Structural changes and price formation in the minerals and metals industry

The paper seeks to analyse the deep structural changes which have occurred in the mining and metals industries over the last twenty years. Slackening demand and its unprecedented persistence have forced producers to innovate and cut costs. Companies have adopted a variety of strategies and the former homogeneity displayed by the industry has given way to a more fluid structure with no clear market leaders.     

The future markets for minerals: Some causes of uncertainty

This paper argues that the major uncertainties surrounding the future markets for minerals derive from three serious lacunae in mineral intelligence – first, the altered investment climate for minerals, the undetermined magnitude and geography of its effects, and its prospective impact upon supply; second, the paucity of macroeconomic, medium-term forecasts for the OECD economies, a deficiency that has seriously undermined the possibility of generating useful resource demand forecasts; and third, the indeterminate speed at which changes in the geography of mineral processing activities and metal manufacture are likely to occur.     

Market imperfections in recycling markets: conceptual issues and empirical study of price volatility in plastics

The effectiveness of recycling depends upon efficient functioning of secondary material markets. This paper focus on the role that price volatility can play in slowing investment and market development. However, a statistical analysis of the relative volatility of secondary and primary material prices does not confirm the widely-held belief that relative price volatility is higher in secondary than in primary materials, at least at national levels.An econometric estimation of the determinants of plastic recovery volumes in Seattle contributes to the literature in four ways: the use of monthly (as opposed to annual) data; the use of local (as opposed to national) data; the use of an explanatory variable to reflect price volatility; and, the focus on plastics, which have not been examined previously. Some tentative conclusions can be made: the results generally support the principal hypothesis that price volatility has a negative effect on recovery of secondary materials; in addition, and consistent with previous studies, price elasticities are low and insignificant; and finally, policy factors are clearly important. The concluding section treats the economic and policy implications of market inefficiency in secondary material markets.     

The integrated programme for commodities: An assessment of negotiations on minerals and metals

No agreement has yet emerged from the negotiations on mineral commodities held under the Integrated Programme for Commodities (IPC), and there is little, if any, prospect for one in the near future. This article examines the reasons for this standstill and the underlying assumptions on which the IPC is based. The following points are raised: the premise that problems of individual commodities are mutually exclusive and can be dealt with in a single framework of measures is shown to be doubtful; the principle of a commodity-by-commodity approach can no longer remain unchallenged; and structural flaws in the negotiating machinery are manifest. However, results of negotiations have not been entirely negative: the need for two-tier preparatory negotiations has been accepted and a case for a permanent consultative body, perhaps covering several commodities, has been made out. Lack of substantive reciprocity, hence political discord, remains the stumbling-block.     

Economic rent : Incidence in selected metals and minerals

The magnitude of the ‘economic rent’ and its distribution among producing countries, mineral exploitation companies and consumers has become a dominant issue in national and international policy formulation, but the difficulties in measuring the rent add to the problems of determining its equitable distribution. This paper examines the nature of the rent and estimates its incidence in bauxite, copper, iron ore, phosphate rock, tin and petroleum. Rents were found to be low for bauxite and iron ore. Bauxite, phosphates and petroleum producers have increased their share of the rent, though this trend now seems to be reversing for bauxite and phosphates. Only in tin, and to a lesser extent petroleum, have the exporting countries captured significant shares in total rent. Otherwise, the rent is largely concentrated at the processing stage, which suggests that processing plant would have to shift to the producing countries if they are to claim a larger share.     

An empirical approach to determine specific weights of driving factors for the price of commodities—A contribution to the measurement of the economic scarcity of minerals and metals

In recent years, commodity markets show a large amount of volatility and substantial price jumps, indicating an increasing economic scarcity in many cases. As this scarcity makes commodity procurement a critical issue for national economies, industry sectors and manufacturing companies, a number of criticality indices have been presented and utilized in science as well as in practice. These indices are mostly based on an aggregation of different key figures, both qualitative and quantitative. However, the weighting of the different factors is in most cases arbitrary or based on rough estimates.     

Long memory in energy futures markets: Further evidence

This paper investigates long memory (or long-range dependence) in price returns and volatilities of energy futures contracts with different maturities. Based on a modified rescaled range analysis and three local Whittle methods, the results from rolling sample test suggest that the returns showed little or no long-range dependence over time but the volatilities displayed significant time-varying long-range dependence. Our evidence shows that some extreme events could cause long memory in returns and volatilities, leading to market inefficiency. Employing multiscale analysis, we find that the returns displayed no long-range dependence for any of the chosen time scales. Significant long-range dependence only existed in volatilities for daily time scales but not for monthly or yearly time scales.     

Impact of crude oil price volatility on economic activities: An empirical investigation in the Thai economy

This paper empirically examines the impact of oil price volatility on key macroeconomic indicators of Thailand. Following Andersen et al. [2004. Analytical evaluation of volatility forecasts. International Economic Review 45(4), 1079–1110], quarterly oil price volatility is measured by using the realized volatility (RV). The impact of the oil price volatility is investigated using the vector auto-regression (VAR) system. The Granger causality test, impulse response functions, and variance decomposition show that oil price volatility has significant impact on macroeconomic indicators, such as unemployment and investment, over the period from 1993Q1 to 2006Q4. Perron's [1997. Further evidence on breaking trend functions in macroeconomic variables. Journal of Econometrics 80(2), 355–385] test identifies structural breaks in all the concerned variables during the time of the Asian Financial Crisis (1997–1998). A VAR for the post-crisis period shows that the impact of oil price volatility is transmitted to budget deficit. The floating exchange rate regime introduced after the crisis may be the key contributor to this new channel of impact.     

Assessment of risk in a minerals industry: Canadian nickel

The level of rents attributable to natural resource producers depends on the risk faced by those producers. This paper argues that estimates of risk in mining should control for characteristics of firms such as diversification and debt financing. The capital asset pricing model is applied to securities of three Canadian nickel mining firms over the period 1961–1974. It is concluded that the level of risk was not unusually high.     

Innovation in the minerals industry: Australia in a global context

The pattern of innovation in the global minerals industry is changing as the industry becomes increasingly globalised. In this paper, we look at the structure of innovation in the industry and the drivers of change. We first consider the broad international trends and then examine these more closely with special reference to the Australian industry. Issues addressed include the apparent decline in corporate research and development spending, changing patterns in research collaboration and outsourcing, and the uptake of information and communication technologies in the industry. We also look at the potential implications of these trends for step-change technological developments and at the role of technological innovation in the future development of the industry.     

Derivative mine valuation: strategic investment decisions in competitive markets

Successful management in competitive markets requires evaluation methods that respond to global market dynamics and provide investors with relevant information to make strategic investment decisions. These strategic decisions include decisions on investment timing, feasibility study and risk management and mine operating options. Conventional methods do not have the built-in capabilities to help investors handle these strategic issues. Advances in modern finance have had profound impacts on financial markets for options, futures and collaterized securities and offer appropriate tools in solving these problems. In this paper, the authors have extended the Brennan and Schwartz mineral resource model to develop the derivative mine valuation method based on the dynamic arbitrage theory. A copper mining venture has been evaluated using the derivative mine valuation and conventional methods. The results show that the derivative mine valuation method allows investors to maximize the venture's market value by exercising these strategic options.     

Incentive problems in Canada's land markets: Emphasis on Ontario

The specific issue addressed in this paper is urban encroachment on agricultural lands, and the problems it poses for both analysis and the conservation of the land resource. The purpose of our discussion is two-fold: (1) to identify where and why traditional analytical and regulatory approaches fail to resolve land use conflicts, and (2) to explore ways and means of resolving some of the dilemmas which society faces in making land use decisions. This paper's contribution is in the spirit of Getting Incentives Right for the inter-temporal transfer of wealth, as represented in trade-offs between environmental and resource endowments and human and physical capital. Efforts are placed on identifying what the appropriate price, levy, taxes, and grant ratios ought to be in order to encourage individuals in the marketplace to act in society's interest. We have also explored ways of efficiently transmitting those incentives through the market mechanism, without unduly relying on bureaucratic methods or suasion. Emphasis is placed on mechanisms that have little scope for preferential access and are subject to public scrutiny; emphasis on such self-disciplining approaches should result in less effort expended on (unproductive) lobbying activities and bureaucratic administration.Brad Gilmour and Ted Huffman are Policy Analyst and Land Use Specialist respectively with Agriculture and Agri-food Canada. Andy Terauds and Charlie Jefferson are chairman and secretary respectively for the Ontario Institute of Agrologists Ottawa Branch Land Use Committee. This paper is intended to provoke thought and stimulate debate for input into the land use policy process and should not be seen as representing the views and policies of either Agriculture Canada or the Ontario Institute of Agrologists.     

Petrochemical markets in the UK: Methodological aspects of assessing future demand

This article focuses on how input-output techniques could be applied to study the petrochemical industry in general and plastics materials in particular. The theory serves as a tool for understanding the operations of the industry and, therefore, allows for a better control and organization of its development process.     

Landowner equity in Papua New Guinea's minerals sector: Review and policy issues

The involvement of local communities as equity holders in major mineral resource developments dates back over a decade in Papua New Guinea. This article reviews the history and result of landowner equity at two of Papua New Guinea's major mines (Porgera and Lihir), with a particular focus on the contribution of these equity holdings to local sustainable development. It is found that while an equity holding can provide significant returns to a local community, it also exposes them to significant financial risk. A second major area of concern is the structures and instruments by which revenues generated from the equity are distributed and utilized within the local community. Further research and policy redirection is required before local equity holding can be viewed as making a significant contribution to local sustainable development.     

Magnesium-rich minerals in sediment and suspended particulates of South Florida water bodies: implications for turbidity

Fine sediments in shallow water bodies such as Lake Okeechobee are prone to resuspension. Predominantly inorganic "mud" sediment that covers approximately 670 km2 of the lake has been recognized as a persistent source of turbidity. The objective of this study was to determine if mineral components of sediments in Lake Okeechobee and water conveyances of the northern Everglades also occur as suspended sediment and hence constitute a potential abiotic contributor to turbidity. Sediment samples were collected from nine stations within the lake and eight locations north of Water Conservation Area 2A in the Everglades. Water samples were also collected at selected locations. The silt and clay mineralogy of sediment and suspended particles was determined using X-ray diffraction, thermogravimetry, scanning-electron microscopy, energy-dispersive X-ray elemental microanalysis, and high-resolution transmission-electron microscopy. Clay fractions of the lake sediment contained the Mg silicate minerals sepiolite and palygorskite, along with smectite, dolomite, calcite, and kaolinite. Sediment silt fractions were dominated by carbonates and/or quartz, with smaller amounts of Ca phosphates and sepiolite. Mineralogy of the mud sediment was similar to that reported for geologic phosphate deposits. This suggests that the mud sediment might have accumulated by stream transport of minerals from these deposits. Suspended solids and mud-sediment mineralogy were similar, except that smectite was more abundant in suspended solids. Everglade samples also contained Mg-rich minerals. The small size, low density, and fibrous or platy nature of the prevalent mud sediment minerals make them an abiotic, hydrodynamically sensitive source of persistent turbidity in a shallow lake. Mitigation efforts focused exclusively on P-induced biogeochemical processes do not address the origin or effects of these minerals. Ecological management issues such as turbidity control, P retention, geologic P input, and suitability of dredging are related to mud-sediment properties and provenance.     

Economic liberalisation, innovation, and technology transfer: opportunities for cleaner production in the minerals industry

The liberalisation of investment regimes for mining over the past decade is encouraging an inflow of foreign investment for mining and mineral processing projects in developing and former centrally-planned economies. This new investment is occurring at a time of technological change within the international mining industry as market and regulatory pressures lead the most dynamic firms to invest in the development or acquisition of new technologies and management practices. The effective transfer and assimilation of these technologies enable mining companies to combine gains in productivity with improvements in environmental management. Joint ventures and other strategic alliances between inwardly investing firms and the newly privatised or remnant state-owned mining enterprises may provide an effective vehicle for the transfer of the techniques for more productive and cleaner operations. Specific examples of innovative process and remediation technologies are analysed and it is suggested that the ability of innovative technologies to improve competitiveness and sustain best-practice environmental management in the recipient is linked to the transfer and effective acquisition of the capacity to manage the complex processes of technological and organisational change. The paper closes with some recommendations for further research directed towards a systematic examination of this hypothesis.     

Impact of groundwater markets in India on water use efficiency: a data envelopment analysis approach

In the hard rock areas of India, overdraft of groundwater has led to negative externalities. It increased costs of groundwater irrigation and caused welfare losses. At the same time informal groundwater markets are slowly emerging and are believed to improve water distribution and to increase water use efficiency in the irrigation sector. These claims are evaluated in this study. For this purpose data was collected from a sample containing three different groups of water users: water sellers, water buyers and a control group of non-traders. First the socio-economic characteristics of these groups are compared. Then the efficiency of water use of the three groups is studied using Data Envelopment Analysis. The results indicate that groundwater markets provide resource poor farmers access to irrigation water, giving them the opportunity to raise their productivity. Water buyers are furthermore shown to be most efficient in their water use, while water sellers are also shown to be more efficient than the control group. The differences in efficiency between the groups are statistically significant. The demonstrated potential of groundwater markets to improve the efficiency of water use and to increase equity in resource access should be taken into account by the Indian government when deciding on their attitude towards the emerging groundwater markets.     

Social dimensions of mining: Research,policy and practice challenges for the minerals industry in Australia

The social dimensions of the mining industry are increasingly acknowledged as critical to business success, yet remain the least understood aspect of the business concept of sustainable development—the ‘triple bottom line’ of economy, environment and society.     

Housing association and local authority provision in rural housing markets: a Mid‐Wales case study

Over the last decade or so, rural housing problems in Britain have become an important focus of attention both for researchers and planners. Inaccessibility to adequate housing is a significant component of the more all‐embracing problems of rural deprivation. The rented sector is of particular relevance to the amelioration of these problems, but the supply has been increasingly restricted both in the private and in the public sector. Great stress has therefore been laid on the ability of housing associations to provide rented sector housing. This paper investigates the work of one particular housing association in Mid‐Wales — Cymdeithas Tai Dyffryn Teifi (CTDT) and assesses the degree of complementarity achieved with housing provision by the local councils operating in the same rural locality. The particular areas of effectiveness of a housing association in this context are thereby evaluated.     

Household size and composition and implications for housing need in Kumasi,Ghana: a research note

A simple method of calculating the scale of housing need for Kumasi, Ghana, uses two likely variations in household size distribution and an overcrowding threshold of 3 p.p.r., and a measure of preference. The two household size distributions take account both of trends and of changes which may occur if and when new housing is provided. At that time, released from the current constraints, household formation along traditional lines may again be possible. The preferred supply equates households’ perceived need to their ability to pay at current rents. The resulting range of rooms required is wide but even the lowest need is so far in excess of supply that conventional approaches are self‐evidently inadequate and greater client involvement must be encouraged.