Commercial Bank Financing For The Mineral Industries

The extractive mineral industries share a number of common characteristics and basic problems which are completely different from those associated with manufacturing and mercantile operations. These industries now supply about 95% of the inanimate energy consumed in this country, and share with agriculture in providing virtually all of our basic raw materials. Mineral producers, like farmers, are subject to the economic hazards of fluctuating markets and prices. Unlike farmers, however, they cannot renew the productivity of the earth, but must seek continually for new sources of supply. The necessity for exploration and development of new reserves, to replace those used up by production, introduces additional factors of economic risk. These operations require the expenditure of large amounts of capital, often well in advance of any assurance of profitability. Commercial banks that understand these special problems can provide a variety of constructive financial services to the mineral industries. The history of cooperation between banks and mining enterprises has yet to be written, but there is every indication that it would encompass a period of hundreds of years. Records refer to depository and lending services by the early European private bankers involving precious metals and jewels. Many of the exploratory voyages to the Far East and the New World were organized with the financial backing of wealthy syndicates, some of which also provided banking services, in the hope of finding new sources of gold and other precious minerals. In the United States many large banks are closely identified with the development of some of the larger mineral deposits such as the Mesabi Range and the gold fields of California.