Australian mining giant BHP trying to buy London-listed Anglo American (LSE: AAL) suggests that the people at BHP – who know a lot about mining — find BHP’s valuation attractive. On the other hand, consolidation can sometimes indicate a sector that is going through difficult times and so players look for economies of scale. At the moment, I do not own Anglo American shares. In fact, I have no miners in my SIPP. But mining is a sizeable business sector and looks set to stay that way. Man has been pulling thing out of the ground for thousands of years and I do not see that changing any time soon. Demand for minerals looks set to keep growing as the global economy develops. So am I missing a trick by not having any mining shares? A quick look at the economics of Anglo American (or indeed, any of its large rivals) quickly reveals some key points about the mining industry. It has huge costs – buying the rights to mine and setting up operations is costly. Once that is done, if a project does poorly, the miner typically has to bear the losses. But if it does well, the local...