Industrial Minerals - Industrial Mineral Economics and the Raw Materials Survey - Discussion

Bruce C. Netschert—It is unfortunate that the authors of this paper consider it necessary to begin with an expression of concern over possible false interpretations of the word "economics." In their preoccupation with the definition of economics, they have adopted a definition of mineral economics which is, to say the least, unduly narrow. Just as the broad field of economics is not confined to a study of the profitability of business concerns, but includes the problems of production, distribution, and consumption as they pertain to society as a whole; so an inclusive definition of mineral economics should not be confined to the determination of the profitability of mineral-producing and processing enterprises, but should include the significance of the unique characteristics of mineral resources as raw materials for the use of society. Such features as the exhaustibility and localized, haphazard occurrence of deposits, the existence of a secondary (scrap) supply, and the increasing cost of operation during the life of a mining enterprise are obviously factors which concern those businesses which are producing mineral raw materials, since they partially determine the profitability of such enterprises. They are also of concern to society as a whole, however, as characteristics of one of the basic elements of the economic system. In the last analysis, the contribution which mineral economics can make as a means of determining and guiding social policy with respect to the production and utilization of mineral resources is perhaps more important than its use as a basis for determining the cost accounting procedure of individual firms. The list of "economic factors peculiar to the industrial minerals" which the authors present is in reality an application of such a broad definition of mineral economics. An inconsistency appears, however, in the inclusion of items 8 and 9 in the list. As this writer sees it, the point in question is: What influences do the characteristics of industrial minerals have on the characteristics and operating procedures of industrial mineral enterprises which are not present in the metallic mineral field? In answering this question with items 8 and 9, Messrs. Ladoo and Stokes do not recognize that there are two distinct types of differences between the two fields of enterprise. There are, on the one hand, important basic economic distinctions due to inherent economic characteristics of industrial minerals which do not pertain to metallic minerals. On the other hand are those characteristics of the industrial mineral enterprises peculiar to them alone, but which are superficial and temporary, in that they may be changed or eliminated at the discretion of the managers of those enterprises. The lack of adequate research and development in industrial mineral production, processing, and marketing (item 8) is not due to an inherent characteristic of industrial minerals. It is true that one may perhaps describe the field of industrial mineral enterprise in terms of such a deficiency, just as one could, until recently, point to a similar lack of research and development in the coal industry; but unless it can be shown that the deficiency has been wholly or partially due to the very nature of industrial minerals themselves it is not an "economic factor peculiar to the industrial minerals" but a temporary characteristic peculiar to the industry. In the writer's opinion, the authors have not demonstrated that the former relationship exists. Similarly, item 9, the "influence of technologic developments," is also not inherently peculiar to industrial minerals. Nowhere in the discussion of this item do the authors mention anything that is not equally applicable to the field of metallic minerals. This is not meant to imply that the specific technologic developments which the authors list are of equal significance in both fields. It does mean that such a statement as, "technological advances together with new consuming areas to provide markets make deposits commercially valuable which once were of no interest" cannot be considered as an argument that technological developments have significance in the field of industrial minerals alone. In considering the problem of stockpiling, the authors note that the stockpiling of nonstrategic materials might be desirable if future wartime needs could exceed domestic production capacity, but dismiss this as hardly adequate to justify such stockpiling. The problem, however, can be stated in broader economic terms, i.e., the real costs (as distinguished from the money costs) of prewar versus wartime production. In other words, it might well be that the labor and capital required to produce a given amount of a certain mineral raw material could be used more efficiently in another industry. In such a case it is obviously advantageous to stockpile the material in prewar times rather than forego the benefits of additional production in another line of endeavor during wartime under conditions which demand the optimum use of all resources, including manpower and capital. To the writer's knowl-