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Astride mining: issues and policies for the minerals industry
Book reviews / Resources Policy 29 (2003) 69–74
menting with branding (product differentiation). Why buy a Gucci purse for US$ 1500 when you can buy an attractive alternative for US$ 15? The author describes efforts by De Beers, Ekati, BHP, Rio Tinto and Alrosa to create branded stones that can be marketed at a premium price. In summary, Chaim Even-Zohar has written a superb book on the world diamond industry. Any person involved in the diamond industry, be he or she a geologist, a miner, a cutter, a jewelry retailer or a mistress, will benefit from reading this fascinating and comprehensive volume.
James Otto, Institute for Global Resources Policy and Management Colorado School of Mines Golden, CO 80401-1887, USA E-mail address: [email protected] doi: 10.1016/j.resourpol.2004.04.005
Astride mining: issues and policies for the minerals industry Phillip Crowson, Mining Journal Books Ltd., London, 2003, 287 pages, ISBN 09537-336-5-3 (hardcover), US$110 If you are involved in the minerals industry, either as an academic or practitioner, and have not yet read a book by Phillip Crowson, now is the time to open your wallet and visit the bookstore. The former Chief Economist of Rio Tinto (and previously a Director of the London Metals Exchange) has retired and this has allowed him the time and freedom to pass along his knowledge and views of the industry. If you enjoy this book, you may also be interested in his prior volume Inside Mining: The Economics of the Supply and Demand of Minerals and Metal. Crowson opens the eleven-chapter book with a chapter devoted to Economic Rent. This is a favorite topic of economists as it proves fodder for endless studies of how mining revenues net of costs should best be divvied up between the miner, government and other parties of interest. In this reviewer’s experience governments today pay no heed whatsoever to the rent concept when designing mineral sector tax policy. However, while Crowson describes, in non-technical terms, the rent concept he uses it as a vehicle to talk more generally about wealth creation and its importance in facilitating economic and social development, for both present and future generations. Chapter 2 discusses the adequacy of global resources and reserves of minerals. Minerals are a non-renewable
73
stock and global resources are thus depleted as they are mined. Why then do we have more reserves of minerals now than in the past? The explanation is found in the definitions of the terms ‘‘resources’’ and ‘‘reserves’’ and in how the later is affected by exploration, discovery and the application of new technologies. Secondary sourced information is provided to support the discussion. Sadly, here and throughout the book, citations to in-depth work by other authors is often missing. Crowson’s approach is to keep it simple, to the point, and not bury the reader with analysis that supports his conclusions. Non-economists will probably appreciate this, but economists and academics would probably prefer more citations. Once establishing that the world has minerals resources, the next Chapter moves on to how they are located. Information on exploration trends is presented and patterns explained. The roles of the ‘‘juniors’’ and the ‘‘majors’’ are made clear and we learn about their respective motives. The issue of exploration productivity is clearly set out but one wonders why the author uses data over twenty years old to illustrate the concept. Information is presented on how companies decide where to invest (discovery potential versus ‘‘country risk’’) and readers will find the many figures useful. While the Author introduced us to the concept of wealth generation in the first Chapter, it is in Chapter 5 that the flesh is put upon the bones. Economic development is a complex subject. Some have argued, with good evidence, that minerals wealth leads to impaired economic development. Likewise, others have concluded, using the same data, that mining fosters economic development. I particularly liked his World Bank quote—‘‘it might be best not to draw elaborate conclusions on the basis of data analysis alone . . .’’. Crowson provides good coverage of the economic development concepts including: enclave nature of a mine, economic linkages, multiplier effects, value-adding and so forth. This is a very good chapter for anyone who is interested in mineral-led economies. Many mines are located in the developing nations (the ‘‘south’’) and most metals usage is in the industrialized nations (the ‘‘north’’). This premise has led to decades of debate about exploitation, value-adding, redistributing wealth and the like. In Chapter 6, Crowson examines the international politics of the minerals industry. He discusses the role of multi-lateral agencies (particularly UNCTAD), calls for a new international economic order, and the Antarctic treaty. Lacking is a discussion of the growing role of bilateral treaties—on trade, investment, and taxation. How much does it cost? and how can we affect that price? is the theme of Chapter 7. Various schemes have been proposed and some implemented to stabilize metals prices and mineral sector income. Crowson
74
Book reviews / Resources Policy 29 (2003) 69–74
explains the pluses and minuses of price stabilization and the mechanisms that can be used to manage instability. The mechanisms include tools available to firms as well as to governments. Chapter 8 builds on Chapter 7 and describes the initial success and ultimate failure of the International Tin Agreement as a means to stabilize the tin price. Chapter 9 examines the issue of security of supply. Can global supply keep pace with demand? Will control of supply by some parties mean that other parties will not have access? With mining becoming ‘‘unpopular’’ in the developed economies, will those nations still willing to mine hold a political advantage over importdependent nations? Should governments stockpile metals against times of shortage? These and other issues are examined. State ownership and control issues are the subject of Chapter 10. The growth and decline of state mine ownership in the later part of the last century is described as is the brief period of oil company involvement in mining.
The final chapter returns to the theme in chapter one but in more detail. Industry profitability and sustainability issues are introduced and useful charts and diagrams are presented. Crowson’s style is dry and to the point. My guess is that any publication attempts by the author at mystery or romance will result in endless rejection notices. However, if taken in small bites the book will reward the reader with a comprehensive, albeit shallow, picture of the global mining industry. The book covers a lot of ground competently but readers interested in in-depth analysis of any one subject will need to look further a field. James Otto, Institute for Global Resources Policy and Management, Colorado School of Mines, Golden, CO 80401-1887, USA E-mail address: [email protected] doi: 10.1016/j.resourpol.2004.04.006
menting with branding (product differentiation). Why buy a Gucci purse for US$ 1500 when you can buy an attractive alternative for US$ 15? The author describes efforts by De Beers, Ekati, BHP, Rio Tinto and Alrosa to create branded stones that can be marketed at a premium price. In summary, Chaim Even-Zohar has written a superb book on the world diamond industry. Any person involved in the diamond industry, be he or she a geologist, a miner, a cutter, a jewelry retailer or a mistress, will benefit from reading this fascinating and comprehensive volume.
James Otto, Institute for Global Resources Policy and Management Colorado School of Mines Golden, CO 80401-1887, USA E-mail address: [email protected] doi: 10.1016/j.resourpol.2004.04.005
Astride mining: issues and policies for the minerals industry Phillip Crowson, Mining Journal Books Ltd., London, 2003, 287 pages, ISBN 09537-336-5-3 (hardcover), US$110 If you are involved in the minerals industry, either as an academic or practitioner, and have not yet read a book by Phillip Crowson, now is the time to open your wallet and visit the bookstore. The former Chief Economist of Rio Tinto (and previously a Director of the London Metals Exchange) has retired and this has allowed him the time and freedom to pass along his knowledge and views of the industry. If you enjoy this book, you may also be interested in his prior volume Inside Mining: The Economics of the Supply and Demand of Minerals and Metal. Crowson opens the eleven-chapter book with a chapter devoted to Economic Rent. This is a favorite topic of economists as it proves fodder for endless studies of how mining revenues net of costs should best be divvied up between the miner, government and other parties of interest. In this reviewer’s experience governments today pay no heed whatsoever to the rent concept when designing mineral sector tax policy. However, while Crowson describes, in non-technical terms, the rent concept he uses it as a vehicle to talk more generally about wealth creation and its importance in facilitating economic and social development, for both present and future generations. Chapter 2 discusses the adequacy of global resources and reserves of minerals. Minerals are a non-renewable
73
stock and global resources are thus depleted as they are mined. Why then do we have more reserves of minerals now than in the past? The explanation is found in the definitions of the terms ‘‘resources’’ and ‘‘reserves’’ and in how the later is affected by exploration, discovery and the application of new technologies. Secondary sourced information is provided to support the discussion. Sadly, here and throughout the book, citations to in-depth work by other authors is often missing. Crowson’s approach is to keep it simple, to the point, and not bury the reader with analysis that supports his conclusions. Non-economists will probably appreciate this, but economists and academics would probably prefer more citations. Once establishing that the world has minerals resources, the next Chapter moves on to how they are located. Information on exploration trends is presented and patterns explained. The roles of the ‘‘juniors’’ and the ‘‘majors’’ are made clear and we learn about their respective motives. The issue of exploration productivity is clearly set out but one wonders why the author uses data over twenty years old to illustrate the concept. Information is presented on how companies decide where to invest (discovery potential versus ‘‘country risk’’) and readers will find the many figures useful. While the Author introduced us to the concept of wealth generation in the first Chapter, it is in Chapter 5 that the flesh is put upon the bones. Economic development is a complex subject. Some have argued, with good evidence, that minerals wealth leads to impaired economic development. Likewise, others have concluded, using the same data, that mining fosters economic development. I particularly liked his World Bank quote—‘‘it might be best not to draw elaborate conclusions on the basis of data analysis alone . . .’’. Crowson provides good coverage of the economic development concepts including: enclave nature of a mine, economic linkages, multiplier effects, value-adding and so forth. This is a very good chapter for anyone who is interested in mineral-led economies. Many mines are located in the developing nations (the ‘‘south’’) and most metals usage is in the industrialized nations (the ‘‘north’’). This premise has led to decades of debate about exploitation, value-adding, redistributing wealth and the like. In Chapter 6, Crowson examines the international politics of the minerals industry. He discusses the role of multi-lateral agencies (particularly UNCTAD), calls for a new international economic order, and the Antarctic treaty. Lacking is a discussion of the growing role of bilateral treaties—on trade, investment, and taxation. How much does it cost? and how can we affect that price? is the theme of Chapter 7. Various schemes have been proposed and some implemented to stabilize metals prices and mineral sector income. Crowson
74
Book reviews / Resources Policy 29 (2003) 69–74
explains the pluses and minuses of price stabilization and the mechanisms that can be used to manage instability. The mechanisms include tools available to firms as well as to governments. Chapter 8 builds on Chapter 7 and describes the initial success and ultimate failure of the International Tin Agreement as a means to stabilize the tin price. Chapter 9 examines the issue of security of supply. Can global supply keep pace with demand? Will control of supply by some parties mean that other parties will not have access? With mining becoming ‘‘unpopular’’ in the developed economies, will those nations still willing to mine hold a political advantage over importdependent nations? Should governments stockpile metals against times of shortage? These and other issues are examined. State ownership and control issues are the subject of Chapter 10. The growth and decline of state mine ownership in the later part of the last century is described as is the brief period of oil company involvement in mining.
The final chapter returns to the theme in chapter one but in more detail. Industry profitability and sustainability issues are introduced and useful charts and diagrams are presented. Crowson’s style is dry and to the point. My guess is that any publication attempts by the author at mystery or romance will result in endless rejection notices. However, if taken in small bites the book will reward the reader with a comprehensive, albeit shallow, picture of the global mining industry. The book covers a lot of ground competently but readers interested in in-depth analysis of any one subject will need to look further a field. James Otto, Institute for Global Resources Policy and Management, Colorado School of Mines, Golden, CO 80401-1887, USA E-mail address: [email protected] doi: 10.1016/j.resourpol.2004.04.006