In academics, the domain involving extensive research studies, technical surveys, detailed statistical analysis, and education regarding the economics, regulations, and policies dealing with the complete lifecycle of mineral commodities is known as mineral economics. The complete lifecycle involves all the steps from discovery to planning, extraction, utilization, recycling wastes, and eco-friendly disposal of the remains.1
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By correlating resource availability and utilization with industrial needs, mineral economics enables efficient management of mineral resources to ensure a seamless supply for all major industries.
Key Areas of Focus in Mineral Economics
Researchers have identified several key focus areas critical for mineral economics study, including the detailed analysis of worldwide mineral markets, demographic mineral exploration and extraction, availability of mineral resources for industries, mineral pricing, sustainability practices, eco-friendly policies, and regulatory impacts.2
Mineral Market Analysis: A Key Aspect of Mineral Economics
Mineral economics focuses on the comprehensive study of the evolving global mineral market. The comprehensive market analysis during mineral economic studies involves an in-depth study of major minerals, their raw materials, significant market players, global mineral trends, and regional analysis of mineral resources.3
Why is Mineral Exploration and Extraction a Key Aspect of Mineral Economics?
Mineral economics focuses on mineral exploration. This process is not confined to finding precious minerals, drilling practices, and extracting mineral commodities; rather, it is a complex multi-step process.
The steps include performing comprehensive research and detailed analysis, studying the demographic areas to identify key mineral availability, performing data analysis to highlight key insights, and selecting appropriate extraction techniques, such as drilling and sampling, to confirm the economic viability of the mining project.4
During the mineral exploration process, a dedicated team of experts ensures the compliance of mineral exploration with regulatory frameworks, ownership of mineral rights, proper calibration of mineral equipment, and obtaining required permissions from the authorities.5
Mineral Pricing: A Key Aspect of Mineral Economics
Mineral economics involves the study of mineral pricing, which shows that the price of minerals is not always fixed. In the case of a shortage of a mineral resource in a market economy, an increase in mineral prices is observed. In this way, the demand and supply of minerals are key factors in mineral pricing during mineral economics.6
The mineral pricing process depends on various factors, such as the extraction cost, demand, and supply. Government regulations and the global economy also play a critical role, as strict laws for mineral extraction in a declining global economy will cause a surge in the price of minerals.7 Experts can make better forecasts regarding mineral availability and price by studying market pricing, demand, and supply of commodities and historical pricing trends.
Role of Mineral Economics in Global Trade and Sustainable Development
Mineral economics is crucial for global trade and social development worldwide. Mineral resources are fundamental raw materials for industrial applications and are crucial in supporting sustainable economic development.
When a country's mineral resources are easily accessible, it benefits economic development as exports support growth. However, heavy reliance on external resources can hinder economic stability.
Historical trends and economic analyses of developed nations show that countries with strong economies should prioritize strategic reserves of mineral resources and implement regulations that protect these resources and encourage their export in international markets.8
Applications and Real-World Implications of Mineral Economics
Mineral economics plays a key role in real-world projects, and its principles are applied at each step to ensure the profitability and viability of minerals-related projects. Experts use mineral economics to study the viability of mining projects in three different forms: scoping, pre-feasibility, and feasibility studies.
Scoping studies
Scoping deals with financial predictions at the earlier phase of the mining projects. It can be thought of as a preliminary economic assessment (PEA). These are comparative planning studies done by companies with about 30 to 50 percent accuracy.
Pre-feasibility studies
Experts conduct this intermediate stage to estimate the viability of new mining projects considering both the financial and technical goals. It involves an in-depth analysis that presents and correlates various economic and technical options, advancing the study to the stage of selecting the preferred mining method.
Unlike a scoping study, the pre-feasibility study is more detailed and can serve as due diligence to decide if a full feasibility study should proceed and identify project areas that need further exploration.
The Feasibility Study Using Mineral Economics Principles
The feasibility study is the most detailed study during the planning and engineering evaluation phase. It strongly correlates with engineering technology, available knowledge, and resources to economic parameters to determine the project's success before extensive investments.
This comprehensive study is the basis for the economic evaluation of mining projects. It plays a key role in improving the focus and maximizing the profit of mineral exploration and mining projects.9
A prime example is Gen Mining Limited, which conducted an economic analysis of its Marathon Palladium-Copper Project in Northwestern Ontario. The mineral economics experts performed feasibility studies and found that a change in project designs is necessary.
The company is currently in the permitting phase and working to obtain government approvals to commence construction. It has also engaged a construction-focused engineering firm to help optimize the project's design. This collaboration aims to improve constructability, reduce initial capital expenditures, and lower operating costs during the operational phase.
The profits estimated in the first feasibility study were unconvincing, so the company experts utilized economic geology principles to perform a new feasibility study. It is estimated that, with efficient mineral resource management, an internal rate of return of 25.8% will be achievable with an estimated 158,000 ounces of gold. This is an excellent application of mineral economics principles to determine and optimize mining operations and contribute to efficient and sustainable mineral development.
Recent Trends and Sustainability in Mineral Economics
With recent developments in sustainable mining processes, promoting sustainable and net-zero mining processes has become an integral part of mineral economics. Experts are currently focusing on selecting and implementing eco-friendly mining and mineral exploration processes during feasibility studies.
Experts are harnessing artificial intelligence (AI) technology, promoting sustainable operations and safety, boosting productivity, and playing a key role in mineral resource management. Furthermore, there has been a focus on urban mining or recycling, which is a key player in reducing waste and greenhouse gas emissions. Urban mining has also reduced supply chain problems and optimized profits during mineral exploration.11
Conclusion
Since the focus on sustainability, mineral economics principles have been applied to improve productivity and promote sustainable and renewable energy applications. With the implementation of digital operations, the accuracy of feasibility studies during the conceptual phase of mining projects has improved significantly. Undoubtedly, the mining industry's future looks positive, and we can expect to see a boost in mineral exploration projects.
References and Further Reading
- Gordon, R. et al. (2008). Mineral economics: Overview of a discipline. Resources policy, 33(1), 4-11. Available at: https://doi.org/10.1016/j.resourpol.2008.01.003
- Luleå University of Technology (2024). Mineral Economics. [Online]. Available at: https://www.ltu.se/en/research/research-subjects/economics/mineral-economics. [Accessed on: November 06, 2024].
- Hivo. (2023). A Comprehensive Mineral Market Analysis. [Online]. Available at: https://hivo.co/blog/a-comprehensive-mineral-market-analysis [Accessed on: Novermber 06, 2024].
- DW Insights. (2024). Understanding Mineral Exploration. DW Insights: Mineral Rights. [Online]. Available at: https://www.dwenergygroup.com/understanding-mineral-exploration/ [Accessed on November 06, 2024].
- Resources Victoria (2024). Understanding minerals exploration. Community, and Land Use. [online]. Available at: https://resources.vic.gov.au/community-and-land-use/understanding-exploration [Accessed on November 06, 2024].
- Wellmer, F. et al. (2017) Peak minerals: What can we learn from the history of mineral economics and the cases of gold and phosphorus?. Miner Econ. 30, 73–93. Available at: https://doi.org/10.1007/s13563-016-0094-3
- MAJR Resources (2024). How is the price of the mineral determined for the purpose of royalty payment? [Online]. Available at: https://majrresources.com/how-is-the-price-of-the-mineral-determined-for-the-purpose-of-royalty-payment/. [Accessed on November 07, 2024].
- Xi, X. et al. (2020). Impact of the global mineral trade structure on national economies based on complex network and panel quantile regression analyses. Resources, Conservation and Recycling, 154, 104637. Available at: https://doi.org/10.1016/j.resconrec.2019.104637
- Al-Bakri, A. et al. (2023). Evaluation studies of the new mining projects. Open Geosciences. 15(1). 20220466. Available at: https://doi.org/10.1515/geo-2022-0466
- Fernandes, S. (2024). Generation Mining Proceeds with Project Refinements for the Marathon Palladium-Copper Project. Chem Analyst. [Online]. Available at: https://www.chemanalyst.com/NewsAndDeals/NewsDetails/generation-mining-proceeds-with-project-refinements-for-the-marathon-palladium-28255 [Accessed on November 08, 2024].
- PWC (2024). Mine 2024: 21st edition_Preparing for impact. Insights. [Online]. Available at: https://www.pwc.com/gx/en/industries/energy-utilities-resources/publications/mine.html [Accessed on November 08, 2024]
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