Geology Reference
In-Depth Information
billion (ABARE, 2010)), depending on the energy source chosen for replacing the
mineral capital (coal or electricity). This figure would have been even larger, if the
other non-fuel minerals exported by Australia but not considered in this analysis,
were taken into account, namely: aluminium, uranium, ilmenite, rutile and zircon.
According to the Australian Mineral Statistics (ABARE, 2010), the resource
sector contributed to approximately A$ 116.2 billion in 2007 (9.8% of the GDP).
The latter figure includes exports of mineral and energy resources. However the mi-
neral capital lost, i.e. the replacement costs of non-fuel minerals, is not considered
in these accounts. Indeed trading minerals at the market price is as if one would
“sell” an ancient cathedral at the price of its constituent bricks. In the authors'
opinion, a fairer accounting system should consider the avoided and “hidden” cost
that Man does not need to pay for having those “mineral monuments” available.
Extracting concentrated mineral resources today implies a greater energy consump-
tion and cost in the future. This is why it is so important to recognise and assign
fairer prices to non-renewable resources, so as to help conserve the Earth's natural
endowment for the benefit of future generations. This idea is in line with the so
called Environmental Defense Expenditures (EDE) (Sec. 2.5.3), i.e. replacement
investments that compensate the depreciation of Nature's machinery in manmade
capital.
It should be stated that the numbers obtained depend strongly on commodity
prices and the choice of the energy source used in the monetary calculation of the
replacement of non-fuel minerals. The same amount of physical capital lost, cal-
culated with 2008 energy prices, would be equivalent to between A$ 114 and 144
billion respectively (9.7 and 12% compared to the 2007 Australian GDP 12 ). More-
over, should the exergy replacement costs of minerals be internalised, commodity
prices would surely increase significantly, much more than the values here obtained.
This fact is a clear indication that assessing mineral wealth loss in monetary terms
is not very suitable, as the volatility and arbitrariness of prices distorts their real
physical value. Furthermore, the latter is absolute and understandable, without
exception, worldwide.
That said, monetary values do provide an order of magnitude as to the impor-
tance of a given mineral's extraction. The considerable amount of money calculated,
as calculated in the example above, is what Australia should have virtually paid the
Earth in 2008 for the amount of minerals it extracted in the previous year. It should
also be stated that less developed countries, whose economy is fundamentally based
on the extraction of their mineral capital could even obtain values which are in the
order of their GDPs.
What remains clear is that the global economy treats the planet as if it were
a reservoir of free goods. Yet as the Earth becomes steadily more depleted, Man
12 For the following energy prices in 2008, respectively: 242.4 A$/toe of coal; 372.2 A$/toe of oil;
294.2 A$/toe of natural gas; and 40 A$/MWh.
 
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