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By Harry M. Callaway

IN times of a falling metal market the mine operator attempts to remain in competition by lowering his overall cost and raising the grade of ore he processes. But these adjustments can be made only within narrow limits imposed by inherent characteristics of the operation. Is there some additional method whereby the break-even point can be lowered? One approach, perhaps the only one, to lower a break-even point is careful cost analysis considering both fixed and variable costs in relation to mining rate. The following is an analysis of cost distribution and its significance in determining the most economic combination of the factors of ore grade and tonnage output applicable to a given mining operation.

Jan 4, 1958

By Herbert D. Drechsler

The objective of this paper is to identify the components of income above that necessary to keep a mine in production and relate those components to the profits of a mining firm. This is a discussion of "Economic Rent". Economic rent is the payment to the factors of production -- capital, labour, entreprenuer and the owner of the mineral deposit -- above the minimum necessary to keep all of these factors cooperating in the production of minerals from a particular deposit. THE SOURCE OF ECONOMIC RENT IN THE MINING INDUSTRY In the mining business each mine has a unique cost of production unrelated to any other mine. The cost of production is developed from many factors such as the technical characteristics of the deposit: depth of deposit, depth of overburden, areal extent, and type of deposit. Furthermore, there are locational factors which also alter cost of production. For example, identical mineral deposits located in Zambia or in the southwest U.S.A. would have different capital and operating costs. These differences occur because of different qualities of labour, ease of acquisition of operating supplies or investment capital and other similar factors. To explain the source of rent, we shall use ideas developed by Alfred Marshall and Kenneth Boulding. Suppose a meteorite with special qualities exploded over earth and sent showers of small meteorites to the ground in various places. At some point in time, people learned of the special qualities of these meteorites and a demand arose and one mine was started. Suppose further that the cost of production to produce these meteorites was different for each deposit. Probably the lowest unit cost mine would commence production because if a higher unit cost mine started-up, eventually someone would discover a deposit that had a lower unit cost of production. The lower unit cost mine would take over the market and the high unit cost mine would cease production. The cost curve for the first mine would look like the following Figure 1. [ ] The output for the first mine is on the horizontal axis with the cost per ton on the vertical axis. The curve labelled AC I is the average total cost of production over the range of possible production that could occur at the property. The total costs are composed of variable costs, which are dependent on output and fixed costs, which are dependent on time. For example, the cost of operating supplies would be a variable cost and normal profit would be a fixed cost.1 The opportunity cost of the investment would also be part of the fixed costs. In our example, all factors of production, are receiving the minimum necessary payment that will keep the mine operating. The average total cost curve is U-shaped because at zero output, the meteorite mine has no variable costs, only fixed costs which, on a unit basis, obviously are very high. To produce a small output of meteorites, the mining firm adds

Jan 1, 1985

By John K. Hammes

INTRODUCTION From the point of view of the consumer, the cost of mineral commodities might be viewed as the total price industry pays for mine output. Similarly, the mining company engaged in the ongoing business of finding, developing and operating new mines is concerned very much today with the distribution of all the revenue paid for mine output and not just with its direct or controllable cash costs. In other words, what will the labor force, the supplier of energy, explosives, and reagents, and the supplier of government services, management, capital, and the ore reserves receive for their contribution to production? A significant amount might be categorized as what economic theory classifies as economic rent. Mining companies are finding it increasingly difficult to negotiate concession or work contracts to develop ore reserves in lesser developed countries, just as they find themselves accused of taking excess profits in their own countries. The principal difficulty in reaching mutually satisfactory agreements in many cases is the difficulty in establishing an acceptable distribution of income, in particular the distribution of economic rent. (See Chapter 7). Further, it is logical that the decisions and policies of the interested parties be they government or industry should be and will be influenced by their competitive position relative to determining the distribution of economic rent. The raising of finance for a mining project today may be inhibited by too biased an extraction of economic rent by entities other than the risk takers, the mining companies. ECONOMIC RENT A British economist (Ricardo D. McGraw-Hill, 1955) first proposed the concept of economic rent (See Drechsler, H.D. earlier in this Chapter.) Ricardo pointed out that no rent would be paid until land became scarce. Ricardo also stressed the distinction that the price of farm produce was not higher because of the rent paid on farm land but that the rent or price of more fertile farm land was higher because the price of produce is higher. This led to the concept that economic rent is not a cost and that it is therefore not price determining, but is itself price determined. Economic rent may be viewed as a cost if cost is equated with the concept of payment or distribution of income to any factor used in production. However, if it is a criterion that a payment must be made to the supplier of the factor of production, then economic rent is not truly a cost because it is not necessarily distributed or "paid" to the supplier. Consider the commodity A which occurs in three grades: Al, A2, and A3. Any grade may be used as a substitute for another grade in all of the industrial uses of A. However, in industries X and Y the different grades have different productivities. Table 1 shows the relative productivities of each grade in industries X and Y, and in all other industries [~]. [ ]

Jan 1, 1985

By C. L. Pillar

In the capitalistic system the success of a mining enterprise is measured by the rate of return on the investment and the speed by which its redemption is achieved. Exploration in search of ore deposits often results in the emergence of the lean orebody which does not meet basic company requisites. At this point a decision must be made whether to place the orebody into production or postpone production pending more favourable market conditions. The wisdom of this decision, borne out by future results, demonstrates the quality of a company's management and is instrumental in the degree of financial success it achieves. The project feasibility report must show a rate of return on the capital invested that is attractive to the company, plus its full redemption in the desired period of time, in order to bring the property into production on a sound economic basis. Mining companies have demonstrated their ability to bring the profitability of a marginal property from a point that says "no go" to a point of "go" by substantial reduction of expenditure without adversely affecting production rate or cost. Here is where the real challenge exists for today's mining engineers and plant designers; they will have to develop better ideas and concepts: ideas that will still allow maximum production at reduced capital expenditure, This is the sound way marginal orebodies can be brought into production without inflationary increases in the price of their product.

Jan 1, 1969

By Charles E. Heinrichs

IN the last decade one of our oldest and largest non-metallic metallic mineral industries has been the subject of persistent technical research, the results of which are another example of the benefits following the systematic application of scientific principles. The consequent improvement in the technique of phosphate recovery represents the greatest material advance in the industry since the discovery of phosphate in Florida in 1881. Moreover, these successes have stimulated interest and development in numerous other nonmetallic industries. Strange as it may seem, and despite the fact that the phosphate deposits of Giles County, Tennessee, together with those of Polk and Hillsborough Counties, Florida, have yielded more than 50,000,000 long tons in the last twenty years, the mineralogy of phosphates has been given scarcely any space in our technical literature. For many years it was the general consensus that these so-called phosphate rocks represented a physical mixture composed principally of tri-calcium phosphate, together with smaller quantities of calcium carbonate, calcium fluoride, iron phosphate, aluminum phosphate and other less important constituents. More recent investigations, however, led to the conclusion that these phosphates really represent a complex mineral in which calcium, iron, aluminum, phosphorus pentoxide, carbon dioxide, and fluorine all form a definite part of the molecule. Colony, after a careful study, utilizing chemical, microscopic, and X-ray diffraction methods, reported that American phosphates consist principally of calcium-carbono-phosphate of the staffalite type.

Jan 1, 1933

Carbon sequestration in planted forests provides an immediately available, low cost option to address the greenhouse impacts of coal mining and coal utilisation in a carbon constrained world. In addition, planted forests also offer the opportunity to address other environmental issues, particularly salinity and loss of biodiversity. Given salinity is characteristically associated with agriculture in the 500 to 700 mm rainfall belt, then where such forests can also produce commercial timber products, they offer the additional opportunity to establish new, diversified rural employment in both timber growing and processing. In the majority of Australian catchments affected by salinity, where rainfall is generally less than the 700 mm limit to conventional forestry, and where groundwater reserves are often saline, the objective of achieving economically viable forestry production presents a significant challenge. In 1996, Saltgrow commenced a collaborative breeding program to combine the salt and stress tolerance of E camaldulensis, with the growth rate, stem form and wood properties of the commercial species, E grandis and E globules. This program aimed to produce trees with the potential for commercial rehabilitation of saline landscapes. Results covering a range of site conditions from SaltgrowÆs network of over 100 trials around Australia are presented. The opportunity for commercial plantations integrated with agriculture in low to medium rainfall areas to address salinity and sustainability will be discussed. In addition, the significant potential for partnerships between land-rich, cash-poor farmers, catchment management authorities seeking to invest in public good projects that enhance environmental sustainability, and major carbon producing industries with either mandated or voluntary requirements to curtail net emissions will also be discussed.

Jan 1, 2005

By A. S. Bayne

WITH the great increase in the use of power-driven machinery in industry, and consequent large-scale operations, the hazards to which , workmen are exposed have become much more numerous than at the beginning of the century. This is especially noticeable in mining. In the past thirty years or so, improvements in methods of excavation and metallurgy have made possible the exploitation of deposits which would have failed to make ore in previous years. This improvement, together with the in-creased use of machinery, has facilitated the mining of tremendously greater tonnages with a marked decrease in unit cost of production. This 'speed up' in mining creates numerous problems demanding close attention of operators and necessitates careful prep;tratory planning, as well as diligent supervision of actual operations. Underground openings increase in size so fast, and all phases of mining, mucking, and transportation proceed at such a rate, that a short period of reduced vigilance on the part of operators . results in disaster, both from the standpoint of safety and economies. Happily, the challenge of increased hazards has been successfully met by a general application of the slogan 'Safety First'. Today, we have large manufacturing concerns devoted entirely to the development and production of safety equipment for the protection of workmen in various branches of industry. Machinery manufacturers, in co-operation with their mining customers, have included the best possible in foolproof devices in the manufacture of hoists, compressors, boilers, electric motors, and equipment of all kinds. Mining companies and private individuals spend thousands of dollars and devote a great deal of time to research with the single object of preventing accidents and combating miners? diseases. Governments throughout the world have written regulations into their statures for the protection of miners and operators. Staffs are appointed to enforce these laws and investigate accidents to ascertain means of preventing them for the future benefit of the industry.

Jan 1, 1938

By Rex C. Bryan

An application of geostatistics to financial decision analysis is the linking of reserve parameters estimation precisions to a mine economics computer program calculating profitability. The estimates of economic reserve parameters are obtained by the kriging method, while precision are calculated by a technique more akin to the polygon method. To indicate the effect of the variables probability distribution on a distribution of profitability, their values are sampled by a Monte Carlo technique and entered into a mine economics modelling program developed by T. R. Ellis. The distribution of profitability calculations are in essence, a superior method of sensitivity analysis. The method is applied to a roll-front uranium deposit in the Powder River Basin, Wyoming.

Jan 1, 1982

By E. Mcl. Tittmann

Deep-seated human instincts urge us to positively mark the passage of time. We celebrate the passage of each year. Years give way to decades, and decades to half centuries and centuries. At all these mileposts we are inclined to pause, take a look around and catch our breaths before embarking on the next leg. We are at such a point now and this meeting I am sure will give direction to the road ahead into the decade of the seventies. In looking around at this point, 1979, it is obvious to all of us that the environment in which we must mine, mill, smelt and refine lead and zinc has radically changed. These changes have, of course, occurred over a long period of time. They have, however, all been in the same general direction. They have all had the same motivation. The period of greatest contrast is probably the fifteen years just before World War II and the fifteen years following the end of that war. I thought that I might review briefly with you what seems to me to be four of the more important changes that have developed since World War II that profoundly affect our activities in the lead and zinc industry. I mentioned before that all these changes have been in the same direction; that is, they have all tended to restrict our freedom of action in pursuing our objective of producing lead and zinc on a competitive basis at a profit. Consequently, in discussing them you may think that I am merely viewing with alarm. This is not the intent. This is merely supposed to be an objective analysis. I think it appropriate before discussing these trends in detail to examine the position of lead and zinc today.

Jan 1, 1970

By E. Mcl. Tittmann

Deep-seated human instincts urge us to positively mark the passage of time. We celebrate the passage of each year. Years give way to decades, and decades to half centuries and centuries. At all these mileposts we are inclined to pause, take a look around and catch our breaths before embarking on the next leg. We are at such a point now and this meeting I am sure will give direction to the road ahead into the decade of the seventies. In looking around at this point, 1973, it is obvious to all of us that the environment in which we must mine, mill, smelt and refine lead and zinc has radically changed. These changes have, of course, occurred over a long period of time. They have, however, all been in the same general direction. They have all had the same motivation. The period of greatest contrast is probably the fifteen years just before World War II and the fifteen years following the end of that war. I thought that I might review briefly with you what seems to me to be four of the more important changes that have developed since World War II that profoundly affect our activities in the lead and zinc industry. I mentioned before that all these changes have been in the same direction; that is, they have all tended to restrict our freedom of action in pursuing our objective of producing lead and zinc on a competitive basis at a profit. Consequently, in discus- sing them you may think that I am merely viewing with alarm. This is not the intent. This is merely supposed to be an objective analysis. I think it appropriate before discussing these trends in de- tail to examine the position of lead and zinc today.

Jan 1, 1970

By Richard Franchot

From an efficiency viewpoint, the greatest loss of energy to the blast furnace is in its failure to convert more than about a third of the coke carbon from carbon monoxide to carbon dioxide. This result has usually been ascribed to a necessity of a 2:1 excess of CO in order to reduce iron. It has, however, been proved that iron is completely reduced by equal volumes of carbon monoxide and carbon dioxide. Hence there is room for the hypothesis that vaporization, as cyanid, of accumulated alkalis is a serious primary factor limiting the ratio of ore to coke. Observed cyanid vapor concentrations and those measured by the variations of the nitrogen-oxygen ratio in the hearth gases form the basis for a quantitative explanation of the furnace action. As EVERYBODY knows, the blast furnace is a gas producer. As to the reason for this, people are not so well agreed. The significance of the fact is obvious, for the extent to which the fuel leaves the furnace as combustible gas measures poor economy in iron smelting; while good efficiency in this respect means poor gas. The furnace thus works at cross purposes. The present trend of the steel industry is toward. a primary use of the blast furnace as a gas producer with pig iron as a byproduct. Needless to say, this trend is away from improvement in iron making. The production of more and better iron in a given furnace consuming a given amount of coke would seem, at least, to involve a decrease in the relative proportion of the combustible gas. The possibility at the same time, however, of making more and better gas need not necessarily be excluded. (The more the furnace acts as gas producer, the bigger is the sulfur problem.) Whatever the object, it would seem desirable to have a, clear, comprehensive, mathematically exact estimate of why and how the blast furnace functions, to the large degree that it now does, as a gas producer. The literature does not give a definite answer to the question. That for which explanation is sought is the fact that only a minor part, usually not more than a third, of the coke carbon burned is oxidized to carbon dioxide; that the development in the furnace of the fuel energy is thus limited usually to little more than 50 per cent.; that it requires about twice as much fuel coke to make a ton of iron as is indicated by the rela-

Jan 7, 1925

By Paul M. Tyler, Carle R. Hayward

DOES it pay to do really good work? Quite likely the practical millman will answer that it does not. The preparation of ores for market is primarily a business enterprise, and by and large the individual operator does not bother his head about squandering our national resources or making easier the job of the smelterman. Having accepted such ore as he may get fro111 the mine, his job is to make the best possible showing with his mill fro111 the standpoint of financial return. His success is measured in dollars and cents, and he has no rightful reason to expect more than scant acknowledgment of any other achievements from the stock- holders of his company who in the last analysis are his employers.

Jan 1, 1936

By Arno C. Fieldner

PROBABLY no large industry in the United States is in greater need of technologic research leading to economic improvement than the coal industry. It has suffered severely from increasing substitution of petroleum and natural gas for coal and its products in the fuel markets. Part of this substitution is due to the greater convenience and suitability of liquid and gaseous fuels for special purposes, and part of it has been due to the extensive research programs conducted or sponsored by the petroleum and allied industries in the past 2 decades. A recent estimate1 places these expenditures at $100,000,000 a year.

Jan 7, 1951

By HILAND BATCHELLER

COMMENT on the economic significance of the special alloy steels seems inevitably to reduce itself to an attempt to peer into the future of the industry in which we are interested. We are all familiar with the historical development of iron and with the almost complete replacement of iron by steel. Those who have been connected with the industry since its .early days have had the satisfaction of witnessing the greatest industrial development the world has seen. As the cartoonists of the muck-raking decade liked to picture steel as an ogre armed with a spiked club, his hands reeking with blood and with golden coins dripping from his pocket, fiercely seeking for more widows and orphans to devour, I choose to call on my imagination to create a gigantic but beneficent robot of such marvellous mechanical skill. that it quickly transforms millions of tons of otherwise worthless material into the infinite variety of useful products which are so largely responsible for our present civilization.

Jan 1, 1931

By AIME AIME

AT the end of September, ' the metal-producing industries were almost prostrate, the production of fuels was largely curtailed, there was a fair degree of activity in general manufacturing, while retail trade was moderately good. Looking at industry on the whole, there was a large percentage of unemployment, the degree of which has increased, progressively, month by month since the beginning of 1921. There is the prospect of much destitution and misery this winter; yet while' in some, quarters, idle workers are already being fed from, commissaries; in other quarters profligacy; in "spending continues, unabated. Amid this confusion in conditions there is;' much that appears paradoxical, but in fact it is not so and indeed everything is running pretty true to form: Such activity in production as there is to be seen is mainly in textiles; - leather goods, foodstuffs, etc., i.e., consumption goods for immediate use. Even in hard times 105,000,000 people must buy a good deal of clothing and food. Besides this there is indispensable repair work and- maintenances. Thus, the good business of the year in white lead for painting. The chief uses for the metals, however, are in the production of capital goods, and except for occasional and special reasons nobody in his senses is capitalizing anything at present prices for labor. Hence several millions of men are idle. The impoverishment of Europe and the exhaustion of her credits adds to this by curtailing our export trade.

Jan 1, 1921

By Walter Renton Ingalls

IN SEVERAL papers and addresses during the past two years, I have dwelled upon some of the economic consequences of the war. The fundamental thought that I have sought to convey is that the world became immensely poorer by the war, not only in material wealth and population, but also in the psychology and morale of the people. I do not see how there can be any intelligent dissent from that statement. All the ideas of post-war prosperity were manifestly fallacious, manifestly fallacious from the outset. If there had been any truth in them it would have followed logically that a great war, with all its destruction of wealth, health and life would be a good thing. Therefore, let us have a great war every ten years or so. Such an idea would be both monstrous and absurd. Assuming then the acceptance of my premise, I have tried to show that the losses by the war could be made good in a short time, i.e., in a relatively short time, only by doing things a great deal better than formerly, and that the accomplishment of such a result called for greater transparency in industry, for industrial cooperation, for thinking in terms of industries as a whole, and for the greater exercise of engineering functions. All of this introduced, of course, the position and psychology of labor. I say frankly that I do not look for labor to contribute any constructive thought to the upbuilding. I neither expect it nor hope for it. This is a pity, for it could do so much for its own economic advancement if it would. However, it never has done so, but rather has benefited only from the exercise of the talents of the few, and the main hope now is to bring it into a passive state, dispelling the resistive fallacies that developed during the war. Let us briefly examine the nature of these.

Jan 1, 1921

By Thomas V. Fame, William E. Porter

"As geological and mining conditions become more complex, and as overall mining economics become more marginal, short- and long-range decision-making regarding multiple-seam surface mining becomes more difficult. The decision-making problem involves a study of economics, cut-off grades and ratios, equipment capabilities, sequencing and selective mining practices.This paper is concerned primarily with multiple-seam mining of bituminous coal. The research has led to the development of an economic decision-making model for use as a day-to-day tool to aid mine operators and pit geologists to decide what and how to mine.The model is designed as an aid for feasibility decision-making in multiple-scam situations and for situations where selective mining is needed or desired. In effect, a simulation of the feasibility and preliminary mine planning phases has been developed. The model is divided into four separate segments: decision-making, simulated mining, cost calculations and the determination of the discounted cash flow return on investment."

Jan 1, 2014

By W. A. Forbes

OUR present-day geological surveys show that 36 of our States are underlain with bituminous coal, covering a total area of 496,709 square miles. The North American continent possesses 69 per cent of the world's coal reserves, with the United States alone having an estimated 55 per cent. The American coal reserves, in tons, are calculated to he about 3,500,000,000,000 tons, of which we have exhausted about 1 to 1 1/2 per cent. If this coal were mined at the rate of the 1918 production-a record output of 579;000,000 tons-it would not be depleted for 4,000 years. The more easily accessible and high-grade coals would obviously be consumed much before this; some estimates are 100 years. The natural progress of the nation's industries up to 1910 encouraged on every hand the development of new mines, especially where cheap and easy access to coal measures was coupled with short hauls to the consumer. Over-development resulted, which is perhaps today one of the fundamental causes for the many difficulties faced by the coal industry, which is highly competitive; about 70 per cent of the production cost is labor. Salient statistics for 1930, recently issued by the U. S. Bureau of Mines, follow:

Jan 1, 1932

Economic Sustainable Power for Mineral Processing

Sep 13, 2010

By Joseph E. Pogue

NEW economic forces are at work in the petroleum industry.. In order to visualize these forces and clearly see their bearing on the producer, refiner and marketer, it is necessary to see in perspective the economic evolution of the business. For several decades prior to 1913 the outstanding feature of the petroleum industry was a trend toward integration, culminating in a huge combine, the Standard Oil Co. An important aspect of this integrative trend, however, was its concentration on the combination aid control of refining and marketing, leaving crude oil production, for the most part, to the exigencies. of small-unit competition. It is a noteworthy coincidence that during this era the law of oil and gas was formulated and applied, whereby these substances had to be reduced to possession to establish ownership; and the forces of competition in crude oil production were thereby intensified. It was to the interest of an industry, safeguarded in its control of manufacturing and markets, to have supply stimulated by legal convention as well as by individual initiative in order that the growing demand could be met without interruption. And so over-production of crude oil during this era was no handicap, but rather an aid, to the progress of the industry.

Jan 1, 1929