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By Catherine C. Kilgore

The Bureau of Mines investigated the availability of manganese from known domestic occurrences. Eight of these deposits were found to have demonstrated resources totaling 420 million metric tons with an average grade of 10 percent contained manganese. They were found to be submarginally subeconomic. Economic evaluations of the eight deposits resulted in incentive prices ranging from $8 to almost $35 per long ton unit (22.4 pounds) of contained manganese. Comparing these prices with the current market value of $1.70 per long ton unit of manganese clearly illustrates the submarginal nature of the domestic ores analyzed. These domestic resources would probably not be developed except in the case of an extreme national emergency. Production from the eight deposits would take 3 to 6 years to develop, and the final product would be manganese ore concentrate, which could be used in the production of ferromanganese. If preproduction development began in 1981, annual production would peak in 1987 with 900,000 metric tons of recoverable manganese. Thereafter, production would see a steady decline unless additional resources were located or technologic improvements were made to allow processing of lower grade material, or unless mining and processing of ocean manganese nodules began to take place.

Jan 1, 1982

By Richard B. Stein

This paper will present an overview of several hydrometallurgical processes which can be used for sea-nodule metal recovery and some simplified economics. Before going any further, here are some of the basic figures from which the economics were developed. The first is to establish a representative composition for a typical nodule feed (Slide 1). This set of chemical analysis figures can be taken as typical for a deep Pacific nodule feed and shows manganese at 30%, copper at 1.1%, cobalt at 0.2%, nickel at 13% and iron at 10% for the metals of economic interest1.

Jan 1, 1982

By James H. Boettcher

INTRODUCTION A complex interaction of worldwide economic and political forces is increasingly requiring 3 primary participants for the successful development of large natural resource projects in developing countries. They are the host government of the developing country (the "host government"), one or a consortium of international natural resource companies, (the "Resource Company") and one, or more likely, a syndicate of international lenders. The host government typically controls the rights to its country's natural resources and establishes the economic ground rules for their development. However, because of worldwide inflation and the depletion of easily accessible, high-grade resources, the nominal and real capital development and operating costs of projects have been spiraling. Moreover, the depletion of high-grade and mineralogically uncomplicated resources also raises the technical and operating risks associated with resource recovery. Thus, despite increasing political self-consciousness and economic nationalism in developing countries, international resource companies are still often necessary project sponsors since they can provide, among other things, the required technical and management expertise and equity capital. The presence of these factors, and often the addition of worldwide market access in a project, is often critical in determining whether or not the project will be considered creditworthy by international commercial lenders. The international commercial lender is often the critical third party in project development, due in a large part to the ever escalating-costs of project developments relative to the financial resources of many companies and even a growing number of countries. In addition, lenders have other reasons for taking more than a passive interest in all aspects of a project's development. These reasons include the following: 1. Projects are often financially structured such that the primary security for a loan, once completion and performance standards are met, is the cashflow of the project rather than recourse to its sponsors. 2. Lenders, in addition to the "project risk" just described, are frequently asked to assume various elements of "political" risk which nay put them in a sensitive economic position between the host government and international resource firms (This is discussed later). 3. International banks today have large loan portfolios of developing country debt with final maturities ranging from one to fifteen years. The various current projects undertaken are the building blocks of most developing country economies that will hopefully contribute to the long run economic development of a country as well as generate the foreign exchange necessary to repay foreign loans in the future. In this regard it is useful for lenders to realize whether a given project "makes sense" in terms of a country's natural resource endowments and competitive advantages over other countries. The type of framework discussed in this article would help lenders to better make such assessments. In order to facilitate the continued international flow of capital and technology to developing countries and of readily available supplies of raw materials from them, it is important for each of these three parties to increase its awareness of the goals and objectives of the other parties as well as the bargaining process that results in the legal, financial, credit and fiscal structures by which a joint venture project ultimately proceeds. Each of the parties faces increasingly complicated accept/reject decisions when they are faced with difficult choices among. a wide range of alternative structural combinations each of which has different implications for risk and reward to them. Therefore, by increasing the mutual, 3-way awareness of the decision processes of the other parties, it should be possible to: • provide better information and results in the formation of more rational expectations by all parties going into negotiations, • facilitate the project formulation process by allowing parties to focus more clearly on the areas of common interest and conflict, • result more frequently in final structures and agreements that better reflect the economic and political realities associated with a project and thus • result in more creative, innovative agreements that should reduce the need for changes to them and thus promote the kind of long run political stability conducive to attracting capital and further investment.

Jan 1, 1982

By Kumara S. Rachamalla

Long-term stability, appropriate taxation and incentive policies are essential to attract and stimulate investment in the mineral sector. An outline of Ontario's $4.6 billion industry and associated tax incentives is presented. Producers are offered incentives under The Mining Tax Act, federal and provincial income tax acts for exploration and development by reducing Me after tax cost to 13-25¢ for each dollar spent. The Mining Tax Act provides generous processing incentives which have positive effects in enhancing investment and economic advantages of building processing facilities. Non-mining companies and entrepreneurial individuals can receive 25% of eligible exploration expenditures in grants/tax credits under the Ontario Mineral Exploration Program.

Jan 1, 1982

Argentina follows Venezuela and Mexico as the largest producers of crude petroleum and natural gas in Latin America. Argentina 1S practically self-sufficient in fuels, but relies substantially on imports for its supply of copper, iron ore, ferroalloys, sulfur, and fertilizers. Mining activity is limited and is in an incipient stage of growth, considering the country's potential for mining. Most nonfuel mineral output in 1979 consisted primarily of minerals used for construction, while only 9% are other nonmetallic, and 2% are metallic minerals. Argentina is Latin America's major producer of boron minerals and uranium (yellow cake). Mineral exports consist primarily of borates, uranium concentrates, and of late, some tin. These exports have in the past been shipped mostly to Great Britain. London banks have been involved in arranging financing for St. Joe Minerals Corp. IS planned development of the El Pachon copper deposit (see map), and were being counted upon to also back the development of large copper and manganese projects. The following is a review of Argentine mineral production in 1979: (For 1981, the production of boron minerals is put at 167,000 metric tons and uranium at 300,000 metric tons.)

Jan 1, 1982

By Robert L. Grayson

An application of goal programming (GP) in evaluation of proposed purchases of major mining machinery is presented. It incorporates historical operating data compiled on mechanical delays to production time. The goal programming technique, which is an extension of integer programming, is used to maximize an objective function. The objective function combines the capital budgeting evaluation methods of net present value, payback period, profitability index, and total net earnings as goals weighted according to a management preference. The GP method gives an optimal solution to a multiple-goal problem. A sensitivity analysis is performed to determine the effect of an increased production forecast or a tightened budget on proposal selection.

Jan 1, 1982

By Herbert R. Babitzke

The Minerals Availability System (MAS) was formally established by the Bureau of Mines in May 1975 to provide current appraisals of the engineering and economic availability of nonfuel minerals for consideration in the formulation of both domestic and foreign minerals policy, Domes- tic mineral property reports are developed by the Bureau's four Field Operations Centers, and foreign data are obtained under contract. This site-specific information is subsequently subjected to engineering verification and economic evaluation, and the results are analyzed and published as Minerals Availability System Appraisals. The deposit-specific data are also entered into the computerized MAS data base, where a subset of this information, the Mineral Industry Location System (MILS), is available to the public in the form of computer graphics and listings. Other MAS products are also described. The Bureau's MAS personnel are frequently involved in special engineering and mineral economic projects for other Federal and State agencies. MAS personnel also work closely with the private sector, both in the area of mining and processing cost estimation, and as a source of nonproprietary mineral deposit information.

Jan 1, 1982

This section of Minerals and Materials analyzes the following three factors affecting the recent performance of the U.S. and world mineral industries: 1) the health of the U.S. and world economies, 2) the level of interest rates and 3) the performance of productivity in both the U.S. mineral industry and the general economy. While these indicators do not exhaust the possible critical factors, they represent an initial attempt to probe some of the considerations underlying the performance of the U.S. minerals and materials industry. The U.S. and World Economies It is essential to analyze the state of the U.S. and world economy because the demand for minerals and materials is a derived demand; that is, since minerals and materials are used in the productive process, the demand for them is a direct function of the demand for the finished products of which they are a basic input. Thus, the demand for minerals and materials is directly affected by changes in present and planned consumption and investment expenditures. The past two issues of this publication have highlighted the generally discouraging performance of the national and inter-national economies. Briefly, the world economy is in the third year of the first long recession in recent history where inflation rates have remained above 5 percent. With many countries either unable or unwilling to support domestic spending while inflation continues, there has been a growing tendency to institute trade-restrictive policies to support domestic demand. The resulting weakened demand conditions in exporting nations have had a direct effect on the mineral industry.

Jan 1, 1982

By Robert B. Parsons

"Several recent cases indicate that the Courts may be leaning toward a more favourable treatment of mine closing and related costs. In this article, we look at two recent cases, Burnco Industries Ltd. and Nomad Sand & Gravel Ltd. The former was heard before the Federal Court - Trial Division and the latter before the Tax Review Board.It appears that in certain situations mining companies may now be able to sustain current deductibility of estimated mine closing costs during the productive years of the mine, rather than waiting until either the date on which mining ceases or the reclamation and similar activities commence. This would be of great benefit to the mining industry, as waiting until the bitter end often means that there are no revenues available against which the expenses may be offset and, hence, no tax relief.IntroductionUnder the Income Tax Act in Canada, taxpayers are not permitted any deductions in respect of an outlay or expense in determining income from a business or property, except to the extent that such expenditures are made or incurred by the taxpayer for the purpose of gaining or producing income. In addition, no deductions are permitted for amounts transferred or credited to a reserve, contingent account or sinking fund except as expressly permitted by the Act.In large measure, these provisions are relevant to the mining industry to the extent that they determine the periods during which expenses may be charged against revenues for income tax purposes. Several recent cases have indicated that the Courts are leaning toward a more favourable treatment of accrued costs in the mining industry than was previously considered to be the case."

Jan 1, 1982

By Phillip N. Yasnowsky

This Bureau of Mines report summarizes State severance taxes imposed on minerals and mineral fuels, provides a hypothetical example of how a State severance tax affects selected components of a firm's income statement, and uses the Bureau's Minerals Availability System (MAS) to estimate the effect of assumed changes in State severance tax rates on copper recovery cost at given levels of potential copper availability. A reduction of the rates to zero or a doubling of them results in changes in costs that are of the same order of magnitude as the cost of transporting copper to the United States from major foreign producing countries.

Jan 1, 1982

By Ludwig Strah

"The paper outlines the history of rubber mill liners beginning with the awarding of the first North American patent rights in 1923. It includes the early-day applications and installations of the 1920s and 1930s through to their present-day application. Over-all rubber mill liner design is discussed in relation to present day installations employing rubber mill liners in various grinding applications. A brief overview is given of a manufacturer's procedures to produce rubber mill liners.IntroductionIn early 1910, it became apparent that the productive life of the silver mines in Cobalt, Ontario, could be substantially prolonged by mining lower-grade ores.The mining of lower-grade ores required the establishment of treatment facilities which initially employed jaw crushers, stamp mills, jigs and concentrating tables. The recovery of silver in other than a coarse metallic form required the additional step which was introduced at that time: the cyanidation of silver concentrates from the tables. The resultant requirement for increased and improved recovery led to the introduction of grinding mills, i.e. tube mills.Shortly after the introduction of the tube mills to the Nipissing Mine's mill in 1914, the idea of using rubber as a mill liner material was spawned. However, no action was taken due to the advent of World War I. It is interesting to note that the idea of rubber mill liners emanated from having used pieces of solid rubber tire as an emergency repair on a set of liners when a liner had broken and no immediately available spare was on site.The credit for this ingenuity and subsequent application for a patent on rubber mill liners falls to James John Denny, the mill superintendent, and Rolla Barnum Watson, the general manager of Coniagas Mines Limited. The patent application was formally made on December 3, 1921. The U.S. Patent Office issued Patent No. 1,470,597 on October 16, 1923."

Jan 1, 1982

With IIT research institute as a cosponsor, this seventh mineral waste Utilization Symposium was funded by the Bureau of Mines through its Division of Mineral Resources Technology. Environmental scientists and engineers from five countries (Canada, Netherlands, Austria, England, Guatemala) besides the United States participated in the symposium, which was held Oct. 20-21, 1980, at the Chicago campus of IIT Research Institute. Of the 25 papers presented on the reclamation and recycling of mining and mineral wastes, municipal solid waste, industrial waste, and scrap metal, 21 are summarized herein.

Jan 1, 1982

By Walter R. Hibbard

Precipitation in the northeastern United States, Florida, California and in many industrialized areas of the world is now more acidic (lower pH) than can be accounted for by natural causes. At the same time, the acidity of many lakes and streams in the northeastern United States has been measured and found to be similar to that of actual rain. These facts have led to conclusions that the two conditions are related. Coal burning utilities, 700 to 1000 miles upwind, have been accused of being the cause, leading to proposals for strict emission controls on the alleged offenders. The costs of these controls would place an estimated $10 to $15 billion capital burden on utility customers in about 15 states plus $2 to $6 billion annual operating costs. There appears to be no direct well-established scientific evidence that the accused are guilty but that the indictment is based largely on circumstantia1 evidence. This study examines the evidence, describes the situation and proposes what must be done to reduce the acid precipitation in an orderly cost beneficial manner. It is interesting to observe that studies by the different adversaries on the acid precipitation issue come to different conclusions largely because they do not read the same literature, but selectively develop evidence to support their own points of view, This study will try to review the issues impartially and reach a position of scholarly balance.

Jan 1, 1982

By Jim F. Lemons

The Bureau of Mines Minerals Availability System collected and analyzed data for 34 nonlaterite and 9 nickeliferous laterite domestic chromite deposits in order to assess their viability as sources of chromium under present technologic and economic conditions. These 43 deposits, none currently in production, contain approximately 6.3 and 22.3 million metric tons of Cr203 at the demonstrated and identified resource levels, respectively. Approximately 4.6 and 15.6 million metric tons of Cr203 are recoverable at the demonstrated and identified levels, respectively, for the 34 nonlaterite deposits. None of these resources are economically recoverable at January 1981 market prices. Production of metallurgical-grade chromite (market price $128 to $144) would require a minimum chromite market price of $237 per metric ton. Chemical-grade chromite production (market price $74 to $85) would require a chromite market price in excess of $188 per metric ton. From the 34 nonlaterite deposits, roughly 5.4 and 17.6 million metric tons of ferrochrome could be produced at the demonstrated and identified resource levels, respectively; however, a minimum market price of $770 per metric ton of ferrochrome would be required to stimulate production. The nine nickeliferous laterite deposits were not evaluated through production stages because of uncertainties in process technology and cost.

Jan 1, 1982

By John C. Brower

The purpose of this paper is to examine the Gays in which- the policies of the U.S. government, mining companies and third world countries affect each other with regard to the availability of minerals. The interaction involves U.S. policy towards the mining industry, the policies of the companies themselves, and the policies of third world countries towards the U.S. and multinational companies. It is assumed in this discussion that U.S. policy will continue to be to seek certain minerals from abroad rather than attempt to develop domestic sources for all its requirements. This would seem to make sense both from the standpoint of cost, and for preserving what domestic resources there are so as to maintain some degree of market leverage. In today's jargon, this means greater dependency on the "third world", which, for this discussion, includes virtually all the nations in Africa, South America and Asia. Concern for availability raises the important distinction between dependency and vulnerability, and as the Director of the Bureau of Mines has pointed out, the two are not the same. Dependency is not neccessarily a bad thing; it is vulnerability that counts (Norman, 1980)

Jan 1, 1982

By Wilfred Walker

A working hypothesis is presented herein mineral belts are split as all world oceans opened. Rather than plate tectonics, expansion is favored as the most recent expression of the sequence of convecting systems in the Earth's mantle. Throughout the geological record this sequence has produced similar mobile belts. This similarity lends itself to both stratigraphic classification and the theme of mineralization in mobile belts demonstrated by Y. A. Bilibin. Crustal evolution should, therefore, serve as an important guide in understanding Pacific mineral belts.

Jan 1, 1982

By Michael S. Koleda

Less than two years ago, the, Congress, with broad bipartisan support, passed the Energy Security Act of 1980. A decade marked by ten- fold increases in world oil prices and two major interruptions in oil flows from the Middle East had ended. An all-out national commitment to transform America's vast tar sands, oil shale and coal resources into conventional fuels had begun. The national synfuels effort was to be public-private cooperation at a scale unmatched in peace time. Private industry would own and operate the synthetic fuels facilities. Government would reduce market uncertainties to acceptable levels. The potential government commitment was substantial. Up to $88 billion would be available through the Synthetic Fuels Corporation, principally in the form of contingent financing. Billions more would be spent through Department of Energy programs. Additional incentives for alternate energy development were contained in the Energy Tax Act of 1978. The Energy Security Act clearly specified national synthetic fuels production objectives: 500,000 barrels per day by 1987 -- 2 million barrels per day by 1992. Finally, said Congress, Uncle Sam was going to do something about rapidly rising oil prices, uncertainties of energy supply, and the resulting disruption to the U. S. economy. Simply put, the purpose of the Energy Security Act of 1980 was to provide government guarantees sufficient to get synthetic fuels projects off the private sector drawing boards and into commercial production. Because of their huge cost, technological uncertainty, and lengthy pay-out period, these projects were always second place to projects of smaller size, known technology and more rapid pay-out. The Energy Security Act was the legal expression of public policy to bring the free-market synfuels timetable into line with the faster paced political timetable in the interest of national energy security.

Jan 1, 1982

By Forest Mintz

Many oil and gas producers find it advantageous to borrow against the value of their hydrocarbon re- serves. This paper considers the requirements for a reserve based loan and the calculations that a bank would perform to arrive at a loan amount. Three of the most common loan structures, i.e. a term loan, a production payment, and a revolving credit/term loan will be discussed. A typical outline for each type of loan is presented. Finally, a comparison of major considerations in the three financing techniques is shown.

Jan 1, 1982

By Herbert P. Haschke

I. Changes made by the Economic Recovery Tax Act of 1981 (ERTA) which have an effect on investing in tax shelter investments A. Maximum ordinary income tax rate on individuals is now 50%. B. Maximum tax rate on long-term capital gains for individuals is now 20%. C. Maximum tax rate on alternative minimum taxable income for individuals is now 20%. D. Although not changed, the "add-on" 15% minimum tax on tax preference items and the possibility of paying the alternative minimum tax cause individual U.S. income tax planning to continue to be very complex. II. Real Estate A. The new Accelerated Cost Recovery System of depreciation (ACRS). 1. Mandatory for assets placed in service after 1980. ACRS will eliminate most if not all controversies with the IRS over depreciation. 2. Real property now depreciated over 15 years. Component depreciation is not available. 3. Accelerated depreciation is available - a 175% declining balance method with an automatic shift to straight line method at the optimum point in the asset's life. Alternatively, a taxpayer can elect to use the straight line method.

Jan 1, 1982

By Anthony G. Reid

INTRODUCTION At the time of the death of Mao Tse-tung in 1976, China was a major oil producing country with a daily oil flow in the order of 1.735 million barrels. This position had been achieved with minimal assistance from the outside world. Further, only some fifteen years had elapsed since the country's daily oil production capacity had hovered at the barely significant level of one hundred thousand barrels. Why then did the new leaders of China, after this very creditable record of success, suddenly change the direction of the country's drive for future hydrocarbon production? First, by switching much of the emphasis of exploration from onshore to the offshore continental shelf basins, and further by apparently abandoning the philosophy of self reliance calling upon the world's oil industry to share in the task of locating and developing these potential offshore energy reserves. The answer is probably only partly understood by those of us outside China, However, a number of factors exerting an important influence on this decision can be identified. THE MOVE OFFSHORE The new leadership was anxious to rapidly move China into her rightful place amongst the powerful and technologically advanced nations of the world. Modernization became the slogan, specifically modernization on four fronts, agriculture, industry, technology and military with the goal to "catch the west by the year 2000". But how to generate the capital to finance this massive modernization program? The rapid escalation of the price of crude oil following the 1973 Oil Embargo and the continuing apparently insatiable world demand for this now extremely precious primary resource was very clear to all. China, as a major producer, could export crude to help finance the ambitious development programs of the government. To do this, however, would require a very significant in¬crease in present production capacity, as the domestic demand even for China with her relatively low per capita energy consumption, is essentially equal to the current production. Trying to rapidly move the new regime's programs into actions, one can only assume that the planners looked at the success of the petroleum industry over the preceding fifteen years and quickly concluded that this well established curve could be maintained and indeed steepened with an increase in effort. The rapid discovery of a few more Daqing's (China's premier oil field, producing one million barrels a day) would have the country's ambitious modernization goals within reach. Petroleum would At the time of the death of Mao Tse-tung in 1976, China was a major oil producing country with a daily oil flow in the order of 1.735 million barrels. This position had been achieved with minimal assistance from the outside world. Further, only some fifteen years had elapsed since the country's daily oil production capacity had hovered at the barely significant level of one hundred thousand barrels. Why then did the new leaders of China, after this very creditable record of success, suddenly change the direction of the country's drive for future hydrocarbon production? First, by switching much of the emphasis of exploration from onshore to the offshore continental shelf basins, and further by apparently abandoning the philosophy of self reliance calling upon the world's oil industry to share in the task of locating and developing these potential offshore energy reserves. The answer is probably only partly understood by those of us outside China, However, a number of factors exerting an important influence on this decision can be identified. THE MOVE OFFSHORE The new leadership was anxious to rapidly move China into her rightful place amongst the powerful and technologically advanced nations of the world. Modernization became the slogan, specifically modernization on four fronts, agriculture, industry, technology and military with the goal to "catch the west by the year 2000", But how to generate the capital to finance this massive modernization program? The rapid escalation of the price of crude oil following the 1973 Oil Embargo and the continuing apparently insatiable world demand for this now extremely precious primary resource was very clear to all. China, as a major producer, could export crude to help finance the ambitious development programs of the government. To do this, however, would require a very significant increase in present production capacity, as the domestic demand even for China with her relatively low per capita energy consumption, is essentially equal to the current production. Trying to rapidly move the new regime's programs into actions, one can only assume that the planners looked at the success of the petroleum industry over the preceding fifteen years and quickly concluded that this well established curve could be maintained and indeed steepened with an increase in effort. The rapid discovery of a few more Daqing's (China's premier oil field, producing one million barrels a day) would have the country's ambitious modernization goals within reach. Petroleum would be the principal bridge to the bright future. The next decision involved the question of where to look for these vast new reserves. Chinese exploration teams had already looked at most of the onshore sedimentary basins and, while they were the first to admit that there was much yet to do, it was fairly clear to them that the potential for large new accumulations was confined to two areas: the little explored, remote, inhospitable regions of western China, principally Xinkiang Province and the equally unexplored offshore basins of the continental shelf and slope. In both cases China faced a very serious problem. The inhospitable environments were severely straining her petroleum industry's current technological ability to cope, particularly as the government needed rapid results. Thus the pragmatic and, to the foreign oil industry, unexpected decision to invite cooperation with the outside world. The reasons for the initial emphasis on the exploration of the offshore basins with the cooperation of foreign oil companies are again supposition on my part, but probably involved considerations of technical merit, ease of development and delivery to markets together with more sensitive issues such as controling the influence of foreign philosophies and values on the Chinese population by containing most foreign activity to the offshore. So within three years of the death of the great helmsman, China had developed a plan to involve foreign oil companies, both state and private, in a grand plan to rapidly increase the nations oil production. In fact, by this time, the first round of talks had been concluded and the first phase begun, and what a beginning. Some forty eight companies from thirteen countries had signed documents to participate formally in this world scale event. It was far easier to list those companies which did not participate than to list those which did. FOREIGN COMPANY INTEREST Why the rush by the world's oil industry to be involved in China? What was China offering which made everyone so anxious to join in? Again the answer is complex in detail, but principally involved a combination of factors which together caused this virtual stampede. Timing was a major element. Oil Companies, despite an ever increasing take by governments, were beginning to benefit. from the' rapid escalation of crude prices induced by OPEC and were looking for suitable areas to reinvest these funds. Producers

Jan 1, 1982