Economic Evaluation Of Industrial Minerals On Federal Lands

The methods of evaluation of industrial minerals occurring on Federal lands have different meanings if the evaluations are done by a company rather than a government agency. For example, when the Bureau of Land Management (BLM) conducts an examination of mining claims, this is commonly referred to as a "validity examination," whereas it is an "economic evaluation" when performed by a company. Not only is there a difference in nomenclature in these evaluations, but there is a general lack of expertise in the Federal government on industrial minerals in general. A metallic mentality still prevails in the U.S. Forest Service (USFS) and the BLM. Because of this, many validity exams on industrial-mineral deposits commonly just skim the surface concerning economics and marketability. The BLM and USFS place a high amount of emphasis on past administrative case law pertaining to the validity of industrial minerals under the 1872 Mining Law and, rightly so, on marketability, which also is heavily addressed in case law. When the BLM considers marketability, only the marketability of a particular industrial mineral for only the primary use for which it was located is considered and any value-added markets cannot be included. The BLM defines marketability based only on the value of the mineral material in its in situ or raw state, rather than value-added through processing. Another difference in the evaluation of industrial minerals by government and industry is the question of by-products. When a company evaluates a mineral material it looks at all the markets. The BLM looks only at that market for that locatable mineral for which the claim was located. In other words, sales from non-locatable by-products cannot be used to support marketability or the prudent-man rule (i.e., oversize silica sand from a glass-sand claim being sold for construction sand, road base, fill, etc.). The question of reserves also can present conflicts. An industrial-mineral company will often try to identify all the reserves available for a possible future development. They must do this for financial backing and support from upper management. The BLM, however, will limit their validity examination only to those reserves that meet the prudent-man rule and marketability tests. The BLM will validate reserves sufficient to last 25-30 years, based on available market. The development of industrial minerals on Federal lands is a difficult process, and, if the 1872 Mining Law is changed, it could become not only more challenging but also more costly. The industry must become more tolerant of the mineral specialists in the BLM and the USFS. On the other hand, the government mineral examiners must become more aware of the importance of industrial minerals in everyday living, and the economic evaluation of these materials.