Mining is facing a crisis which will transform it and us. That’s the claim made by Simon Michaux of the University of Queensland to a meeting in Adelaide.
Michaux bases his analysis on hard data. Since 1850 Population, per capita energy consumption and total energy consumption have all increased exponentially. We now use 8 times as much energy per person than in 1850. We are better off in many ways – almost all of which require energy and metals. And it is mining that produces coal and metals as well as diamonds and other gemstones.
So the demand has increased and this requires miners to dig and process more rock. And that just the start.
Mining is getting harder. Since 2002 the multifactor productivity index has decreased by 40% - it’s now at its lowest level for 35 years. That means that it takes 40% more resources – energy, water, labour – to produce one ton of useful material. That’s because everything is getting more difficult:
o Discovery rates are falling; most new mining projects are expansions of existing mines.
o We have to use poorer ores. For instance, copper ores used to contain 4% copper but now it’s no more than 0.6%. And it’s not just Copper. Michaux shows data for seven other metals and diamonds that tell the same story. This is no surprise. When it comes to minerals “no one is making them any more”.
o The ores we do use are harder, which means the grinding process takes more energy. We have to process harder ores, demanding more energy.
o The size to which the ore must be ground has also fallen, from 150 microns to typically 4 microns. So that also needs more energy – the energy needed increases exponentially as target size declines.
So the volume of rock to be processed and the required energy grow exponentially. This has been achieved through economies of scale. For the future the industry proposes to scale up and dig deeper.
Unfortunately there are a few problems with this. Energy production from all sources is expected to peak in 2017. The required water may not be available. Communities may recognise the harm caused by polluted air and water and prevent or restrict major developments.
And, says Michaux, there’s a further problem. The global crude oil market changed in about 1975. Prior to that production increased each year and the price rose slowly, reaching $50/barrel. After that production stagnated and the price rose sharply, reaching $147/barrel in 2008 – the start of the financial crisis.
The oil price needed to make exploration economic is now $100/barrel. But that’s also the price at which economic growth is difficult. Without growth there’ll be less demand for minerals.
And that will produce peak mining.
What will follow is less clear. Michaux foresees a big switch from extracting new material to “mining our rubbish tips”. He believes we will get there following a major geopolitical transformation somewhat as follows:
o Mineral-rich countries demand an increased share of the minerals.
o The money system become unstable.
o Money-based international trade is replaced by large-scale barter with key decisions taken by the mineral-rich countries on the basis of utility not profit.
This is probably optimistic!
There’s a lot of good stuff here and it’s not stuff that environmentalists and climate change activists often talk about. But it should be.