Looking Ahead - Mining and the Environment: From Ore to Metal - page 836

Price
US$/lb.

4

3.5

3

2.5

2

1.5

1

0.5

0

1860

Year

2006

FIGURE 22.2
Long-term Copper Price (adjusted for infl ation)

Copper Producer Price Index (PPI) Constant Price
Copper Historical Price

The price of commodities such as copper has
declined progressively over the past century.
Source:
International Nuclear INC.

Accordingly, although future demand may lead to the establishment of more mining
companies, more and more of the world's production is likely to be from a small number
of large mines operated by large companies.

Reduced Mine Life

Despite the fact that many mines
are now much larger, the total
mine life may be much shorter.

Another consequence of economies of scale is that, despite the fact that many mines are
now much larger, the total mine life may be much shorter. The Net Present Value (NPV)
of a mineral deposit will vary depending on the rate of production; commonly within
practical limits, the higher the production rate, the higher the NPV. This means that min-
eral deposits which may have previously been mined over 25 years are now being mined
over 10 years or less. As discussed in Chapters One and Fifteen of this topic, this may have
important ramii cations in terms of social impacts on local communities.
It is quite common for a mining project to expand its production rate during its operat-
ing life. This may be in response to one or more of the following factors:
●

Discovery of additional resources;

●

Commodity price increase enabling deepening of the mine and/or lowering of the
cutoff grade, with consequent increase in tonnage;

●

Commodity price decrease reducing or eliminating proi tability at the original produc-
tion rate, or

●

The availability of new technology or equipment which changes the economic balance
in favour of higher production rates.

Many other factors may also inl uence the selection of production rate and hence mine life.
One is supply and demand. Oversupply will inevitably lead to lower prices, which means
that some operations - usually not the ones responsible for the increased supply - will
become uneconomic. There is no point in producing more of a commodity than can be sold