Transcript Document

MINERAL RESOURCE AVAILABILITY
and the
FUTURE OF CIVILIZATION
John L. Berry
John Berry Associates, Austin,TX
©John Berry Assoc.
Slide 1 of 54
OUTLINE
Introduction and Manifesto
Minerals and the Law of Supply and Demand
•
•
•
•
•
“Ore is where you find it”
Deposit Types, Prices and Volumes
Mineral processing and Price
Implications of “Lumpy” Supply Curve
Ore grade and external (environmental) costs.
Strategic Minerals:
•
•
•
•
•
List of Strategic Minerals
Uses of Strategic Minerals
Growth rates of strategic minerals use.
“Ore is where you find it” – haves and have-nots
“War and Peace”: Strategies for security of supply.
Conclusions: Problems and Opportunities.
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
INTRODUCTION
BASIC HUMAN SUSTENANCE:
Air, Water, Useful Plants, Useful Animals
SUSTENANCE OF CIVILIZATION: The above, plus minerals and fossil fuels.
Tools: Stone>> Bronze>> Iron >>Machines (Alloys)>> Semi-conductors (Exotics)
ALL are mineral resources: without them we are hunter gatherers using
wooden sticks.
Fossil Energy is the basic enabler:
(wood) > Charcoal -> Coal -> Oil -> Nat. Gas -> Nuclear >??
<------e l e c t r i c i t y------
Grime’s Graves ©Nic McPhee: 433 shafts, 96 ac.
WHERE ARE MINERAL RESOURCES USED??
Home:
Roads:
Cars:
Clothes:
IT:
Steel (nails, rebar), Copper (wiring, plumbing), Plastics, Concrete (slab)
Concrete, Steel, petroleum (black-top), sand and gravel
Steel, Copper, Fossil Fuels, Plastic, Lead, Sulfuric Acid, etc.
(Natural Fibre), Fossil Fuels (Fibre and Manuf), Steel etc (manuf),
REE, Copper, Lithium, Germanium, Cesium, etc., etc.
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
MANIFESTO
ALL non-renewable resource extraction and use is harmful to the planet
Direct harm:
Holes in the ground (Athabasca tar Sands)
Waste tips (Aberfan disaster, Wales)
Air pollution (Nkana smelter)
Water/groundwater disturbance and pollution
“Destructive “ use of water – can’t be returned.
Indirect Harm: Massive transport arteries (Land destruction)
Litter, junk, wastage (land & water destruction)
Megacities (land, esp. agric. land, destruction)
Air pollution, CO2 and Methane.
Climate Change (probably)
Athabasca Tar Sands, Ft.McMurray, Canada
Don’t blame ONLY the extraction companies:
we are ALL responsible: DEMAND is the driver.
We do not know where lie the thresholds of permanent, irreversible,
runaway harm to Earth.
350-ton Truck
Thus, sooner or later, we have to completely REVAMP our CIVILIZATION to survive.
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
IMPORTANT TERMS
MINERAL RESOURCE:
any naturally occurring non-living substance that is, has been, or may be useful to human beings
RESOURCE BASE:
The volume of rock in a given area that contains more than the Clarke, or average concentration
of that mineral in the Earth’s crust.
INFERRED RESOURCES: volumes of mineralization above some mini mum grade that are known to exist, or are hypothesized on geological grounds to exist, in a given area, but have not been measured. May be orders of
magnitude less than resource base and greater than the quantities of known ore.
INDICATED RESOURCES: mineral occurrences that have been sampled to a point where an estimate has been made, at a
reasonable level of confidence, of their contained metal, grade, tonnage, shape, densities, physical
characteristics. Generally orders of magnitude less than inferred resources in same area.
LEAD:
an area in which there are specific indications of valuable mineralization.
PROSPECT:
an area in which there are sufficient indications of the presence of ore to carry out
a serious evaluation campaign (drilling, test mining). (It takes 10 – 100 LEADS to find 1 PROSPECT)
DEPOSIT:
a defined or partially defined body of mineralization, which may or may not be ore, depending on
economic conditions. (It takes 10 -100 PROSPECTS to develop 1 DEPOSIT)
GRADE:
the percentage of the rock composed of valuable material. E.g. 62% Fe, 1% Cu,
ORE:
rock that can be mined for its mineral content at a profit.
ORE GRADE:
any grade above the lowest grade that can be mined at a profit. Varies with time and deposit.
RESERVES:
thoroughly explored and characterized volumes of ore (rarely amounts to more than a few years’
extraction, because it costs a lot of money to convert resources to reserves). “Peak” people and
many economists do not understand the difference between Resources and Reserves.
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
ORE GRADE for SELECTED ELEMENTS
Clarke: the average abundance of an
element in the earth’s crust
Metal
Clarke
(in percent)
Ore Grade
(in percent)
Clarke of
Concentration
for Ore Grade
Clarke of Concentration:
the concentration of an element in a rock
compared with its average concentration
in the earth’s crust.
Aluminum
5.13
30
4
Iron - Fe
5.00
60
12
Titanium
0.66
15
23
Copper
0.0055
0.25
45
Rare Earths
0.019
1.6
84
Nickel
0.0075
1.5
200
Gold - Au
0.0000005
0.00023
460
Manganese
0.10
35
350
Uranium
0.0002
0.1
500
The difficulty and expense of recovering
the metal from its ore (e.g. Aluminum,
Titanium)
Zinc
0.007
4.0
600
Lead – Pb
0.0013
4.0
3000
3.
Advances in mining and refining technology
Chromium
0.01
30
3000
4.
Changes in the value that society places
upon the metal (e.g. Gold, REE, Lead, Tin).
Tin – Sn
0.0002
1.0
5000
Silver – Ag
0.00001
0.05
5000
Ore Grade, or the Clarke of Concentration
changes over time and is affected by:
1.
2.
The availability of minerals with high
concentrations if the element
(e.g. Cu2S, PbS, etc.
REEs, for example, lack such minerals)
In general, the larger the Clarke of Concentration, the smaller the typical orebody becomes
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
LIFE EXPECTANCIES OF WORLD RESERVES
FOR SELECTED COMMODITIES
©John Berry Assoc.
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Source: Tilton, 2001
MINERAL RESOURCE AVAILABILITY
LIFE EXPECTANCIES OF RESOURCE BASE
for SELECTED COMMODITIES
Notes: (1) estimates of the resource base for coal, oil and gas are meaningless: the USGS estimates “ultimate recoverable
resources” instead, but these estimates can change with technology.
(2) the life expectancies are meaninglessly large, since we will never recover (many) commodities from “average rock”.
The energy costs alone would be too high!
©John Berry Assoc.
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SOURCE: Tilton, 2001, who used Brobst & Pratt, 1973; Lee & Yao, 1970 for the Clarke)
MINERAL RESOURCE AVAILABILITY
THE CLASSICAL ECONOMISTS’ VIEW
Two approaches to analyzing the exhaustion and depletion
Physical
Economic
Physical Approach:
Mineral resources are thought of as a set of deposits in the earth that were formed in geologic time and that
cannot be duplicated in human time. Removal of ore from this set of deposits reduces the remaining ore and
depletes the resource.
The Pure Theory of Exhaustion (the Gray-Hotelling Theory), has been developed to fit this physical
view. (p.457)
Economic Approach:
Mineral and materials … have not limited society’s welfare in the past. Nor do they have the potential for limiting
the welfare of mankind in the future, so long as certain conditions are maintained.
Internalization of external environmental damages,
Access to the earth’s crust for exploration,
Worldwide trade access to raw materials and,
Prevention of market control by either sellers or buyers.
If these rules … are followed, markets will provide supplies and ration use so that minerals and materials will be available
to meet society’s needs without significantly increasing costs for a very long time, probably for ever. (p.457)
… (this) has become the mainstream of economic thought, even though those who engage in resource
assessments using an engineering or physical view of resources and reserves disagree. (p.460)
VOGELY, William A., Nonfuel Minerals and the World Economy.
Chapter 15 in REPETTO, Robert, ed., 1985: The Global Possible.
Resources, Development, and the New Century. Yale UP, New Haven.
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
PROBLEMS WITH THE PHYSICAL AND ECONOMIC VIEWS
•
The Gray-Hotelling Theory is nonsense because it ignores new discovery,
technology, and substitution (e.g. Tin, Lead).
•
The Economic Approach has severe limitations, stemming from:
•
Internalization of external environmental damages:
We have not found a good way to internalize external costs.
Taxation vs regulation vs markets in “credits”
2.
Access to the earth’s crust for exploration
The Earth is not infinite, AND
Cities, farms, Wilderness Areas & Parks put a lot of it out of reach
3.
Worldwide trade access to raw materials and,
Deposit distribution is “lumpy” – haves and have nots.
Some people don’t play by our rules (e.g. China, Zimbabwe, Congo)
4.
Prevention of market control by either sellers or buyers.
Mineral deposits are log-normally distributed
There are many more low-grade deposits than high grade
There are many more small deposits than large ones
Log-normal distribution and capital intensive operations give opportunities
for market control by companies (DeBeers) & countries (China)
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
MORE PROBLEMS WITH THE “ECONOMIC VIEW” OF MINERAL SUPPLY
Log-normal distribution curve and high capital requirements also mean that the supply
curve gets increasingly “lumpy”, causing major price troughs and spikes.
3.
Technology sometimes creates more problems than it solves
Many more elements used for very specific
properties
Huge capital investments required for low-grade
deposits
Exploration “bubbles”.
4.
Substitution is not always possible
©John Berry Assoc.
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(e.g. Copper vs Silver)
MINERAL RESOURCE AVAILABILITY
ENVIRONMENTAL ISSUES - MINING
Grade and amount of earth moved:
• If the grade is halved, size of the mine is doubled, etc.
• All of the rock is ground up, and the tailings (fine waste) have
to be disposed of (in general they can’t go back in
the hole as they can liquify and contain noxious chemicals).
Bingham Canyon, UT
Dewatering well
Overburden:
• Can be more than ten times the volume of the ore (see Right)
Dewatering:
soil
overburden
Cone of dewatering
• In general, mine workings must be kept free of water.
• Means lowering the water table to the level of the
Stripping Ratio = vol. overburden/vol. ore
bottom of the mine by pumping, up to
= 12:1 in this case
100s of millions of gals/day (see sketch at right)
• Lots of problems for surface owners, potential pollution problems
(e.g. Bastrop Co. lignite.)
Dust:
• Dust from tailings is the worst.
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
COMPETITION FOR LAND
Commodities Ranked by Worldwide Area of Land Disturbed per Year
Sand/grav
Coal
Diamonds
Phosphates
Cement
Copper
Crushed rock
Chromites
Iron Ore
Lignite
Boron
Commodity
Bauxite
Petroleum
Clays
Gold
Lime
Gypsum
Zinc
Fluorspar
Kaolin
Vanadium*
Manganese
Industrial sand
Molybdenum
Lead
Nickel
Feldspar
Zirconium
800
Peat
0
2,000
1600
4,000
2400
6,000
3200
8,000
4000
10,000
4800
12,000
5600
14,000
6400 sq.mi.
16,000
18,000
Square Kilometers
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
“ORE IS WHERE YOU FIND IT”
“If it isn’t there you won’t find it”
• Ore deposits are rare
•
If you make a mineral deposit inaccessible (e.g.ANWR), you can’t replace it.
• There has to be favorable geology
A porphyry copper deposit will never be found in the Permian Basin
You can’t move a deposit from where you don’t want it to somewhere else.
(e.g. Crested Butte, Green River Oil Shale, ANWR, etc.)
Some countries have it all, some have none (Strategic Minerals)
• Exploration requires access to lots of land
Rule of thumb: 100 leads > 10 prospects >1 mine
(This also implies a need for large companies)
It usually takes 5 exploration campaigns
to delineate a mineable deposit.
• Mines are Ugly and Destroy Lots of Land
Thus, conflicts are inevitable (NIMBY).
©John Berry Assoc.
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DiaVik Diamond Mines, NWT, Canada
MINERAL RESOURCE AVAILABILITY
ACCESS TO MINERAL DEPOSITS
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
STRATEGIC MINERALS
Definition: Minerals essential to the national
defense for which during war we are
wholly or partly dependent upon
sources outside the continental
limits of the United States
Most critical: Platinum Group Metals (PGM),
NAS (2007)
Rare Earths (REE) (La>Nd>Dy>Tb)
Indium,
Manganese
Niobium (Columbium)
(ColTan)
also
Beryllium http://www.helium.com/items/
Uranium 1949042-what-are-strategic-minerals
Chromium
Cobalt
Tungsten
Petroleum
(pers. knowl.) Helium
Stockpiles:
PGM
Platinum:
Palladium:
Iridium:
Manganese
Tantalum
Bauxite (Aluminum ore)
Chromium
Tin
Cobalt
©John Berry Assoc.
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4.704 mt
16.715 mt
0.784 mt
1,700,000 metric ton
635 mt
10,500,000 mt
1,400,000 mt
59,993 mt
189 mt
Data: USGS, Mineral Commodity Summaries, 2011. MINERAL RESOURCE AVAILABILITY
STRATEGIC MINERALS (cont)
• “Ore is where you find it”: Mineral Distribution is SPATIALLY “LUMPY”
•
Thus, different mineral commodities are Strategic for different countries
(e.g. China and copper, chromium, platinum)
• Strategic Mineral Endowment and War:
•
In 1925 the American economic geologist C.K.Leith predicted WWII and the line-up
because the USA, the USSR, The British and French Empires were virtually self-sufficient in mineral
resources, but Germany, Italy, and Japan were lacking in all but a few. These countries were lacking,
in particular, strategic minerals – the fossil fuels, copper, manganese, nickel, etc.
(C.K.Leith. Political Control of mineral resources, Foreign Affairs, July 1925.)
• Strategic Mineral Crises and Consequences:
Threatened US Embargo of Petroleum to Japan
USA/EU Sanctions against Iran, 2011
Tungsten, Tin
(Arab Petroleum Embargo, 1973-4
Dem Rep Congo civil wars
Soviet embargo of Mn, Cr during Berlin & Korea
©John Berry Assoc.
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- Pearl Harbor (Butts, et al)
- Blockade of Hormuz Straits??
- scarce after Japan conquered Malaya, WWII
– Runaway inflation in western countries)
- Cobalt, ColTan supply interruptions
– Threat of war by USA
MINERAL RESOURCE AVAILABILITY
CHINA
“Because China’s economy and resource import dependence continue to grow at a
high rate ( 13% in 2010) it has adopted a geopolitical strategy to secure strategic
resources. China’s resulting role in the mineral trade has increased Western security
community concern over strategic minerals to its highest point since the end of the
Cold War.”
“The uneven distribution of strategic mineral reserves and their concentration in a
handful of politically unstable or potentially hostile countries makes it necessary that
U.S. policymakers recognize the security of resource supply as a top national security
issue.”
“In 1973 Leonid Brezhnev said: “Our aim is to gain control of the two great treasure
houses on which the West depends, the energy treasure house of the Persian Gulf
and the mineral treasure house of Central and Southern Africa”(Nixon 1980). “
"China has made the assured access of strategic mineral imports a critical component
of its geopolitical strategy and is moving aggressively to purchase control of mineral
concessions and mining companies."
Butts K H, B Bankus & A Norris, 2011. Strategic Minerals: Is
China’s Consumption a threat to United States Security?
US Army War College, CSL Issue Paper, v. 7-11.
©John Berry Assoc.
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MINERAL RESOURCE AVAILABILITY
CHINA (cont.)
• High growth rates essential for Communists to retain legitimacy
• The Chinese people are seeking affluence on par with the industrial West.
• Chinese consumption patterns are driving world commodity markets.
In 2009, 35 % (37.7Mt) of world’s primary Aluminum production (#1 in world) consumer of primary
aluminum.(Halpern 2010).
• China’s supplies of minerals such as Cr, Pt and Cu are inadequate (i.e. strategic for China),
Between 2002 and 2010 the price of copper rose from $0.70/lb to over $4.00/lb (Blas, 2010).
• China has high quality reserves of, and exports, tungsten, REEs, tin, antimony and zinc
47% of the 19 minerals on which the USA is 100% import dependent come from China
In 2002 mineral imports and exports accounted for nearly 20% of China’s total trade (CIMG 2003).
• China views the world financial and trade systems as creations of the West and does not trust
them to supply its needs.
•
China’s “Go Out Strategy” to reduce its geopolitical vulnerability to mineral and energy import cut off:
Pursuing equity ownership of fuel and mineral producing companies & deposits worldwide
Approx. $3 trillion in foreign exchange reserves to support this strategy.
In 2008 China offered $18.5 bn for UNOCAL (which owned the Mountain Pass, CA, REE mine)
$19.5 bn for a stake in the 2nd largest minerals company, Rio Tinto.
In 2009 China’s National Oil Companies established approximately $50 billion in energy agreements with
Brazil, Russia, Venezuela and Kazakhstan (Jiang 2009).
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
CHINA AND REE
•
China’s growing control of some important mineral resources will enable it to
deny mineral imports to the United States or other countries for political reasons.
• China demonstrated that it will do that when it embargoed REE exports to Japan in 2010 (Bradsheur 2010).
•
Rare Earth Sources
Mines: Bayan Obo REE-Fe-Nb deposit, Inner Mongolia
Bayan_Obo type: lenses in metamorphic rocks –NOT a Carbonatite
Discovered as an iron deposit in 1927. REE minerals were discovered in 1936
Nb-bearing ores in the late 1950s.
Reserves > 40 million tons of REE minerals grading 3-5.4% REE,
1 million tons of Nb2O5 and
470 million tons of iron. The deposit also contains
130 million tons of Fluorite, making it the world's largest fluorite deposit.
Contains 70% of world's known REE reserves.
•
Export Quota Reductions began 2006
•
Used punitively against Japan 2010.
•
Therefore, REE consumers are relocating to China to ensure supply security.
(Causing destruction of supply chain and multiplication of job losses in west)
©John Berry Assoc.
Slide 1 of 54
From Butts et al.
MINERAL RESOURCE AVAILABILITY
CHINA AND REE ELEMENTS (Cont)
Mining more rare earths in the West is just the beginning.
Developing a downstream supply chain for them is equally important.
More emphasis needs to be put on downstream operations, such as
creating highly pure versions of the metals,
fabricating them into alloys, and
turning them into permanent magnets, advanced batteries etc
That is what the far-sighted Chinese are doing.
Slashing Chinese exports of REE has little to do with dwindling supplies or environmental concerns.
It is about moving Chinese manufacturers up the supply chain, so
they can sell valuable finished goods to the world rather than raw materials.
Because of their similar chemical properties, the rare earths tend to clump together in rocks,
often along with radioactive thorium or uranium. That makes extracting, separating and
refining them difficult. A lot of water, acid and electricity has to be used in the ion-exchange,
fractional crystallisation and liquid-liquid extraction processes used to manufacture them.
Handling the radioactive and chemical waste produced in the process adds significantly to
the cost. Lax environmental standards, along with low wages, has allowed Chinese
producers to undercut competitors abroad and corner the market. (The Economist, 9/17/2010)
©John Berry Assoc.
Slide 1 of 54
From Butts et al.
MINERAL RESOURCE AVAILABILITY
EFFECT OF TECHNOLOGY
RAW MATERIALS
PYRAMID, 2002
(Ranked by Weight)
Pre-industriaL minerals
Notes:
World-wide consumption
Scale is only relative
(1 bn cu.yd. = 1 sq.mi.by 1000 feet)
Sand/Gravel: 18 billion tonnes/year
(approx 7 bn cu.yd).
Iron Ore:
2.4 billion tonnes/yr(2010)
(approx 1 bn cu.yd/yr ore)
Copper
17 million tonnes (2010)
(approx 3.5 bn cu. yd. ore)
Gold:
3.1 tonnes
(approx 2 million cu yd ore)
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
Worldwide Commodity Production by Value, 2010
Billions of Dollars
Commodities
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Gold
Bauxite
Cement
Chromites
Iron Ore
Pt-group
Sand/grav
Silver
Copper
Zirconium
Magnesite
Crushed rock
Nickel
Zinc
Potash
Silicon Metal
Clays
Rock Salt
Phosphates
Lead
REE
Molybdenum
Uranium
Kaolin
Tin
Cobalt*
Industrial sand
Boron
Sulphur*
Niobium/Tanta
Lime
Graphite
Tungsten
Asbestos
Feldspar
Diamonds
Mica
Antimony
Gypsum
Talc/Pyrophyll
Vanadium*
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
CAPITAL REQUIREMENTS for NEW PRODUCTION
COMMODITY
ANNUAL NEW
PRODUCTION
REQUIRED, 2012
NEW PROJECT
INVESTMENT,
2010 ($BN)
SOURCE
Oil
1 million BOD
$100
Bishop, SIPES talk
Iron
84 million tons
$28
http://www.wpgresources.com.au/pdf/Iron%20Ore%
20Outlook%20UBS%2010%20Nov%202010.pdf
Gold
?
$7
E&MJ
Copper
400,000 tons
$6
Economist
REE
?
$3
Excluding China
$562 bn
6% of total world funds available
for investment, or 4% US GDP
Total Mining
Notes:
58 projects more than $1billion in Latin America alone
©John Berry Assoc.
Slide 1 of 54
SOURCE: EMJ 2011 Annual Survey, March 2012
MINERAL RESOURCE AVAILABILITY
World’s Largest
Iron Ore & Copper
Producers, 2010
http://www.steelonthenet.com/plant.html
IRON ORE
Company
Base
Capacity
mt/yr
%
1
Vale Group
Brazil
417.1
19
2
Rio Tinto Group
UK
273.7
13
3
BHP Billiton Group
Australia
188.5
9
4
ArcelorMittal Group
UK
78.9
4
5
Fortescue Metals Group
Australia
55.0
3
6
Evrazholding Group
Russia
50.4
2
7
Metalloinvest Group
Russia
44.7
2
8
AnBen Group
China
44.7
2
COPPER
Company
Codelco
Produc’n
1000mt/y
1,757
% of
World
11
1,441
9
3
Freeport-McMoRan
Copper & Gold Inc
BHP Billiton Ltd
1,135
7
9
Metinvest Holding Group
Ukraine
42.8
2
4
Xstrata Plc
907
6
10
Anglo American Group
South Africa
41.1
2
5
Rio Tinto Group
701
4
11
LKAB Group
Sweden
38.5
2
12
CVG Group
Venezuela
37.9
2
6
Anglo American Plc
645
4
13
Cliffs Natural Resources
USA
34.6
2
7
Grupo Mexico
598
4
14
NMDC Group
India
32.6
1
8
Glencore International
542
3
15
Imidro Group
Iran
29.8
1
9
KGHM Polska Miedz
426
3
16
CSN Group
Brazil
28.0
1
17
Shougang Beijing Group
China
26.5
1
18
US Steel Group
USA
23.5
1
19
ENRC - Eurasian Natural
Resources
Kazakhstan
19.7
1
20
Wuhan Iron & Steel Group
China
18.6
1
1
2
NOTE:
The Iron Ore mining industry is more concentrated
than the Copper mIning industry, with the top 3
companies having 27% and 41% of the market,
respectively
©John Berry Assoc.
Slide 1 of 54
Total capacity
2177.3
MINERAL RESOURCE AVAILABILITY
“BREAKDOWNS” OF THE STANDARD MODEL
OF THE LAW OF SUPPLY AND DEMAND
“If demand increases and supply remains unchanged, then it leads
to higher equilibrium price and quantity, etc.“
D3
Sm
Mineral
Supply
Curve
• The graph shows a smooth response, which seems to be what
every economist envisions (the Marshallian Model), too, BUT the
Price vs Quantity curve for minerals tends to be stepped, or “lumpy”
(my term).
• The volume of mineral supply is price inelastic over the short term
(up to several years) once current production capacity is reached
(red curve – vertical sections). (e.g. oil since 2003, copper 1953-7
and 1961-1971))
• This is because it may require a huge investment of time and money
(up to $20billion and 25 years, see sidebar) to bring in a new deposit.
• The reverse is true: if overcapacity develops, production can not
easily be shut-in. Therefore there are long periods (up to 20 years)
when mineral prices are unsustainably low (oil from 1986-2002;
copper 1975-2004 (PoCu “bubble”, next slide)).
©John Berry Assoc.
Slide 1 of 54
Marshallian model of smoothly
varying supply and demand. In
the case of minerals, once
capacity is reached a large price
increase is required before
additional supply comes on-line.
The Economist, 1/24/2112:
Oyu Tolgoi Cu/Au Mine, Mongolia
Discovery: 2001
Explo Drilling: 2003
Cost to 1st production (2013): $6bn
Expenditure to 2020: $10bn
Full Prod.Rate (2018): 450,000t Cu/yr
(3% of global total)
Mine represents 30% Mongolian GDP
MINERAL RESOURCE AVAILABILITY
MORE PROBLEMS WITH
THE MARSHALLIAN MODEL
1. The largest or richest deposits may not be discovered or developed first.
This can cause long periods during which demand is increasing but prices are decreasing: it is
often more expensive to shut down a less-efficient mine or refinery than it is to operate it at a
loss.
2. The supply of some minerals is completely independent of the demand for that
mineral, since it is produced as a by-product of the production of another mineral
Sulfur : by-product of smelting and oil refining
Gallium: by-product of zinc mining
Cobalt: by-product of Copper mining in Congo/Zambia
Gold: by-product of mining Porphyry Copper deposits
3. Some minerals cannot be produced without the use of other minerals, which may
themselves be rare or in tight supply:
Aluminum: requires cryolite, available only from one deposit in Greenland
Titanium: requires magnesium. The major source is China.
Oil & Gas: requires Helium3, whose supply is in turn dependent on the manufacture of
hydrogen bombs.
refining requires Platinum, available only from Russia, South Africa.
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
The “LUMPY” SUPPLY CURVE
Deposit Types, Prices and Volumes
• Almost all mineral commodities are found in a variety of different types of deposit
• Each type of deposit is characterized by its own average size and grade, etc.
• In general, deposit types characterized by high grades are much smaller than
deposit types characterized by low grades
• High grade deposits require little capital and
lots of labor, and have low output
U/G Mechn
• Large, low grade deposits require lots of capital,
energy, other resources, and land, but
have low labor costs and low cost in $/ton.
Energy/ton
Energy
Opencast
• Low grade deposits are much more environmentally
unfriendly than high-grade deposits (amount
of land disturbance, permanence of damage,
damage to waterways, carbon footprint).
• However, industrial civilization would die if we lost
our high-volume low-grade mines.
©John Berry Assoc.
Slide 1 of 54
Output
Cost/Ton
Grade
Deposit Size
MINERAL RESOURCE AVAILABILITY
“LUMPY” SUPPLY CURVE (cont.)
•
If a mineral’s supply comes from 2 or 3 countries or a few very large deposits, and one
country or deposit goes off-line there may be a large but temporary (decade) jump in price
until new supplies are found and developed.
• If a deposit type becomes ex-
GRADES AND SIZES OF COPPER DEPOSIT TYPES
hausted, then it may require a
HUGE & PERMANENT JUMP
in price to bring on stream the
next, lower-grade, type.
• The price may then decline
slightly over time as more deposits of the same type are
found and efficiencies increase.
• Or, if there is an “exploration
rush” and a “mine development
bubble”, then prices may decline
steeply and for a long time.
©John Berry Assoc.
Slide 1 of 54
Source: Singer
Metals Economics Group (December 15, 2011) ”Copper will almost certainly go into
surplus for the first time in many years but the lack of significant discoveries and the
challenges faced by today’s developers mean that a brief period (3 yrs) of over-supply
will be followed by another prolonged period of deficit.”
MINERAL RESOURCE AVAILABILITY
5%
$8
4%
Veins
Land
Disturbance
(km2/yr
Skarns
INVERSE SUPPLY_DEMAND CURVE
MANY PORPHYRY COPPERS DISCOVERED
$7
Sedimentary Copper
$6
$5
800 $4
3%
Price (1998$)
PRICE SHOCK: SED CU
DEPOSITS IN FULL PRODUCTION, NO NEW
DISCOVERIES
2%
$3
400 $2
Production (106tons/yr)
Transition to
Open-Cast Mining
Ore-Grade
1000
Price in 1998 $
Land Area Disturbed/yr (km2)
2000
Massive Sulfides
FEW NEW PoCu
DISCOVERIES
INCREASING
ENVIRONMENTAL
ISSUES
1%
Porphyries
$1 0.5%
Ore-Grade
0
$0
0%
2050
Time
COPPER SUPPLY 1900-2030: PRICES, VOLUMES & LAND DISTURBANCE
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
GRADE & SIZE OF COPPER DEPOSIT TYPES
1012
Future Types
Tons of Ore
109
106
Sea-bed nodules??
Mn 27-30 %,
Fe 6 %,
Ni1.25-1.5 %, Si 5%,
Cu 1-1.4 %,
Al 3%),
Co 0.2-0.25 %
= Marshallian Model of supply and
demand breaks down temporarily
Porphyry Coppers
(1960-2100?)
Sedimentary Copper
(1936-1980)
IOCG??
Olympic Dam
Cu 589mt @1.81%
U 589mt @ 590g/t
Au 589mt @ 3.36gt
Ag 589mt @ 0.66g/t
103
“Clarke”
Chuqui Pit: 4.3 x 3 x 1 km ©Till Niermann
Native Cu in
Volcanics (1800s)
102
101
10-3
Veins (to 1920)
10-2
10-1
1
10
102 (100%)
Grade (%, oz/ton, etc.)
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
THE LOG-NORMAL DISTRIBUTION
“A continuous probability distribution of a random variable whose logarithm is normally distributed
Most of the World’s Mineral
Supply is in A FEW BIG MINES
For the distribution at left, the
threshold for the top 2.3% of the
deposits is 4 times the Median.
This is equivalent to a normal
distribution with ¯x=100, σ=150
A log-normal distribution with original scale (a) and with logarithmic
scale (b). Areas under the curve, from the median to both sides,
correspond to one and two standard deviation ranges of the normal
distribution. (from http://stat.ethz.ch/~stahel/lognormal/bioscience.pdf)
In a log-normal distribution X, the parameters denoted μ (or x*) and σ,
are the mean and standard deviation, respectively, of the variable’s
The geometric mean of a log-normal distribution is equal to its median.
natural logarithm (by definition, the variable’s logarithm is normally
distributed), which means X = eμ+σZ with Z a standard normal
variable. (from http://en.wikipedia.org/wiki/Log-normal_distribution) Limpert, E., W A Stahel, & M Abbt, Log-normal Distributions
across the Sciences: Keys and Clues. Bioscience, 51 (5) 341-352. May 2001
VIRTUALLY ALL GEOLOGICAL PHENOMENA ARE LOG-NORMALLY DISTRIBUTED, including SIZES AND GRADES OF
MINERAL DEPOSITS. Thus MOST OF THE SUPPLY IS IN A FEW VERY LARGE or VERY HIGH-GRADE OREBODIES.
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
Laws of Deposit Distribution, Size and Grade:
• Ore grade and tonnage statistical
distributions are lognormal, both
within deposits and across deposits:
• Most ore is thus in a few very large
deposits.
•
For Copper - Mines
#1: Escondida, Chile:
#2: Chuquicamata, Chile:
#3: Grasberg, Indon:
Bingham Canyon, UT:
Highland Valley, BC:
8% 1.3 Mt 2008
6% 0.9 Mt 2006
4% 0.6 Mt 2006
265,600 t 2006
119,300 t 2008
The top 3 mines produce around 18% of the
world’s copper
• For Copper – Production by country, 2009
Chile:
Peru:
USA:
China:
Indonesia:
Australia:
Russia:
Zambia:
Canada:
Poland:
©John Berry Assoc.
Slide 1 of 54
5,941,000 Mt 34%
34%
1,407,000 Mt 8%
1,302,000 Mt 7%
1,171,000 Mt 7%
1,098,000 Mt 6%
62%
941,000 Mt 5%
745,000 Mt 4%
614,000 Mt 4%
540,000 Mt 3%
484,000 Mt 3%______ 81%
P90/median = 6.3
Example: Porphyry Copper Deposits. Lognormal
Distribution of Ore Deposit Tonnage. These are
the largest class of copper deposits, and also
contain Au, Ag, and Mo. The vertical lines indicate
the 10th, 50th and 90th percentile of deposits.
http://www.copper.org/resources/market_data/pdfs/annual_data.pdf
MINERAL RESOURCE AVAILABILITY
DEPOSIT STATISTICS - Porphyry Coppers (cont).
P90/med=1.7
NOTES:
• Little Correlation between size of deposit and grade within class
• Very small number of deposits with grade > 1% Cu.(~0.3%)
• 56 new copper discoveries have been made during the past three decades.
• World discoveries of copper peaked in 1996. (http://en.wikipedia.org/wiki/Peak_copper)
SOURCE:
Singer, D A. , V I. Berger, and B C. Moring, Porphyry Copper Deposits of the World: Database And
Grade and Tonnage Models, 2008. USGS Open-File Report 2008-1155 2008
http://pubs.usgs.gov/of/2008/1155/of2008-1155.pdf
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
DEPOSIT TYPES, GRADES AND TONNAGE: GOLD
1850-1920
Viable at $24/oz
1890-1990
Viable at $35/oz
1980-Present
Viable at $300/oz
Gold is a by-product
Price barely matters
NOTES:
Not shown: Placer Gold 1800-1900. Lowest capital requirement, lowest grades. “Gold Rushes”
Since 1980 there has been a modern gold rush for SH/HS Gold in Nevada, but it
takes ~500 of these deposits to replace the output from 1 Witwatersrand deposit,
Their average grade is 1/5 that of the Witwatersrand, which is a “Paleoplacer”.
©John Berry Assoc.
Slide 1 of 54
Source: Singer
MINERAL RESOURCE AVAILABILITY
WORLD AND NEVADA GOLD DEPOSIT STATISTICS
Grades: P90/median =2
Tonnage: P90/median = 7
Source: Singer, Donald A, Grade and Tonnage Models for the ANALYSIS OF Nevada’s Mineral Resources. Chapter 11 in ???)
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
RARE EARTH ELEMENTS
DISTRIBUTION:
• Ancient Shields – therefore
Africa, Australia, Brazil,
Canada, Baltic Shield
• Very few in USA, Russia, India
Euro zone.
• Several in China, Mongolia.
US IMPORTS
2009: $ 113 M.
2010: $ 161 M
USES (2009) - total 1,400 mt.
Chemical catalysts
22%;
Metallurgical alloys, Jet engines
21%;
Petroleum refining catalysts
14%;
Automotive catalytic converters
13%;
Glass polishing and ceramics
9%;
REE phosphors for displays, lasers
8%;
Permanent magnets
7%;
Electronics
3%;
Batteries: 25 lbs La, Nd, Dy, Tb per Prius
Other (Fiber Optics (Er), Radar systems) 3%.
©John Berry Assoc.
Slide 1 of 54
Cerium,
Yttrium
Cerium, Lanthanum
Cerium
Cerium
Yttrium, Europium
Gd, Pr, Neodymium
Tm, Gd, Pm
Unstable Places:
•Congo
•Gabon
•Angola
•Mozambique
•Mauretania
•Tanzania
•Namibia
•South Africa
Stable Places
MINERAL RESOURCE AVAILABILITY
RARE EARTH ELEMENTS
aka “LANTHANIDES”, plus Scandium & Yttrium
WHAT THEY ARE:
Elements in Group 3
of the Atomic Table,
in the 7th Period
MINERALOGY
Bastnäsite: US, China
Monazite:
Rest of world
Phosphorites: Florida
GEOLOGY:
Lanthanum
Cerium
Prasodymium
Neodymium
Promethium
Samarium
Europium
Gadolinium
Terbium
Dysprosium
Holmium
Erbium
Thulium
Ytterbium
Lutetium
REE are found in mineable concentrations mainly in fascinating rocks called Carbonatites.
• These are intrusive or, rarely, extrusive igneous rocks consisting of >50 percent carbonate (e.g. calcite)
•
•
•
•
•
•
Carbonatites usually occur as small plugs within zoned alkalic intrusive complexes, or as breccias.
They occur in continental rift-related tectonic settings.
Only one carbonatite volcano is known to have erupted in historical time, Ol Doinyo Lengai volcano in
Tanzania. It erupts with the lowest temperature lava in the world, at 500-600 °C.
Nb; Nb–rutile and Nb–ilmenite occur in some deposits.
Monazite (Ce,La,Di)PO4, Bastnaesite (CeF)CO3, and synchysite are the most important source of REE elements.
Much of China’s production is a by-product of iron mining in Inner Mongolia (The Economist, 9/17/2010)
REE can also be found in clays and in placer deposits derived from carbonatites
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
RARE
EARTH
ELEMENTS
=0.000004 x Cu usage
=1/200th Cu usage
2010: 130,000t
The “Electronic Metals” form the very top of the
Raw Materials Pyramid (2002 Annual Consumption in Tonnes). Data from BGR – databank.
(Emphasize highly compressed horizontal scale)
REE Source and Supply
Av. growth rate, 2002-2010 = 6%
©John Berry Assoc.
Slide 1 of 54
Source: Wagner, M., and F W Wellmer, Global Mineral Resources,
Occurrence & Distribution, in Environ. & Engineering Geology, vol. III
MINERAL RESOURCE AVAILABILITY
RARE EARTH ELEMENTS
US Import Sources (2006–09):
Rare-earth metals, compounds, etc.:
China,
92%;
France,
3%;
Japan,
2%;
Austria,
1%;
Other,
2%.
US Mine Production
None,
Stockpiled concentrates from
Mountain Pass mine, CA,
were processed.
The break (red lines)
in the cumulative
frequency curves
suggests the
existence of two
populations
(i.e. deposit types).
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
REE EXPLORATION & DEVELOPMENT “RUSH”
Mining Companies are trying to reopen old mines and develop new supplies:
Hoidas Lake, Canada: could supply about 10% of the $1 billion market for REE in N. America.
Mountain Pass Mine: Molycorp has raised $500 million. Projected to reopen in 2011.
SE Nebraska:
Quantum Rare Earth Devel., of Canada, conducting test drilling.
Alaska:
Ucore Rare Metals, of Canada, has started drilling for REE.
Kvanefjeld, Greenland: large, recent discovery. Drilling at this site has confirmed significant
quantities of black lujavrite, which contains ~1% rare earth oxides (REO).
Vietnam:
Mt. Weld, Australia:
agreed in 2010 to supply Japan with rare earths from Lai Châu Province.
Ore to be refined at Kuantan, Malaya. Designed to supply 1/3 of world’s
demand, exclusive of China. $730 million already spent on it. The
Lanthanide concentrate from Mount Weld is “slightly radioactive”: this has
caused permitting and political problems.
(At Bukit Merah in Perak, a rare-earth mine operated by Mitsubishi,
closed in 1992 and left continuing environmental and health concerns).
Estonia (Alum Shale): Tailings from 50 years of uranium, shale and loparite mining at
Sillamäe are now ore, and yield 3000 mt, or 2% of world REE production.
Nuclear reprocessing: Nuclear fission produces a full range of elements. Due to the radioactivity
hazard, it is unlikely that refining can be done safely and economically.
©John Berry Assoc.
MINERAL RESOURCE AVAILABILITY
Slide 1 of 54
TITANIUM
USES:
• About 95% of titanium ore is refined into titanium dioxide, an intensely white pigment
used in paints, paper, toothpaste, and plastics.
• 70% of all titanium metal produced is used in aircraft engines and frames
The SR-71 “Blackbird” pioneered its use in modern military and commercial aircraft.
An estimated 59 tons are used in the Boeing 777, 45 tons in the Boeing 747
• As a strengthening agent in graphite composite fishing rods and golf clubs and bicycles.
• Also in STEEL (Ferro-titanium) to reduce grain size and as a deoxidizer
and in aluminium (to refine grain size) and Copper (to harden) alloys, &
in Iron, Manganese, Molybdenum, and Vanadium alloys
• Titanium mill products used in industrial, aerospace, recreational, and emerging markets.
• Powdered titanium is used in pyrotechnics as a source of bright-burning particles.
PROCESSING:
The Kroll process used to extract titanium from its various ores is laborious and costly:
it sacrifices another expensive metal, Magnesium.
Chlorine gas is passed over red-hot rutile or ilmenite in the presence of carbon to make Titanium
tetrachloride TiCl4. This is condensed and purified by fractional distillation and then reduced with
800 °C molten magnesium in an argon atmosphere.
©John Berry Assoc.
Slide 1 of 54
Highlighted: other minerals required to produce Titanium.
MINERAL RESOURCE AVAILABILIT
TITANIUM: MAGNESIUM SUPPLY
In the United States, magnesium is principally obtained by electrolysis of fused
magnesium chloride from brines, wells, and sea water.
The United States has traditionally been the major world supplier of this metal,
supplying 45% of world production even as recently as 1995. Today,
the US market share is at 7%, with a single domestic producer left,
US Magnesium, in Utah
As of 2005, China has taken over as the dominant supplier, pegged at 60%
world market share, which increased from 4% in 1995. China is
almost completely reliant on a different method of obtaining the metal
from its ores, the silicothermic Pidgeon process (the reduction of the
oxide at high temperatures with silicon). http://en.wikipedia.org/wiki/Magnesium
Note: Both the manufacture of Magnesium and the subsequent manufacture of
Titanium require large quantities of energy (electrolysis at high temperatures).
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
TITANIUM GEOLOGY AND EXPLORATION
Titanium is mainly mined from beach sands and dunes. There is one such mine in Florida.
The continent of Africa accounts for half the world’s supply.
Richards Bay Mines in South Africa: largest single producer of titanium products in the world
25% of world output of titanium feedstocks, (titania slag and rutile)
33% of world zircon output, and
25% of high purity pig iron.
Mines dunes along the northern Kwazulu-Natal coast,
Extracts heavy mineral concentrates from the sands and rehabilites the dunes.
Four mining plants
Two lease areas; 17km x 2km “Tisand”, and (i,e. 10.5 miles long and 1 mile deep)
20km x 2km “Zulti North” (i.e. 12.5 miles long and 1 mile deep)
Paraquay Discovery:
Announced by David Lowell, famous porphyry Copper geologist.
Indicated and inferred resources are 5.3 billion tons at an ore grade of 78 percent
Requires a $500 million investment to get 5 million metric tons a year of ore, says Lowell
Ore concentrate is quoted at $90 to $110 a metric ton depending on the grade,
according to Reg Adams, a titanium dioxide researcher at Artikol N.L. in London.
NOTE: With an Ore-grade of 78% this cannot be a fossil beach sand – it is a massive
Ilmenite (FeTiO3) deposit .
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY
CHROMIUM
PRODUCTION, 2000: ~4.4 million mt of chromite ore, converted into
~3.3 million tons of ferro-chrome
MARKET VALUE:
$2.5 billion
PRODUCTION BY COUNTRY:
South Africa
India
Kazakhstan
Zimbabwe
Finland
Iran
BrazIl
GEOLOGY:
©John Berry Assoc.
Slide 1 of 54
44%
18%
16%
5%
4%
4%
2%
Found in peridotite from the Earth's mantle, and serpentinite,
its metamorphosed equivalent.
It also occurs in layered ultramafic intrusive rocks, of which
the Bushveld Complex in South Africa and the
Great Dyke of Zimbabwe are the largest
The Stillwater igneous complex in Montana also
contains significant chromite.
Chromite layers occur as early precipitates from the molten rock:
The Merensky Reef of the Bushveld Complex is
very thin (<1m) but consists of 90% chromite.
MINERAL RESOURCE AVAILABILITY
COBALT
PRODUCTION by country, 2009:
DRCongo: 44,000 mt 50% – processed in China
Zambia:
11,400 mt 13%
China:
6,200 mt 7%
Russia:
Norway:
Canada:
World
6,200 mt
7%
88,000 mt
Recycling – 20% of US supply
PRODUCTION by Company, 2009:
Glencore Ltd., Switzerland: 33%
Note: DR Congo and Zambia supply is a by-product or co-product
(depending on the ratio of Copper price to Cobalt price)
of Copper Mining.
©John Berry Assoc.
Slide 1 of 54
SOURCE: http://www.technologyreview.com/energy/38458/
MINERAL RESOURCE AVAILABILITY
CONCLUSIONS - 1
1. The Supply Curve for Mineral Commodities is “Lumpy” because
•
•
•
•
Mineral Deposit Distribution is Log-Normal – a few large deposits control supply
Capital Requirements are huge (billions to tens of billions)
Time required to bring in new capacity is measured in decades
Exploration and development are subject to “Bubbles” (PoCu, EpiGold, REE)
2. Population and economic growth is causing the exploitation of larger and
larger deposits of lower and lower grade, causing
•
•
•
increased “lumpiness” of supply (capital, time, societal constraints)
increased political risk (“Lumpy” distribution of deposits)
exponentially increasing environmental damage
3. Technology is leading to the use of more and more exotic minerals, which causes:
•
•
•
•
increased refining cost (refining is generally complex)
increased co-dependence between minerals (rare minerals required)
increased environmental costs (low grades, noxious effluents)
increased political risk
4. Technology has also led to decreasing mineral costs in general, but has done little or
nothing to lower environmental costs.
©John Berry Assoc.
Slide 40 of 40
MINERAL RESOURCE AVAILABILITY
CONCLUSIONS - 2
There is no immediate threat of exhaustion of any important commodity
There is no (adequate?) economic theory of the relationship between price, demand and supply in
a situation of “Lumpy Supply”, therefore companies, customers and countries are
unable to make good plans for mineral resource investment and development.
Therefore, there will be temporary price spikes, which could cause wars, due to:
• Political supply interruptions
• Natural disasters destroying capacity
• Exhaustion of deposit types and the switch to a lower grade type.
In the long-term, prices are dependant on a race between mining technology and resource
depletion. Since 1800 technology has been winning the race, but as resource grades
approach the Clarke, this becomes more difficult, and raw material prices may rise
significantly in comparison to other economic inputs (wages, capital).
Environmental consequencies per year, dD/dt, are a multiplicative product of the growth in world
population (dP/dt) and the growth in in average living standards (gross world
product/person – dW/dt), divided by the change in average ore grades, which is <1.
dD/dt = dP/dt * dW/dt * (dG/dt)-1
All of these are exponential functions, so the environmental impacts of mining are
spiralling upward with time. This causes more and more antagonism to mining, and
this could be a serious problem for civilization if not addressed.
The solutions: radically fewer people; lowered per person usage; recycle, recycle, recycle.
©John Berry Assoc.
Slide 1 of 54
MINERAL RESOURCE AVAILABILITY