URGENT: Mining Bad for Clans?
(NOTE: The foregoing analysis is made by me exclusively, and may not reflect the opinions held by clan Whisper’s Edge, the clans as a whole, or anyone else for that matter.)
Introduction
The decision by the Interstellar Confederation of Corporations (“ICC”) of 29 November 29476 to fully deregulate the monopoly on the mining of notum on Rubi-Ka, held prior thereto by Omni-Tek Corporation (“OT”), seemed at the outset a blessing to the clans. After months of living in uncertainty, with no leadership and no land to truly call their own, many among them saw this as an opportunity to finally strike back at OT for imposing this existence on them. Little did the clans realize that their engagement in mining activities would actually serve to strengthen their opponent, rather than chip away at its power.
Downstream and Upstream Monopoly
In accordance with the terms of the lease granted to OT over all natural resource rights as such lease existed prior to the 29476 decision, OT was granted a full monopoly over both the mining of notum (and similar activities that are “downstream” in the production process) and the actual transport and sale of such notum quantities to interstellar markets. OT bore all right, title and particularly all responsibility for ensuring that a continuous stream of notum flowed to these markets, and its buoyant profits and elevated share price reflected its positive fulfillment of these.
However, one can logically assume that the ongoing conflict between the clans and OT, the uncertainty created by the Dust Brigade attacks, and the overly inhospitable political and economic climates on Rubi-Ka bore increasingly harsh on OT. In such times, OT would be forced to spend billions of credits on security for mining installations, on police and intelligence assets to prevent strikes against its facilities, and on military forces to ensure sufficient readiness should its citizens be targeted. All of those would have been the responsibility of OT under the terms of the lease. It would also incur ongoing operating expenses for the mines, refining and processing, and off-world transportation facilities as required to bring notum from its raw, unrefined state to the “product” phase.
The latter group in the previous list is a valid business expenditure; it is fully accountable in planning horizons and on corporate balance sheets. The former, however – the security, uncertainty and military – is not. Such expenses are tremendously difficult to budget for, and in the case of uncertainty, impossible to accurately manage. In light of the pre-November 29 circumstances, it is highly likely that such unplanned and unwarranted expenses could have eroded the normally-exorbitant profits of OT.
Upstream-Only Monopoly
When the ICC made its decision to deregulate the mining phase of the notum production process, OT executives and employees decried the ICC for blatant stupidity. Some even renounced the administration of OT for its comparatively muted response to what seems, on the surface, as a complete attack on its legal right to a monopolized supply of notum.
However, OT did retain its “upstream” monopolization. Despite the ICC decision, it was still the only legally-authorized entity permitted to sell notum to the intergalactic marketplace. OT still reaped all profit from sale of the element, and continued to fulfill its duty to supply nanotech corporations and labs throughout the galaxy with notum.
While on Rubi-Ka, and in response to the ICC decision, OT employees have taken to the battlefield in support of the corporation; clans have drawn battle lines in the sands and forests to wage war for what precious little land they can seize from the oppressive corporation. Inevitably, countless billions of credits have been spent by private individuals – clan, neutral and OT – to ensure that their respective faction achieves and maintains its land control advantage in a war that no one wanted. Or did someone actually want it?
Meanwhile, at Sol Banking Corporation…
Rumors have recently surfaced, due to some outstanding detective work by Major “Nyadach” Prabel of the Independent Rubi-Kans, that Sol Banking Corporation (“SBC”) was slowly increasing its net worth and its size, possibly approaching parity with the giant that is OT. Let us not forget that OT barely survived the Corporate Wars after concurrently fighting both Sol Banking Corporation and TruSpace Networks on one front, and the clans on the other. It is quite likely and quite reasonable to assume that, if Sol Banking Corporation was equal to OT in power at that time, OT may well have been defeated. As such, if these rumors are indeed proved true, the Board of Directors at OT must be (or have been) planning furiously to counteract this alarming development.
Why this Helps OT – Part I: Business Reasons
During the days of the viable Council of Truth and the Amnesty, OT’s expenditure on downstream, unaccountable expenses would have been relatively minimal. Naturally, security would be maintained, but as general social harmony prevailed, so too would those expenses be minimized. Similarly, with a relative absence of war and, accompanying that, no need to spend hard-earned credits on top-line military gadgetry and machinations of war, citizens of Rubi-Ka achieved unparalleled levels of wealth, as reflected in by the market prices of rare goods, such as the ever-valued Grid Armor nanocrystals. Business owners of popular establishments, such Rompa Bar and its much-acclaimed managers, Vixen Entertainment, saw their bars teeming with life, and teeming with an endless supply of credits.
Times were good. Rubi-Ka had peace. Rubi-Ka had an unparalleled level of security. And Omni-Tek had little need to worry. So what changed?
The Dust Brigade attacked. Radiman disappeared. Radiman came back, only to flee with the entire Council of Truth. The clans became disorganized and vengeful. Silverstone invaded Tir.
All of these developments would have increased the amount of credits OT would have spent preparing and defending its precious notum mining facilities, to account for the uncertainty created by such disturbing domestic events. Billions upon billions, endlessly sunk into ensuring that it continued in its ability to appease the market it was tasked to serve. Billions and billions in lost, unnecessarily-wasted profit.
The solution? To a prudent corporate financial planner concerned only with the corporation’s bottom line: off-load the expense to a third party. Let someone else secure the mining facilities, defend against attacks, and waste endless time budgeting for unaccountable uncertainty. The solution? Let the people of Rubi-Ka mine the notum.
This single act serves the financial objective of minimizing the OT’s costs. Under the post-November dynamic, OT no longer has to pay for mining security, for intelligence assets, or for repairs to damaged assets. It no longer has to incur the expenses associated with employing a legion of planners and analysts to prepare for the “next Dust Brigade attack” or the “next clan leadership”. Concurrently, it retains what must be the most lucrative aspect of the notum production process – the final sale.
Once the notum leaves the stormy air of Rubi-Ka and is being carried along interstellar transportation routes, security costs are minimal. The odd pirate group here, the odd band of galactic terrorists there. Why? Because no corporation in its right mind would dare attack a shipping convoy, lest it be caught in the act and have OT declare an embargo against that corporation, preventing it from acquiring what is perhaps the most essential commodity in the universe. With these costs off-loaded onto the citizens of Rubi-Ka, OT can once again concern itself with maximizing profit (and potentially fending off a growing SBC), happy in the fact that it will continuously have notum flowing to its canons, at someone else’s expense.
Why this Helps OT – Part II: Strategic Reasons
The ICC decision potentially serves a much more sinister purpose. Prior to the deregulation, and in spite of the leadership void among the clans, the clan peoples were becoming vastly wealthy, and based on available data, outnumbered OT employees on Rubi-Ka. With the lease quickly drawing to its conclusion, OT would be very wary of its relative strength vis-à-vis the clans when its total monopoly is eventually eroded. OT would have needed to diminish the aggregate wealth of the man-power superior clans if it had any hope of winning the war, and not simply the odd battles.
Even with the clans’ superior numbers of personnel, OT still holds the military advantage. It has access to superior weaponry, more powerful technology, and battalions of Omni-AF troops scattered around the galaxy that it could call to Rubi-Ka should a military conflict erupt. But, as with all such measures, that would cost money. Moreover, the greater the wealth of the clans, the easier it would be for them to purchase comparable weaponry, bribe other groups to strengthen their numbers, and even bribe wavering OT employees for crucial information. Inevitably, as the number of credits available to the clans increased, the worse off OT became.
The solution? Money sinks. Off-loading costs to a third party. That third party is the clans. Many clan members throughout the streets of Tir, Athen and beyond have triumphantly declared in recent weeks that they are “winning” the war against OT, because over half of available mining installations are currently under clan control. Little do they realize that, with each facility that falls under clan control, OT’s profit margin grows.
Think about it for one moment. A mine transfers to a clan. Responsibility for defense, upkeep, operation and maintenance of that facility is taken from the credit accounts of that clan. Such clan mines notum, hands it off to OT, and…OT earns credits, while fully absolving itself of the most costly aspects of the notum production process.
Conclusion
Implicit in this analysis is a generally tone that the ICC is somehow controlled, or is manipulated, by OT. Despite rampant speculation in this regard, no concrete proof has been forwarded supporting or refuting this. However, given OT’s past and present behavior, it is far too likely.
The burning question which this analysis fails to address (for lack of information) is: if OT is suddenly earning vast sums of credits above what it was before, and is showing no appreciable signs of business expansion, what is it spending its money on? Only time, and a bit of detective work and analysis, will tell.
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