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The Pace of Mineral Depletion in the United States
Abstract
A simple test compares the pace of copper, oil, and coal depletion in the US with the theoretically optimal pace. The royalties that would have covered past copper, oil, and coal quality depeltion costs are generally in close agreement with market royalty payments. This agreement suggests that the pace of mineral depletion in the US has remained reasonably close to the theoretical optimum. Historical evidence indicates that the lack of future markets and much uncertainty lead not to myopic industry behavior, but to farsighted decision making. Long-run cycles and peaks in the cycles of royalties, then, may be used to predict long-run cycles in the pace of depletion. 42 references, 2 figures, 6 tables.
... The current pace of global development has led to increases in the demand for minerals and their by-products [16]. This growth has resulted in rapid depletion of quality mineral ores to the extent that most mineral ores are no longer found in economically viable deposits [30]. ...
The quest for quality mineral resources has led to the development of many technologies that can be used to refine minerals. Biohydrometallurgy is becoming an increasingly acceptable technology worldwide because it is cheap and environmentally friendly. This technology has been successfully developed for some sulphidic minerals such as gold and copper. In spite of wide acceptability of this technology, there are limitations to its applications especially in the treatment of non-sulphidic minerals such as iron ore minerals. High levels of elements such as potassium (K) and phosphorus (P) in iron ore minerals are known to reduce the quality and price of these minerals. Hydrometallurgical methods that are non-biological involving the use of chemicals are usually used to deal with this problem. However, recent advances in mining technologies favour green technologies, known as biohydrometallurgy, with minimal impact on the environment. This technology can be divided into two, namely bioleaching and biobeneficiation. This review focuses on Biobeneficiation of iron ore minerals. Biobeneficiation of iron ore is very challenging due to the low price and chemical constitution of the ore. There are substantial interests in the exploration of this technology for improving the quality of iron ore minerals. In this review, current developments in the biobeneficiation of iron ore minerals are considered, and potential solutions to challenges faced in the wider adoption of this technology are proposed.
... Despite a 20% decline in the 1970s the marginal product-weighted EROI for coal shows no long-term decline. The decline in all three indices in the 1970s is consistent with the decline in the quality of the coal resource base as reflected by smaller seam thickness in underground mines and greater overburden-to-seam-thickness in surface mines (Dale, 1984; Gelb, 1984). The decline in the EROI for coal is also caused by the increase in energy use caused by regulations that have internalized some of the environmental and human health costs associated with the extraction of coal. ...
The goal of net energy analysis is to assess the amount of useful energy delivered by an
energy system, net of the energy costs of delivery. The standard technique of aggregating
energy inputs and outputs by their thermal equivalents diminishes the ability of energy
analysis to achieve that goal because different types of energy have different abilities to do
work per heat equivalent. This paper describes physical and economic methods of calculating
energy quality, and incorporates economic estimates of quality in the analysis of the
energy return on investment (EROI) for the extraction of coal and petroleum resources in
the U.S. from 1954 to 1987. EROI is the ratio of energy delivered to energy used in the
delivery process. The quality-adjusted EROI is used to answer the following questions: (1)
are coal and petroleum resources becoming more scarce in the U.S.?, (2) is society’s
capability of doing useful economic work changing?, and (3) is society’s allocation of energy
between the extraction of coal and petroleum optimal? The results indicate that petroleum
and coal became more scarce in the 1970s although the degree of scarcity depends on the
type of quality factor used. The quality-adjusted EROI shed light on the coal-petroleum
paradox: when energy inputs and outputs are measured in thermal equivalents, coal
extraction has a much larger EROI than petroleum. The adjustment for energy quality
reduces substantially the difference between the two fuels. The results also suggest that
when corrections are made for energy quality, society’s allocation of energy between coal
and petroleum extraction meets the efficiency criteria described by neoclassical and biophysical
economists.
... The increase in surface mining requires moving to lower grade surface deposits as measured by the generally increasing overburden ratio in U.S. surface mines. The stripping ratio (tons of waste per ton of ore extracted) in metal, nonmetal, and coal surface mines in the U.S. has increased sharply in the last half-century (Dale, 1984;Gelb, 1984). The decline in resource quality increases the land required to produce a ton of coal which, in turn, increases the amount of degraded land that must be reclaimed and the quantity of water used in reclamation. ...
The concern about natural resource scarcity has traditionally focused on changes in the cost, quality, and availability of energy and material inputs to the production process. Ecological economists are increasingly concerned with an additional aspect of scarcity — the growing scarcity of environmental services that sustain human economic existence. The analysis here explores economic and biophysical indicators of natural resource scarcity. The indices are quantified for the extraction of petroleum resources in the U.S. The economic indicators are the market price of crude oil and natural gas, the unit (capital plus labor) cost of extraction, and the average total cost of extraction (dollars per Btu extracted). The biophysical index is the energy return on investment (EROI). All indices show a trend of decreasing and then increasing scarcity of petroleum at the wellhead. The economic and biophysical cost indices indicate that the 1960s marked the transition from a decreasing to an increasing cost resource base. The market price of oil is influenced by nonscarcity forces to the extent that it does not reflect that turning point. The increase in the energy cost of petroleum extraction is in stark contrast to the changes in the energy cost of producing other goods and services in the U.S. economy, which generally declined in the last 20 years. The increase in the energy cost of extraction has important economic implications. From 1954 to 1987, the fraction of total industrial output in the U.S. generated in the petroleum extraction sector declined almost 40%. Despite the declining share of its output, the petroleum industry's share of direct energy use (fossil fuels and electricity) generally increased in that period. The result is a clear increase in the amount of energy diverted from other potential uses to secure an additional unit of output in the petroleum sector. None of the indicators reflect to any degree substantial nonmarketed environmental cost of petroleum extraction. The biophysical perspective, however, emphasizes the coupling between physical scarcity and the demands that extraction places on renewable resources and ecosystem services. The extraction of one barrel-of-oil-equivalent, for example, requires 250 gallons of fresh water and emits more than 60 pounds of CO2, and these costs are increasing.
An optimal control model of exhaustible resources is used to clarify the long run relationship between mineral rent and depletion cost at the industry level. A standard first order condition of the time rate of change of rents is reformulated to reveal that rent data may be used to help forecast the rise in extraction costs resulting from resource depletion.
This application of the theory of exhaustible resources is illustrated using historical mineral industry rent and extraction cost data. A forecast of U.S. coal extraction costs, following the method proposed in this paper, suggests that future rates of extraction cost increases will be similar to rates experienced in the past.
This paper analyzes the relationship between rent and resource depletion occurring as a result of increasing costs (i.e., economic exhaustion). Economic exhaustion is used as the framework because it is more representative of natural resources markets than a Hotelling-type physical exhaustion model. Rent is measured as the discounted present value of future marginal cost increases resulting from today’s extraction. A simple model with exhaustion rents and smoothly increasing costs shows that there is no systematic relationship between rents and exhaustion. Empirical analysis, in a simulation mode, is then undertaken to examine rents, prices, and exhaustion in the U.S. coal market over the period 1985 to 2075. These empirical results also show that rising rent is not a leading indicator of exhaustion. Thus, detailed investigations of both geologic and economic conditions are required for successful forecasts of an impending resource shortage.
Ziel meines Beitrags ist, eine von der Hauptrichtung der Rententheorie abweichende politökonomische Begründung der Unausweichlichkeit von Renten zu liefern, auf die die These der strukturierenden Rolle von Renten für internationale Beziehungen aufgebaut werden kann. Sie zielt darauf, Rente als Resultat der Bedingungen des Übergangs zum Kapitalismus und als Ergebnis ungleicher Entwicklung so abzuleiten, daß Rente als Gefährdung einer liberalen Weltwirtschaft belegt werden kann.
This is the latest version of a document periodically produced since the early 1980's. It combines an outline of the field of natural resource and environmental economics with a bibliography of 945 references. In the past, this reading list has been used in a variety of ways: as a guide to the literature for graduate students in departments of economics which do not offer a Ph.D.-level survey course of the field; as a resource for Ph.D. students who wish to develop a directed readings course in the field; and as an aid to students at the masters and undergraduate levels who wish to explore selected areas in greater depth.
The relationship between the discount rate and the rate of resource extraction is central to the economics of depletion. Neher and Farzin have shown this relationship to be of ambiguous sign for capital intensive minerals because a higher discount rate, while lowering the value of the resource stock and thus encouraging extraction, also increases the capital cost of that extraction. This paper employs a simulation analysis to assess the relative importance of these anticonservation and disinvestment effects for the important copper and bituminous coal industries. At the actual estimated discount rates for these minerals we find that the two effects approximately balance, leaving extraction approximately neutral with respect to the rate of discount. This in turn negates the common presumption of underconservation by mineral firms with discount rates exceeding the social rate of discount.
The traditional theory of exhaustion is revised to allow for long run capital mobility. This model is extended to include the impact of cumulative environmental damages on the optimal path of resource use. Models and optimal markets are then analyzed for cases where minerals are available over a continuum of quality and where recycling ameliorates inevitable exhaustion of non-renewable resources. Finally, the impact of technological change on long run trends in mineral prices is examined.