economics of the Minerals industry
used in packaging can also be recycled. The extent to which
recycling supplements primary production depends on the
nature of the original end uses, the lives of the finished goods,
the available technology, and governmental regulation. It is
also governed by the rate of demand growth. Even in mature
markets, recycling alone cannot meet new demand, but its
ability to satisfy part of that demand does constrain the com-
mercial freedom of the mining industry. Much recycled mate-
rial will be supplied for environmental reasons as a result of
governmental regulation or fiscal incentives. Its supply is thus
fairly insensitive to price, a contrast to the supply of newly
mined material.
SuPPly
Attention is normally focused on minerals supply, and in par-
ticular on its nonrenewable nature and site specificity. These
are extremely important but over a rather longer time span
than the immediate characteristics of supply and demand.
It is often overlooked that the mining industry exists solely
because there is a demand for its products rather than because
ore deposits exist. Unless there are potential end uses for the
products of their exploitation, ore deposits would be not much
more than interesting geological phenomena.
geographical location
It is a truism that viable deposits of most minerals are not
scattered evenly across the globe but that their geographical
distribution is uneven. The lower a mineral element’s crustal
abundance, and the higher the concentration factor required
for economic mining, the scarcer and less evenly spread geo-
graphically it becomes. In sharp contrast to manufacturing
and to mineral processing, the location of mines is dictated
by a combination of geology and geography. Yet the contrast
can be overstated because the existence of known ore deposits
does not necessarily guarantee that they will be mined. That
will depend on a wide range of technical, economic, social,
environmental, and political factors.
Mining is not the only type of economic activity whose
location is geographically predetermined. Others include, for
example, certain forms of agriculture, the generation of hydro-
electric power, and even tourism. It is, however, unquestion-
able that mining can only occur where mineral deposits exist,
often in places that are remote and inhospitable. Historically,
mining was regarded in nearly all locations as having a prior
claim on land use and taking precedence over alternative uses,
almost regardless of where the mineral deposits were located.
That is increasingly less likely today, with mining having to
compete with other potential uses. This applies not just near
urban centers in densely populated countries but also in popu-
lated regions where the preservation of the natural landscape
may take precedence over any form of development.
All forms of mining involve some, often irreversible, dis-
turbance to the physical landscape. When today’s advanced
economy countries were industrializing and needed minerals
both as raw materials for industry and to create infrastructure,
such disturbance was accepted as an unavoidable consequence
of accessing mineral wealth. Moreover, mines tended to be rel-
atively small and not too obtrusive on the landscape. Metallic
minerals were largely extracted from underground workings,
which produced limited amounts of waste. By contrast, much
modern mining is carried out on a large scale, often through
open-pit workings that both scar the landscape and create sub-
stantial volumes of waste rock.
41
ore and Waste
The product of all mines is ore. Even where it is mined under-
ground from rich veins or seams, its extraction will neces-
sarily require the removal of waste rock. Historically, miners
followed the often narrow veins using muscle power to extract
the ore with pick and shovel, and the amount of waste was
kept to an absolute minimum. With the introduction of ever
more complex machinery and equipment, mines produce a
greater proportion of waste. The underground workings now
have to be large enough to provide access for and to accom-
modate modern equipment. Open-pit mines have to remove
any overburden and sufficient surrounding rock to ensure the
stability of the pit walls. The deeper the mine, the greater the
volume of waste removed.
In most instances, the run-of-mine product requires treat-
ment and upgrading before it can be profitably sold. Even coal
may require washing. Most industrial minerals are subjected
to a variety of physical or chemical processes in order to maxi-
mize their market value. Metallic ores usually contain only
modest proportions of commercially valuable products whose
extraction generates large amounts of tailings. Today a typical
mine covers a much larger land area than it did in the 19th
or early 20th century, and it alters the landscape irreversibly.
That makes the mine a much less desirable neighbor than in
earlier times, to the extent that local communities are often
unwilling to trade the environmental and social costs for the
benefits. Even so, mining of all forms accounts for a modest
proportion of the earth’s surface.
Depletion and Transport
The mining industry’s substantial need for supplies of energy,
power, and water—both in the extraction of raw ore and in
its subsequent processing—partly governs its location. These
requirements certainly help dictate the form in which mineral
products are transported and the nature and extent of upgrad-
ing on the mine site. So too, crucially, does the availability of
transport. Indeed, there has been an almost symbiotic relation-
ship between the development of transport systems and the
mining industry.
That relationship has been fostered by the main charac-
teristic of the mining industry: its dependence on the extrac-
tion of nonrenewable resources. Individual ore deposits are
strictly finite, either because they are physically bounded or
because the costs of extracting the remaining ore become
prohibitive. Naturally, any society will first exploit the most
accessible and easily worked ore deposits. As these become
worked out, it will develop technologies to extract more ore
from the existing workings, whether by going deeper or by
process innovations. These productivity improvements will
be accompanied by a search for new ore deposits, which will
probably be increasingly distant from population centers and
their markets. Hence, the imperative is to improve transport
links and reduce transport costs in order to enable the develop-
ment of more distant mines at acceptable costs.
Mineral deposits will only be exploited if the mines based
on them can profitably ship their products to the marketplace.
With relatively few exceptions, mines are primarily developed
with the expectation of earning profits, over and above their
operators’ capital costs. If they are persistently unprofitable,
they will close down, even if the underlying mineral deposits
are not depleted. The emphasis is on persistently, as explained
later. The cost of transport relative to the price of the final
product dictates the geographical reach of each mine’s market