By-Product Marketing

Recently a mining analyst for a major bank called me to say that during his travels he had encountered an electric utility interested in a new uranium supply. Since we produce uranium as a by-product of phosphate operations rather than as a primary product, he assumed we simply sold our output in the spot market and that a new prospective purchaser would be of interest to us. This assumption was incorrect; the uranium had already been sold on a long term basis at terms more favorable than the currently depressed spot market. From the outset our approach to the marketing of uranium was based on the principle that by-product marketing is not unlike primary product marketing. This was particularly appropriate in the case of uranium, as we were planning a considerable technical and capital commitment to a new business. This illustrates: that the fundamental principle in by-product marketing is to follow a primary product strategy; that the terms "by-product" or "co-product" are creations of accountants; that they have no place in marketing decisions! Traditionally, the term "by-product" has implied that only a secondary marketing effort is required. Recent history has contradicted that view by demonstrating that by-product values can have marked impact on a mine's revenues and costs. In fact, by-product values can spell the difference between success and failure.