Quantitative Economic Analysis Applied To The Mineral Industries - 2.8.A. Introduction - Brian W. Mackenzie

The term "mineral economics" is applied to a wide range of activities in the mineral industries. Earlier chapters have described the application of economic concepts to the mineral industries-supply, demand, conservation, tariffs, etc. The solution of mineral economics problems is often assisted by the application of quantitative methods. The purpose of this chapter is to describe a number of quantitative methods-econometric, operations research, and management science techniques-which find application in the analysis of mineral economics problems. These methods include input-output analysis, trend analysis, forecasting techniques, simulation, multivariate statistical analysis, mathematical programming, and market research techniques. The purpose of this introductory section is to provide a mineral economics framework for the application of these methods. Mineral economics is a subdivision of economics that is justified by a sufficient number of economic problems in the mineral industry requiring special experience and an unusual combination of skills. These problems are concerned with the conversion of minerals as geologic resources to minerals as economic goods. The mineral conversion process is outlined in Fig. 8.A.1. The physical occurrence of mineral deposits in nature and the market demand for mineral products in the economy provide the basic stimuli. The conversion process embodies a number of sequential stages-exploration, the development of mineral deposits, and mineral processing facilities and, consequently, productive activity to supply market demand. Changes in demand and the depletion of deposits illustrate the dynamics of the process. Mineral economics applies economic con-