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Measuring the Level of Competition for Valuable Minerals

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Resource Monopolies: Measuring the Level of Competition for Valuable Minerals

Measuring Competition for Valuable Minerals

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Everybody loves a little competition.

It levels the playing field and ensures prices and products are kept affordable and available. But how do you measure and track the competitiveness of specific sectors?

The Herfindahl-Hirschman Index (HHI) is a commonly accepted measurement of market concentration, and in today’s case, we use it to show which mineral sectors have healthy competition between countries, as well as the sectors that are more monopolistic.

What is the Herfindahl-Hirschman Index?

The HHI is calculated by squaring the market share of each competitor and then summing up the resulting numbers. It can range from zero to 10,000.

The closer a market is to a monopoly, the higher the market’s concentration, and the lower its competition. If there were only one company in an industry, that company would have a 100% share of the market, and the HHI would equal 10,000, demonstrating a monopoly.

Conversely, if there were thousands of firms competing, the HHI would be near zero, indicating almost perfect competition.

  • HHI below 1,500: a competitive marketplace
  • HHI between 1,500 – 2,500: a moderately concentrated marketplace
  • HHI of 2,500 or greater: a highly concentrated marketplace

Interestingly, the same technique is also used by the U.S. Department of Justice to look at market competition and potential anti-trust violators, as well.

Global Metal Production

Today’s chart uses data from the World Mining Congress to look at the competition for global minerals between countries. The HHI scores show the minerals most and least exposed to competition, while uncovering opportunities for countries looking to bolster their own mineral production.

Here are 33 minerals ranked, going from highest score (most monopolistic) to lowest (least monopolistic):

RankMineralHHI ScoreType of Mineral
#1Niobium (Nb2O5)8,413Iron and Ferro-Alloy Metals
#2REE (Rare Earth Elements)7,219Non-Ferrous Metals
#3Oil Sands6,871Mineral Fuels
#4Tungsten (W)6,828Iron and Ferro-Alloy Metals
#5Platinum (Pt)5,383Precious Metals
#6Graphite4,990Industrial Minerals
#7Asbestos3,738Industrial Minerals
#8Vanadium (V)3,573Iron and Ferro-Alloy Metals
#9Coking Coal3,423Mineral Fuels
#10Cobalt (Co)3,184Iron and Ferro-Alloy Metals
#11Palladium (Pd)3,163Precious Metals
#12Aluminum (Al)3,078Non-Ferrous Metals
#13Chromium (Cr2O3)2,942Iron and Ferro-Alloy Metals
#14Molybdenum (Mo)2,812Iron and Ferro-Alloy Metals
#15Boron (B)2,749Industrial Minerals
#16Lithium (Li2O)2,749Non-Ferrous Metals
#17Steam Coal2,639Mineral Fuels
#18Lead (Pb)2,505Non-Ferrous Metals
#19Uranium (U308)2,233Mineral Fuels
#20Tin (Sn)2,036Non-Ferrous Metals
#21Iron (Fe)2,015Iron and Ferro-Alloy Metals
#22Diamond1,904Gemstones
#23Zinc (Zn)1,687Non-Ferrous Metals
#24Manganese (Mn)1,627Iron and Ferro-Alloy Metals
#25Potash1,565Industrial Minerals
#26Copper (Cu)1,136Non-Ferrous Metals
#27Titanium (TIO2)1,120Iron and Ferro-Alloy Metals
#28Silver (Ag)1,015Precious Metals
#29Salt (NaCl)982Industrial Minerals
#30Nickel (Ni)949Iron and Ferro-Alloy Metals
#31Natural Gas884Mineral Fuels
#32Petroleum686Mineral Fuels
#33Gold (Au)557Precious Metals

The data here makes it clear that mineral production is not uniformly distributed throughout the world, giving some countries huge advantages while revealing potential supply problems down the road.

Renewables in the Spotlight

While commodities like gold and oil have robust levels of competition around the world, the renewable energy industry relies on more obscure raw materials to make solar, wind, and EVs work.

Rare earth elements (REE) rank #2 on the list with a HHI score of 7,219, while battery minerals such as graphite (#6), vanadium (#8), cobalt (#10), and lithium (#16) also appear high on the list as well.

According to a recent study, the production of rare earth elements is an area of particular concern. Used in everything from electric motors to wind turbines, rare earth demand will need to increase by twelve times by 2050 to reach emissions targets set by the Paris Agreement.

The only problem is that China currently controls 84% of global production, which increases the odds of bottlenecks and scarcity as demand rises. This ultimately creates an interesting scenario, where a sustainable future will be at the mercy of a few a producing nations.

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Visualizing the Size of Mine Tailings

This infographic is a unique look at the estimated 217 billion m³ of mine tailings around the world.

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Mine Tailings

Visualizing the Size of Mine Tailings

On January 25th, 2019, a 10-meter tall wave traveling 120 km/h, washed 10 million m3 of mining waste from the Brumadinho tailings dam over the Brazilian countryside killing somewhere between 270 and 320 people.

This was a manmade disaster, made from mining the materials we use daily. Every copper wire in your house, steel frame in an EV, or any modern appliance comes from mining.

Mining leaves behind waste in the form of tailings stored in dams or ponds around the world. This infographic takes a look at the estimated size of one part of this waste, tailings, visualized next to the skyline of New York City as a benchmark.

Quantifying Mining’s Material Impact

In the wake of the Brumadinho tailings failure, the International Council on Mining and Metals (ICMM) began a review with institutional investors and the United Nations Environment Programme (UNEP), to survey tailings facilities around the world.

The Global Tailings Review tracked a total of 1,743 unique facilities containing 44,540,000,000 m3 of tailings. This dataset represents only 30.2% of global commodity production.

However, the review estimated the total number of active, inactive, and closed facilities is around 8,500. If we use the assumptions for the 1,743 estimate to calculate for the 8,500 facilities, a total of 217,330,652,000 m3 of tailings are in storage globally.

What are Tailings?

Not all rock that comes out of the ground is metal. Miners find, remove, and refine rocks that carry a small amount of metal we need.

According to the USGS, 72 billion tonnes of material produced just over 10 billion tonnes of ore. Only 14% mined material makes it to processing for metals.

Waste rock (tonnes)Material Sent to Mill (tonnes)Ore Produced (tonnes)Tailings (tonnes)
72,000,000,00018,800,000,00010,180,000,0008,850,000,000

Tailings are what is left over after mills separate the metal from the mined rock. The processed material “tailings” comes from the “tail” end of a mining mill and comprise fine particles mixed with water forming a slurry. Mining companies will store this waste in dams or ponds.

Not All Minerals Are Equal: Tailings Contribution by Commodity

Not all minerals are equal in their contribution to tailings. The grade, quantity, and the process to extract the valuable metals affect each metal’s material impact.

Mineral% Contribution to Global Tailings
Copper46%
Gold21%
Iron9%
Coal8%
Phosphate4%
Lead and Zinc3%
Nickel2%
Platinum Group Elements1%
Bauxite1%
Uranium<1%
Chromium<1%
Molybdenum<1%
Tin<1%
Vanadium<1%
Manganese<1%
Niobium<1%
Rare Earths<1%
Lithium<1%
Other minerals1%
Total100%

A renewable future will be mineral intensive and will inevitably produce more mining waste, but growing awareness around mining’s true cost will force companies to minimize and make the most of their waste.

Turning a Liability into an Asset

While tailings are waste, they are not useless. Researchers know there remains economic value in tailings. Natural Resources Canada estimated that there is $10B in total metal value in Canadian gold mining waste.

Rio Tinto has produced borates from a mine in the Mojave Desert which has left behind more than 90 years’ worth of tailings. The company was probing the tailings for gold and discovered lithium at a concentration higher than other U.S. projects under development.

According to UBC’s Bradshaw Initiative for Minerals and Mining professor Greg Dipple, the mining industry could help society store carbon. For over a decade, he has researched a process in which tailings naturally draws CO₂ from the air and traps it in tailings.

A Material World

While the majority of mining companies manage tailing dams safely, the issue of the material impacts of mining on Earth remains.

Mining of metal has grown on average by 2.7% a year since the 1970s, and will continue to grow. The importance of the size of tailings is critical to address proactively, before it comes rushing through the front door, as it did in Brazil.

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Visualizing the $2.9B Money Flow into Gold Exploration

This infographic tracks $2.87B from 425 transactions for gold projects in 41 countries between February 1, 2020, and February 28, 2021.

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Gold Exploration

Visualizing the $2.9B Money Flow into Gold Exploration

In 2020, the price of gold reached multi-year highs, in part to the impact of COVID-19 shutdowns. This renewed interest in gold spurred the plans of many gold exploration and development projects around the world.

This infographic uses data from Mining Intelligence which tracked the $2.87 billion from 425 transactions for gold projects in 41 countries between February 1, 2020, and February 28, 2021.

Gold Financings, by Country

Five countries accounted for 75% of the money raised for top gold projects around the world.

Canada attracted the most with $965 million or roughly 34% of all the money raised for gold exploration and development.

CountryAmounts ($USD)Number of Transactions
Canada$965,066,856180
Mexico$389,087,53425
Australia$291,040,97743
United States$255,563,60782
Chile$253,711,4272
Mali$85,728,40213
Guatemala$75,939,9824
Colombia$71,389,2294
Burkina Faso$58,937,8522
Greenland$54,739,5441
Fiji$44,024,2243
Nigeria$40,660,7351
Ivory Coast$37,608,0314
Argentina$30,678,6215
Brazil$30,292,1439
Nicaragua$29,040,3614
Tanzania$22,215,1782
Finland$2,106,07402
Mongolia$15,120,7001
Ghana$14,894,3364
Kyrgyzstan$13,651,8011
Namibia$13,041,6211
Ecuador$8,644,9751
Bulgaria$6,879,4501
Japan$6,569,7422
Guyana$6,282,1342
United Kingdom$4,796,9833
Dem. Republic of the Congo$4,528,4501
Peru$4,436,3356
Sudan$4,066,4841
Cameroon$3,252,9564
Papua New Guinea$1,737,9032
Serbia$1,478,5791
Kenya$1,288,0411
Spain$1,074,2111
Dominican Republic$992,2521
Guinea$387,4831
Kazakhstan$334,7331
Honduras$296,0961
Indonesia$213,8351
South Africa$102,9591
Total$2,870,857,503425

In second place, Mexico attracted $389 million or 14% of total exploration dollars raised while Australia with $291 million (10%) is in third place.

The United States comes in fourth place with $256 million or 9% of global gold exploration dollars. Chile on the fifth spot received $254 million (9%) with one project attracting the largest amount of any on the list.

Top 10 Financings by Gold Project

Focusing on individual projects, Gold Fields’ Salares Norte project in Chile received $252 million for the largest financing of the period. The company started construction this year, after a delicate operation to remove endangered chinchillas from the site.

Silvercrest’s Las Chispas project in Mexico’s Sonora state received $228.9 million, giving it the second largest sum. According to the company, the property hosts 94.7 million ounces of silver equivalent (AgEq) in proven and provable reserves.

PropertiesLocationAmount ($USD)Company
Salares Norte🇨🇱 Chile$251,845,426
Gold Fields Ltd.
Las Chispas🇲🇽 Mexico$228,858,469SilverCrest Metals Inc.
Windfall Lake🇨🇦 Canada$130,539,783Osisko Mining Inc.
Blackwater🇨🇦 Canada$129,712,140
Artemis Gold Inc.
Magino🇨🇦 Canada$108,128,440Argonaut Gold Inc.
Dargues Reef🇦🇺 Australia$96,500,680Aurelia Metals Ltd
Cariboo🇨🇦 Canada$95,460,630Osisko Development Corp.
Marmato🇨🇴 Colombia$66,116,989Aris Gold Corp.
Cerro Blanco🇬🇹 Guatemala$65,632,958Bluestone Resources Inc.
Mount Morgans🇦🇺 Australia$63,179,600Dacian Gold Ltd.

Gold is Canada’s most valuable mined mineral and the next 3 projects on the list show this priority. Osisko Mining’s Windfall Lake project in Quebec is third ($130 million), Artemis Gold’s Blackwater mine ($130 million) in British Columbia is the fourth, and Argonaut’s Magino project in Ontario ($108 million) the fifth.

The analysis found that more than half of the money raised (57%), went to 63 gold projects to advance economic studies – from scoping studies or preliminary economic assessments through to bankable feasibility studies and permitting.

A total of 71% of the projects were in the early stages of exploration, but they only accounted for about 25% of the total capital raised during the period.

Gold Going Forward

With $2.9 billion in capital going into gold projects around the world, the gold industry has big plans. These financings represent opportunities for host countries’ economies and their workers, along with more gold for investors to buy.

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