A new way to look at the value of minerals

It makes for interesting reading at a time when Australia is debating the need for a profit-based tax on mining to more “fairly” distribute the value being extracted from non-renewable resources.
The report said that as a mineral dependent economy facing the challenges of adapting to carbon constraints and a new tax structure, a comprehensive assessment of the industry’s current and future role in the Australian economy is imperative.
Authors of the “Peak Minerals in Australia: A review of changing impacts and benefits”, explored the questions of the future global need for minerals and metals; how to ensure that benefits outweigh costs; and what to do with the proceeds of mining to sustain long-term benefit.
The report suggested that peak oil offers a useful conceptual model for understanding the impact of going from ‘easier and cheaper’ to ‘complex and expensive’ resource processing, and critically, to planning a transition to new ways of providing energy services.
‘Peak minerals’ occurs at the point when mineral production peaks and begins to decline - sometimes occurring at numerous times during the history of production. For example, gold has had multiple peaks due to the development of new technologies.
Much of the evidence to date suggests Australian minerals are unlikely to run out in the near future, but it is becoming more difficult to obtain and produce the quantities and qualities of product demanded by the market. The report follows that the consequences of more difficult production (environmental and social impacts) are also increasing.
The peak concept has largely been applied in the context of general resource depletion and physical scarcity (particularly for peak oil). However, the report said the concept may hold greater significance in the minerals context when applied in relation to the consequences of continued extractive exploitation up to and post-peak.
“With greater environmental and social impacts from mining come greater costs for the mining industry to minimise these impacts. Ultimately, peak production may occur because of the economic scarcity of minerals, rather than physical scarcity alone,” the report stated.
The report concluded that Australia is heavily dependent on mining exports and should develop strategies to ensure long-term national benefits from minerals along social, economic and environmental lines.
For a copy of the report visit: www.isf.uts.edu.au/publications/giurcoetal2010peakmineralsreview.pdf