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Wednesday, June 21, 2006
Osmeña: Will mining bring economic benefits to Cebu?
By Antonio V. Osmeña
Estatements
According to basic economic theory, a competitive free market controls supply and demand of all goods and services. If a resource becomes scarce, prices rise; if there is a glut, they fall.
Some economists have pointed out that there are several reasons for the frequent failure of this idea when applied to the supply and demand for non-fuel mineral resources.
One reason: instead of an open, competitive market, both industry and government in the United States (and in many industrial nations) have gained increasing control over supply, demand and prices of raw materials and products.
Second, the costs of non-fuel mineral resources account for only a small percentage of the total cost of goods and services in the United States. Thus, increased demand for cars or dishwashers has little effect on the prices of non-fuel mineral raw materials used to make these goods.
This occurs primarily because the average per capita cost of raw materials in the United States remained the same or even declined between 1900 and 1985, even though the prices (in constant dollars) of products rose during the period. This artificially low cost of raw materials was caused by market control in highly developed countries, low mining leases and exclusion of many of the environmental costs of mining from the price of materials.
Since 1975, however, the prices of raw materials have risen somewhat as the cost of mining and environmental protection increased, and some long-term low cost mining leases expired.
Third reason,supplies of nonrenewable mineral resources are not infinite. Indeed, several analysts have argued that failure to recognize this is the fatal flaw in the cornucopian position of economist Julian Simon.
They point out that Simon bases most of his key arguments on the notion that supply of all resources is infinite because anything that is infinitely divisible is infinite in quantity. This is equivalent to saying that since you can theoretically divide the money in your bank account into an infinite number of fractions of a cent, you have an infinite amount of money.
Others who share this cornucopian thought agree that supply of certain resources are finite. But they insist that the only relevant issue is, when do economically affordable supply of such resources become too scarce for widespread use in this generation? What about in 100 years, or in 10,000 years?
Fourth reason, resource supplies may be limited in the future because mining and processing require expensive energy.
Between 1950 and 1985, the United States mineral production rose 50 percent, but the energy needed to find, extract and process these minerals increased 600 percent.
Fifth, there may not be enough investment capital available for continued expansion of mining activities.
With these factors, the people of Cebu must now decide whether to support mining operations anywhere in the island as these would eventually degrade the environment.
The islands of Negros, Cebu and Bohol have the potentials to be world-class tourist destinations. The people have to decide between protecting the environment and mining.
The environmental effects of mining are aplenty and all are very serious. Our local governments must do something about them and ask themselves, will earnings from mining be enough to cover the environmental costs?
What have the people of Toledo City learned from the past operation of the Atlas mine? Will the new operator of the Toledo City copper mine not violate regulations on the disposal of mine spoils that will pollute the aquifer.
If the new copper mine operator decides to dispose of the mine wastes by depositing it at the Biga Pit, toxic arsenic and cyanide used as depressant to remove iron and other mineral impurities would eventually percolate to the groundwater aquifer.
If they throw it to the ocean like before, marine resources will suffer.
For Bisaya stories from Cebu. Click here. (June 21, 2006 issue)
Write letter to the editor.Click here.
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