Mineral Resources, Economics and the Environment

History and structure of the mineral industry

A mineral deposit must be an ore deposit before society can use it. In other words, it must have the potential to yield a profit. But, what is a profit? It could be defined narrowly as income remaining after deduction of expenses and taxes for a single mineral deposit. But a broader view that includes other deposits or activities is also possible. The definition that prevails depends largely on the organization and the economic framework in which it operates. Many different types of organizations have been involved with mineral deposits and their definition of profit has varied considerably.

Historical perspective

During the Industrial Revolution, most minerals were produced by individuals or small groups funded by wealthy backers. As the scale of operations grew, small producers became large corporations funded by loans from banks, governments or other institutions, or sale of shares in the corporation (also known as stock). Where shares were sold to a few people and not widely traded, the operation was privately owned. Where shares were sold to the general public, a publicly owned corporation was created and its shares were traded on a stock exchange. Government-owned corporations were those in which the government held all the shares. These were not publicly owned because people could not buy a share in the company, although citizenship allowed them to benefit indirectly from the corporation's activities.

Consolidation became necessary when mining of isolated deposits showed that they were, in fact, parts of a single large deposit. The classic example of this happened in the diamond deposit at Kimberley, South Africa, which was discovered in 1871 (Wheatcroft, 1985). Early arrivals to Kimberley simply staked a claim on the deposit and began digging. At the height of activity, 30,000 people were digging on adjacent small parcels of land covering the kimberlite pipe that contained the diamonds. Gradually, adjacent claims were joined to form groups, and groups combined with neighboring groups to form small syndicates. By the mid 1870s, the original 3,600 mines had condensed into 98 groups, and by 1889, two groups, De Beers Mines headed by Cecil Rhodes and Kimberley Mines headed by Barney Barnato, vied for total control.