MINERAL RESOURCE AVAILABILITY
MINERAL RESOURCE AVAILABILITY
and the
and the
FUTURE OF CIVILIZATION
FUTURE OF CIVILIZATION
John L. Berry
John Berry Associates, Austin,TX
©John Berry Assoc.
Slide 1 of 54
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MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY
and the and the
FUTURE OF CIVILIZATION FUTURE OF CIVILIZATION
John L. Berry
John Berry Associates, Austin,TX
©John Berry Assoc. Slide 1 of 54
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY
OUTLINE
Introduction and Manifesto
Minerals and the Law of Supply and Demand
• “Ore is where you find it”
• Deposit Types, Prices and Volumes
• Mineral processing and Price
• Implications of “Lumpy” Supply Curve
• Ore grade and external (environmental) costs.
Strategic Minerals:
• List of Strategic Minerals
• Uses of Strategic Minerals
• Growth rates of strategic minerals use.
• “Ore is where you find it” – haves and have-nots
• “War and Peace”: Strategies for security of supply.
Conclusions: Problems and Opportunities.
©John Berry Assoc. Slide 1 of 54
MANIFESTO ALL non-renewable resource extraction and use is harmful to the planet
Direct harm: Holes in the ground (Athabasca tar Sands)
Waste tips (Aberfan disaster, Wales)
Air pollution (Nkana smelter)
Water/groundwater disturbance and pollution
“Destructive “ use of water – can’t be returned.
Indirect Harm: Massive transport arteries (Land destruction)
Litter, junk, wastage (land & water destruction)
Megacities (land, esp. agric. land, destruction)
Air pollution, CO 2 and Methane.
Climate Change (probably)
Don’t blame ONLY the extraction companies: we are ALL responsible: DEMAND is the driver.
We do not know where lie the thresholds of permanent, irreversible,
runaway harm to Earth.
Thus, sooner or later, we have to completely REVAMP our CIVILIZATION to survive. MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY ©John Berry Assoc. Slide 1 of 54 350-ton Truck Athabasca Tar Sands, Ft.McMurray, Canada
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY IMPORTANT TERMS MINERAL RESOURCE: any naturally occurring non-living substance that is, has been, or may be useful to human beings RESOURCE BASE: The volume of rock in a given area that contains more than the Clarke , or average concentration of that mineral in the Earth’s crust. INFERRED RESOURCES: volumes of mineralization above some mini mum grade that are known to exist, or are hypothes- ized on geological grounds to exist, in a given area, but have not been measured. May be orders of magnitude less than resource base and greater than the quantities of known ore. INDICATED RESOURCES: mineral occurrences that have been sampled to a point where an estimate has been made, at a reasonable level of confidence, of their contained metal, grade, tonnage, shape, densities, physical characteristics. Generally orders of magnitude less than inferred resources in same area. LEAD: an area in which there are specific indications of valuable mineralization. PROSPECT : an area in which there are sufficient indications of the presence of ore to carry out a serious evaluation campaign (drilling, test mining). (It takes 10 – 100 LEADS to find 1 PROSPECT) DEPOSIT : a defined or partially defined body of mineralization, which may or may not be ore , depending on economic conditions. (It takes 10 -100 PROSPECTS to develop 1 DEPOSIT) GRADE: the percentage of the rock composed of valuable material. E.g. 62% Fe, 1% Cu, ORE: rock that can be mined for its mineral content at a profit. ORE GRADE: any grade above the lowest grade that can be mined at a profit. Varies with time and deposit. RESERVES: thoroughly explored and characterized volumes of ore (rarely amounts to more than a few years’ extraction, because it costs a lot of money to convert resources to reserves). “Peak” people and many economists do not understand the difference between Resources and Reserves. ©John Berry Assoc. Slide 5 of 42
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY
©John Berry Assoc.
Slide 1 of 54
LIFE EXPECTANCIES OF WORLD RESERVES FOR SELECTED COMMODITIES Source: Tilton, 2001
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY ©John Berry Assoc. Slide 1 of 54 (^) SOURCE: Tilton, 2001, who used Brobst & Pratt, 1973; Lee & Yao, 1970 for the Clarke) LIFE EXPECTANCIES OF RESOURCE BASE for SELECTED COMMODITIES Notes: (1) estimates of the resource base for coal, oil and gas are meaningless: the USGS estimates “ultimate recoverable resources” instead, but these estimates can change with technology. (2) the life expectancies are meaninglessly large, since we will never recover (many) commodities from “average rock”. The energy costs alone would be too high!
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY ©John Berry Assoc. Slide 1 of 54 PROBLEMS WITH THE PHYSICAL AND ECONOMIC VIEWS
- The Gray-Hotelling Theory is nonsense because it ignores new discovery,
technology, and substitution (e.g. Tin, Lead).
- (^) The Economic Approach has severe limitations, stemming from:
- (^) Internalization of external environmental damages:
We have not found a good way to internalize external costs.
Taxation vs regulation vs markets in “credits”
2. Access to the earth’s crust for exploration
The Earth is not infinite, AND
Cities, farms, Wilderness Areas & Parks put a lot of it out of reach
3. Worldwide trade access to raw materials and,
Deposit distribution is “lumpy” – haves and have nots.
Some people don’t play by our rules (e.g. China, Zimbabwe, Congo)
4. Prevention of market control by either sellers or buyers.
Mineral deposits are log-normally distributed
There are many more low-grade deposits than high grade There are many more small deposits than large ones
Log-normal distribution and capital intensive operations give opportunities
for market control by companies (DeBeers) & countries (China)
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY ©John Berry Assoc. Slide 1 of 54 MORE PROBLEMS WITH THE “ECONOMIC VIEW” OF MINERAL SUPPLY Log-normal distribution curve and high capital requirements also mean that the supply curve gets increasingly “lumpy”, causing major price troughs and spikes.
- Technology sometimes creates more problems than it solves Many more elements used for very specific properties Huge capital investments required for low-grade deposits Exploration “bubbles”.
- Substitution is not always possible (e.g. Copper vs Silver)
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY ©John Berry Assoc. Slide 1 of 54 800 1600 2400 3200 4000 4800 5600 6400 sq.mi. COMPETITION FOR LAND
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY ©John Berry Assoc. Slide 1 of 54 “ORE IS WHERE YOU FIND IT” “If it isn’t there you won’t find it”
- (^) Ore deposits are rare
- (^) If you make a mineral deposit inaccessible (e.g.ANWR), you can’t replace it.
- (^) There has to be favorable geology
A porphyry copper deposit will never be found in the Permian Basin
You can’t move a deposit from where you don’t want it to somewhere else.
(e.g. Crested Butte, Green River Oil Shale, ANWR, etc.)
Some countries have it all, some have none ( Strategic Minerals )
- (^) Exploration requires access to lots of land
Rule of thumb: 100 leads > 10 prospects >1 mine
(This also implies a need for large companies)
It usually takes 5 exploration campaigns
to delineate a mineable deposit.
- (^) Mines are Ugly and Destroy Lots of Land Thus, conflicts are inevitable (NIMBY). DiaVik Diamond Mines, NWT, Canada
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY ©John Berry Assoc. Slide 1 of 54 STRATEGIC MINERALS Data: USGS, Mineral Commodity Summaries, 2011.
Definition: Minerals essential to the national
defense for which during war we are
wholly or partly dependent upon sources
outside the continental limits of the
United States
Most critical: Platinum Group Metals(PGM),
NAS (2007) Rare Earths (REE) (La>Nd>Dy>Tb) Indium, Manganese Niobium (Columbium) (ColTan) also Beryllium http://www.helium.com/items/ Uranium 1949042-what-are-strategic-minerals Chromium Cobalt Tungsten (pers. knowl.) Helium
Stockpiles:
PGM Platinum: 4.704 mt Palladium: 16.715 mt Iridium: 0.784 mt Manganese 1,700,000 metric ton Tantalum 635 mt Bauxite (Aluminum ore) 10,500,000 mt Chromium 1,400,000 mt Tin 59,993 mt Cobalt 189 mt
Petroleum
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY STRATEGIC MINERALS (cont)
- (^) “Ore is where you find it”: Mineral Distribution is SPATIALLY “LUMPY”
- (^) Thus, different mineral commodities are Strategic for different countries
(e.g. China and copper, chromium, platinum)
- (^) Strategic Mineral Endowment and War:
- (^) In 1925 the American economic geologist C.K.Leith predicted WWII and the line-up
because the USA, the USSR, The British and French Empires were virtually self-sufficient in mineral
resources, but Germany, Italy, and Japan were lacking in all but a few. These countries were lacking,
in particular, strategic minerals – the fossil fuels, copper, manganese, nickel, etc.
(C.K.Leith. Political Control of mineral resources, Foreign Affairs, July 1925.)
- (^) Strategic Mineral Crises and Consequences:
Threatened US Embargo of Petroleum to Japan - Pearl Harbor (Butts, et al)
USA/EU Sanctions against Iran, 2011 - Blockade of Hormuz Straits??
Tungsten, Tin - scarce after Japan conquered Malaya, WWII
(Arab Petroleum Embargo, 1973-4 – Runaway inflation in western countries)
Dem Rep Congo civil wars - Cobalt, ColTan supply interruptions
Soviet embargo of Mn, Cr during Berlin & Korea – Threat of war by USA
©John Berry Assoc. Slide 1 of 54
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY ©John Berry Assoc. Slide 1 of 54 CHINA (cont.)
- (^) High growth rates essential for Communists to retain legitimacy
- (^) The Chinese people are seeking affluence on par with the industrial West.
- (^) Chinese consumption patterns are driving world commodity markets. In 2009, 35 % (37.7Mt) of world’s primary Aluminum production (#1 in world) consumer of primary aluminum.(Halpern 2010).
- (^) China’s supplies of minerals such as Cr, Pt and Cu are inadequate (i.e. strategic for China), Between 2002 and 2010 the price of copper rose from $0.70/lb to over $4.00/lb (Blas, 2010).
- China has high quality reserves of, and exports, tungsten, REEs, tin, antimony and zinc 47% of the 19 minerals on which the USA is 100% import dependent come from China In 2002 mineral imports and exports accounted for nearly 20% of China’s total trade (CIMG 2003).
- China views the world financial and trade systems as creations of the West and does not trust
them to supply its needs.
- (^) China’s “Go Out Strategy” to reduce its geopolitical vulnerability to mineral and energy import cut off: Pursuing equity ownership of fuel and mineral producing companies & deposits worldwide
Approx. $3 trillion in foreign exchange reserves to support this strategy.
In 2008 China offered $18.5 bn for UNOCAL (which owned the Mountain Pass, CA, REE mine) $19.5 bn for a stake in the 2nd^ largest minerals company, Rio Tinto. In 2009 China’s National Oil Companies established approximately $50 billion in energy agreements with Brazil, Russia, Venezuela and Kazakhstan (Jiang 2009).
- (^) China’s growing control of some important mineral resources will enable it to
deny mineral imports to the United States or other countries for political reasons.
- (^) China demonstrated that it will do that when it embargoed REE exports to Japan in 2010 (Bradsheur 2010).
- (^) Rare Earth Sources
Mines: Bayan Obo REE-Fe-Nb deposit, Inner Mongolia
Bayan_Obo type : lenses in metamorphic rocks –NOT a Carbonatite Discovered as an iron deposit in 1927. REE minerals were discovered in 1936 Nb-bearing ores in the late 1950s. Reserves > 40 million tons of REE minerals grading 3-5.4% REE, 1 million tons of Nb2O5 and 470 million tons of iron. The deposit also contains 130 million tons of Fluorite, making it the world's largest fluorite deposit. Contains 70% of world's known REE reserves.
- (^) Export Quota Reductions began 2006
- (^) Used punitively against Japan 2010.
- (^) Therefore, REE consumers are relocating to China to ensure supply security.
(Causing destruction of supply chain and multiplication of job losses in west)
MINERAL RESOURCE AVAILABILITYMINERAL RESOURCE AVAILABILITY
©John Berry Assoc.
Slide 1 of 54
CHINA AND REE From Butts et al.