Peak minerals

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Peak minerals marks the point in time when the largest production of a mineral will occur in an area, with production declining in subsequent years. While most mineral resources will not be exhausted in the near future, global extraction and production has become more challenging. [1] Miners have found ways over time to extract deeper and lower grade ores [2] with lower production costs. More than anything else, declining average ore grades are indicative of ongoing technological shifts that have enabled inclusion of more 'complex' processing – in social and environmental terms as well as economic – and structural changes in the minerals exploration industry [3] and these have been accompanied by significant increases in identified Mineral Reserves. [4] [5]

Contents

Definition

The concept of peak minerals offers a useful model for representing the changing impacts associated with processing declining resource qualities in the lead up to, and following, peak mineral production in a particular region within a certain time-frame. [6]

Peak minerals provides an analytical framework within which the economic, social and environmental trajectories of a particular mining industry can be explored in relation to the continuing (and often increasing) production of mineral resources. It focuses consideration on the change in costs and impacts associated with processing easily accessible, lower cost ores before peak production of an individual mine or group of mines for a given mineral. It outlines how the economy might respond as processing becomes characterised by higher costs as the peak is approached and passed. Issues associated with the concept of peak minerals include:

Resource depletion and recoverability

Giurco et al. (2009) [8] indicate that the debate about how to analytically describe resource depletion is ongoing. Traditionally, a fixed stock paradigm has been applied, but Tilton and Lagos (2007) [9] suggest using an opportunity cost paradigm is better because the usable resource quantity is represented by price and the opportunity cost of using the resource. Unlike energy minerals such as coal or oil – or minerals used in a dissipative or metabolic fashion like phosphorus [10] – most non-energy minerals and metals are unlikely to run out. Metals are inherently recyclable and more readily recoverable from end uses where the metal is used in a pure form and not transformed or dissipated; in addition, metal ore is accessible at a range of different grades. So, although metals are not facing exhaustion, they have become more challenging to obtain in the quantities that society demands, and the energy, environmental and social cost of acquiring them could constrain future increases in production and usage. [11]

Peak oil

Given increasing global population and rapidly growing consumption (especially in China and India), frameworks for the analysis of resource depletion can assist in developing appropriate responses. The most popular contemporary focus for resource depletion is oil (or petroleum) resources. In 1956, oil geologist M. King Hubbert famously predicted that conventional oil production from the lower 48 (mainland) states of the United States would peak by 1970 and then enter a terminal decline. [12] This model was accurate in predicting the peak (although the peak year was 1971). This phenomenon is now commonly called 'peak oil', with peak production curves known as Hubbert Curves.

The concept of peak minerals is an extrapolation and extension of Hubbert's model of peak oil. Although widely cited for his predictions of peak oil, Hubbert intended to explore an appropriate response to the finite supply of oil, and framed this work within the context of increasing global population and rapidly growing consumption of oil.

In establishing the peak oil model, Hubbert was primarily focused on arguing that a planned transition was required to ensure future energy services.

World gold production has experienced multiple peaks due to new discoveries and new technologies. Many mineral resources have exhibited logistic Hubbert-type production trends in the past, but have transitioned to exponential growth during the last 10–15 years, precluding reliable estimates of reserves from within the framework of the logistic model. [13]

As extrapolating peak oil

Only limited substantive work is currently undertaken to examine how the concepts and assumptions of peak oil can be extrapolated so as to be applied to minerals in general. [14] [15] When extrapolating peak oil to account for peak minerals and then utilising this analytical 'peak framework' as a general model of resource exploitation, several factors must be taken into consideration:

In understanding how these factors are important for modelling peak minerals, it is important to consider assumptions concerning the modelling process, assumptions about production (particularly economic conditions), and the ability to make accurate estimates of resource quantity and quality and the potential of future exploration.

Cheap and easy in the past; costly and difficult in future

Peak production poses a problem for resource rich countries like Australia, which have developed a comparative advantage in the global resources sector, which may diminish in the future. The costs of mining, once primarily reflected in economic terms, are increasingly being considered in social and environmental terms, although these are yet to meaningfully inform long-term decision-making in the sector. Such consideration is particularly important if the industry is seeking to operate in a socially, environmentally and economically sustainable manner into the next 30–50 years. [8]

Benefits from dependence on the resource sector

In 2008–09, minerals and fuel exports made up around 56% of Australia's total exports. Consequently, minerals play a major role in Australia's capacity to participate in international trade and contribute to the international strength of its currency. [16] Whether this situation contributes to Australia's economic wealth or weakens its economic position is contested. While those supporting Australia's reliance on minerals cite the theory of comparative advantage, opponents suggest a reliance on resources leads to issues associated with 'Dutch disease' (a decline in other sectors of the economy associated with natural resource exploitation) and ultimately the hypothesised ‘resource curse’.

Threats from dependence on the resource sector

Contrary to the theory of the comparative advantage, many mineral resource-rich countries are often outperformed by resource-poor countries. [17] This paradox, where natural resource abundance actually has a negative impact on the growth of the national economy is termed the resource curse. After an initial economic boost, brought on by the booming minerals economy, negative impacts linked to the boom surpass the positive, causing economic activity to fall below the pre-resource windfall level.

Mineral supply and demand

The economics of a commodity are generally determined by supply and demand. Mineral supply and demand will change dramatically as all costs (economic, technological, social and environmental) associated with production, processing and transportation of minerals increases with falling ore grades. These costs will ultimately influence the ability of companies to supply commodities, and the ability of consumers to purchase them. It is likely that social and environmental issues will increasingly drive economic costs associated with supply and demand patterns. [18] [19] [20]

Economic scarcity as a constraint to mineral supply

As neither overall stocks nor future markets are known, most economists normally do not consider physical scarcity as a good indicator for the availability of a resource for society. [21] Economic scarcity has subsequently been introduced as a more valid approach to assess the supply of minerals. There are three commonly accepted measures for economic scarcity: the user costs associated with a resource, the real price of the resource, and the resource's extraction costs. These measures have historically externalised impacts of a social or environmental nature – so might be considered inaccurate measures of economic scarcity given increased environmental or social scrutiny in the mining industry. Internalisation of these costs will contribute to economic scarcity by increasing the user costs, the real price of the resource, and its extraction costs.[ citation needed ]

Demand for minerals

While the ability to supply a commodity determines its availability as has been demonstrated, demand for minerals can also influence their availability. How minerals are used, where they are distributed and how, trade barriers, downstream use industries, substitution and recycling can potentially influence the demand for minerals, and ultimately their availability. While economists are cognisant of the role of demand as an availability driver, historically they have not considered factors besides depletion as having a long-term impact on mineral availability. [22]

Future production

There are a variety of indicators that show production will become more difficult and more expensive. Key environmental indicators that reflect increasingly expensive production are primarily associated with the decline in average ore grades of many minerals. [23] This has consequences in mineral exploration, for mine depth, the energy intensity of mining, and the increasing quantity of waste rock.

Social context

Different social issues must be addressed through time in relation to peak minerals at a national scale, and other issues manifest on the local scale.

As global mining companies seek to expand operations to access larger mining areas, competition with farmers for land and for scare water is likely to increase. [20] [24] Negative relationships with near neighbours influence companies' ability to establish and maintain a social license to operate within the community. [25]

Access to identified resources is likely to become harder as questions are asked about the benefit from the regional economic development mining is reputed to bring.

See also

Related Research Articles

<span class="mw-page-title-main">Mining</span> Extraction of valuable minerals or other geological materials from the Earth

Mining is the extraction of valuable geological materials from the Earth and other astronomical objects. Mining is required to obtain most materials that cannot be grown through agricultural processes, or feasibly created artificially in a laboratory or factory. Ores recovered by mining include metals, coal, oil shale, gemstones, limestone, chalk, dimension stone, rock salt, potash, gravel, and clay. Ore must be a rock or mineral that contains valuable constituent, can be extracted or mined and sold for profit. including a valuable mineral Mining in a wider sense includes extraction of any non-renewable resource such as petroleum, natural gas, or even water.

<span class="mw-page-title-main">Natural resource</span> Resources that exist without actions of humankind

Natural resources are resources that are drawn from nature and used with few modifications. This includes the sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest, and cultural value. On Earth, it includes sunlight, atmosphere, water, land, all minerals along with all vegetation, and wildlife.

The Hubbert curve is an approximation of the production rate of a resource over time. It is a symmetric logistic distribution curve, often confused with the "normal" gaussian function. It first appeared in "Nuclear Energy and the Fossil Fuels," geologist M. King Hubbert's 1956 presentation to the American Petroleum Institute, as an idealized symmetric curve, during his tenure at the Shell Oil Company. It has gained a high degree of popularity in the scientific community for predicting the depletion of various natural resources. The curve is the main component of Hubbert peak theory, which has led to the rise of peak oil concerns. Basing his calculations on the peak of oil well discovery in 1948, Hubbert used his model in 1956 to create a curve which predicted that oil production in the contiguous United States would peak around 1970.

<span class="mw-page-title-main">Resource depletion</span> Depletion of natural organic and inorganic resources

Resource depletion is the consumption of a resource faster than it can be replenished. Natural resources are commonly divided between renewable resources and non-renewable resources. Use of either of these forms of resources beyond their rate of replacement is considered to be resource depletion. The value of a resource is a direct result of its availability in nature and the cost of extracting the resource, the more a resource is depleted the more the value of the resource increases. There are several types of resource depletion, the most known being: Aquifer depletion, deforestation, mining for fossil fuels and minerals, pollution or contamination of resources, slash-and-burn agricultural practices, soil erosion, and overconsumption, excessive or unnecessary use of resources.

<span class="mw-page-title-main">Non-renewable resource</span> Class of natural resources

A non-renewable resource is a natural resource that cannot be readily replaced by natural means at a pace quick enough to keep up with consumption. An example is carbon-based fossil fuels. The original organic matter, with the aid of heat and pressure, becomes a fuel such as oil or gas. Earth minerals and metal ores, fossil fuels and groundwater in certain aquifers are all considered non-renewable resources, though individual elements are always conserved.

<span class="mw-page-title-main">Economic geology</span> Science concerned with earth materials of economic value

Economic geology is concerned with earth materials that can be used for economic and/or industrial purposes. These materials include precious and base metals, nonmetallic minerals and construction-grade stone. Economic geology is a subdiscipline of the geosciences; according to Lindgren (1933) it is “the application of geology”. Today, it may be called the scientific study of the Earth's sources of mineral raw materials and the practical application of the acquired knowledge. The term commonly refers to metallic mineral deposits and mineral resources. The techniques employed by other earth science disciplines might all be used to understand, describe, and exploit an ore deposit.

<span class="mw-page-title-main">Exploitation of natural resources</span> Use of natural resources for economic growth

The exploitation of natural resources is the use of natural resources for economic growth, sometimes with a negative connotation of accompanying environmental degradation. Environmental degradation can result from depletion of natural resources, this would be accompanied by negative effects to the economic growth of the effected areas.

<span class="mw-page-title-main">Hubbert peak theory</span> One of the primary theories on peak oil

The Hubbert peak theory says that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve. It is one of the primary theories on peak oil.

<span class="mw-page-title-main">Peak oil</span> Hypothetical point in time when the maximum rate of petroleum extraction is reached

Peak oil is the hypothetical point in time when the maximum rate of global oil production is reached, after which it is argued that production will begin an irreversible decline. It is related to the distinct concept of oil depletion; while global petroleum reserves are finite, the limiting factor is not whether the oil exists but whether it can be extracted economically at a given price. A secular decline in oil extraction could be caused both by depletion of accessible reserves and by reductions in demand that reduce the price relative to the cost of extraction, as might be induced to reduce carbon emissions.

<span class="mw-page-title-main">Steady-state economy</span> Constant capital and population size

A steady-state economy is an economy made up of a constant stock of physical wealth (capital) and a constant population size. In effect, such an economy does not grow in the course of time. The term usually refers to the national economy of a particular country, but it is also applicable to the economic system of a city, a region, or the entire world. Early in the history of economic thought, classical economist Adam Smith of the 18th century developed the concept of a stationary state of an economy: Smith believed that any national economy in the world would sooner or later settle in a final state of stationarity.

Mineral economics is the academic discipline that investigates and promotes understanding of economic and policy issues associated with the production and use of mineral commodities.

<span class="mw-page-title-main">Uranium mining</span> Process of extraction of uranium ore from the ground

Uranium mining is the process of extraction of uranium ore from the ground. Over 50 thousand tons of uranium were produced in 2019. Kazakhstan, Canada, and Australia were the top three uranium producers, respectively, and together account for 68% of world production. Other countries producing more than 1,000 tons per year included Namibia, Niger, Russia, Uzbekistan, the United States, and China. Nearly all of the world's mined uranium is used to power nuclear power plants. Historically uranium was also used in applications such as uranium glass or ferrouranium but those applications have declined due to the radioactivity of uranium and are nowadays mostly supplied with a plentiful cheap supply of depleted uranium which is also used in uranium ammunition. In addition to being cheaper, depleted uranium is also less radioactive due to a lower content of short-lived 234
U and 235
U than natural uranium.

Peak coal is the peak consumption or production of coal by a human community. Global coal consumption peaked in 2013, and had dropped slightly by the end of the 2010s. The peak of coal's share in the global energy mix was in 2008, when coal accounted for 30% of global energy production. The decline in coal use is largely driven by consumption declines in the United States and Europe, as well as developed economies in Asia. In 2019, production increases in countries such as China, Indonesia, India, Russia and Australia compensated for the falls in the United States and Europe. However, coal's structural decline continued in the 2020s.

<span class="mw-page-title-main">Peak phosphorus</span> Point in time of the maximum phosphorus production

Peak phosphorus is a concept to describe the point in time when humanity reaches the maximum global production rate of phosphorus as an industrial and commercial raw material. The term is used in an equivalent way to the better-known term peak oil. The issue was raised as a debate on whether phosphorus shortages might be imminent around 2010, which was largely dismissed after USGS and other organizations increased world estimates on available phosphorus resources, mostly in the form of additional resources in Morocco. However, exact reserve quantities remain uncertain, as do the possible impacts of increased phosphate use on future generations. This is important because rock phosphate is a key ingredient in many inorganic fertilizers. Hence, a shortage in rock phosphate might negatively affect the world's food security.

<span class="mw-page-title-main">Predicting the timing of peak oil</span>

Peak oil is the point at which oil production, sometimes including unconventional oil sources, hits its maximum. Predicting the timing of peak oil involves estimation of future production from existing oil fields as well as future discoveries. The most influential production model is Hubbert peak theory, first proposed in the 1950s. The effect of peak oil on the world economy remains controversial.

Peak water is a concept that underlines the growing constraints on the availability, quality, and use of freshwater resources. Peak water was defined in 2010 by Peter Gleick and Meena Palaniappan. They distinguish between peak renewable, peak non-renewable, and peak ecological water to demonstrate the fact that although there is a vast amount of water on the planet, sustainably managed water is becoming scarce.

<span class="mw-page-title-main">Natural resource economics</span> Supply, demand and allocation of the Earths natural resources

Natural resource economics deals with the supply, demand, and allocation of the Earth's natural resources. One main objective of natural resource economics is to better understand the role of natural resources in the economy in order to develop more sustainable methods of managing those resources to ensure their availability for future generations. Resource economists study interactions between economic and natural systems, with the goal of developing a sustainable and efficient economy.

<span class="mw-page-title-main">Sustainability measurement</span>

Sustainability measurement are tools and methods that attempt to measure the degree of sustainability of processes, products, services, businesses and so forth. Sustainability is difficult to quantify, perhaps even immeasurable. The metrics used to try and measure sustainability involve the sustainability of environmental, social and economic domains, and are still evolving. They include indicators, benchmarks, audits, sustainability standards and certification systems like Fairtrade and Organic, indexes and accounting, as well as assessment, appraisal and other reporting systems. They are applied over a wide range of spatial and temporal scales. Some of the widely used sustainability measures include corporate sustainability reporting, Triple Bottom Line accounting, World Sustainability Society, and estimates of the quality of sustainability governance for individual countries using the Environmental Sustainability Index and Environmental Performance Index. The UN Human Development Index and the ecological footprints are methods to monitor sustainable development over time.

Ecoflation is a future scenario in "Rattling Supply Chains", a research report by the World Resources Institute and A.T. Kearney, released in November 2008. It is characterized by natural resources becoming scarcer and sustainability issues become more pressing, leading to an increase in the price of commodities. The effects of the increase in the price of commodities are felt by corporations suffering environmental costs being added to their usual cost of doing business. The concept of ecoflation focuses on having environmental externalities of business be the burden of the organization/business responsible, rather than costs being allocated to the general public. Ecoflation represents more accurate pricing of the true costs associated with business actions. The concepts also emphasized the necessity of businesses to be creative and innovative in order to adapt their business models and supply chains to remain competitive on the market. The idea is that the more a business integrates sustainability in their core business principle, the more success they will have.

References

  1. ↑ Mudd, G M, 2010, The Environmental Sustainability of Mining in Australia: Key Mega-Trends and Looming Constraints. Resources Policy, doi : 10.1016/j.resourpol.2009.12.001.
  2. ↑ Klare, M. T. (2012). The Race for What's Left . Metropolitan Books. ISBN   9781250023971.
  3. 1 2 Schodde, Richard C. "Exploration trends, finds and issues in Australia". External Presentations and Publications. MinEx Consulting. Retrieved 3 March 2016.
  4. 1 2 West, J (2011). "Decreasing metal ore grades: are they really being driven by the depletion of high-grade deposits?". J Ind Ecol. 15 (2): 165–68. doi:10.1111/j.1530-9290.2011.00334.x.
  5. ↑ Drielsma, Johannes A; Russell-Vaccari, Andrea J; Drnek, Thomas; Brady, Tom; Weihed, Pär; Mistry, Mark; Perez Simbor, Laia (2016). "Mineral resources in life cycle impact assessment – defining the path forward". Int J Life Cycle Assess. 21: 85–105. doi: 10.1007/s11367-015-0991-7 .
  6. ↑ Giurco, D., Prior, T., Mudd, G., Mason, L. and Behrisch, J. (2009). Peak minerals in Australia: a review of changing impacts and benefits. Prepared for CSIRO Minerals Down Under Flagship, by the Institute for Sustainable Futures (University of Technology, Sydney) and Department of Civil Engineering (Monash University), March 2010.
  7. ↑ Drielsma (2013). Mancini, L; De Camillis, C; Pennington, D (eds.). Security of supply and scarcity of raw materials. Towards a methodological framework for sustainability assessment (PDF). Luxemburg: European Commission, Joint Research Centre, Institute for Environment and Sustainability, Publications Office of the European Union. Retrieved 8 March 2016.
  8. 1 2 Giurco, D., Evans, G., Cooper, C., Mason, L. & Franks, D. (2009) "Mineral Futures Discussion Paper: Sustainability Issues, Challenges and Opportunities". Institute for Sustainable Futures, UTS and Sustainable Minerals Institute, University of Queensland.
  9. ↑ Tilton, J. & Lagos, G. (2007) "Assessing the long-run availability of copper." Resources Policy, 32, 19–23
  10. ↑ Cordell, D., Drangert, J.-O. & White, S. (2009) "The story of phosphorus: Global food security and food for thought". Global Environmental Change, 19, 292–305.
  11. ↑ Meinert, Lawrence D; Robinson, Gilpin R Jr; Nassar, Nedal T (2016). "Mineral Resources: Reserves, Peak Production and the Future". Resources. 5 (14): 14. doi: 10.3390/resources5010014 .
  12. ↑ Hubbert, M. K. (1956) Nuclear Energy and the Fossil Fuel. Drilling and Production Practice.[ ISBN missing ]
  13. ↑ Rustad, J. R. (2011) Peak Nothing: Recent Trends in Mineral Resource Production https://arxiv.org/abs/1107.4753
  14. ↑ Heinberg, R. (2007). Peak Everything: Waking Up to the Century of Declines, Gabriola Island, BC, Canada, New Society Publishers.[ ISBN missing ]
  15. ↑ Mudd, G. M. & Ward, J. D. (2008) "Will Sustainability Constraints Cause 'Peak Minerals'?" 3rd International Conference on Sustainability Engineering and Science: Blueprints for Sustainable Infrastructure. Auckland, New Zealand
  16. ↑ AusI MM (2006) Australian Mineral Economics, Carlton, The Australian Institute of Mining and Metallurgy.
  17. ↑ Auty, R. M. & Mikesell, R. F. (1998) Sustainable development in mineral economies, Oxford, Oxford University [ ISBN missing ]
  18. ↑ Esteves, A. M. (2008) "Mining and social development: Refocusing community investment using multi-criteria decision analysis". Resources Policy, 33, 39–47.
  19. ↑ Hamann, R. (2004) "Corporate social responsibility, partnerships, and institutional change: The case of mining companies in South Africa". Natural Resources Forum, 28, 278–90.
  20. 1 2 Jenkins, H. & Yakovleva, N. (2006) Corporate social responsibility in the mining industry: Exploring trends in social and environmental disclosure. Journal of Cleaner Production, 14, 271–84.
  21. ↑ Barnett, HJ, GM Van Muiswinkel and M. Schechter, (1981). "Are Minerals Costing More?" Int. Inst Appi. Syst. Anal., Work. Pap. No. WP-81-20. П ASA, Laxenburg, Austria
  22. ↑ Yaksic, A. & Tilton, J. E. (2009) "Using the cumulative availability curve to assess the threat of mineral depletion: The case of lithium". Resources Policy, 34(4): 185–94.
  23. ↑ Mudd, G. M. (2007) "Gold mining in Australia: linking historical trends and environmental and resources sustainability". Environmental Science & Policy, 10, 629–44.
  24. ↑ Hamann, R. (2003) "Mining companies' role in sustainable development: the 'why' and 'how' of corporate social responsibility from a business perspective". Development Southern Africa, 20, 237–54.
  25. ↑ Brereton, D., Moran, C. J., McIlwain, G., McIntosh, J. & Parkinson, K. (2008) "Assessing the cumulative impacts of mining on regional communities: An exploratory study of coal mining in the Muswellbrook area of New South Wales". ACARP Project C14047, Centre for Social Responsibility in Mining, Centre for Water in the Minerals Industry, and the Australian Coal Association Research Program.
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