day on which I scaled the mountain
chanced to be particularly favourable; there was not a cloud in the
sky, nor the slightest haze in the atmosphere; and hence, though I
failed in obtaining the object in quest of which I had quitted the
camp, I returned to it in the evening more than usually delighted with
the issue of my ramble.
We remained in this delightful position only two days; and on the
morning of the 6th of September, once more struck our tents. Noon
had passed, however, before we began to move; when, taking the
direction of the Foundry, we ascended the chain of green hills before
us, till we had attained an eminence directly over the Bidassoa, and
consequently within sight of the enemy's camp. Our march was by
no means an agreeable one. We had scarcely left our ground when
the rain began to fall in torrents; and as the baggage travelled more