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.     

How to evaluate raw material supply risks—an overview

Some strategic raw materials do have an extremely unsecure supply situation. Several working groups around the world have made criticality assessments for metallic raw materials to analyze the driving impact factors for this instability. However, the influences on raw material availability are manifold and therefore criticality assessment methods are very heterogeneous. Here we give an overview about the differences and similarities of supply risk evaluation in 15 criticality assessment methods. We take the example of Indium, which has been rated in 60% of these criticality studies, and show which data base is used for supply risk evaluation. Our results show a lack of consensus about which indicators give reliable information for raw material supply risk and how these indicators should be aggregated. We anticipate our essay to be a starting point for more justified indicator selection and weighting in criticality assessments.     

Permitting a new mine: Insights from the community debate

When a mining company selects a site for development, the company begins a dialogue with the local community about receiving the necessary approvals for the mining permits. The dialogue focuses on how well the company can use science and technology to manage risk to the local environment, and on how much economic benefit will be gained by the local community for accepting the risk. A useful approach to better understand how the debate affects the outcome of the permitting effort is to use the method of “discourse communities and analysis”. This paper analyzes two efforts by Kennecott (Rio Tinto) and one by Exxon to develop base metal mine sites in the Upper Midwest of the USA. As the three case studies show, the local pro- and anti-mining discourse community members will not be changing their basic positions as the permitting of a new mine is debated. Accordingly, both communities are trying to convince undecided stakeholders rather than talking to each other. Both sides are using ever more sophisticated media methods to communicate their message to the undecided residents of the community. By winning the support of the majority of the undecided residents, political pressure can be used to sway the decision.     

Exploring the origins of ‘social license to operate’ in the mining sector: Perspectives from governance and sustainability theories

In the mining sector, local communities have emerged as particularly important governance actors. Conventional approaches to mineral development no longer suffice for these communities, which have demanded a greater share of benefits and increased involvement in decision making. These trends have been spurred by the growth of the sustainable development paradigm and governance shifts that have increasingly transferred governing authority towards non-state actors. Accordingly, there is now widespread recognition that mineral developers need to gain a ‘social license to operate’ (SLO) from local communities in order to avoid potentially costly conflict and exposure to social risks. A social license can be considered to exist when a mining project is seen as having the ongoing approval and broad acceptance of society to conduct its activities. Due to the concept's relatively recent emergence, however, only a limited body of scholarship has developed around SLO. Drawing on examples from northern Canada, this paper uses governance and sustainability theories to conceptualize the origins of SLO in the mining sector and describe some of the associated implications. Further research is needed to determine governance arrangements which help facilitate establishment of SLO in different mineral development contexts.     

Lithium availability in the EU27 for battery-driven vehicles: The impact of recycling and substitution on the confrontation between supply and demand until2050

The adverse impacts of climate change are widely recognized as well as the importance of the mitigation of carbon dioxide (CO₂). Battery driven vehicles are expected to have a bright future, since GHG emissions can be reduced. Lithium-ion (Li-ion) batteries appear to be the most promising, due to their high energy density. Recently, the discussion concerning adequate lithium carbonate (Li₂CO₃) resources is resolved. The current challenge is the needed increase in flow rate of Li₂CO₃ into society to foresee in forecasted demand. This research determines ten factors which influence the availability of Li-ion batteries for the EU27 in the coming decades. They are used in a system dynamics analysis. The results of this research show that undersupply can be expected in the EU27 until 2045 somewhere between 0.5 Mt and 2.8 Mt. Substitution of Li₂CO₃ in other end-use markets and recycling can relieve the strain on Li₂CO₃ supply to some extent. In 2050, 20% of the vehicle fleet in the EU27 can be battery electric vehicles (BEVs). The lack of resources in the EU27 and the geographical distribution of lithium in politically sensitive areas suggest that the shares of lithium available for the EU27 will be less than assumed in this research. The increase in flow rate shows to be the bottle-neck for a transition to (partly) battery driven vehicles in the EU27, at least when Li-ion batteries are used. Focusing on large-scale application of BEVs with Li-ion batteries in order to substantially mitigate CO₂ emissions in transport is a futile campaign.     

Aggregates in England—Economic contribution and environmental cost of indigenous supply

Aggregates represent one of the largest material flows in the UK economy; however, the importance of these minerals in underpinning economic activity is frequently not recognised. Features such as the spatial imbalance between resources and demand centres, exacerbated by changes in demographics and public perception, are placing increased pressure on the planning system to maintain supply. This paper sets out the direct and indirect economic contributions made by the indigenous aggregates industry to the English economy through Gross Value Added and employment sustained. It describes the key role of aggregates in construction activities, assesses the links between infrastructure development and economic growth. In 2005, aggregates extraction directly contributed £810 million of Gross Value Added to the English economy. Primary aggregates are, however, extracted at a cost to the environment and this cost, based on amenity value reduction, is estimated by updating previously published contingent valuation data. Estimates for the costs associated with carbon dioxide emissions are derived from values published by the European Union and, separately, by the UK Government. These two elements combined result in an environmental cost of indigenous extraction of £445 million in 2005. Additionally, an examination of the potential for a significant increase in the level of aggregate imports into England is made and the consequences assessed. This includes an evaluation of shipping costs and port capacity, and concludes that there are significant barriers to any substantial increase in the level of aggregate imports into England. As a consequence, indigenous supply is likely to predominate into the foreseeable future.     

The impact of commodity price risk management on the profits of a company

It is well recognized that for the producing companies hedging the commodity price using financial products like forwards or futures has become an important part of the company's production process. But apart from the direct impacts of hedging on the production and hedging costs the use of financial products affects the financing of the company: hedging the volatile commodity prices leads to a reduction of the risk premium the company has to pay for its debt capital, since hedging contributes to more confidence of the investors in the redemption of the debt. In this paper we therefore analyze this dependency of hedging and financing and derive optimal hedging extents for companies in different market situations based on a long-term model. By hedging the commodity price, companies can realize a surplus in profits. Thereby, the optimal hedging extent for a monopolist is often up to 100%, whereas for companies in a polypolistic market the optimum is always less than 100%. These results are illustrated by examples for a producing company.     

Using system dynamics to model water-reallocation

Improving the efficiency of water allocation has long been recognised as a key problem for the water resources management decision-makers. However, assessing the efficacy of management decision is difficult due to the complexity and interconnectivity of water resource systems. For this reason, it is vital that robust modelling approaches are employed to deal with the feedback loops inherent in the water resource systems. Whilst many studies have applied modelling to various aspects of water resource management, little attention has been given to innovations in modelling approaches to deal with the modelling challenges associated with improving decision-making. The aim of this study is to apply a System Dynamics modelling approach to improve the efficiency of water allocation incorporating a myriad of irrigation system constraints. The system dynamic approach allows the different system components to be organised as a collection of discrete objects that incorporate data, structure and function to generate complex system behaviour. Through the application of a system dynamic approach, a robust model (named the Economical Reallocating Water Model (ERWM)) was developed which was used to examine the options of re-allocating water resources that minimize the water cost all over an irrigated agricultural area. The EWRM incorporated a wide range of complexities likely to be encountered in water resource management: surface and ground water sources, water trading between sources, system constraint such as maximum ground water pumping, rates, maximum possible trading volumes and differential water resource prices. Two hypothetical systems have been presented here as an example. The results show that the System Dynamics approach has a significant advantages in estimating and assessing the outcomes of alternative water management strategies through time and space.     

Cultivating collaboration: Lessons from initiatives to understand and manage cumulative impacts in Australian resource regions

Australia has experienced rapid development within its resource regions, with traditional mining sectors like coal, iron-ore and natural gas expanding and new industries such as coal seam gas emerging. As a result, there is an increasing prevalence and awareness of the cumulative impacts of the extractive resource industries on the society, environment and economy of these regions. Collaborative governance is emerging as a means of addressing cumulative impacts. This article undertakes an analysis of 30 case studies of collaborative governance in the resources sector of Australia. The initiatives analysed range from those focussed on information exchange and coordination to higher degrees of collaboration that involve shared resources and shared risks. The study demonstrates that there are challenges in using collaborative approaches to tackle cumulative impacts, but that significant benefits can be realised. The study highlights the need to nurture and cultivate collaborative relationships in order to provide the foundation for long-term solutions.     

How have reforms fuelled the expansion of artisanal mining? Evidence from sub-Saharan Africa

This paper investigates whether and how World Bank mining sector reforms have fuelled the expansion of illegal artisanal mining activity in Sub-Saharan Africa. In doing so, the analysis examines three issues. First, the emerging correlation between reforms and poverty, mainly a result of increased unemployment caused by Structural Adjustment Programmes and concurrent privatisation of state-owned enterprises, is explored. Second, the possibility that reform of large-scale mining has decreased available land for peasant farming as well as legalised small-scale mining activity is discussed. Finally, the notion that the regularisation of informal mining activities has been an exceedingly bureaucratic procedure in Africa, therefore providing individuals with little incentive to operate within the legal domain, is examined. Faced with few employment prospects, a growing number of Africans are pursuing employment in the artisanal mining sector, a worrying prospect given its intimate association with environmental degradation and HIV/AIDS.     

From landfill to water,land and life: The creation of the Centre for stone materials aimed at secondary processing

This paper focuses on the creation of a Centre for the recycling of stone materials. The Centre will be able to offer a range of activities amongst which is the improvement of the production chain of the Orosei Marble district in Sardinia, Italy. Several companies operate within the marble producing area, specializing in both quarrying and stone processing. They have formed a Consortium in order to rehabilitate an area of more than 17 ha. The restoration will be carried out through an environmentally sustainable procedure. The area was previously used as a landfill for waste deriving from marble quarrying and processing. At that time unshaped blocks of various sizes (which are unsuitable to block-cutter sawing), waste deriving from both block sawing and slab/strip cutting (such as broken slabs, strips, tiles) and microfine dust from filter presses of water treatment plants were representing an environmental problem. The local administration was struggling to find new areas which could be used for landfills, resulting in an additional cost for the landfill, ultimately affecting the variable production costs. The project involves the building of a venue to be used for temporary storage, treatment of wastes produced by both quarrying and primary processing, in order to make them suitable as secondary raw materials. The project also deals with the catch basin hydrology of the area involved in the project, the building of a multifunctional centre, the landscaping and other environmental features such as vehicle traffic and slopes greening.     

Metalliferous sediments in the Atlantis II Deep—Assessing the geological and economic resource potential and legal constraints

Projected increases in demand and thus increasing metal prices have brought the exploration and exploitation of marine mineral resources back into focus. The Atlantis II Deep, located in the central Red Sea between Saudi Arabia and Sudan, is one of the largest marine sulfide deposits known, with high concentrations of metals such as zinc, copper, silver and gold. However, little is known about the economic potential of marine minerals as well as the legal constraints. Our geological assessment shows that the deep is similar in grades and scale to large land-based deposits. Its economic potential is far from negligible. The total present value of possible gross revenues for the four metals zinc, copper, silver and gold ranges from 3.03 to 5.29 billion US$, depending on the assumptions made concerning future price development, mass calculation and discount rate. From a legal perspective, a general duty to cooperate in the exploration and exploitation of non-living resources located in disputed maritime areas is identified in both customary international law and in UNCLOS. It is submitted that a joint development agreement is one means of ensuring compliance with this duty in general and in the case of the Atlantis II Deep in particular.     

Corporate social responsibility in the mining industry: Perspectives from stakeholder groups in Argentina

Since the liberalisation of its investment regime in the 1990s, Argentina has seen a rise in foreign direct investment into large-scale exploration and exploitation of mineral resources. However, many social groups (local communities, grassroots movement and the church) often strongly oppose new mining projects on the grounds of environmental, ethical and economic concerns. In a situation marked by widespread conflict, mining companies continue operating and develop Corporate Social Responsibility (CSR) initiatives which are often promoted as a means of contributing to the sustainability and development of the nation. The paper develops a framework to highlight how the principles of stakeholder theory could be used as conceptual and practical guidance for conflict-resolution oriented CSR policies. The framework is further used to analyse two case studies of conflictive mining projects in Argentina. The paper explores how key stakeholders perceive contribution of CSR to welfare and the socio-economic development of mining communities and sustainable development of the nation. It demonstrates that institutional and social stakeholder networks often strongly oppose the idea of voluntary self-regulation implied by CSR in situations characterised by weak governance. Even though the CSR of companies could be improved in areas of corporate communication, transparency, stakeholder engagement and dialogue, it is not seen as a panacea for the social conflicts in the sector.     

Drivers of Interbasin Transfers in the United States: Insights from Sampling

Interbasin transfers (IBTs) are manmade transfers of water that cross basin boundaries. In an analysis of 2016 data, this work identified 2,161 reaches crossing United States (U.S.) Geological Survey hydrologic unit code 6 boundaries in the U.S. The objectives of this study were to characterize and classify IBTs, and examine the development drivers for a subset of 109 (~5%) of the IBT reaches through examination of samples from different climate regions of the U.S. The IBTs were classified as being near irrigated agricultural lands, near cities, or rural IBTs not near cities or irrigated land. IBTs near both cities and irrigated agricultural land were designated as city + irrigated agriculture. The 109 samples were selected, based on approximate proportional distribution to the total number of IBTs within each climate region, with representation of areas having a high density of IBTs. Analysis of the samples revealed that in the U.S., there have been four major drivers for basin transfers: irrigation for agriculture, municipal and industrial water supply, commercial shipping or navigation, and drainage or flood management. The most common has been drainage or flood management, though IBTs at least partially driven by agricultural needs are also prevalent. The majority of the sampled IBTs were constructed between 1880 and 1980, with peaks in development between 1900–1910 and 1960–1970. The samples also showed the drivers of IBT development evolved over time, reflecting changes in regional economies, populations, and needs.     

Application of a system dynamics approach for assessment and mitigation of CO2 emissions from the cement industry

A system dynamics model based on the dynamic interactions among a number of system components is developed to estimate CO(2) emissions from the cement industry in India. The CO(2) emissions are projected to reach 396.89 million tonnes by the year 2020 if the existing cement making technological options are followed. Policy options of population growth stabilisation, energy conservation and structural management in cement manufacturing processes are incorporated for developing the CO(2) mitigation scenarios. A 42% reduction in the CO(2) emissions can be achieved in the year 2020 based on an integrated mitigation scenario. Indirect CO(2) emissions from the transport of raw materials to the cement plants and finished product to market are also estimated.     

Broadening the statistical search for metal price super cycles to steel and related metals

During the past five years, industry analysts have proclaimed that metal prices are in the early phase of a ‘super cycle,’ driven primarily by Chinese industrial expansion. Academic economists have generally been very skeptical about the presence of long cycles. A time-series econometric analysis by Cuddington and Jerrett [2008. Super cycles in real metals prices? IMF Staff Pap. 55(4), in press], however, has used band-pass filtering techniques to isolate super cycles in the prices of six metals traded on the London Metal Exchange (the ‘LME6’). This paper extends the search for super-cycle behavior to three additional metal products that are critical in the early phases of industrial development and urbanization: steel, pig iron, and molybdenum (a key ingredient in many steel alloys). There is strong evidence of super cycles in these three metals, although their timing differs to some extent from the super cycles found for the LME6.     

Participatory evaluation of collaborative and integrated water management: Insights from the field

The Maitland Watershed Partnerships (MWPs) is a multi-stakeholder forum established in 1999 in an agricultural watershed in Southwestern Ontario, Canada. This paper presents 10 lessons emerging from the participatory evaluation of the MWPs carried out in 2005. As suggested in the literature and highlighted by the experience of the MWPs, multi-stakeholder collaboration and integration is about learning how to cope with and take advantage from difference, diversity and divergence. Watershed partnerships are arenas in which different types of knowledges, diverse values and divergent sectoral perspectives, are confronted. In this context, inter-organizational leadership is essential to develop and sustain collaborative advantage among multiple public, private and civil society actors. According to the experience of the MWPs, however, embracing difference, diversity and divergence should go well beyond initial planning stages. Instead, pursuing compromise and agreement should also be at the forefront during the monitoring and evaluation stages. Negotiating indicators for monitoring and evaluation that can address water management both as a social process and a technical process is critical, as is making the distinction between partnership outputs and partnership outcomes.     

‘Reserves’ as a leading indicator to future mineral production

The factors which influence the size and value of mineral reserves are discussed and an example is given of a more rigorous system for measuring supplies of non-renewable resources.The extent to which reserves and resources of minerals can be used as leading indicators of future mineral production is examined and examples of the dangers of over-reliance on this factor are described.Key aspects, such as confidence limits, differences in the economic exploitability, the dynamic nature of reserves, and their variability in grade, are examined in some detail using the South African coal industry as an example.     

Disaster policy and nuclear liability: Insights from post-Chernobyl agriculture in the United Kingdom

The recent events at Chernobyl have again brought the issues of nuclear safety to the forefront of the nuclear power debate. Fortunately, our experience with such incidents has been very limited, but it is important to learn as much as possible from such events so as to minimize the cost and effect of any other nuclear incidents, be they small or large. Much of the discussion about the possible effects of nuclear incidents has centered around the human cost in terms of health. While this is undoubtedly of paramount concern, the effect of the release of radiation from Chernobyl on the agricultural resource base in Europe can provide valuable insights on how to reduce the costs associated with the contamination of agricultural areas. This article outlines some of the lessons that can be learned using the livestock-raising industry in northern Wales as an example.     

Evaluating aquacultural use of thermal effluents: An application of system dynamics to environmental problem solving

Given the ecological burden imposed by power plants located in the coastal zone, efforts to improve the marginal benefits realized from their operation are warranted. Indeed, if this source of environmental pollution can be utilized to compensate for past ecological damage, then the benefits will be magnified many-fold.This study addresses the economic feasibility of utilizing heated effluent water from power plants to invigorate the growth of oysters raised under controlled conditions. The preliminary findings indicate that given proper combinations of system capacity, supplemental nutrient supplies, sea water flow and temperature gradients, such an operation is feasible.This is also a demonstration of a viable application of a sophisticated computer modeling approach to environmental problems. System Dynamics a technique pioneered at the Massachusetts Institute of Technology, is applied to evaluate the physical, biological, and economic interrelationships of the aquacultural system variables. It offers many advantages for the environmental manager and researcher, a number of which are realized in the present investigation.