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What are minerals?Why is mining important?Geography of miningDemand for mineralsReserves and resources


Metals are chemical elements that conduct electricity .

In nature, they occur in the form of minerals, which are chemical compounds

containing metals and with specific chemical and physical characteristics .

Minerals occurring in sufficient quantity and grade to be economically exploitable

are called ores .



Aluminium: Transport, packaging, construction, high tension power

lines Copper:Electrical conductors, construction,

transportGold:Investment, jewellery, electronicsLead:Batteries, pigments, ammunition,

radiation shieldingNickel:Stainless steels, electroplatingPlatinum:Jewellery, catalystsSilver: Electronics, sterlingwareTin: Tinplate in packaging, solder,

pigmentsZinc: Galvanizing, brass and bronze


Metal Share in total value of metallic mineral

production % (estimates)

Volume of output (metal content in

kilotonnes)

Iron ore 21.9 800 000Copper 18.0 16 900

Gold 13.5 3Nickel 4.9 1 300

Zinc 3.4 10 300Bauxite 1.5 31 000Others 36.8 ..

All metals 100.0 ..


Around twenty developing countries depend on mining for more than half their export income –

and the number is increasing Ease of entry into mining

No need to mobilize domestic capitalEasy access to technologyNo need for government financed infrastructureEasy market accessTransparent and simple standardsMinimal need for marketing

Scale of revenues The world’s largest mines generated annual sales of

more than US$ 12 billion, annual profits of more than US$ 8 billion in 2006-2007

Governments can easily appropriate rents



27%

6%2%

51%

14% Metals

Industrial minerals

Diamonds

Coal & uranium

Crushed rock

YEAR 2005 TOTAL ~ 910 billion USD

Source: Raw Materials Group, Stockholm 2006.


18%

29%

23%

11%6%

4%2%7%

Gold

Iron ore

Copper

Nickel

Zinc/lead

PGMs

Bauxite

Other

YEAR 2005 TOTAL ~ 250 billion USD



GLOBAL MINING – GEOGRAPHY 1990

1. China 10.1%

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1990 1995 2000 2003 2004 2005 2006

Largest 3 largest 10 largest

% of total value of non-fuel mineral productionat the mine stage



Asian minerals and metals demand has grown very rapidly and Asian countries have accounted for almost all of the increase in demand over the

past five yearsChina is now the world’s largest steel producer,

steel consumer, steel exporter and iron ore importer, the world’s third largest iron ore

producer and the third largest steel importerMetals use per capita is still very low in

countries such as China and India, but they are still at a stage where metals consumption

relative to GDP is rising and large populations make them more than significant forces on the

market



Demand will continue to be strongly linked to Asian growth and high rates of

increase are expected Once the recovery from the recession is

completed, capacity is expected to just keep up with growth in demand in the

long term (next 8-10 years)A large share of output growth will take

place in developing countries (Africa and Latin America), where there is now strong

investor and exploration interest


Metal Share of value added% ,Gold 100Platinum Group Metals 100Tin 83Copper 77Lead 77Nickel 70Zinc 63Cobalt 33Bauxite/aluminium 9




Reserves Resource baseAluminium 81 1065

Copper 22 736Iron 65 886

Lead 17 607Nickel 30 526Silver 15 731

Tin 28 759Zinc 20 778


ASSUMPTIONSMetals use has

increased by 5 % annually in the past

and continues to do so until year 5 ;

from year 6 to year 15, metals use grows at an

annual rate of 20 ;% from year 16 to year 24

it grows at 10 ;% from year 25 to 35 it is

constant ;from year 36 onwards it

declines by 2 % per yearThe average life of

metal containing products is 15 years

67 % of the metal in a product can be

recycled .

Hotelling: Mineral prices should rise at the same annual rate as the rate of

interest – if the price increase is lower, then more should be produced, if higher,

resources should be left in the ground However, technology changes and new

resources are discoveredOver most of human history, real mineral

prices have declined – technological progress has offset depletion

Is the trend about to change?


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