Creating Wealth and Competitiveness in Mining

The ability of companies and countries to mine copper and other mineral commodities competitively and in the process to generate new wealth depends on their mineral endowment. Chile, for example, produces and exports copper because it is well endowed with high-quality, low-cost deposits. This production creates wealth that benefits mining companies and their stockholders, the government, local communities, as well as copper consumers around the world. The widespread perception that mineral endowment must largely determine competitiveness, or what economists call comparative advantage, must be true at any particularly moment. Countries with abundant reserves must be competitive. This follows from the definition of reserves — the quantity of a mineral commodity found in discovered deposits that are profitable to exploit under current conditions. As a result, it is a tautology and not particularly interesting. The important question is what causes reserves to change over time, producing in the process new wealth and shifts in competitiveness?