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By Joseph Pogue

OVER a period of years the writer has presented a number of studies1 on various aspects of proration, in a progressive attempt to analyze critically and constructively the economic complexities of this interesting institu-tion, which in a decade has revolutionized the economics of oil production in the United States. In the course of the investigations leading to these papers, the changing nature of proration and the principles under-lying its evolution have gradually become clear, so that it is now possible to depart from the analytical method and to construct a synthesis of the steps that, if furthered by the industry, should carry proration past the economic hazards that still surround it to the goal of maximizing the value of the petroleum resource to the industry and the public alike. NATURE OF PRORATION Proration literally means the allocation of demand among competing producers on a pro rata basis, but the term now carries a much broader significance for it is employed to describe the entire process by which the production of crude oil in the United States is regulated. There is naturally much confusion of thought on the subject, for proration is an evolving system of control based upon principles of conservation and equity and embracing a body of practices that are tending to adjust themselves to the needs of the situation but are subjected to varying and divergent influences in the process. As it is now constituted, proration is a planned production measure designed to prevent waste, insure ratable takings, and balance supply and demand. The procedure is administered by State regulatory bodies through use of the police power of the States under authority of State conservation laws; the practice is supported by a considerable degree of voluntary conformance on the part of operators; and the Federal Government has accorded its cooperation by providing advisory quotas, circumscribing imports, checking movements of hot

Jan 1, 1939

By Andrew Torok, Thomas D. Thompson

Research efforts have not developed techniques for the complete desulfurization of coal that is needed to reduce air pollution caused by burning coal and to reduce the sulfur in metallurgical coke. Sulfur in coal occurs in three forms and of these, the pyritic sulfur occurs as discrete mineral particles and, at least theoretically, should be subject to physical rejection. Pyrite occurring in hard rock mining is concentrated by froth flotation; therefore, the possibility of removal of pyrite from coal by flotation does exist. With this possibility in mind, the flotation and adsorption characteristics of ore and coal-pyrite were compared while using potassium ethyl xanthate as the collector.

Jan 1, 1973

By E. G. Woodruff

(Butte Meeting, August, 1913.) FEW authors of treatises and papers on engineering subjects have . given adequate attention to topographic maps.. The statement applies especially to mining engineering in all branches. Even those who have discussed such maps have treated the subject only in a general way. Therefore it is proposed to outline in this paper a few of the uncommon, yet important relationships which topographic maps and their by-product, structure-contour maps, have to modern methods of mining investigation and development when the facts depicted on such maps are properly interpreted. Topography, as suggested by the etymology of the word, menus a detailed description of particular places. Written descriptions have been found less effective than the pictorial representations, therefore attempts have been made in various ways to picture the surface features of places. Lines and shading have been used, hachures drawn, and, finally, the contour topographic map. To a large extent this style of snap is the result of the demands of engineers. It is designed to meet their needs far more than those of the man untrained in engineering. In fact, the average man obtains a better idea of the topography of an area from the hachure system than from contour maps. . Since the maps. have been made chiefly for the use of the engineer, they ought to meet his demands on the one hand, and, on the other, should be used by him to the fullest extent. Such maps, when properly made, accurately portray a portion of the earth's surface and should present the topography better than a personal examination of the area without a map could present it, because the person making such examination views only a limited portion of the surface at a time, and estimates distances only roughly with his eye. Let the engineer consider carefully the fact that in many instances the topographic map is superior to a personal examination of the surface features of a property because the map is based on careful instrumental measurements, whereas the eye gives imperfect data because it can be used merely for the estimation and

Jan 6, 1913

By AIME AIME

WHEN the War Production Board issued its order which will end the use of iron and steel in more than 400 familiar civilian articles, the list of those products formed a fascinating and homeric catalogue of the things we use. Articles for which iron and steel may not be used after a 90-day "tapering-off" period are as workaday as office machinery and as frivolous as cocktail shakers. Mostly they are smaller items-the smallest probably are phonograph needles but in the aggregate they will save tremendous quantities of the metal most needed to win the war. In total war there are no trifles. Interesting proof of this lies in the fact that by eliminating manufacture of blackhead squeezers we shall save 110,000 lb. of steel a year. Out of this steel we might have made four 155-mm. field pieces. We might have made a thousand 3-in. trench mortars, 4400 0.30-caliber machine guns, 55 16-in. shells, 110 200-lb. aerial bombs, or three 15-ton tanks with something left over to arm them.

Jan 1, 1942

By Cleland N. Conwell

APPLICATION of seismic methods to the location of buried channels in placer mining is fairly common knowledge, yet some of the facets of seismic refraction surveys have remained obscure in their application to mining. This description by a member of the U. S. Bureau of Reclamation team investigating bedrock at the Oso Dam site, may offer a lead to wider application of the method for bedrock determinations in engineering of mine and mill plants, tailing disposal, and water supply. It may also offer assistance in planning geological exploration in areas covered by overburden. Pertinent, and perhaps more than passingly significant, is that the seismic survey of the Oso dam site started at noon and was completed the afternoon of the next day. Location Oso dam site is on the Navajo River, Archuleta, County, Colo., 30 miles southeast of Pagosa Springs, Colo., 10 miles northwest of Chama, N. M. Bedrock at the proposed dam site is Mesa Verde Formation, Cretaceous age sandstone. The nearest good sandstone exposure is about 5/8 of a mile upstream from the location of the seismic determinations. The material above bedrock is sand and gravel with sandy loam soil covering benches above the river. The site appeared favorable, after a geologic and topographic reconnaissance, but overburden thickness was unknown. Exploratory drilling was not contemplated in the near future so a short seismic investigation was selected as the most suitable method of determining depth to bedrock. Field Procedure Geophysically, a seismic depth investigation is simply the measurement of depth from ground surface to the top of a layer which transmits seismic waves at a higher velocity. In this case the high-velocity seismic layer tentatively correlates with the Mesa Verde sandstone. Field procedure required a seismic explorationline or "spread" with 12 geophones set at measured intervals. Explosive charges were buried at few feet in the ground and detonated at shotpoints near the ends of the spread, and at intermediate points. The time of travel of the seismic waves from the shotpoints through the ground to each of the geophones along the spread was measured and recorded photographically with equipment housed in a field truck. The seismograph on each spread provided a time-travel graph. From it were computed the speed of seismic waves in various layers below the surface and depth to each different seismic layer below the shotpoint. In the case of the Oso dam site it was possible, in addition, to determine the depths below certain geophones, because there were only two seismic layers involved. Interpretation In seismic exploration waves are refracted from the top of layers which often correspond to divisions between subsurface formations. When drill holes are available the geologic logs offer a means of correlating stratigraphic breaks with seismic layers, improving reliability of seismic interpretation in terms of depth to bedrock or other geologic terms. There were no drill holes available in the case of the work at the Oso dam site. Geologic conditions appeared favorable for seismic technique because of excellent contrast in seismic wave velocity between the overburden and the Mesa Verde formation. The upper layer had a velocity of approximately 2500 fps and was interpreted as overburden, the lower layer had a velocity of approximately 9000 fps and was assumed to be the sandstone. These velocities are of the order expected in these materials. The seismographs obtained at the Oso dam site were excellent. The energy from the shot came in strongly at each geophone, giving an easily read record. Time-travel graphs plotted from wave arrival times were uniform and made interpretation comparatively easy. In Spreads 1 and 2 near the river the lower velocity layer was 12 to 15 ft deep. For the spreads on higher ground, or the bench south of the river, it was from 15 to 29 ft deep.

Jan 1, 1952

By Freeman Bishop

Senator Henry M. Jackson t D. Wash.) recently tossed a live grenade into the hardrock mining industry with proposed legislation to change provisions of the law governing Federally owned mineral values. Title Two of the measure would place hardrock mining agreements on a leasing basis similar to that which has applied to oil and gas since 1920. Known as the "Public Domain Lands Organic Act 01 1971" or S.921, the bill would monitor exploration by heavy machinery which ran destroy fragile ecology without any requirement for restoration or rehabilitation." Jackson said. Abandoned mining claims, lie continued, dot the public domain, "casting clouds upon the title to property which belongs to all the people.” and a minerals leasing system is "the most practical way of achieving the proper balance."

Jan 1, 1971

By I. L. Box

IN planning retreatment of tailings, the material to be retreated should be thoroughly investigated, tak- ing into consideration the total tonnage, the blende content, the specific gravity of the different particles, and the grinding necessary to liberate the mineral. The tailing pile is surveyed by making a closed trav-erse around the outer edges, locating the stations at points from which a considerable portion of the pile is visible. From each of these points the pile is sur-veyed by stadia and a contour map made. The yardage is then calculated from the contour interval and the area inclosed by the contours obtained with a planim-eter. A party of three men can survey an average tailing pile in one and one-half, days. In calculating tonnage it is assumed that 22 cu. ft. of tailing in place equal one ton. Sampling is done by the use of an auger with casing to prevent the hole from caving. These holes may be bored 12 to 15 ft. deep by hand, but to penetrate the entire pile some kind of power is applied to drive the casing and raise or lower the auger. The latter method is more expensive but the increased cost is more than compensated for by the value of the information obtained.

Jan 7, 1928

By Fred A. Anderson, George B. Wallace, Edward J. Slebir

As the reservoir rises behind an arch dam, it presses the arch into the canyon walls and valley floor. To compute the stresses, deflections, and arch reactions, it is necessary to know how much the rock deforms under the combined loads of gravity, temperature, and water. Under sustained loading for a period of time, the rock continues to deform or "creep" slightly, causing changes in the stresses and shape of the arch. Under reduced loading, the elastic arch tends to resume its unstrained position and it is important to know that the rock will follow it and maintain tight contact along the abutment. It is, therefore, important to know the "set" characteristic of the rock. Past attempts to define load-deformation properties of rock, including creep and set, have largely l been limited to laboratory test of intact cores and in-situ jacking test utilizing bearing plates 2 to 3 ft in diam. In both cases, a uniaxial load has been applied to a volume of rock too small to fully reflect the influence of cracks, joint systems, foliation, and other inherent weaknesses within the rock mass. This chapter describes a large radial jacking test which more nearly duplicates the action of an arch dam by penetrating the load deep into the rock mass, bringing into play more of the factors which contribute to prototype deformation. Results obtained from the large radial test are compared with those from smaller uniaxial test. DESCRIPTION OF RADIAL TEST The radial jacking test described in this chapter was performed in an adit off of an exploratory tunnel driven into a proposed dam abutment

Jan 1, 1972

By Harry H. Angst

THE history and efficiency of 40-ton capacity dump trucks for surface waste removal at the New Cornelia opencut copper mine, at Ajo, Ariz., are summed up in this paper. Tabulations of truck performance, together with detailed cost figures, prove the value of truck transportation for certain special operations at a large mine. Emphasis is given to the fact that truck transportation not only reduces the haulage costs but also reduces the breaking ground and shovel-loading costs per ton. The New Cornelia opencut copper mine is in the desert. The climate is ideal for seven months of the year, but the five summer months are uncomfortably hot. The elevation is 1820 ft. above sea level and the annual rainfall is approximately 6 inches. The ore body is a monzonite-porphyry deposit. The waste-rock capping consists of hard rhyolite, conglomerate and porphyry. All the material is hard and cannot be excavated without blasting. The rhyolite and conglomerate waste is very blocky. The weight of the rock in place is 2.16 tons per cubic yard. The average mine production per day is 22,000 tons of ore and 18,000 tons of waste rock, the latter consisting of surface rock and material within the ore body too low in grade to send to the concentrator. The rock is loaded by electric shovels with 4 ½ -cu. yd. dippers. The primary transportation of ore to the concentrator and waste to the dumps is by 30-yd. dump cars and oil-burning steam locomotives; therefore truck haulage of waste is a minor factor of the New Cornelia operation. However, as New Cornelia was one of the first mines to use large-capacity dump trucks for haulage, the results obtained are of interest. EQUIPMENT On the south side of the New Cornelia is a hill rising about 500 ft. above the normal surface elevation, roughly 1000 ft. in diameter at its base, called locally Arkansas Mountain peak. Exploratory drilling in this area developed additional ore that could be made accessible for open pit operation only by moving the mountain face a maximum distance of 400 ft. to the south. The slope of the mountain adjacent to the pit averaged 35°, and the small area involved precluded the use of train haulage for the removal of the 4,000,000 tons of waste estimated above the normal pit elevation. A study of dump-truck haulage at Boulder Dam and San Gabriel Dam led to the decision to use large-capacity end-dump trucks rather than smaller trucks, for the following reasons: 1. The truck would have to withstand the impact of hard, heavy chunks, some of them weighing as much as 10 tons, which would be dumped from the 4 ½ -cu. yd. dipper. 2. The coarse, rocky, abrasive material would soon damage a light truck body. 3. The body of a small truck could not be efficiently loaded with coarse rock.

Jan 1, 1941

By Henry H. Angst

Tim history and efficiency of 40-ton capacity dump trucks for surface waste removal at the New Cornelia opencut copper mine, at Ajo, Ariz., are summed up in this paper. Tabulations of truck performance, together with detailed cost figures, prove the value of truck transportation for certain special operations at a large mine. Emphasis is given to the fact that truck transportation not only reduces the haulage costs but also reduces the breaking ground and shovel-loading costs per ton. The New Cornelia opencut copper mine is in the desert. The climate is ideal for seven months of the year, but the five summer months are uncomfortably hot. The elevation is 1820 ft. above sea level and the annual rainfall is approximately 6 inches. The ore body is a monzonite-porphyry deposit. The waste-rock capping consists of hard rhyolite, conglomerate and porphyry. All the material is hard and cannot be excavated without blasting. The rhyolite and conglomerate waste is very blocky. The weight of the rock in place is 2.16 tons per cubic yard. The average mine production per day is 22,000 tons of ore and 18,000 tons of waste rock, the latter consisting of surface rock and material within the ore body too low in grade to send to the concentrator. The rock is loaded by electric shovels with 4 1/2-cu. yd. dippers. The primary transportation of ore to the concentrator and waste to the dumps is by 30-yd. dump cars and oil-burning steam locomotives; therefore truck haulage of waste is a minor factor of the New Cornelia operation. However, as New Cornelia was one of the first mines to use large-capacity dump trucks for haulage, the results obtained are of interest. EQUIPMENT On the south side of the New Cornelia is a hill rising about 500 ft. above the normal surface elevation, roughly 1000 ft. in diameter at its base, called locally Arkansas Mountain peak. Exploratory drilling in this area developed additional ore that could be made accessible for open pit operation only by moving the mountain face a maximum distance of 400 ft. to the south. The slope of the mountain adjacent to the pit averaged 35°, and the small area involved precluded the use of train haulage for the removal of the 4,000,000 tons of waste estimated above the normal pit elevation. A study of dump-truck haulage at Boulder Dam and San Gabriel Dam led to the decision to use large-capacity end-dump trucks rather than smaller trucks, for the following reasons: I. The truck would have to withstand the impact of hard, heavy chunks, some of them weighing as much as 10 tons, which would be dumped from the 4 ½ -cu, yd. dipper. 2. The coarse, rocky, abrasive material would soon damage a light truck body. 3. The body of a small truck could not be efficiently loaded with coarse rock.

Jan 1, 1941

By Walter Knox, J. D. Doherty

IN 1939, at the request of The Koppers Coal Co., the Koppers Company Research Department established a Stoker Coal Research Laboratory for the purpose of investigating the performance characteristics of stoker coals in typical domestic stoker installations. Fig. I is a photograph of part of the laboratory. The material in this paper deals with the performance of one coal in a single installation. Presented are details of this installation, mechanical characteristics of the stoker, and the results of a series of burning tests in which adjustments were systematically varied. SUMMARY OF RESULTS Mechanical Features I. A large percentage of the total power consumed by a domestic stoker is used to operate the gear case and motor (Fig. 3). 2. The power consumption per ton goes down with an increase in rate of coal feed (Fig. 4). 3. The automatic air control in this stoker showed advantages over manual control (Fig. 5). 4. The air velocities through the retort tuyeres were uniform around the retort, but varied between the rows of tuyere rings (Fig. 6). 5. The crushing of coal with this stoker increased the minus 1/8-in. from 1 1.6 per cent to 19.2 per cent. There was a noticeable segregation of coal as it came from the retort and distribution was not uniform (Fig. 7). 6. Measurement of air entering over the fire showed that with some not uncommon adjustments this air may he a high percentage of the total air supply (Fig. 8 and Table I). Operating Performance I. The removal of clinker was shown to give a period of poor performance characterized by a high fuel-bed resistance and a high percentage of carbon monoxide in the flue gases (Fig. 10). 2. The fuel-bed resistance was found to decrease as the fuel bed built up in a normal response to heat demand after a prolonged hold-fire (Fig. II). 3. With intermittent operation the burning rate was almost always less than the feeding rate. The wide variations were found to be greatly dependent upon the length of the On period and the length of the intervals between On periods (Fig. 12). 4. The maintenance of a low furnace draft led to less fly ash, better clinker formation, and higher efficiencies (Fig. I3). 5. The maintenance of a minimum of excess air also resulted in less fly ash, better clinker formation, and higher efficiencies (Fig. 14). GUIDING PRINCIPLES In planning the investigations, the following principles were adopted: Selection of Healing Equipment.-Use only standard models of stokers and furnaces representative of those widely used.

Jan 1, 1942

By James H. Boettcher

INTRODUCTION There are many and varied sources of finance available to the mining industry for exploration, development and/or the operation of mining projects and companies. These sources include equity from major as well as "penny" stock exchanges, precious metal mutual funds, private investor groups (from "grubstakes" to tax-oriented limited partnerships) and banks. The variety is representative of the fact that the world's capital markets are segmented and stratified according to risk-reward characteristics. This interrelationship is summarized in Exhibit I and 2 which relate (very approximately) various sources of finance to a typical mining project's life cycle and risk-return characteristics. The objective of this paper is to introduce, as it applies to the mining industry, a somewhat recent phenomenon represented by one of these capital markets segments referred to as "venture capital." Venture capital investing per se, which today is a multibillion dollars per annum investment business, goes back as far as Queen Isabela's backing of Columbus' "wild ideas." The real institutionalization of the venture capital process really began in earnest, however, after World War II. Today over 700 private venture capital sources (and more government related ones) exist providing funding to a range of industries, but typically related to the "high-tech" business. The table to the right shows industries financed by venture capital funds between 1980 and 1982. Conspicuous by its absence is, of course, mining which is not a great surprise since typical mining projects up until recently were large, required long lead times and were undertaken by established mining houses. Also, as most of you can appreciate, successful investing in the mining business requires a great deal of experience and understanding of the industry which most venture capital funds do not have. TARGETED RETURN The rate of return objective of most venture capital funds is, according to the legalized version, to realize a return which is "substantially in excess of that obtainable through conventional equity investments." One may say that a common objective of venture capital funds is to realize a 20% to 30% compound annual internal rate of return on capital over their life which is often ten years. [ ] This objective has been recently more feasible in the mining sector due to the development of smaller precious metal projects which cost less and are quicker to generate cash flow than the behemoth projects of the 1970s. In addition to precious metals, venture capitalists have invested or looked at a variety of other mining projects including ones as prosaic as a high margin "kitty litter" operation, sand-gravel and other industrial minerals operations, the leveraged buyouts of coal mines or mineral divisions of major energy or mining corporations, and even in in-situ copper or gold leaching ventures. A typical investment is in the range of $100,000 to $3,000,000 although some can go as high as 5,000,000. This implies a project size up to, say, 30,000,000 if a venture capital fund does it on its own. Larger projects can be done if the equity portion of the investment is syndicated with other investors.

Jan 1, 1985

New Mexico School of Mmes, and State Bureau of Mmes and Mineral Resources, Socorro, N. M E. H Wells, President and Director Available publications of the State Bureau of Mines and Mineral Resources of the New Mexico School of Mines are: Bulletin 4, Fluorspar in New Mexico (1928), 60 cents; 5, Geologic

Jan 1, 1933

By Richard M. Foose

WOULD you like to find a large new ore deposit next year? The answer is as obvious as the question is foolish. But perhaps the question does have some merit if we alter it slightly and ask: What are you doing about finding new ore? This one is more difficult to answer. Possibly you are doing nothing about finding new ore because you have proved reserves for many future years of production. Others may be investing some small percentage of time, effort, and money in mineral exploration, and reserves may be currently adequate, or inadequate, in terms of many future productive years. Still others may be engaged in large-scale mineral exploration programs involving large expenditures of time, personnel effort, and money. In whatever category you may be, a final question might well be asked. Is your current mineral exploration program, or lack of program, consistent with the long-range needs and objectives of your organization and of the mining industry as a whole, and is it designed to stimulate the growth of the industry in future years, or is it only a short-range program in response to some current situation?

Jan 3, 1958

By Sidney Swensrud

ABOUT a year ago, I attempted in a general way to trace the origin and development of some of the marketing problems of the petroleum industry, and to describe certain trends which it then seemed possible to foresee. To summarize briefly, it was pointed out that the consumption of gasoline, after increasing for more than a decade at an almost unbelievable rate, was slowing down, but that the two factors which determined the supply of gasoline-namely, the production of crude oil and the percentage of gasoline derived therefrom-were tending steadily to mount. It was suggested that, while the increase in gasoline outlets began with and probably was justified at the start by the rapidly increasing demand, long after all reasonable requirements as to number of outlets had been met the number continued to increase-if anything, at a still more rapid rate-because by that time the overproduction of crude had begun to exert an impelling urge upon the owners of that crude to seek assured outlets for it in the form of gasoline. As more and more companies became integrated all the way from crude oil to marketing, there took place an ever-increasing competition among them, not only for the existing outlets but for new ones. The wide margin between wholesale cost and retail price, which is characteristic of the early stages of most new industries, persisted in the oil industry longer. than in most industries, for various reasons. The existence of that wide margin provided in large measure the means of attracting new outlets, for as the gallonage per outlet declined with the increasing number of outlets, competing companies simply offered the dealers a larger part of the total margin. The very nature of competition suggests that such a process would continue until practically all of the available margin was thus given away, and such was clearly the, tendency. It was a system that in turn produced increasing marketing expense per gallon on account of the -diluted gallonage per outlet; this increased expense might seem to have provided a justification for continuing wide margins. Economics, like its parent, nature, however, progresses by mutations and so began to throw out new types of marketers, in the form cf tank-car service stations, cut-price jobbers, and the like-heretics or

Jan 1, 1932

YEAR OF ELECTION 1944. SELWYN GWILLYM BLAYLOCK Trail, B.C., Canada 1922. FEDERICO GIOLITTI Torino, Italy 1917. HERBERT HOOVER New, York, N. Y. 1941. DANIEL COWAN JACKLING San Francisco, Cal if. 1939. HENRY KRUMB New York, N. Y. 1942. ESSINGTON LEWIS Melbourne, Vic., Australia 1921. C. McDERMID London, England 1942. PAUL DYER MERICA New York, N. Y. 1913. EZEQUIEL ORDONEZ Mexico City, Mexico 1938. A. M. PORTEVIN Paris, France. 1937. JOHN V. W. REYNDERS New York, N. Y. 1937. GEORGE S. RICE Washington, D. C. 1911. ROBERT H. RICHARDS Cambridge, Mass. 1934. T. A. RICKARD Victoria, B.C., Canada

Jan 1, 1944

By William J. Potter, Roger N. Pyle

Introduction The primary ingredient for survival of mining companies during a recessionary period is to be innovative and resourceful in the structuring and financing of operations. Over the past decade, many mining companies have had to retrench and restructure their operations and to redeploy their assets just to survive. During the same period, traditional sources of financing for mining companies -- commercial banks, subsidized export credit loans and long term straight debt financing in the public markets -- became less available and more expensive. Meanwhile, new markets and new financing instruments provided new alternatives for mining companies. Those companies which exploited these alternatives greatly enhanced their capacity for survival and even for profitability. This article considers the strategies adopted by some companies to adapt to changes in this recessionary environment; the inadequacy of traditional sources of financing; certain of the new financing instruments, structures and markets which have become available; and how several mining companies have utilized these new instruments, structures and financial markets to improve their competitive positions. THE IMPACT OF RECESSION ON MINING COMPANIES AND TRADITIONAL FINANCING SOURCES In its 1983 year-end article "The New Economic Order" Mining Journal characterized many of the large private sector mining companies with operations in the industrialized countries as being "gripped between the jaws of high working costs and stagnating metal commodity prices." The article went on to characterize the Canadian mining industry in particular as being "in the difficult position of having to seek to sell the bulk of its output in a world market characterized by over-capacity, where production costs were determined by internal political and economic factors while prices were set by external competitive forces of supply and demand." Miners of a wide range of commodities in the industrialized countries have come to realize that their domestic mineral resources are in many cases no longer competitive with global sources of supply. To compete and survive they would have to rely on their technical and financial expertise in mineral exploration and development and in mining and processing. Strategies For Survival Global competition has compelled management in the extractive industries to improve their worldwide cost position. This is the only means whereby a mining company can differentiate its product and attain a substantial competitive advantage. During the past decade, for example, ASARCO Inc. and Inco Ltd. chopped their payrolls, postponed expansion plans and otherwise retrenched. ASARCO reduced its capital expenditures and cash requirements for operations in 1984 to a level almost equal to its internally generated cash. The company's finances were also strengthened by increasing total lines of credit from outside sources, by selling common stock, and by reducing annual pension funding through a change in actuarial assumptions. Other companies returned to their traditional organizational structure where they had a demonstrated competitive strength. Consolidated Gold Fields, for instance, resumed its operation as a mining finance house. Its capital investment programs are now devoted solely to resource development. In mid-1984, at a time of firming zinc prices, Union Miniere S.A. used the opportunity to integrate its smelting capacity and to direct investment to certain subsidiaries at the expense of less viable operations. Smaller corporations realized that it was not enough just to be the low-cost producer. For example, Drummond Coal Company in Alabama, which dominates its regional market due to its low-costs, has also developed a world-wide trading capability and has placed incremental tonnage from its own mines as well as brokered coal produced by others, thereby minimizing capital risk. In Canada, Campbell Resources has exploited difficult times by acquiring assets cheaply. In the process it improved its capacity to withstand cyclical economic swings by diversifying from solely a copper and gold producer to a company based upon asbestos, coal, copper, gold and natural gas.

Jan 1, 1985

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