Collapse_ How Societies Choose to Fail or Succeed - Jared Diamond [286]
Economic factors that make environmental cleanup costs less bearable to the hardrock mining industry than to the oil industry (or even the coal industry) include lower profit margins, more unpredictable profits, higher cleanup costs, more insidious and long-lasting pollution problems, less ability to pass on those costs to consumers, less capital with which to absorb those costs, and a different labor force. To begin with, while some mining companies are more profitable than other mining companies, the industry as a whole operates at such low profit margins that its average rate of return over the last 25 years hasn’t even met the cost of its capital. That is, if a mining company CEO with $1,000 to spare had invested it in 1979, then by the year 2000 the investment would have grown to only $2,220 if invested in steel industry stock; to only $1,530 if invested in metal stocks other than iron and steel; to only $590, representing a net loss even without considering inflation, if invested in gold mine stock; but to $9,320 if invested in an average mutual fund. If you’re a miner, it doesn’t pay you to invest in your own industry!
Even those mediocre profits are unpredictable, at the level both of the individual mine and of the industry as a whole. While an individual oil well within a proven oil field may turn out to be dry, the reserves and oil grade of a whole oil field are often relatively predictable in advance. But the grade (i.e., the metal content, and hence the profitability) of a metal ore often changes unpredictably as one digs one’s way through an ore deposit. Half of all mines that are developed prove unprofitable. The average profits of the whole mining industry are also unpredictable, because metals prices are notoriously volatile and fluctuate with world commodity prices to a much greater degree than do oil and coal prices. The reasons for that volatility are complex and include the lower bulk and smaller amounts consumed of metals than of oil or coal (making metals easier to stockpile); our perception that we always need oil and coal but that gold and silver are dispensable luxuries during a recession; and the fact that gold price fluctuations are driven by factors having nothing to do with the supply of gold and the industrial demand for gold—namely, speculators, investors buying gold when they grow nervous about the stock market, and governments selling off their gold reserves.
Hardrock mines create far more wastes, requiring much more expensive cleanup costs, than do oil wells. The wastes that are pumped up from an oil well and that have to be disposed of are mostly just water, typically in a waste-to-oil ratio of only around one or not much higher. If it weren’t for the access roads and the occasional oil spill, oil and gas extraction would have little environmental impact. In contrast, metals constitute only a small fraction of a metal-bearing ore, which in turn constitutes only a small fraction of the dirt that has to be dug up to extract the ore. Hence the ratio of waste dirt to metal is typically 400 for a copper mine, and 5,000,000 for a gold mine. That’s a huge amount of dirt for mining companies to clean up.
Pollution problems are more insidious and much more long-lasting for the mining industry than for the oil industry. Oil pollution problems arise mainly from quick and visible spills, many of which it has been possible to avoid by careful