Search Documents

By David Donoghue

Efforts made in the year 1930 and in previous years restricted production in most of the fields of Texas to a point that was satisfactory, at the beginning of 1931, to the majority of producers and buyers. In the Panhandle, North Texas and West Central Texas districts, a few operators with refinery affiliations or contracts either ignored, or by virtue of injunction suits, did not comply with the Railroad Commission's orders, and there was some oil sold at less than posted prices, which, with the Oklahoma City difficulties, caused the first general price reduction. More could have been done perhaps to help the situation on the Gulf Coast and in the Laredo district, but natural advantages are not readily surrendered. East Texas Proration troubles in 1930 were insignificant when compared with those of 1931. In January, 1931, efforts were begun to convince the producers and citizens of East Texas of the necessity of curtailment. Opposition quickly developed and meetings were held in the towns of the region and proration denounced vigorously. Notwithstanding a strenuous campaign for additional legislation waged by many producers, the regular session of the State Legislature refused to strengthen the conservation laws and passed only the Marginal Well Bill, designed to prevent the Commission from prorating small wells. The Railroad Commission held a heated hearing on East Texas in the latter part of March. During April the Commission issued three orders based on the Yates plan for the proration of the East Texas field. Each succeeding order raised the allowable for the field. In June the opposition held more mass meetings at which a plan based on acreage was endorsed. Apparently on the theory that any plan was better than none, the Commission issued an order on July 2 embodying some of the features of the proposed plan, limiting production to 250,000 bbl. per day, and dividing the producing area into 20-acre units participating equally in the outlet. Owing to the bringing in of many wells and the many violators of the Commission's orders, production increased to such an extent that prices went as low as 5c per barrel.

Jan 1, 1932

By Armando M. Lago

Secular and cyclical patterns of postwar sources and uses of funds of the mineral sector are analyzed. A simultaneous equation behavior model of sources and uses of funds is developed for both mining firms and integrated producers, and these models were put through the task of predicting the financial and expenditure be-havior of mineral corporations in response to mergers and changes in investment tax credits and depletion allowances. Finally, the quantitative analysis methodology is applied to the analysis of optimum capital structure of mining corporations. The postwar changes that have occurred in the expenditure and financial behavior of mineral corporations are reviewed, particularly the relative importance of factors that affect the industry's supply and demand for funds. This quantitative statistical investigation of factors affecting sources and uses of funds of mineral corporations is achieved through the formulation of a simultaneous equation model of sources and uses of funds. After a description of the study sample, the postwar cyclical and secular financial behavior of mineral corporations is analyzed in detail. An econometric model of mineral corporate financial behavior is formulated. This model is then estimated and reviewed. Policy issues regarding depletion allowances, investment tax credits, and industrial organization of the mineral sector are discussed. Finally, the optimum financial structure of mining firms is discussed and the effect of corporate financial structure on the mining corporations' average cost of capital is analyzed.

Jan 1, 1971

By Howard N. Eavenson

One who has been trained in belief in the law of supply and demand and its effect upon prices finds it difficult to adjust himself to the minute regulations imposed by the New Deal, and also to the bewildering changes of government policy as expressed within a short period of time between the antitrust laws and the N.R.A., and later by the Bituminous Coal Conservation Act of 1935. A survey of the coal industry since the World War, both in this country and Great Britain, however, shows that regulation of some sort is needed if any stabilization is to be achieved and if the wage structure and economic welfare of the many communities dependent solely upon coal are to be maintained. Let us look at what has happened to the industry since 1920, which can be considered as the end of the period affected by the war influence. This discussion will be confined solely to bituminous coal, although many of the general conditions are equally applicable to anthracite, the position of which now is at least as bad as that of the softer variety. Since 1920—to the end of 1934—the production of coal has decreased from 568.7 million to 358.4 million tons, or 37 per cent; the number of mines from 14,766 to 6,258, or 58 per cent; the average annual production per mine has changed from 38,512 to 57,425 tons, or 50 per cent. The number of large mines has increased considerably, and the number of men employed has decreased from 639,547 to 458,011, a reduction of 28 per cent, while the average output per employee has changed from 4.0 to 4.4 tons, or an increase of 10 per cent. The average price per ton of coal at the mine has varied from $3.75 to $1.75. During that time wages decreased largely until 1933 and since that time have increased, until now the rates paid are considerably above those in other occupations, although the actual yearly earnings are low, because of part-time work. From 1920 to the signing of the Jacksonville wage agreement in 1924, about two-thirds of the men were union members and practically all of the nonunion mines were south of the Ohio River; with the fixing of the high wage scale of that agreement, which soon proved to be an uneconomic one, many of the mines found that they could not retain their business, so gradually changed to nonunion. By 1928 the proportion

Jan 1, 1936

By Howard N. Eavenson

One who has been trained in belief in the law of supply and demand and its effect upon prices finds it difficult to adjust himself to the minute regulations imposed by the New Deal, and also to the bewildering changes of government policy as expressed within a short period of time between the antitrust laws and the N.R.A., and later by the Bituminous Coal Conservation Act of 1935. A survey of the coal industry since the World War, both in this country and Great Britain, however, shows that regulation of some sort is needed if any stabilization is to be achieved and if the wage structure and economic welfare of the many communities dependent solely upon coal are to be maintained. Let us look at what has happened to the industry since 1920, which can be considered as the end of the period affected by the war influence. This discussion will be confined solely to bituminous coal, although many of the general conditions are equally applicable to anthracite, the position of which now is at least as bad as that of the softer variety. Since 1920—to the end of 1934—the production of coal has decreased from 568.7 million to 358.4 million tons, or 37 per cent; the number of mines from 14,766 to 6,258, or 58 per cent; the average annual production per mine has changed from 38,512 to 57,425 tons, or 50 per cent. The number of large mines has increased considerably, and the number of men employed has decreased from 639,547 to 458,011, a reduction of 28 per cent, while the average output per employee has changed from 4.0 to 4.4 tons, or an increase of 10 per cent. The average price per ton of coal at the mine has varied from $3.75 to $1.75. During that time wages decreased largely until 1933 and since that time have increased, until now the rates paid are considerably above those in other occupations, although the actual yearly earnings are low, because of part-time work. From 1920 to the signing of the Jacksonville wage agreement in 1924, about two-thirds of the men were union members and practically all of the nonunion mines were south of the Ohio River; with the fixing of the high wage scale of that agreement, which soon proved to be an uneconomic one, many of the mines found that they could not retain their business, so gradually changed to nonunion. By 1928 the proportion

Jan 1, 1936

By DeVerle P. Harris

Risk for most mineral investments is greater than that of average business ventures, because the physical and economic characteristics of the mineral deposit are never known with certainty. Inasmuch as the merits of a potential mineral investment cannot be fully appraised without consideration of the impact to the investor of the possible unfavorable events associated with the adoption of the project, methods of risk analysis are important in project evaluation and investment selection. The conceptual framework for risk analysis and the means by which some of the recommended practices might be implemented are examined. In addition to the normal business risk due to market forces, the physical and economic characteristics of the mineral deposit are never known with certainty, for only partial or indirect information is available, such as data from drill cores or surface and underground workings. Consequently, risk for most mineral investments is greater than that of average business ventures. Inasmuch as the merits of a potential mineral investment cannot be fully appraised without consideration of the impact to the investor of the possible unfavorable events associated with adoption of the project, methods of risk analysis are important in project evaluation and investment selection. This paper examines the conceptual framework for risk analysis and means by which might be implemented some of the recommended procedures. Utility Theory A discourse on risk and its impact upon investment selection quite often leads the reader into the concept of utility theory, for utility theory is a device constructed by economists to measure the satisfaction an individuai receives from a good; in the case of investment analysis, that good is the outcome of an investment. It briefly is reviewed here to describe the reaction of the individual to risk and as a stepping stone to other techniques more suited to risk analysis at the level of the firm. Utility theory proposes that an investor possess a utility map (curve), such as indicated in Fig. 1, which indicates the value in utiles of potential monetary rewards to an individual with some specific endowment of resources. Points on this map are obtained from the following relationship:

Jan 1, 1971

By E. B. Swanson

Frequent reference has been made to the increased domestic gasoline demand recorded for 1931. This increase was in the neighborhood of 7,000,000 bbl. Although smaller relatively than that to which the oil industry had become accustomed by virtue of the experience of preceding years, the increase was of substantial amount, particularly at a time when any increase at all could be regarded with eminent satisfaction. Less has been said, however, of the 18,000,000 bbl. decline in gasoline shipments to territories and foreign countries. When the loss of business outside the United States is combined with the domestic increase, there results a net loss of some 11,000,000 bbl. in total gasoline demand. The gain of 2 per cent in domestic sales gives way to a loss of 2.5 per cent in total domestic and foreign sales. The United States actually has been losing ground in the international gasoline market since 1924, when shipments from this country equaled 72 per cent of the gasoline shipments from the leading gasoline-producing countries of the world. A loss in relative standing was recorded with each succeeding year. As long, however, as gasoline shipments showed an actual increase, the loss in relative standing was of little concern. Foreign producing centers annually supplied an increasing share of the foreign gasoline markets, but, until the past year, the demand abroad continued to increase at a pace which could accommodate all of the increased output of foreign plants and yet require increasing quantities from the United States. It was not until 1931 that the various factors were combined so as to produce an actual and substantial decrease in the foreign demand for United States gasoline. Consumption in foreign countries generally declined, while the output of foreign refineries and the foreign manufacture of substitute fuels continued to increase. From our own viewpoint, this meant a loss of some 18,000,000 bbl. of gasoline business in foreign countries, one-half of it probably due to the lowering in foreign demand and the other half to the increased output of foreign refineries and the increased utilization of substitute fuels.

Jan 1, 1932

By A. Weiss, W. A. Coster

The search for ore is characterized by a great variety of uncertainties, each of which can be resolved by obtaining information at a cost. Three exploration stages may be distinguished in which information can be obtained, based on inherently different cost structure: 1) the reconnaissance or scanning stage, 2) the examination or screening stage and 3) the project stage. This exploration sequence would roughly coincide with replies to questions as to: where, how, why and how much. As complete information in each stage is too costly to acquire, we must assess the probability that adequate information will be furnished by a limited amount of effort and attempt to maximize the expected value of ore to be found for a given exploration expenditure. Several problems are discussed relative to the mathematical formulation and possible computer procedures for determining the optimum allocation of a total exploration effort. Based on the available literature possible solutions to this problem are indicated. When scanning through published literature on mineral exploration, it seems at first that there is little room for substantial and systematic improvements in the efficiency with which the problem of discovery of new ore deposits is presently being handled by large organizations active in exploration. It appears equally difficult to offer something relevantly new which could generate a break-through in exploration thinking and cause a marked improvement in the ratio of successful undertakings to the total exploration projects started. On the other hand, a number of experts in recent years have urged that the problems in prospecting be analyzed in a more skillful and sophisticated manner than in the past. Their thesis is based mainly on the premise that the cost of finding mineral deposits will increase with increasing technical difficulties. In present large-scale exploration ventures, especially in those regions where outcrops and immediately visible geologic evidence are scarce, older methods of prospecting are increasingly being replaced by more indirect and systematic geophysical and geochemical methods with more emphasis on correct statistical design of exploration patterns. It is perhaps the oil industry which has made the greatest strides in developing statistically, well justified patterns in its search for oil; possibly because oil seepages, as indicators of the presence of oil, left off at an earlier point in time than did outcrops as indicators of base metals. Among the pioneers in the field of statistics and operations research, as applied to mineral exploration, the excellent works of Allais, Slichter, Koop-man, Mickey, de Guhnin, Krumbein, Griffith, Sichel, Krige, de Wijs, and Matheron may be mentioned. It should, however, be pointed out that three subjects of basic importance to the allocation of exploration efforts have so far received only scant attention in published literature, even by the aforementioned authors. In the first place, a more precise definition of the object of the search, i.e., a minimum-size orebody, seems to be outstanding. Secondly, a decision model is not a widely-discussed subject. Thirdly, no concentrated attempt so far seems to have been made to establish probabilities of the occurrence of economic deposits on a regional scale and to arrive at a slightly more accurate knowledge of the probability laws governing the deposition of ore. It is not the purpose of this paper to create new order in the complexity of uncertainties in which our decision processes in exploration necessarily have to be conducted. Rather, we intend to highlight some of the outstanding, hitherto unmapped territory, where diligent compilation and a utilization of present and historic data may statistically improve our chances of success. We hope that the contribution of this paper will lie in bringing allocation problems into better focus and in increasing the mineral industry's realization of the magnitude of the factors involved. THE MINIMUM-SIZE OREBODY The concept of target specifications for what constitute a minimum-size orebody in exploration is a rather variable one and depends to some extent on

Jan 1, 1963

By Leonard Logan

The petroleum industry is not peculiar in that it has a problem of stabilization. Economic conditions, not only in the United States but throughout the entire world, are unstable. However, the petroleum industry together with coal mining and agriculture has experienced a longer period of depression than most of the others. It is significant to note that industries engaged in the production of basic raw materials, the primary industries, have not enjoyed as much prosperity since the war as the secondary industries, or those engaged in the fabricating of raw materials and their distribution. The problems of the primary industries are not all the same. Overproduction has existed for several years in agriculture but its causes are not the same as those that have brought about overproduction in the petroleum industry. Unlike agriculture, the institution of property rights and the migratory nature of oil are responsible for the oil man's troubles. Our laws permit the owner of the oil and gas rights, with certain exceptions, to drill when and where he pleases. Since oil is migratory, the adjacent property owner must go and do likewise—drill. This condition spread over a wide area soon brings to the surface more petroleum than can be readily absorbed by the market, creating a condition of overproduction. It is significant to note at this place that when overproduction occurs the complete units in the industry suffer least. A complete unit is taken here to mean a corporation engaged in all the phases of the industry through production, transportation, refining and marketing. In the present depression the complete units in the industry are not in as bad financial condition as those engaged in single phases of the industry. The same thing can be said of the zinc industry, the lumber industry, and the other industries where there are organizations engaged in all the steps through the production of raw materials to the marketing of the finished product. The reason for this is that the complete units are in better position to coordinate all the factors that would work for a stabilized condition than are the units that are engaged in a single branch of the industry.

Jan 1, 1931

By Albert J. McIntosh

In discussing the petroleum products situation the first thing that comes to mind is "what is happening to gasoline." Is the consumption increasing? How is the export market? What about imports? Are stocks on hand too high? Have we produced too much? This paper will attempt to answer these questions. Consumption of gasoline (motor fuel) in the United States in spite of the depression and the chaotic conditions of many industries has increased during 1931 about 2 per cent over 1930. This favorable factor was offset by a severe contraction in exports, which fell off about 30 per cent from 1930. This drop in exports was so large that very little more export business was done than in 1926 or 1927. Taking all demand combined, there was a decrease from the peak year of 1930 of nearly 11,000,000 bbl., amounting to slightly over 2 per cent. The units of the industry, though, should have expected some decrease and governed themselves accordingly. Let us see what they did. They reduced imports over 3,000,000 bbl., which helped. Production was cut 3,000,000 bbl., but this was not enough, so that stocks increased 1,800,000 bbl. whereas during the previous year stocks were reduced 2,500,000 bbl. It is apparent, therefore, that something was done to keep the industry in balance in regard to gasoline, but not enough. If the year had ended on Sept. 30, we could have said that production had been cut 19,000,000 bbl. and stocks had been reduced from the previous year, but the excessive production during the last three months of the year changed everything. It is a strange thing and worthy of note that the price of gasoline fell to its lowest levels when apparently the greatest improvement was being made, and that during the last quarter of the year prices started to improve, when, in spite of an improvement in total demand which approximated 1930, an excessive production caused an uneconomic condition to set in. Stocks on hand on Dec. 31 were unquestionably too high, possibly 10,000,000 bbl. more than was needed for a strong condition to obtain. It seems almost unbelievable that the industry would continue to produce

Jan 1, 1932

By W. A. Riggs

In a single year the total transportation cost equals nearly 30 pct of the value of mineral commodities, the largest single cost from the deposit to consumer. The magnitude of this economic factor calls for more complete understanding of cost and operational problems between producer and carrier than now exists. Details are given of the costs of providing transportation as well as freight rates for selling transportation. In 1958, transportation of mineral commodities in the United States required 600 billion ton-miles to move 1 3/4 billion tons of products of mines comprising solid fuels, crude oil, industrial minerals and rocks, and ores. Possibly 17 pct was handled by more than one mode of transport, since combinations of several modes of transport may, at times, achieve better service/cost results than any single mode. Total transportation cost of nearly $5 billion equaled roughly 30 pct of the value of the mineral commodities, the largest single cost from the mineral deposit to the consumer. The tremendous magnitude of this transportation undertaking demands much more complete understanding than now exists between mineral producers and carriers about the economic and operational problems of each other. A substantial portion of the daily work of the writer is spent in trying to act as a combination interpreter and catalyst between potential shippers and carriers, hoping to direct both to points of mutual understanding and advantage. For the purpose of this paper, it is necessary to ask mining people to accept some terminology and to try to appreciate the mental approach of the freight rate making people of the carriers. This paper will consider costs of providing transportation as well as freight rates for selling transportation—although these are fields of limited certainty. There are no accurate statistical breakdowns for all modes of transport and types of carriers indicating commodities, volume of traffic, distances, costs, and rates. Much information is available for railroads, and some for the regulated portions of air, motor, pipeline, and water transportation. Unregulated carriers, handling about half of the transportation of products of mines, are not required to report, and very little is known of their activities. Figures used herein are national in scope, unless otherwise indicated, and have generally been derived from Interstate Commerce Commission reports and files. Tonnage figures have been reduced to net tons of 2000 lb. The very generalized comparison of average mileage freight rate levels for various modes of transport provided by Fig. 1 affords advantageous perspective for the entire field of transportation costs. Dashed guide lines show cents per ton-mile, and dotted guide lines show percentage of first class railroad freight rate. While costs of other than railroad transportation more nearly follow constant cents per ton-mile functions, costs of railroad transportation show characteristic taper, or decrease in cents per-ton mile with increasing length of haul. This fundamental difference in cost is due largely to the fact that railroads and pipelines provide their own fully taxed roadway facilities while highway, waterway, and air carriers use government-provided tax-free roadway at no cost other than fuel, license, and certain excise taxes. Thus railroad and pipeline transportation might be said to carry heavy threshold costs in addition to those transportation costs which are directly variable with ton miles of transportation produced. The original basis of railroad freight rate structures lies in the classification of all articles of commerce into railroad class ralings ranging from 7 to 40 pct of first class (100 pct) rate level, dependent on value, hazard, loading characteristics, service requirements, and whether carload or less than carload. Classification tables and mileage-based (but arbitrarily grouped), rate scales are published as tariffs subject to approval by regulatory bodies. Used together, these determine class rates in cents per 100 lb between points in the U. S. Where local commercial or operating conditions render it advantageous for carriers to depart from

Jan 1, 1961

By C. W. Merrill

The price records of seven representative mineral commodities for the 68-year period 1890 through 1957 have been compiled and analyzed for significant trends. When these records are reduced to real prices in terms of dollars of constant purchasing power or to the purchasing power of industrial wages at average rates, a substantial overall fall in prices is revealed. This downtrend contradicts the widely held concept that heavy drafts on a mineral resource must lead to scarcity, reflected in rising prices. Three metals (aluminum, copper, and pig iron), two fuels (bituminous coal and petroleum), and two nonmetals (sulfur and cement) have been chosen because of their pre-eminence in their respective categories, their significance in an industrial economy, and the ready availability of their price records. It might be added that these seven commodities were selected before any price figures were compiled; none was selected or rejected to substantiate any preconceived notions as to price trends. The overall importance of the seven is demonstrated by the fact that, taken together, they composed over three-fourths of the value of all minerals produced in the U. S. in 1957. The first step in the analysis was to reduce the price records to a basis for significant comparisons. Two such comparisons have been made: 1) The quantities of each of the commodities that could have been purchased for an average hour's wage in each year, and 2) the unit price of each commodity through the years in terms of deflated dollars. These data are set forth in the accompanying table and two charts. The quantities of the mineral commodity purchasable with the average wage for one hour's work in all manufacturing industries through 1926 were based on annual average prices and on average annual wage rates determined by Paul H. Douglas and published in his "Real Wages in the United States, 1890-1926." The series was extended through 1957 by the Bureau of Labor Statistics, U. S. Department of Labor. Calculations based on these data show that the average worker could have purchased 1.28 lb of copper with his hourly wage in 1890, whereas his hourly wage would have purchased 8.11 lb in 1957, an increase of 633 pct in the 68-year period. An average hour's wage would have bought 10.85 gal of petroleum in 1890, compared with 33.04 gal in 1957. Even more spectacular is the increase in sulfur, of which 25.25 lb could have been purchased with the 1904 average hourly wage; 223.08 lb were purchasable with the wage in 1957—an increase of 883 pct. Comparable price data for sulfur are not available for years earlier than 1904. For every commodity, the calculations show an improvement in the wage earner's purchasing power in 1957 compared with the early years. Measuring purchasing power in terms of wages does not give an entirely fair picture of the availability of a commodity in an economy. When the efficiency of an economy changes and the balance shifts among such elements as raw-material production, manufacturing, and service trade, the economic significance of an hour's work changes. Partly to meet such criticism, but mostly to present another interesting measure of the response of minerals to changing market conditions, a second set of calculations has been made to deflate unit prices for the seven commodities into terms of 1954 dollars. To accomplish this adjustment to a common 1954 parity, the Gross National Product Price Deflator, developed by the Office of Business Economics, U. S. Department of Commerce, was used. Although the results of these calculations are not as striking as those based on labor's increasing purchasing power, nevertheless the declines outweigh the rises in the prices of the mineral commodities. In terms of these deflated prices, aluminum and sulfur are much cheaper today than in the early years; copper was substantially cheaper in 1957 than in 1890; pig iron and petroleum are little changed; and only bituminous coal and cement have increased substantially. Strangely, the two mineral commodities with the strongest reserve positions are the two to exhibit rising real prices. Now this apparent overall downtrend in prices has taken place during a period of almost fantastic increase in the demand for mineral products. The value of minerals consumed in the world during the period greatly exceeds all mineral consumption up to 1890. A stage has been reached in the U.S. in which 95 pct of the energy used is of mineral origin and in which machines, structures, roadways, communication facilities, and most other elements in the industrial economy are primarily of mineral origin. Even agricultural fertility is maintained, in large measure, by mineral fertilizers. A series published in Minerals Yearbook shows that the value of U. S. mineral products has risen from $615 million in 1890 to $18,000 million in 1957, a 29-fold increase. Even in deflated dollars, the increase has been eightfold, while population has expanded less than threefold. Not only are demands of the industrial nations— the U. S., countries of Western Europe, and Japan— increasing at rapid rates, but those countries with agrarian economies are calling themselves underdeveloped and clamoring to industrialize. The ever-expanding mineral requirements in the U. S. and throughout the world show no abatement. Mineral reserves frequently have been described as wasting assets. Much concern has been shown for future users, who have been pictured as finding themselves on a plundered planet. Conservationists have viewed the future with alarm and have demanded legislation and regulations to reduce the drain on mineral reserves.

Jan 1, 1960

By Francis Cameron

Gloomy predictions that domestic mineral reserves are approaching exhaustion are unwarranted and may be harmful, this author contends. Specific mineral forecasting errors in the Paley Report are cited to support this contention, and steps that can be taken to insure a progressive mineral industry capable of keeping pace with the major raw material needs of the nation through advancing technology are suggested. Mining is both exciting and rewarding —although at times somewhat frustrating— and we all can have real pride in our industry, in its people, and in its accomplishments. It is, however, with concern that I have noted a deterioration in this Country in what might be called mining's stature and in the growth of a belief in many quarters that our mineral reserves are rapidly approaching exhaustion. In other words, there is a popular image that we are fast becoming a "have not" nation in many respects and that the domestic mining industry can no longer be considered, in the vernacular of Wall Street to offer much in the way of "growth potential." I do not subscribe to this hypothesis, nor do I be-li4ve that the record of the mining industry bears this out. However, let me add that we can, in time, talk ourselves into this frame of mind and we can hasten the day when this very well might come about by unnecessary and unwise legislation or regulation. My remarks today are basically designed to give my reasons for refuting this negative philosophy and to review our record. With your help, I know we can improve our image, and the public's recognition of our industry's peculiar problems. The progress of our civilization over the centuries has been fundamentally based upon proper use of raw materials, both agricultural and mineral, and upon energy, human or otherwise. As the standard of living has progressed century by century, the demands for mineral raw materials have increased in an irregular, but steadily rising progression. Fortunately, those minerals on which we depend most, i.e., iron, coal, petroleum, copper, aluminum, lead, and zinc have been neither too difficult to find nor to process into useful form. Iron, the most useful of all metals, is present in various amounts in most rock types and soils. Gold, seemingly the most generally desired (but certainly not the most useful of all metals), occurs in sea water in a far greater total tonnage than has been won from all of the world's known gold mines. If the latter is true, then why do we not see large installations treating sea water for the recovery of its gold content? The answer, of course, is that even the French, who seem, from their recent actions, to value gold above all else, have not devised a way of doing this at a profit. Theoretically, it is possible, but not with today's technology at a cost which would justify the effort. Man has exploited only those mineral concentrations which accidents of nature have placed within his so far limited means of finding and utilizing. What we geologists and engineers refer to as an orebody is nothing more than a concentration of minerals, exploitable with available knowledge, that will yield a value greater than the value attached to the energy and capital required to produce it. What is "ore" and what is not "ore" is, in the end, a matter of economics. The economic problem stems from the physical and chemical character of mineral deposits. The good Lord stacked the cards heavily in favor of rising costs by limiting the amount of the higher grade ores easily available. As the best and most accessible ores are depleted, it becomes necessary to work harder and with greater ingenuity to produce more from less accessible and lower grade resources. The quantity of mineral raw materials we can have in the future will be determined largely by what we can afford to pay for them in terms of human effort, capital outlay and production energies. We will always have the problem of cost with us and our only real means of keeping ahead of rising costs is by continually improving our technical abilities. We, in this country at least, no longer have open to us large and unexplored virgin wildernesses in which a pick-and-shovel prospector might uncover an untouched mineral bonanza. The rest of the world also has few conventional frontiers left in which the explorer-prospector is free to roam. We do, however, have enormous land areas unexplored, and untouched po-

Jan 1, 1969

By Don Coulter

OBSERVATIONS were made over a period of seventeen months to ascertain the economic value of a four-cycle Miller engine direct-connected to a Watts compressor, to determine whether this type of engine could compete suc-cessfully against the old type of two-cycle engine in general use. The accompanying tables show the data obtained. The first, over a period of seventeen months, compares the operating cost per hour and cost per horsepower-hour with

Jan 8, 1928

By Claude P. Heiner

While the title of this paper embraces the entire West Coast, the author, in the interest of simplification. has confined the discussion to California-particularly the central section. California's population has, risen 45 pct since 1940. Its electric requirements have also increased, not only because of the growth in industry and population but also because of the widespread tendency of all types of electric consumers to use more electricity than ever before. The growth of California's electric utilities is shown by published data covering operations, of three of its large systems and is given in Table 1.

Jan 1, 1949

By J. B. Morrow, D. H. Davis

THERE are two general approaches to the problem of increasing profits from an operation. One is to lower expense; the other is to raise income. Mechanical preparation of coal may be used for either purpose but a prudent consideration of many details must precede any decision lest the results be negative instead of positive. It is quite possible that any net gain will result from a combination of the two. Since mechanically prepared coal invariably is a better product qualitatively than a hand-picked coal from the same mine, it is a reason¬able expectation that the customer will be willing to increase the pro¬ducer's income by paying a higher price. Or there may be the possibility that a combination of mechanical mining plus mechanical cleaning will give a lower over-all production cost for the coal in the railroad car. More likely, there will be found a combination of these two factors. From the customer's point of view, the competitive delivered cost per B.t.u. considered in relation to such incidental factors as dust nuisance, handling properties, ash disposal, and ash fusibility determines what he will pay. In a bulk tonnage product such as coal, freight is a very considerable part of the delivered fuel cost, and obviously freight paid on incombustible ash has no economic attractions.

Jan 1, 1943

By C. Richard Tinsley

Mineral economists debate whether to call the deep-ocean nodules "manganese nodules," "nickel nodules," "polymetallic nodules," or even "ferro-manganese nodules." It is nickel and copper that are generally regarded as the main targets in the nodules. Processing considerations are thought to virtually dictate that Deepsea Ventures will produce high-purity manganese metal (at least if it follows a hydrogen chloride leach), whereas other groups have been focusing on the selective extraction of copper, nickel, cobalt, zinc, and molybdenum, while rejecting manganese to tails. Solvent extraction appears to be the primary multimetal extraction technique (except for manganese). These processing considerations indicate that metal production f, or Deepsea Ventures is essentially a co- product system (manganese recovery is necessary to recycle chloride ions) while the other groups can more easily approach the metals as selective co-products (e.g. recovering nickel and copper, and rejecting cobalt). Some zinc may be produced as a co-product, as it may have to be removed in the solvent extraction process.

Jan 4, 1975

By Sidney Swensrud

ABOUT a year ago, I attempted in a general way to trace the origin and development of some of the marketing problems of the petroleum industry, and to describe certain trends which it then seemed possible to foresee. To summarize briefly, it was pointed out that the consumption of gasoline, after increasing for more than a decade at an almost unbelievable rate, was slowing down, but that the two factors which determined the supply of gasoline-namely, the production of crude oil and the percentage of gasoline derived therefrom-were tending steadily to mount. It was suggested that, while the increase in gasoline outlets began with and probably was justified at the start by the rapidly increasing demand, long after all reasonable requirements as to number of outlets had been met the number continued to increase-if anything, at a still more rapid rate-because by that time the overproduction of crude had begun to exert an impelling urge upon the owners of that crude to seek assured outlets for it in the form of gasoline. As more and more companies became integrated all the way from crude oil to marketing, there took place an ever-increasing competition among them, not only for the existing outlets but for new ones. The wide margin between wholesale cost and retail price, which is characteristic of the early stages of most new industries, persisted in the oil industry longer. than in most industries, for various reasons. The existence of that wide margin provided in large measure the means of attracting new outlets, for as the gallonage per outlet declined with the increasing number of outlets, competing companies simply offered the dealers a larger part of the total margin. The very nature of competition suggests that such a process would continue until practically all of the available margin was thus given away, and such was clearly the, tendency. It was a system that in turn produced increasing marketing expense per gallon on account of the -diluted gallonage per outlet; this increased expense might seem to have provided a justification for continuing wide margins. Economics, like its parent, nature, however, progresses by mutations and so began to throw out new types of marketers, in the form cf tank-car service stations, cut-price jobbers, and the like-heretics or

Jan 1, 1932

By Donald Towse

Geothermal energy can substitute for and compete with other fuels, but until now it has been used only in special situations where it costs much less than alternate fuels. Geothermal heat is expected to be developed where it can: (1) compete with alternate fuels, (2) replace scarce fuels, (3) be more environmentally acceptable, or (4) is especially adapted to local needs. Economic problems in development include the often high capital costs of wells and gathering systems and the long lead-times required for electric generating plants. The large investment and long payout times for large industrial uses adversely affect the economics.

Jan 1, 1977

By W. M. Myers

Certain minerals possess inherent color and other properties that make them suitable for the pigmentation of paints, mortar, plaster, concrete, face brick, and other materials. Their production is one of the most ancient of mineral industries and their use by primitive man is well known. These natural pigments have some economic factors in their favor, particularly wide geographic distribution, low cost of production, ease of preparation, chemical stability, and permanence in use so that they continue to form the basis of a small but useful industry. When used in paints such pigments act as a filler and supply body and opacity in addition to color. Natural mineral pigments are prepared for the market by the comparatively simple operations of washing, grinding, blending, and calcining. Any one, or all of these processes may be applied to a single pigment. The development of synthetic pigments and the use of by- product materials have introduced competition with the products of nature and are having a growing influence on the economic position of the mined minerals.

Jan 1, 1949

By J. Dehais, W. A. Wallace

The pressures of urbanization are forcing producers of construction minerals either to transport their product greater distances or find new mineral sources. In areas with significant urban development near the coastal zone, offshore resources may prove to be an economically attractive alternative source. This paper addresses the economic viability of offshore mining of fine mineral aggregate. It proposes a model using a mathematical programming formulation based upon past research on both the onshore construction aggregate industry and the coal industry. The model is then used to assess offshore mining economics in the greater New York metropolitan area. Results show that in this region total consumer cost would be reduced by offshore mining of fine aggregate. In addition, increasing economies of scale could be realized by progressively larger mining operations. The distribution of these savings is also discussed.

Jan 1, 1982