What do economic simulations tell us? Recent mergers in the iron ore industry

This paper investigates the European Commission's decision to allow a merger between two Brazilian iron ore mining companies, CVRD and Caemi, using data on the Direct Reduced Iron pellet market. By using a simulation model, we can directly simulate the total welfare effects from the merger and hence evaluate the merger from a new perspective. The results from our simulations suggest that the welfare effects are negative from the merger between CVRD and Caemi, which supports the conclusion drawn by the European Commission decision. By performing different simulations between hypothetical merger candidates, our results show that only mergers between small candidates have the potential to be welfare enhancing.     

Utilising of the oiled rolling mills scale in iron ore sintering process

Up to 5% of steel is lost with the scale at hot rolling operation. This waste contains 69-72% of iron in the form of oxides. However, its recycling is confronted with presence of up to 20% of oil and 10% of water. E.g. when the oiled scale is introduced as an additive to the iron ore sintering mixture, incomplete combustion of liberated oil at heating during sintering process creates problems for gas cleaning and may even lead to damage of the equipment. A possibility to improve combustion of the scale's oil at the sintering process by preparation of a mixture with peat was shown in the laboratory experiments. Industrial trials demonstrate possibility to increase the oil combustion degree at sintering 2.7 times as much. Consumption of the oiled scale was increased from zero to 12.8 kg (in a form of scale-peat blend) per ton of sinter, which allows for closing the loop of this waste at the integrated steelmaking factory.     

The carajas iron ore project: The strategy of a third world state- owned enterprise in a depressed market

This paper describes how the Carajas iron ore project was set up in February 1985 at a time of deep recession in the iron ore and steel industries. Development of the project was met with much criticism, mainly from North American steel makers, who argued that the project would only be successful through the support of a Third World government, highly dependent on foreign exchange, without any consideration being given to its economic feasibility or to the fundamentals of the market. The authors explain why the World Bank took the step of setting up the project and how its development can be partly explained by the interests of the Japanese and European steel makers. The role of the Brazilian government is explained and the authors conclude that the relatively low rate of investment anticipated by the project will be overshadowed by the high gains in foreign exchange.     

Impact of the FTSE4Good Index on firm price: an event study

This paper examines whether corporate financial performance is affected by public endorsement of environmental and social performance. Event study methodology, which relies on the notion of market efficiency, is used to examine the relationship between positive and negative announcements and changes in share prices or daily returns. Inclusion in and deletion from the FTSE4Good UK Index is used as a proxy measure for good (poor) corporate social responsibility. The abnormal or unexpected daily returns associated with an event are calculated and their significance tested. The results show a trend towards positive and negative announcements having the expected effects on daily returns. But these movements are not significant and the data do not suggest that a firm's presence on the index brings it any significant financial return for signalling its corporate social responsibility.     

Horizontal mergers in the iron ore industry—An application of PCAIDS

The purpose of this paper is to estimate and analyse the price effects of the iron ore mergers between Rio Tinto and North Ltd in 2000, and CVRD and Caemi in 2001. The analyses are conducted using a merger simulation model that, based on the pre-merger situation, estimates the post-merger outcome. This paper applies the so-called proportionality-calibrated almost ideal demand system (PCAIDS) model, which assumes that the product is differentiated and that the strategic variable is price. The results from the merger simulations show that in the case of the merger between Rio Tinto and North Ltd, the merged firm has a combined market share of almost 20%. However, the estimated market weighted average price effect is only 2.6%. Regarding the merger between CVRD and Caemi, the merged firm's market share is about 29%, and the estimated market weighted average price effect is 4.6%. When removing Caemi's Canadian asset, which was the Commission decision in order to allow the merger, the market price effect decreases to 3.1%. Overall the results in this study support the Commission's decisions regarding both merger cases, and shows that merger simulations of price effects can be valuable tools in merger assessments.     

Implementation of failure modes and effects analysis in detergent production companies: A case study

Failure mode and effect analysis (FMEA) is the most important method used by production companies to identify potential risks regarding occupational and health hazards and environmental hazards. This method is also useful in defining preventive actions to reduce the effects of these risks. Detergent production companies continually encounter many occupational and health hazards and environmental hazards, the management and reduction of which requires complex assessment in real‐world applications. This paper presents a framework for application of FMEA for managing and ranking identified risks in detergent production companies. A case study is presented to show the application of an FMEA to investigate the results of its application and the outcomes from the analysis. A risk priority number (RPN) is proposed for each distinct risk. The application of FMEA in the detergent production company resulted in grouping the RPN of the identified risks into four different categories. The main corrective actions, which are determined to reduce the RPNs, are presented in this paper. Improving the RPN of the main risks is observed after executing the corrective actions.     

Balancing environmental and industry sustainability: A case study of the US gold mining industry

Mandatory insurance requirements and/or mitigation fees (royalties) for mining companies may help reduce environmental risk exposure for the federal government. Mining is examined since the Environmental Protection Agency (EPA) Toxic Release Inventory reveals that this sector produces more hazardous waste than any other industrial sector. Although uncommon, environmental expense can exceed hundreds of millions of dollars per development. Of particular concern is the potential for mines to become unfunded Superfund sites. Monte Carlo simulation of risk exposure is used to establish a plausible range of unfunded federal liabilities associated with cyanide-leach gold mining. A model is developed to assess these costs and their impact on both the federal budget and corporate profitability (i.e., industry sustainability), particularly if such costs are borne by offending firms.     

Backward linkage development in the South African PGM industry: A case study

Backward linkages refer to the various inter-firm relationships connecting an industry with its supply chain. Demand–supply interactions between producer firms and suppliers of original equipment, strategic inputs, components and specialised services have played an important role in the evolution of the South African mining sector, contributing indirectly to employment creation, new business growth and expansion, improved efficiency of mining operations, and new knowledge generation. This paper presents a case study of backward linkage development in the South African platinum group metals (PGM) industry and draws on the findings from a quantitative and qualitative analysis of the sector undertaken in 2007. A profile of the supply chain is provided and an assessment made of the strength and sustainability of existing linkages.     

Environmental sustainability assessment in the process industry: A case study of waste-to-energy plants in Spain

This study proposes a technical procedure based on a life cycle approach for implementation of the environmental sustainability assessment (ESA) of several waste-to-energy (WtE) plants located in Spain. This methodology uses two main variables: the natural resources sustainability (NRS) and the environmental burdens sustainability (EBS). NRS includes the consumption of energy, materials, and water, whereas EBS considers five burdens to air, five burdens to water, and two burdens to land. To reduce the complexity of ESA, all variables were normalised and weighted using the threshold values proposed in the European Pollutant Release and Transfer Register regulation. The results showed the plants studied had a greater consumption of natural resources than Spain, ranging from 1.1 to 2.0 times higher than the Spanish reference consumption. The comparison of Spain with the BREF reference on waste incineration showed that only in the variable related to materials, did Spain have a lower consumption (1.80 times lower). In terms of EBS, air and land impacts were the highest contributors to global burden. The WtE plants presented higher burdens to air and water than Spain, whereas only one plant exceeded the average burden to land of Spain. Finally, this paper demonstrated the usefulness of the ESA methodology to reduce the complexity of LCA and assist the decision-making process in choosing the best option from an environmental point of view. This procedure can be used to obtain an overview of the environmental performance of WtE plants, as well as to assess individual burdens and thereby determine the main environmental hotspots, thereby improving the critical points of the process.     

Modelling of the location of vehicle recycling facilities: A case study in Poland

The technical progress causes that increasing number of used devices presents a threat for environment, particularly in the rural areas. It can be prevented by organizing a proper system of waste disposal. Currently, the most important problem to solve is recycling of vehicles. The key element for the improvement of the functioning of the recycling network in Poland is to redesign the system so that it will allow for a reduction of the total cost related to the vehicle recycling. This paper presents a modelling approach that could be used to establish one important part of the reverse logistics (RL) network for end-of-life vehicles (ELVs) by defining the optimum locations for dismantling facilities. The proposed modelling approach is illustrated using Mazovia province in Poland as an example. The optimization criteria for the location of the elements of the recycling network are the components of the total cost of the ELV's recycling. Due to high complexity of the model a genetic algorithm has been adapted for solving the model and getting a good solution in a reasonable run time. The criteria of optimization was cost of the following processes: transportation, storage, and dismantling of ELVs. The results of simulation proved that the transportation costs of parts and materials may amount to about 70%, and that the cost of dismantling may exceed 25% of the total cost of recycling. The obtained results confirmed that genetic algorithm method can be used effectively to location the ELV's dismantling facilities. The effect of changing the location of processing facilities on the location of dismantling stations was also studied. The developed model is universal and may be used to determine the locations of different kinds of facilities organized in a reverse recycling network.     

Removal of arsenic from wastewater using iron compound: Comparing two different types of adsorbents in the context of LCA

A study was carried out in order to compare the environmental performance of two different types of adsorbents in removing arsenic (As) from wastewater. A FeCl₃-based adsorbent and a poly-Fe-based adsorbent were first synthesized and their abilities in adsorbing As from wastewater were investigated in terms of the adsorption density and the rate of adsorption. Here, it should be noted that the main material being used in the synthesis of the poly-Fe-based adsorbent was a waste product, known as polyferric sulfate or poly-Fe in short, which exits the manufacturing process of titanium dioxide.Both adsorbents were then compared in the context of life-cycle assessment (LCA). In other words, the experimental results (i.e. the value of the adsorption density and the rate of adsorption) were input into the LCA model in order to assess the environmental performance of each adsorbent in removing arsenic. An estimate for the environmental burden of each option was finally calculated as the sum of the depletion of abiotic resources (ADP), the global warming potential (GWP), the acidification potential (AP), the photo-oxidant formation potential (POCP), the eutrophication potential (EP), and the human toxicity potential (HTP). The main finding of this study was that the adsorption of arsenic by using the poly-Fe-based adsorbent is more attractive treatment option in the environmental protection point of view than the adsorption by using the FeCl₃-based adsorbent, which generates a relatively larger environmental burden.     

Cleaner production in the ammonia-soda industry: an ecological and economic study

Five methods to reduce the negative influence of soda ash factories on the natural environment are presented: 1. obtaining calcium-magnesium phosphates by treating the suspension from raw brine purification with orthophosphoric acid (H(3)PO(4)), 2. production of precipitated chalk from soda processing waste, 3. production of gypsum and semi-brine, 4. desulphurisation of fume gases from the factory power plant, 5. utilization of distiller waste. The tests, accomplished on a laboratory scale, showed the high efficiency of these methods. Economic analysis has proved that only four out of the five presented processes can have a positive financial effect on soda ash factories, as well as being well justified economically. The value of two of the innovations presented is confirmed by their implementation in factories.     

A method to assess the allocation suitability of recreational activities: An economic approach

Most existing methods of planning focus on development of a recreational area; less consideration is placed on the allocation of recreational activities within a recreational area. Most existing research emphasizes the economic benefits of developing a recreational area; few authors assessed the allocation suitability of recreational activities from an economic point of view. The purpose of this work was to develop a model to assess the allocation suitability of recreational activities according to the application of a concept of analysis of cost and benefit under a premise of ecological concern. The model was verified with a case study of Taiwan. We suggest that the proposed model should form a critical part of recreational planning.     

The supply behaviour of state mining enterprises: A case study of the Jordanian phosphate industry

An important feature of export-oriented production in mineral-rich developing countries for almost three decades after 1960 was the growth of state-owned enterprises. For the phosphate industry, this was reflected in the expansion of companies such as Office Cherifienne des Phosphate (OCP) in Morocco and the Jordan Phosphate Mines Company (JPMC). There was a strategic importance of the industry for these nations and the large capital outlays necessary for phosphate and fertilizer production expansion often required considerable government assistance because of the perceived high risks of private investment in the industry.     

An approach to integrated ecological assessment of resource condition: the Mid-Atlantic estuaries as a case study

The complex and interconnected nature of ecological systems often makes it difficult to understand and prevent multiresource, multistressor problems. This article describes a process to assess ecological condition at regional scales. The article also describes how the approach was applied to the Mid-Atlantic estuaries, where it focused on characterizing the current state of the environment rather than on predicting future effects from humans. The necessity for iteration during the exercise showed how important it was to identify the purpose of the assessment and its users, that appropriate, consistent data are lacking for large-scale assessments, and that it remains a challenge to communicate succinctly the results of such an assessment.     

Heavy metal removal and cyanide destruction in the metal plating industry: an integrated approach from egypt

Wastewater produced from a metal plating is a major environmental problem. Industrial auditing revealed that the main source of pollution mainly originated from rinsing water. The characterization of final effluent showed that it is highly contaminated with hazardous heavy metals and cyanide. The concentration of copper, hexavalent chromium, nickel, and cyanide in the rinsing water of metal plating department was 14.8, 40.9, 13.3, and 19 mg/l, respectively. The concentration of cyanide and zinc from the galvanizing department reached 60 and 80 mg/l. The remediation scheme included the application of in-plant control measures via changing the rinsing process followed by the destruction of cyanide and reduction of hexavalent chromium bearing wastes. The pretreated wastes were then mixed with other industrial wastes prior to a combined chemical coagulation-sedimentation using lime and/or lime in combination with ferric chloride. The results indicated that, after applying the waste minimization measures alone at the source, prior to final treatment of industrial waste, removal rates of cyanide, copper, nickel, and chromium concentrations were 23.2%, 14.9%, 32.3%, and 55.3%, respectively in the rinse water from metal plating department. Furthermore, the removal rates of cyanide and zinc in the galvanizing department reached 59.7% and 24.3. The integrated control measures and treatment scheme led to more than 99% removal of copper, nickel, chromium, and zinc, while the complete removal of cyanide was achieved in the final effluent.     

Modeling the impact of revegetation on regional water quality: A collective approach to manage the cumulative impacts of mining in the Bowen Basin,Australia

In this paper we quantify the additional water quality benefits that can be achieved through coordinated cumulative impact management. To do this we simulate coordinated and un-coordinated revegetation investments and compare their impact on achieving regional water quality goals. Our results show that coordination between multiple mining companies achieves additional benefits since prioritization is enabled across a broader range of investment opportunities. Additionally, when coordinated investment is permitted beyond the boundaries of coal mining leases, results show that additional benefits are greatly enhanced since these regions provide more rewarding investment opportunities. Results illustrate (a) how regional coordination may influence reputational benefits of investments, and (b) that coordination is beneficial when investment opportunities are unevenly distributed across the landscape. When additional benefits are achievable, we suggest that mining companies should develop collective investment projects with an understanding of how coordination influences project costs. Similarly, investment projects should be developed with an understanding of investment tradeoffs and how these may adversely impact on regional stakeholders and hence industry reputation. The mining industry has significant potential to contribute to regional wellbeing; however, land management policies must be flexible and promote incentives to enable companies to invest beyond compliance.     

Predicting the economic and demographic impacts of long distance commuting in the resources sector: A Surat basin case study

Predicting the economic and demographic impacts of resource development on regional areas is difficult to assess because of limited availability of analysis, difficulties of predicting where workforce are likely to be based, and different impacts on communities because of variations in size and economic structures. In this study modelling has been employed to identify future employment and demographic impacts of future resource developments on communities in the Surat Basin in southern Queensland, Australia. The analysis summarises potential employment increases over multiple projects and uses multipliers from Input–Output models to assess likely impacts by local government area when future workforce might commute to or live locally in the region. The results demonstrate that recent moves to commuting workforces limit the economic impacts on local and regional communities in complex ways.     

Impact of closed-loop network configurations on carbon footprints: A case study in copiers

Growing concerns about the environment make a supply chains’ eco-footprint increasingly important, presuming that footprints are a more effective (policy) instrument than those currently in use. The eco-footprint comprises all kinds of environmental impact, but often is narrowed down to one aspect; e.g. the carbon footprint, material footprint, the water footprint, and so on. Although returns give rise to an additional goods flow from customers back to producers, it usually improves the eco-footprint due to the substitution effect. The reverse channel supplies high quality (recovered) products, components and materials to the forward channel thereby reducing the need for virgin sourcing and production. We refer to this as closed-loop recovery, as opposed to recovery for cascade markets which lacks substitution. To maximize substitution, the recovered items must re-enter the original supply chain. The feasibility of closed-loop recovery depends partly on the geographical proximity of forward and reverse facilities. We develop a decision framework for optimizing closed loop network configurations, i.e. the combined disposition and location–transport decision. We apply the framework to a single case study concerning one type of footprint (namely the carbon footprint) of a copier (closed-loop) supply chain. The main implication is that a regional network, with combined forward and reverse facilities per continent, proves most efficient and most robust in view of uncertain exogenous variables, but only when a full set of closed-loop options is available (including closed-loop recycling). As an embedded case, main contribution value of it lies in the discovery of a new phenomenon with generic implications; namely that not only the closed-loop supply chains footprint strongly depends on the substitution effect, but that in turn the feasibility of closed-loop recovery options depends heavily on the network design. From delineations of the study we derive issues for further research.