Rubin Pajoohan Fartak co. International Engeenering

 What are minerals?  Why is mining important?  Geography of mining  Demand for minerals  Reserves and resources

 Metals are chemical elements that conduct electricity.  In nature, they occur in the form of minerals, which are chemical compounds containing metals and with specific chemical and physical characteristics.  Minerals occurring in sufficient quantity and grade to be economically exploitable are called ores.

 Aluminium: T ransport, packaging, construction, high tension power lines  Copper: Electrical conductors, construction, transport  Gold: Investment, jewellery, electronics  Lead: Batteries, pigments, ammunition, radiation shielding  Nickel: Stainless steels, electroplating  Platinum: Jewellery, catalysts  Silver: Electronics, sterlingware  Tin: Tinplate in packaging, solder, pigments  Zinc: Galvanizing, brass and bronze

MetalShare in total value of metallic mineral production % (estimates) Volume of output (metal content in kilotonnes) Iron ore Copper Gold13.53 Nickel Zinc Bauxite Others All metals

 Around twenty developing countries depend on mining for more than half their export income – and the number is increasing  Ease of entry into mining  No need to mobilize domestic capital  Easy access to technology  No need for government financed infrastructure  Easy market access  Transparent and simple standards  Minimal need for marketing  Scale of revenues  The world’s largest mines generated annual sales of more than US$ 12 billion, annual profits of more than US$ 8 billion in  Governments can easily appropriate rents

YEAR 2005 TOTAL ~ 910 billion USD Source: Raw Materials Group, Stockholm

YEAR 2005 TOTAL ~ 250 billion USD

GLOBAL MINING – GEOGRAPHY 1990

1. China 10.1%

% of total value of non-fuel mineral productionat the mine stage

 Asian minerals and metals demand has grown very rapidly and Asian countries have accounted for almost all of the increase in demand over the past five years  China is now the world’s largest steel producer, steel consumer, steel exporter and iron ore importer, the world’s third largest iron ore producer and the third largest steel importer  Metals use per capita is still very low in countries such as China and India, but they are still at a stage where metals consumption relative to GDP is rising and large populations make them more than significant forces on the market

 Demand will continue to be strongly linked to Asian growth and high rates of increase are expected  Once the recovery from the recession is completed, capacity is expected to just keep up with growth in demand in the long term (next 8-10 years)  A large share of output growth will take place in developing countries (Africa and Latin America), where there is now strong investor and exploration interest

MetalShare of value added, % Gold100 Platinum Group Metals100 Tin83 Copper77 Lead77 Nickel70 Zinc63 Cobalt33 Bauxite/aluminium9

ReservesResource base Aluminium Copper22736 Iron65886 Lead17607 Nickel30526 Silver15731 Tin28759 Zinc

ASSUMPTIONS  Metals use has increased by 5 % annually in the past and continues to do so until year 5;  from year 6 to year 15, metals use grows at an annual rate of 20 %;  from year 16 to year 24 it grows at 10 %;  from year 25 to 35 it is constant;  from year 36 onwards it declines by 2 % per year  The average life of metal containing products is 15 years  67 % of the metal in a product can be recycled.

 Hotelling: Mineral prices should rise at the same annual rate as the rate of interest – if the price increase is lower, then more should be produced, if higher, resources should be left in the ground  However, technology changes and new resources are discovered  Over most of human history, real mineral prices have declined – technological progress has offset depletion  Is the trend about to change?