Amy has taught university-level earth science courses and has a PhD in Geology.
You may be able to go outside and easily find a rock in the ground, but chances are this rock is not worth any money. Mining and exploration companies spend millions of dollars looking for valuable mineral deposits in the earth's surface. What makes these deposits different than the common rocks you might find in your backyard? These valuable deposits are called ore deposits and are the subject of this lesson.
Ore deposits are solid, naturally occurring mineral deposits that can be extracted from the earth for an economic profit. What makes ore deposits unique is the economic benefit that can be gained by extracting these minerals. There are several factors that influence the value of individual ore deposits.
While we must extract all of our metallic resources from the earth's crust, the crust is actually quite poor in metals compared to deeper parts of the earth. For instance, when we look at the crust as a whole, silver only makes up eight parts per billion of the earth's crust. For this reason, it is not economical to mine any random part of the earth and try to extract silver.
Production mines exist in locations where an ore deposit is concentrated in much greater levels than typical crustal abundances. This concentration level is also known as a concentration factor, which is the ore concentration needed to be an economically viable deposit divided by the average crustal abundance. For instance, iron makes up approximately 6% of the earth's crust but must be present at about 40% to be an economically viable ore deposit. This equals a concentration factor of about six to seven for iron to be a valuable ore deposit.
Part of the cost of extracting these valuable deposits is that they are surrounded by hard silicate minerals that are not valuable and termed gangue minerals. The process of removing gangue from the valuable ore can be quite difficult and time-consuming depending on the size of the ore minerals. These unwanted minerals form vast tailing deposits at mines, which are sometimes later the target of further mineral extraction.
Economic Forces in Ore Deposits
As you would assume from the name, economic geology is heavily influenced by economic forces, such as supply and demand. Supply is how much of a good or product that the market can offer. Demand is how much a good is desired by customers. A good example of this is the recent rise in popularity of the lithium ion battery. These batteries are used in most modern technology, ranging from computers to cell phones to hybrid cars. In fact, the demand for lithium compounds has grown 22% per year from 2000 to 2008. Thus, the demand of lithium has been greatly increasing.
In economic geology, the supply is driven by the natural abundance and location of the ore deposits. Unlike most market products, we cannot increase the supply simply by making more lithium. We are limited to the amount of ore deposits that currently exist on Earth. Increased demand provides the drive for more exploration to find new and more cost-effective means of extracting a deposit from the earth. Thus far, the lithium production has been able to grow to meet the rising demand.
It is important to note that the price of ore deposits are not a static feature. You may have heard numerous news reports about the varying price of gold. The price fluctuates daily due to the demand for gold, current cost of extracting new ore, the amount of recycled gold on the market, and the prospect for the amount of gold available in the future.
Because the demand and market price of ore deposits are fluctuating on short and long terms, the concentration of ore that can be economically mined is also variable. This is especially true as the demand for a certain ore rises and the supply is dwindling. In these cases, it becomes more economical to mine lower concentrations of ore than in more favorable market conditions. The variation in market prices for ore will often cause companies to close mines during periods of low prices and re-open in periods of high demand. This is especially true in countries such as the U.S., which have high costs of labor.
Ore deposits differ from other mineral deposits because there's a high enough demand for them in our economy to make them valuable enough to be extracted from the earth. Because these valuable metals are normally rare in the earth's crust, we must find locations where the concentration is greatly increased above average. The value of the ore deposits is highly dependent on market demand and supply. When market demand is growing, this drives new exploration and new mines are opened at areas of lower concentration. As the market evolves and new technologies are constantly being created, we will likely continue to see fluctuation in valuable ore demand and prices.
You should have the ability to do the following after this lesson:
- Define ore deposits
- Explain how the concentration factor affects mining for ore deposits
- Describe how market supply and demand impacts the extraction of ore deposits
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