Mining Explained

Mining Explained

An introduction to mining, or a place to refresh your understanding of the basic industry rules of thumb.

THE total number of mines in the world is huge. However, the exact figure depends on how a mine is defined. If small-scale mines are excluded (of which there are 8,300 in China alone) and only industrial-scale operations are counted, there are some 2,500 metal-producing mines.

The average life of these mines varies dramatically a gold mine averages some eight years whereas a copper mine can soldier on for close to 30 years. In South Africa there are several diamond mines that have produced for 50 years, and are expected to produce for another 50 years.

No reliable figures exist for industrial minerals and aggregate quarries. However, in the US, there are some 100 metal mines, 900 mines and quarries producing industrial minerals, and 3,320 quarries are producing crushed rock.

Assuming that there is a similar relationship elsewhere, there would be some 25,000 mines in the world producing industrial minerals, and almost 100,000 quarries producing aggregates for construction purposes.

The existence of mineable deposits and their frequency and abundance in nature, corresponds closely with the chemical composition of the earth's crust.

Silver, for instance, occurs in nature 19 times as frequently as gold. If we imagine a pyramid with high grade at the apex and low grade at the base, then we can easily see that as we lower the grade that is economic to mine, the available reserve tonnages goes up.

We should not be surprised to find the world is awash in low-grade copper deposits that also include small amounts of gold and silver.

The fact is that mineable mineral deposits are few and far between, and still fewer people will bring a deposit into profitable production. The chances of bringing a raw prospect into production have been estimated at 1 in 5,000-10,000. Some deposits eluded recognition for several decades, despite intermittent exploration of the same showings by several companies and, in many cases, claims were allowed to lapse.

There are many instances in which prospectors have revived old prospects and induced companies to drill just one more time before a discovery was made.

Resource development in the 20th century has been marked by the growth of large-scale mining and technological development that enabled the use of economies of scale.

Back in 1887 the development of the cyanide process made possible the mining and recovery of lower-grade gold-bearing ores and caused South Africa to overtake the US as the world's leading gold-producing nation.

Over the next 100 years, technology permitted low-gold grade ores to be mined ever more cheaply. Indeed, the rise in metals consumption during the past hundred years was been little short of awesome.

Most dramatically, the mined output of bauxite (the raw material for alumina, and hence the new metal aluminium) soared from barely 100,000 t/y (tonnes per year) in 1900 to over 125 Mt/y (million tonnes per year) by the end of the 20th century.
The rate of copper mined between 1900 and 1999 grew from around 0.5 Mt/y to 12 Mt/y. The rise in precious metals output has also been noteworthy, with gold production, for example, rising during the 100-year period from 400 t/y (12.9 Moz) to 2,500 t/y (80.4 Moz).

The total volume of ore produced globally is almost 17,000 Mt, excluding sand and gravel. Metals account for barely one quarter of this amount, while crushed rock (mainly limestone) is by far the dominating commodity (by volume), accounting for some 7,000 Mt/y (40% of the total).

This is not to suggest that we are running out of metals just yet. Already-identified ore reserves, as a multiple of recent annual production rates, represent almost 200 years for bauxite, 30 years for copper and 20 years for gold.

Few mining companies have the financial resources to delineate ore reserves too far into the future. Potash Corp of Saskatchewan is an exception, its mine reserves (at current production rates) are sufficient for 200 years; as close to an annuity for shareholders as it is possible to get.

As a result, most of the world's store of metals and minerals remain undiscovered. Moreover, as (or rather, when) the world's reserves of a particular commodity become depleted, the price will inevitably rise (unless there is a readily available substitute). This, in turn, will make lower-grade ore economic, boosting the available reserves.

Complicating the issue of scarcity is to what extent the extracted metal or mineral is actually consumed. With modern technology (and the increased value of the raw material) we are able to recover commodities that have already been used.
This recycling is of increasing importance in the supply/demand balance of many metals.

Mined metals and minerals (excluding oil and gas) have an annual value of some US$350 billion, split, roughly equally, between coal, metals and aggregates/industrial minerals.