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By K. H. Coats

This paper presents the development and solution of a mathematical model for aquifer water movement about bottom-water-drive reservoirs. Pressure gradients in the vertical direction due to router flow are taken into account. A vertical permeability equal to a fraction of the horizontal permeability is also included in the model. The solution is given in the form of a dimensionless pressure-drop quantity tabulated as a function of dimensionless time. This quantity can be used in given equations to compute reservoir pressure from a known water-influx rate, to predict water-influx rate (or cumulative amount) from a reservoir-pressure schedule or to predict gas reservoir pressure and pore-volume performance from a given gas-in-place schedule. The model is applied in example problems to gas-storage reservoirs, and the difference between reservoir performances predicted by the thick sand model of this paper and the horizontal, radial-flow model is shown to be appreciable. INTRODUCTION The calculation of aquifer water movement into or out of oil and gas reservoirs situated on aquifers is important in pressure maintenance studies, material-balance and well-flooding calculations. In gas storage operations, a knowledge of the water movemenr is especially important in predicting pressure and pore-volume behavior. Throughout this paper the term "pore volume" denotes volume occupied by the reservoir fluid, while the term "flow model" refers to the idealized or mathematical representation of water flow in the reservoir-aquifer system. The prediction of water movement requires selection of a flow model for the reservoir-aquifer system. A physically reasonable flow model treated in detail to date is the radial-flow model considered by van Everdingen and Hurst.1 In many cases the reservoir is situated on top of the aquifer with a continuous horizontal interface between reservoir fluid and aquifer water and with a significant depth of aquifer underlying the reservoir. In these cases, bottom-water drive will occur, and a three-dimensional model accounting for the pressure gradient and water flow in the vertical direction should be employed. This paper treats such a model in detail — from the description of the model through formulation of the governing partial differential equation to solution of the equation and preparation of tables giving dimensionless pressure drop as a function of dimensionless time. The model rigorously accounts for the practical case of a vertical permeability equal to some fraction of the horizontal permeability. The pressure-drop values can be used in given equations to predict reservoir pressure from a known water-influx rate or to predict water-influx rate (or cumulative amount) when the reservoir pressure is known. The inclusion of gravity in this analysis is actually trivial since gravity has virtually no efFect on the flow of a homogeneous, slightly compressible fluid in a fixed-boundary system subject to the boundary conditions imposed in this study. Thus, if the acceleration of gravity is set equal to zero in the following equations, the final result is unchanged. The pressure distribution is altered by inclusion of gravity in the analysis, but only by the time-constant hydrostatic head. The equations developed are applied in an example case study to predict the pressure and pore-volume behavior of a gas storage reservoir. The prediction of reservoir performance based on the bottom-water-drive model is shown to differ significantly from that based on van Everdingen and Hurst's horizontal-flow model. DESCRIPTION OF FLOW MODEL The edge-water-drive flow model treated by van Everdingen and Hurst1 is shown in Fig. la. The aquifer thickness b is small in relation to reservoir radius rb. water invades or recedes from the field at the latter's edges, and only horizontal radial flow is considered as shown in Fig. 1b. The bottom-water-drive reservoir-aquifer system treated herein is sketched in Fig. 2a and 2b. Here the aquifer

By Walter Crooke

Regenerative hot-blast stoves are now in general use in all parts of the world, and are so well understood and appreciated, that I need not take up your time with an account of their history and introduction into the United States. My object in writing this paper is to give you a short description of a stove that is now being very favorably received and adopted here (see drawing). The stove was first introduced into this country in 1887 by M'Clure & Shuler (now M'Clure & Amsler), who have the management of the patent right in the United States. The English design had to be modified to suit the exigencies of American blast-furnace practice, which, in many respects, widely differs from our English experience. In the first place, the fire-bricks used in America expand to an extent unknown in England, and it became necessary to make special provision for this by increasing the number of cross-walls, and by leaving a space at the top of the stove through which the lining could expand. The expansion laterally was, however, more difficult to provide for, as the combustion-chamber in the center, being the hottest part of the stove, must necessarily expand more than the outer walls, and therefore tend to squeeze up the flue-openings. On first introducing these stoves to American ironmasters, a feel ing seemed to prevail that a " four-pass " stove did not utilize the whole of its surface. They also had an idea that the " two-pass " stove let the burning gas go before all the duty had been extracted from it; so that it was found neceseary to design a stove of a special character to suit their wishes. Hence the "three-pass" chimney top stove now before your notice, the advantage claimed for which is that each stove is independent, requiring no underground chimney flue or stack, and can be erected at a very light cost. The working of these stoves has proved to be very successful wherever they have been introduced.

Jan 1, 1891

By Thomas J. O’Neil

Once again, the United States Congress is debating the minerals depletion allowance. If the past is any indication, the debate will quickly become politicized. Representatives of the densely populated but mineral-poor Northeast will no doubt claim that percentage depletion is sheer robbery of tax dollars perpetrated by corporations to line the pockets of wealthy investors. Many southern and western legislators, on the other hand, will portray the depletion allowance as our only savior from mineral deprivation, blackmail from foreign producers, and a stone-age nonmineral existence. Although this characterization of the usual minerals depletion debate may be overstated, the most unfortunate aspect is that the genuinely important role of the depletion allowance in domestic minerals production is often obscured in congressional hearings. This article will try to provide a basic understanding of the minerals depletion allowance, the underlying rationale, and the increasingly important role the allowance will play in the future. Although the discussions and conclusions can be extended to the metal mining industry in general, most of the examples are drawn from the copper industry.

Jan 10, 1974

By E. E. Brownson

THIS paper will be confined to the treatment of methods as applied in the laboratory of the Boston and Montana Reduction Department of the Anaconda Copper Mining Co. at Great Falls, Mont. As the electrolytic plant of this company operates at a current density of approximately 35 to 40 amperes per square foot when running up to capacity, the arsenic and antimony content of the anodes delivered to the, plant is of considerable importance as bearing on the purity of the refined cathodes turned out. Owing to the rather high relative percentage of antimony, it has always been the custom to determine antimony as well as arsenic in all forms of copper. Thus, anodes have been analyzed in which the antimony was about equal to the arsenic although the average shows about 2 parts of arsenic to 1 of antimony. In the refined copper the relative proportions of the two impurities vary considerably, but probably in the average are about equal. In this latter case, the percentage of the two is so small that ordinarily no attempt is made to separate them, the report of analysis showing percentage of As and Sb combined. Although rapid and exceedingly accurate determinations of arsenic may be made by means of various distillation schemes, the determination of antimony, either by itself or together with arsenic, has always been more or less cumbersome and has required a considerable amount of time. By the methods, details of which follow, the determination of arsenic and antimony, either separated as in the case of anodes or together in case of refined copper, is accomplished in 24 hr. from the time the sample is received by the chemist.

Jan 8, 1913

By Hans Lundberg, Theodor Zuschlag

Based upon an instrumental improvement, a new development has taken place in the art of electrical prospecting, and some remarkable results have already been obtained with regard to potential exploration. In order to visualize the importance of this development, it is deemed advisable to review briefly the fundamental facts about potential surveys. Potential exploration may be carried out qualitatively or quantitatively. Qualitative investigations are made by determining and plotting on a map points of equal potential, whereby any anomalies are revealed, without, however, much clue to their magnitude. Quantitative investigations determine the variations of potential or potential drop, and thus show not only the location of the anomalies, but also their magnitude. Figs. 1 to 6 illustrate the influence of simple types of ground inhomo-geneities, assuming one effective exciter potential only. Such a condition can be closely realized by connecting an electric current source to two electrodes, one of which is located at a great distance. Assuming uniform ground resistivity, the resultant potential distribution mar be represented by concentric spheres. Any change from the normal condition causes a characteristic distortion of the spheres, which becomes different for different types of resistivity variation. The series of Figs. la to 6a illustrates schematically results of qualitative investigations and series lb to 6b results of quantitative investigations. Figs. 1 and 2 picture the well-known case of local resistivity variations normally encountered in ore prospecting. Figs. 3 and 4 show the reactions caused by more or less vertical resistivity contacts and Figs. 5 and 6 refer to the problem of ground-water and bedrock investigations where the resistivity contact is horizontal or nearly SO. It is evident from Figs. 5a and 6a that qualitative measurements do not permit an identification of such general geological features as widespread horizontal strata, because the resultant contraction or expansion of the equipotential circles at the surface cannot be recognized without quantitative determinations. On the other hand, qualitative measurements are well suited for the exploration of local or lateral resistivity

Jan 1, 1932

By G. E. Erdman

Gouverneur Talc produces a dry mineral filler from the tremolite talc rocks located near Gouverneur, New York. The raw material for this rock powder is a silicate rock and dust is controlled by water sprays whenever it becomes a problem underground. In the milling operation, there are some nine baghouse-type dust collectors which are utilized for the control of dust created in the crushing and grinding process. These collectors have been installed over a period of years since 1947 and are assigned to specific areas where the particle sizing of the dust can be returned to the plant circuit or product involved at the point of collection. It has been found very advantageous to mount most of these collectors on the top of the mill building and packhouses where the return of the dust can be accomplished by a gravity feed. In the years of effort involved in efficient control of dust generated in the plant, many things have been learned in the construction of ducts for control valves. The company has found useful such things as grasshopper legs for interconnecting silos with similar products, the elimination of fiat dust ducts, cleaning cyclones for coarse dust or heavy loadings, refractory linings for cyclones and certain duct areas, and the avoidance of square intersections when diverting or combining ducts. Operating cost records indicate that collectors handling the finest dust have the least expense. Operating costs on high-temperature dusts generally run higher than other types of material collected. Experience further indicates that the multiple cyclone-type collectors can provide a low cost and efficient way of removing hot dusts from process air streams before the introduction of the material into a baghouse. High moisture conditions and cold northern climates have been found to combine and create conditions under which baghouses can not efficiently function as dust collectors. Gouverneur Talc feels that its several dust collection systems have been a considerable maintenance expense but well worth the cost when it came to safeguarding the employees' health and preventing air pollution.

Jan 1, 1974

By E. L. Brack

ASARCO's copper smelter at Hayden, Arizona has been upgraded to meet the increasing Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OSHA) environmental standards. Fortunately, means were found to accomplish these standards and provide for more efficient operations. With the adaptation of oxygen flash smelting and other related operations at Hayden, ASARCO has turned to the use of minicomputers and microprocessors for inter-plant communications and local area process control. The applications of distributive and computer controls to the plant operations at the Hayden smelter are discussed in this paper.

Jan 1, 1984

The Motor Truck Sections of the 20th Annual Automobile Shows of 1920, to be held in the 8th Coast Artillery Armory, New York, Jan. 3 to 10, 1920, and in the International Amphitheatre, Chicago, Jan. 24 to 31, 1920, will he the largest and most comprehensive exhibitions of the kind ever held. Approximately 125,000 sq. ft. of exhibition space has been alloted at each place and upward of seventy makes of motor trucks, together with trailers, pacts and accessories will be dis-played. In conjunction with these expositions, Highway Transport Conferences will be held, with sessions each afternoon and evening. Every important phase of highway transportation will be discussed by men recognized as qualified authorities. Various talks will he il-lustrated by motion pictures and stereoptican slides. Members of the Institute may apply for complimentary tickets to-S. A. Miles, Manager, 7 East 42d Street, New York City.

Jan 12, 1919

By L. J. Boucher

The beneficiation process at Northampton is described and reasons are given for installing a flotation plant. The economics of running the plant, the difficulties of operation, and subsequent remedial action are discussed. CEMENT rock from a quarry operated by the Northampton plant1, 2 of the Universal Atlas Cement Co. has a relatively low average CaCO³ content. To meet specifications required for cement manufacture it was formerly necessary, over succeeding years, to add increasingly larger amounts of high-lime, low-alumina rock, which was obtained from a quarry operated by the company at a point along the New Jersey-New York state border, 79 miles from Northampton. Previous to 1940, 8 pct of total kiln feed consisted of high-lime rock. From 1940 to 1943, this figure jumped to 13 pct. Today it would be necessary to use 18 pct of this high-lime to meet current specifications. Increasing transportation costs made this an expensive operation. In addition, this high-lime rock quarry was contaminated with granite and high magnesia pockets. As there was no available high-lime rock in the Lehigh Valley, it was decided in 1936 to install a pilot plant where experimental work was done on processing local cement rock with flotation and burning the resulting product in a small kiln. This plant was in operation for six months and at the end of that period a suitable method of flotation had been established. From these studies it was also found that if the proportion of shipped-in rock rose slightly above 10 pct it became economically advisable to use the flotation process. It is the object of this paper to present briefly the operation of the flotation system at the Northampton plant. It seems advisable to comment on the raw material used in this process. The Northampton quarry lies geologically in what is known as the Jacksonburg formation of Trenton limestone.' In Pennsylvania this extends in a southwesterly direction from Portland, through Nazareth, Bath, and Northampton and across the Lehigh River to Ormrod. This argillaceous limestone was formed from marine deposits laid down during the early Ordivician period when a shallow sea covered most of Pennsylvania. Carbonaceous matter in the original deposit formed graphitic carbon under later metamorphic forces. From this graphite the cement rock of the Lehigh Valley derives its dark color. Most of the graphite must be removed before lime flotation can proceed. The quartz in this rock is desirable from the chemist's point of view, as it furnishes him with a form of silica necessary in the calcining process, but its abrasive properties damage pumps and piping. Aluminum silicates of potassium, sodium, iron, and magnesium are found in the form of sericite. Cal-cite averages from 69 to 76 pct. Iron in the form of iron pyrites is also present and has no deleterious effect. Talc is present in minute quantities. The

Jan 1, 1954

By A. E. Hall

The paper gives a general solution of ventilation net- works where densities play an important role and fans operating at different densities from branch densities are considered. Both the physics and computing techniques needed to deal with these networks are discussed.

Jan 1, 1977

By B. K. Mozumdar

This paper describes the development and application of a dynamic simulation model of ground movement in an underground mine. Ground movement and related stress distributions with or without stowing are computed as the mining face advances. Pressure profiles plotted for different face positions indicate the presence of a front abutment with a maximum value of four times the original ground pressure but no back abutment in the gob. The surface strain is considerably reduced with increase in packing density in the gob up to a certain value. Beyond this value, the reduction in the strain is minimal, indicating an economic level of packing. As a result of model experiments with different physical systems and geological parameters, it has been concluded that when one of the coordinates for the subsidence and the strain curves is made dimensionless in terms of the critical width, the relationship will hold true for all physical situations. This was in agreement with the NCB observations for different panel lengths.

Jan 1, 1977

By W. McA. Johnson

The work of J. E. Johnson, Jr., on the effect of small amounts of oxygen in cast iron in increasing its strength and resistance to shock, is of interest from the technical and scientific standpoints. The following exposition of the theory carries Mr. Johnson's explanation further and, in my opinion, will disclose certain related phenomena and perhaps shed further light on the subject. Some facts, so novel in character as to excite incredulity, have been accepted finally by many metallurgical authorities. One of these is that oxygen to the amount of 0.060 per cent. in cast iron gives it a breaking strength of 3,500 Ib. per square inch, compared with a breaking strength of 2,500 lb. per square inch in cast iron of the same composition with respect to elements other than oxygen, but having only 0.010 per cent, oxygen. The "oxygenated" cast iron, even if made in a coke furnace, has properties equivalent to the best charcoal pig iron. Mr. Johnson has also established the fact that the variations in combined carbon cannot account for the results. By microphotographic evidence he has shown that in oxygenated cast iron the graphite particles are dense and spherical, while in well-deoxidized cast iron the graphite particles are flaky and leaf-like. It is just a matter of common sense that iron of the latter structure is much weaker than the former. The analytical and microscopical work has been done with care and there is no doubt in my mind about the accuracy of the experimental results. In this paper then, we shall consider it as accepted that small amounts (0.060 per cent.) of oxygen increase the strength of cast iron by producing a structure in which the round and solid particles of graphite are surrounded firmly by a principal matrix of ferrite. The purpose of this paper is to show that the reason why the graphite particles are round is founded on the fact that the particles of any precipitate are made denser and harder by the presence of a reagent having a solvent action on the precipitate. This can be stated as a law, although I have never seen it so given in any textbook. Let us then, for purposes of illustration, give a concrete example and develop the theory of such mechanical and chemical actions as occur: It is well known that, by a soluble sulphate, a barium salt in solution is precipitated in a dense and easily filtered body when the solution is

Jan 1, 1916

By Robert L. Zerga

Mining equipment and systems have been incorporated into the San Manuel mine to meet the requirements of ore development and extraction. A general discussion of the existing equipment as it relates to the specific methods is presented. A comparison is made between original and present equipment, and future equipment needs. The problems, successes and failures of mining equipment adaptation for the San Manuel mining system are highlighted.

Jan 1, 1981

By Arch. B. Johnston, Carle R. Hayward

The effect of copper on steel has been studied by numerous investigators. Before modern testing methods had been developed, blacksmiths noted red shortness in iron, the cause for which was ascribed to the presence of copper. Numerous papers have been published on the corrosion of steels containing various amounts of copper, and a few writers have discussed the effect of copper on the mechanical properties of steel. The purpose of the investigation described in the following paper was to obtain additional data on the mechanical properties of medium-carbon steel containing small quantities of copper. Among those who have published results of mechanical tests on copper steels are Ball,' who states that copper increases the tensile strength and hardness but lowers the elongation. Stead2 states that copper steels closely resemble nickel steels containing equivalent percentages of nickel, as regards tensile strength, resistance to shock, corrosion and hardness. Wigham3 found that copper in small amounts had no injurious effect on steel. Breui14 found that with 1 per cent. carbon, copper lessened the brittleness of steel and in low-carbon steel it increased the tensile strength and lowered the ductility slightly. H. H. Campbell5 states that copper up to 0.25 per cent. slightly raises the elastic limit, elongation and reduction of area.

Jan 1, 1918

By F. H. Willcox

In Bessemer-steel practice, air is blown through a bath of iron, or projected strongly upon its surface to burn out silicon, manganese, and cafbon. Toward the end of the blow, when the iron is not protected from oxidation by these elements and the excess of air becomes great, there is oxidation of the iron. In open-hearth practice, the same difficulty is experienced with dissolved gas and oxides in the product, though not to as great or severe a degree as in the Bessemer process because the oxidizing conditions grow less severe as the end of the heat is approached, and if the bath is allowed to boil for a time it undoubtedly frees itself from a large part of the gas and oxides which have been absorbed in the earlier part of the process. Basic open-hearth steel is usually assumed to contain a larger proportion of oxides than acid open-hearth steel, but it may be said that all steel, Besserner and open-hearth, contains more or less oxide of iron dissolved in the fluid metal at the end of the "blow" or "heat." That certain metals are solvents for their respective oxides has been shown, in the case of copper, by Heyn, and, in the case of iron, by Law. It is indicated that the solubility of iron oxide in iron increases with the purity and temperature of the metal. This confirms what is observed and known by operating men, and these observations may be summarized as follows: 1. Cast iron. is rarely subject to oxidation, as is logical from its composition. 2. Normal steel, unless deoxidizers are added, contains blow holes. 3. Steel known to be oxidized is full of blow holes. 4. The addition of deoxidizers prevents, to a greater or less degree, the formation of blow holes in normal steel. With these observations in mind, it is logical to deduce that the cause of blow holes lies in part in the presence of dissolved oxide of iron in the molten steel and its consequent reaction with the carbon of recarburizers, when these are added, to form gases. (Another factor in the origin of blow holes is, of course, the solubility of gases themselves in the steel and

Jan 1, 1917

By W. S. Gresley

The object of this communication is to give a description of some remarkable spheroidal specimens of anthracite coal recently encountered in stripping the Mammoth seam at Milnesville, Luzerne county, Pa. Somewhat similar forms of coal, occurring in France and in Australia, have been described already. In vol. xxxvii. (1888) of the Transactions of the North of England Institute of Mining and Mechanical Engineers, under the title "Coal Nodules from the Borehole Seam at Newcastle, New South Wales," Mr. T. E. Forster describes and illustrates, with two plates of specimens, a series of " nodular " forms of anthracite coal taken from a depth of 300 feet beneath the town of Newcastle, and possessing the following characteristics : The lines of cleavage of the coal-seam are more or less curved, giving a rouuded appearance to the blocks. Dikes of intrusive dolerite intersect the coal, and the coal-nodules occur with with greatest frequency where the seam is most disturbed. They are easily separated from the surrounding coal. "The seam at this point is remarkable, not only for its splendid proportions but also for its extremely bright and rich appearance, which gives the working-places x strong resemblance to those in the Pennsylvania anthracite mines.....The cleavage of the coal is, in some park of the pit, noticeable for a series of small impressions or concavities about the size of, and resembling roughly in shape, a mussel-shell raised vertically on its longest edge.....To some extent the nodules appear to have a more or less concretionary structure, and to be, roughly speaking, composed of several concentric layers, through which the ordinary cleavage of the coal passes, while in others thin layers may be observed, resembling the coats of an onion!' The chemical composition of one of the nodules, as well as of the seam inclosing them, is as follows:

Jan 1, 1893

By B. Meddings

The technology involved in the Sherritt process for the recovery of nickel and cobalt from sulphide concentrates and mattes is presented in a manner which emphasises the chemistry of the process. The hydrometallurgical process takes advantage of the differing stabilities of the various oxy-acids of sulphur from thionates through thiosulphates to sulphate. Some separations are based upon stability differences, some upon kinetic differences and some upon valence state differences and similarities The engineering and economic factors involved in hydrometallurgy are not discussed in either detail or depth.

Jan 1, 1981

By J. R. Kyte, V. O. Naumann, C. C. Mattax

Imbibition and waterflooding tests at reservoir conditions show that conventional tests at room conditions sometimes lead to recovery estimates that are too low. Core samples which are of intermediate wettability at normal test conditions may be strongly water-wet at reservoir conditions. This was found to be true for samples from two of three reservoirs investigated. For the other reservoir, less difference was observed between the wettability of samples at normal test conditions and at reservoir conditions. Samples which became more water-wet at reservoir temperature and pressure also water flooded more efficiently at reservoir conditions. These results show that core analysis tests on intermediate wettability samples should be performed at reservoir conditions to obtain representative data. INTRODUCTION Throughout the oil industry, core analysis tests normally are performed using refined oils and at room temperature and pressure. This procedure has always been subject to question because the possibility is generally recognized that the reservoir environment may influence displacement behavior. Burkhardt, et al,' have performed waterflood tests at reservoir conditions on East Texas cores. They found little difference between results obtained at reservoir conditions and results of conventional flooding tests at room conditions. As they pointed out, however, this situation might not be general since they obtained data on only one rock and crude-oil system. This paper presents data which demonstrate that it is sometimes necessary to perform core analysis tests in a simulated reservoir environment to properly represent the reservoir wettability and displacement characteristics. The work is specifically concerned with reservoirs which were thought to be of intermediate wettability on the basis of conventional test results at room conditions, i.e., core samples imbibed only small amounts of either oil or water and exhibited no decided preferential wettability characteristics. Tests were performed on cores from three such reservoirs to determine their behavior in the reservoir environment. lmbibition and waterflood tests were used to demonstrate the effect of reservoir environment on reservoir rock wettability and displacement characteristics. Results of tests performed at reservoir conditions were compared with results from conventional tests. Imbibition tests were performed on samples from all three reservoirs. Waterflood tests were performed on samples from only one reservoir. Fluid properties for the three reservoirs studied are shown in Table 1. Tests at reservoir conditions were performed using bottom-hole crude oil at reservoir temperature and pressure. The aqueous phase used in these tests was a synthetic brine approximating the reservoir brine composition. Conventional tests were performed at room conditions with refined oils and synthetic reservoir brine. The oil-to-water viscosity ratios were adjusted to the reservoir values. The cores used in all the tests were taken from the reservoirs using either brine alone or a bentonite-car-boxymethylcellulose mud without additives as coring fluids. Previous tests show that these fluids have no significant effect on the wettability of reservoir rock samples.1 The cores were preserved in brine at the wellsite to prevent wettability changes during shipment and storage. Wellsite imbibition tests have been performed on fresh samples from several reservoirs (including Reservoir A) and compared with later laboratory imbibition tests on samples preserved in brine. The comparison showed that the wettability of the preserved cores was the same as that of fresh, surfaced cores at the wellsite.2 IMBIBITION TESTS Conventional imbibition tests were performed on preserved cores using the apparatus and procedures described by Bobek, et al.2 A sketch of the apparatus for imbibition tests at reservoir conditions is shown in Fig. 1. The preserved samples were first centrifuged to expel excess water and then placed in a stainless-steel container which served

By Elizabeth L. Robinson

INTRODUCTION The financial structure of the mining industry has changed strikingly over the last thirty years. The changes that have taken place in the last ten years include both the acceleration of adverse trends in familiar balance sheet numbers and ratios, and the subtle but extensive increase in the complexity and diversity of funding sources, both on and off the balance sheet. The objectives of this paper are: 1. to briefly trace the evolution of trends in the mining industry's financial structure; 2. to focus in more detail on changes in the last decade; and 3. to analyze those trends both within the framework of capital structure theory, and in the context of changes in business and economic conditions. This survey focuses primarily on the mining companies listed on the major U.S. stock exchanges, since financial data for these firms are readily available. The producers of minerals are a diverse lot, however, and the quantitative data on "the mineral industry" as characterized in this survey fails to encompass the financial arrangements for the bulk of production worldwide, whether owned by governments or private-sector enterprises. Even large portions of the U.S. minerals industry - subsidiaries of still larger firms, medium-sized privately-held companies, and the small miners - were not included in the quantitative part of the analysis. THE EVOLUTION OF THE INDUSTRY'S FINANCIAL STRUCTURE In the aftermath of the business failures of the Great Depression, most borrowers and lenders considered minimal debt on the balance sheet the soundest policy. By the 1950's, however, a body of literature was developing which demonstrated that the use of leverage could improve the value of the firm, given a corporate tax structure which allows interest, but not dividends, to be deducted from income. Optimal Capital Structure The objective of undertaking a new project is to improve the wealth of the current owners of the firm. If internally-generated funds are insufficient to allow growth at the desired rate, the company can raise funds either by issuing new equity, or by incurring debt. The most attractive source is the one which will provide the funds for the lowest cost. Both stockholders and lenders expect to receive compensation for use of their funds at a rate which reflects two things: (1) the return they could earn in alternative investments, and (2) the riskiness of the projected return. Factors which increase business risk include the variability of demand, sales prices and input prices, and "operating leverage", or the proportion of fixed to variable costs. In addition, from the investors' point of view, the use of financial leverage concentrates risk onto the shareholders, because lenders enjoy a prior claim in the event of bankruptcy. So although financial leverage can increase a project's expected rate of return, and therefore, presumably, earnings per share, too much debt will be perceived as uncomfortably risky by equity investors, and have a negative effect on stock prices. In theory, then, there should be an optimal level of debt which the firm's managers should seek to obtain in its financial structure. The desirable proportion of debt should in general be lower for a firm with a higher inherent business risk. In addition to their own judgement, financial managers are sensitive to the attitudes of lenders, rating agencies, and investment bankers in setting financial targets (Scott and Johnson). In practice, financial structure will also depend upon the company's growth rate and level of profitability, and conditions in the capital markets at a given time.

Jan 1, 1985

By James Ruddy

THE medical program of the Climax Molybdenum Co. is under the supervision of the department of industrial medicine of the University of Colorado, of which James J. Waring, professor of medicine at the University Medical School, is director. Dr. Waring is consultant and direct supervisor of both the hospital and industrial medical department at Climax. At Climax the program is in charge of the medical director and the associate physician, Dr. Galen M. Hover. The hospital at Climax is completely equipped with all that is necessary for the practice of scientific medicine and surgery. Only graduate registered nurses with experience in industrial medicine are employed. Being only a few hundred yards from the portal of the mine. acci-

Jan 1, 1946