Search Documents

By A M. Barrett, P J. Chapman

As filtering technology improves and there is an increased focus on environmental impacts, the concept of managing fine coal rejects by filtering, mixing with coarse rejects and dry stacking them is being considered more seriously. In Queensland, there appears to be a desire from regulators to move away from wet rejects facilities towards dry-stacked facilities, resulting in a change in the risk profile for the facility.A coalminer has a site with many constraints, including limited area that is not planned to be undermined and nearby rivers that are prone to flooding. The design of a dry-stacked facility that meets the operational requirements and environmental compliance criteria is challenging in subtropical climatic settings, where there is a need to consider wet seasons with high-volume, sustained rainfall events. The impact of the rainfall is multifaceted, requiring careful surface water management to separate clean and contact water, adequate foundation preparation to limit seepage to groundwater, management of stack stability given a potentially high phreatic surface and the avoidance of potential flood zones. These design constraints were compounded by a limited area available for rejects storage that would not be undermined.This paper presents a summary of the conceptual design of a dry rejects facility, including consideration of regulatory and client requirements, provision for expansion while also considering progressive rehabilitation, diversion of clean water as much as practicable during operations and siting constraints. A step-by-step concept is presented that addresses each constraint during the life of the facility.CITATION:Barrett, A M and Chapman, P J, 2015. Conceptual design of a dry-stacked coal rejects facility in a subtropical climate, in Proceedings Tailings and Mine Waste Management for the 21st Century , pp 27–34 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Jul 27, 2015

By Çisem Tuba, Ismail Girgin

"Comparative atmospheric H2SO4 and H2SO4 + H2O2 leaching experiments were performed using a Turkish lateritic nickel ore containing 1.52% Ni. In the leaching tests; acid concentration, temperature and leaching time were considered as main variables and the dissolution behaviour of the ore were studied by Ni, Fe, Co and Mg analyses. The dissolution values in the H2SO4 leaching experiments were observed to increase up to 60% (w/w) acid concentration and a temperature of 95°C. Increase of H2SO4 concentration above 60% at 95°C caused decreases in all the dissolution values and this was attributed to the formation of Fe2(SO4)3 and Fe2(SO4)3•HSO4•H2O type compounds. At the considered optimum H2SO4 leaching conditions ([H2SO4]= 45%, T=95°C, t=45 min); dissolution values reached for Mg, Ni, Fe and Co were determined as 99.12%, 95.58%, 92.63% and 78.37%, respectively. An activation energy of 30.57 kJ/mole was determined for nickel dissolution from the evaluation of the kinetic data obtained for H2SO4 leaching showing that the dissolution was controlled by external diffusion and chemical reactions. Caro’s acid solutions were prepared at H2SO4/H2O2 mole ratio of 3 for varying initial H2SO4 concentrations and leaching tests were performed at 25°C. Co behaved very differently and a dissolution value of 83.94% was obtained even at 5% acid concentration in 60 minutes reaction time. Complete dissolution of Co was obtained after 30 minutes of reaction time at 60% initial H2SO4 concentration and the corresponding dissolution values for Mg, Ni, and Fe were reached to 96.16%, 94.27% and 89.46%, respectively. Although the H2SO4 + H2O2 leaching experiments were conducted at 25°C, it was realized that the temperature of the leaching medium was increased to 122°C after four minutes of reaction time due to probable exothermic reaction(s) at 60% initial acid concentration."

Jan 1, 2014

By B. Whisner, A. Smith, J. Carr

"Electromagnetic based proximity detection systems (PDSs) are utilized on mining machinery to protect workers from being pinned or struck. These systems generate magnetic fields covering the space around a machine, and a miner-wearable component (MWC) detects the field. The PDS determines the distance of miners relative to the machine based on the detected magnetic flux density in the magnetic field. This information is used to establish warning and shutdown zones around the machine. Maintaining a stable magnetic field is essential for system accuracy. However, components used to generate magnetic fields can be influenced by temperature changes. Depending on ventilation conditions and seasonal alternation, a PDS can be subject to significant temperature fluctuation. To better understand and quantify this phenomenon, researchers from the National Institute for Occupational Safety and Health (NIOSH) developed an experimental apparatus to study the influence of temperature on magnetic field generator circuits used in PDSs. Results from the study show that the electric current through a generator can be influenced by both ambient and internal temperatures, modifying the magnetic field that is produced. These findings show that temperature can significantly influence the ability of PDSs, used in underground coal mines, to accurately determine a worker’s position in relation to mining machine. INTRODUCTION Electromagnetic based proximity detection systems have been developed to reduce machine-related accidents in underground coal mines. The first proximity detection systems installed in underground coal mines were developed for continuous mining machines (CMMs). There are five of such proximity detection systems that are approved for use in U.S. mines by the Mine Safety and Health Administration (MSHA) (Mine Safety and Health Administration, 2013; Mine Safety and Health Administration, 2015). There are several basic components that interact within an electromagnetic proximity detection system (PDS). A PDS includes two main elements: a set of generators to create magnetic fields around a CMM and a set of magnetic probes to detect the fields. These systems can determine if a miner is located at a safe distance from the machine based on the detected magnetic flux density. Stability of the magnetic fields is essential for system accuracy."

Jan 1, 2018

By J. P. BONARDI, William F. Boericke

BOULDER COUNTY, Colorado, ranked during the war years and until the end of 1918 as one of the foremost tungsten-producing districts of the world. In 1919 production fell off drastically, due to heavy importations of foreign ores from China, Burma and South America. So large were the imports that even after the enactment of a protective tariff in 1922 of 45c. per lb. on tungsten metal, equivalent to $7.14 per unit (201b.) of tungstic acid? (WO,), the stocks of metal in this country were extensive enough to supply the demands of industry, and prevent general resumption of mining by domestic producers. Even today there are only two producers in the Boulder district though at one time as many as twenty separate companies were in operation. About the same ratio holds for other tungsten-producing districts in the country, including California and Nevada. Total consumption of tungsten concentrate in terms of 60 per cent WO2 in the United States amounted to approximately 3790 tons in 1928, according to Frank L. Hess.' Of this amount, domestic mines contributed 1290 tons, and the rest, 2500 tons, was imported. Yet in 1917, with tungsten concentrate selling at $20 per unit, the Boulder district alone produced 2707 tons, indicating the effect of enhanced ore price upon production. It is believed by American tungsten miners that, given a sufficiently high tariff, all the demands of industry can be met by domestic production without placing a prohibitive burden on consumers. For instance, in steel manufacturing the percentage of tungsten entering into the manufacture is so small that, ?regardless of cost, it can constitute but a small fraction of the cost of steel to the buyer.

Jan 1, 1929

By Dean Nichols, Matt Ortel

Explosive accidents in the United States have brought increased attention to emergency operation plans (EOP) at all facilities that manufacture, transport, or store hazardous materials – particularly explosive materials. Explosions are sudden, powerful, and complex events that are difficult to characterize in terms of the thermal, over pressure, and debris effects. Industry, regulatory, and public officials require emergency response planners to not only anticipate the blast effects of an explosion, but also to prepare an appropriate response.

Jan 1, 2016

By A. Tordoir, S. S. Kanchibotla, W. Rogers, E. Engmann, B. Bisiaux, S. Ako

Blast-induced rock mass displacement can have a significant impact on ore loss and dilution. The mischaracterization of the grade boundaries both prior to, as well as a result of, blasting can lead to significant financial losses due to ore loss and dilution. Ore dilution occurs when waste material is miscategorized as ore and sent for processing or stockpiling, diluting the run-of-mine head grade and recovery. Ore loss takes place when valuable mineral is miscategorized as waste and sent to the waste dumps, thus never being processed and recovered. Extensive research has been conducted at the University of Queensland over the last fifteen years to understand the impact of blast movement on ore loss and dilution. Recent outcomes of this research have led to the development of innovative tools and techniques to measure and model blast movement. These techniques have been implemented at the Ahafo gold mine in Ghana to understand blast movement dynamics and to implement solutions to reduce blast-induced ore loss and dilution. These solutions are validated through controlled trials and have been incorporated into site standard operating procedures.

Jan 1, 2012

By IPMI Educational and Scientific Foundation

It is with great pleasure that we announce the availability of this fourth issue of the IPMI Journal, a publication of the International Precious Metals Educational and Scientific Foundation. This digital peer reviewed publication has been created as a vehicle for the sharing of technical information related to the science and technology of precious metals. Since 1976, the International Precious Metals Institute has championed the exchange of information of critical importance to the precious metals scientific and commercial communities through its various communications vehicles. This has included instructional videos, annual conference symposia, special topic committee meetings, regional seminars, and professional and student achievement awards. Due to the breadth of important topics related to all aspects of precious metals, it has been the vision of the IPMI to provide a publication available to the general public that would become a key source of pertinent topics containing high quality publications by experts in their fields of study. Historically, the IPMI has attracted world renowned experts in many fields (including Nobel Laureates Henry Taube, Ei-ishi Negishi, Robert Grubs, Professor Ben Feringa, and David MacMillan) in the dissemination of discoveries, inventions, and industry proven practices. Such information has a total value greater than the sum of its parts as seemingly unrelated innovations from distinct focus areas can be adapted to solve problems. Because of this important characteristic of information exchange, we have decided to create a digital journal, available to the general public, that will not only communicate state of the art discoveries and sound practices, but will also review historical communications from the IPMI’s archives that have value and use even in today’s environment. On behalf of the members and leaders of the IPMI, we hope you will find value in this new publication.

Dec 1, 2021

By H. Foster Bain

Ten years ago there was no general , country-wide service for the systematic training of miners in matters relating to safety . A beginning only had been made at a few scattered points . Under the old conditions each man was left largely to look out for himself in meeting the hazards of his day's work, and the foreman , shift bosses , and superintendents chiefly relied upon improvision when major accidents occurred . So long as the mines were small and the workers highly intelligent and well trained in routine mining methods , and when too , the pressure for output had not yet speeded up industry to the extent it has since those days , there was something to be said for this lais- sez faire attitude . When , however , the rapid expansion of industry lead to the introduction of new and little trained labor and to units of production of greatly increased size , the natural dangers of mining were greatly intensified . An accident in a small mine affects only a few; the same accident in a large mine , unless proper precautions have been taken , may cost the lives of many . The public does not generally recognize that the greatly increased outputs of the mines , of coal mines in particular , have been in recent years , obtained from substantially the same number of miners as ten years ago but with a personnel not nearly so well trained in mining . It is inevitable under : such conditions that more care must be devoted to avoiding accidents and much more elaborate preparations made for meeting them . In the years immediately preceding the establishment of the Bureau of Mines this speeding up of industry , change in the character of mine labor , and increasing hazard had all begun to be felt . Immediately prior to the organization of the Bureau of Mines , public attention had been drawn to a series of disastrous coal-mine explosions , to the increasing frequency of these disasters , and to the terrible loss of human life . resulting therefrom. One of the first problems , therefore ; confronting the Bureau was clearly that of finding methods of reducing the number of such disasters and lessening the severity of those that continued to occur . Toward this object were immediately directed the energies not only of the Bureau of Mines but also those of State mine inspectors , mine operators and various other agencies , all of whom were urged to cooperate in this great humanitarian work. The results of this work naturally cannot be measured by figures only . Work for increasing the health , safety , comfort , and happiness of human beings may not be gaged with mathematical precision . But certain features of this work as revealed by the record from year to year are of much interest . ”

Apr 1, 1921

Entry of personnel under a vertical raise bored hole is not standard practice in Australia. Where access is required below a rise, mining operations must be confident that they understand the capacity of the ground control specified and installed. Physical modelling was conducted on Callie mine to evaluate the performance of 5 mm steel wire weldmesh secured to the base of a vertical raise bored hole of 1.4 m diameter. Joint orientation data was used with Unwedge to calculate a series of potential wedges likely to form within the rise. The mass of the most likely wedges were then replicated by collecting rocks in 5 kg increments (¦10 per cent), which were allowed to freefall onto installed mesh at the base of a 40 m vertical rise. The results indicate that two sheets of mesh can retain a freefalling rock of at least 20 kg mass although rupture of strands can result. This paper outlines the test conditions, expected results based on theoretical calculations and actual outcomes of the testing.

Nov 25, 2010

By Mark C. Williams, Shunsuke Managi, Noriko Hikosaka Behling

Particle processing is a key to using solid particles in fuel cell applications. Selectivity with regard to reactivity, impurities, etc. is an important feature and the treatment of particle surfaces could greatly impact the performance of direct carbon fuel cells. Solid fuel particles will become increasingly important in the future. Present energy conversion systems for solid fuels are too inefficient. New energy conversion systems for solid fuels with higher energy conversion efficiencies are possible. Fuel cell technology is a key technology in these new conversion systems. The direct carbon fuel cell (DCFC) operates on carbon particles obtained from a variety of solid fuel feedstocks. The DCFC is the only fuel cell designed to directly oxidize carbon particles in a special anode chamber. The particles are generally graphite structure with high purity. The electrolyte used is the high temperature solid oxide, molten carbonate, or hydroxide electrolyte. Since a pure stream of CO2 is produced, the stream can easily be sequestered and disposed. Pure carbon dioxide produced as a by-product would also have a market in many industries. A well-defined technology roadmap identifying key research and development (R&D) issues is necessary to provide a framework for the development of these systems and to prevent entrenchment in inherently inefficient technologies. This review paper describes the direct carbon fuel cell and its system, how it works, the developmental status, the characteristics of the carbon particles needed, and the research and development issues for the technology

By Patrick R. Taylor

Ilmenite concentrate and methane are fed to a non-transferred arc thermal plasma reactor to produce a powder that is primarily TiC and Fe. This material has promising characteristics for powder metallurgy applications. Free energy minimization plots were used to predict the feasibility of the reaction. An estimate of the optimum molar ratio between the ilmenite concentrate and methane was made based on the mineral composition. Argon-helium mixtures were used as plasma gases. The effects of power input level, carrier gas flow rate, powder feeding rate, and methane-ilmenite molar ratio were studied and the behavior of the system characterized. Two different powder injection angles were tried. A mathematical model to describe the temperature profiles in the reactor was formulated and solved. The product has been characterized by x-ray diffraction and atomic absorption. A conversion of 97 % of Ti to TiC was achieved. It was found that minor amounts of titanium oxides, iron carbide and free carbon are also present. TEM and SEM were used to study the morphology.

Jan 1, 1996

By Raymond S. Shrode

Transportation is one of several important increments in the total market cost of most commodities. On a national average it has been reported that transportation accounts for about 25% of the total cost of a product at the market place. And industrial minerals are no exception. In fact, the proportionate cost frequently exceeds the 25% average. Further, it may actually determine the economic value of a deposit. Transportation may possibly be thought of as a specialized subject of concern only to a traffic manager and of only nominal interest to the mining engineer, the geologist or other technically oriented member of mineral producers' staff. However, in the industrial minerals field, interest is not commonly confined to exploration, development, production or marketing, but is in contrast an overlapping one. In a very real sense this broad area of interest in the total economics of the business is the specialty of the industrial minerals man. And transportation is a vital part of the total picture. Comments in this paper deal with rail transportation.

Jan 1, 1969

By S. Chatterjee, A. K. Gorai, Sahendra Ram, Kapil Kumar, J. Anil

Extraction of underground coal or mineral by the caving methods leads to surface deformations and the accurate measurement of this deformation is becoming a demanding task. Thus, the study demonstrates a Persistent Scatterer Interferometric Synthetic Aperture Radar (PS-InSAR) technique for surface subsidence measurement. The method was applied to measure the subsidence level over three mechanized depillaring panels with caving at GDK-11 Incline mine, India. The study was conducted using C-band data of Sentinel 1A/B sensors, which captured the data in the descending path from October 25, 2017 to March 07, 2020. The deformation level was measured based on the identified PS points in the specified region. In this case, 12 zones were identified (4 for each panel), based on the observation of permanent scatterer (PS) points. The maximum subsidence level and deformation rate range in 12 zones are −43.12 to −65 mm and −73.8 to 100 mm/year, respectively. The deformation level obtained through the PS-InSAR technique showed a good agreement with those of the field measurement. Thus, the PS-InSAR technique can detect and monitor the subsidence level over the goaved-out panel(s) of an underground mine using C-band SAR data of the Sentinal-1A/B sensor.

Mar 14, 2023

By W. C. McLaughlin

Under a cooperative agreement, the Bureau of Mines, Magma Copper Co., and ASARCO, Inc., tested backfilled ground support systems at t.wo elevations in Magma's San Manuel, AZ, mine. The tests were mainly for guidance in designing the loading crosscuts of the new ASARCO Sacaton underground mine. Two-piece, wide-flange steel sets for 8-by 8-ft (2.44-by 2.44-m) and 11-by II-ft (3.36-by 3.36-m) openings were designed. Set spacing was 3 ft (0.91 m) and 5 ft (1.52 m), respectively. After erection, the sets were lagged with various test materials. The void between the lining and the ground was backfilled with sand and pea gravel. Instruments measuring strain (used to determine changes in stress) were placed beneath the sets and in the backfill. Results indicate the backfilled sets in the smaller drift (2315 grizzly level, panels 6 and 7) of 8-by 8-ft (2.44-by 2.44-m) cross section are a viable permanent support system, lower in cost than the standard formed concrete. Results are inconclusive in 2615 grizzly level, panels 5 and 6, where wide-flange steel sets were used with 5-ft (1.52-m) long concrete gob lagging of T-design.

Jan 1, 1983

By James F. O?Neil

Brown iron ore deposits in Quitman County, Ga., were investigated by the Federal Bureau of Mines in cooperation with the State of Georgia, Department of Commerce, and the University of Alabama. Ninety-one holes were drilled, having an aggregate footage of 2,188 feet; seventy-one holes penetrated 248 feet of iron mineralization. Average thickness of the ore zone was 3.5 feet under an average thickness of 14.7 feet of overburden. The drilling developed inferred reserves containing nearly 30 million long tons of crude ore with an average analysis of 28 percent iron plus minor quantities of manganese. Test work done by the Bureau on the crude ore samples indicated that they would upgrade by current lug washer practice, with the use of a 1i8-inch screen, and yield 4.4 million dry long tons of concentrate with an average analysis of 52.1 percent iron plus manganese. The weight recovery obtained was 14.7 percent. Research studies made by the Bureau showed that the weight recovery would be increased by changing the screen size without any appreciable sacrifice of grade. The average weight recovery was increased to 18 percent with a 10-mesh screen and 22.8 percent with a 20-mesh screen. Screen tests studies indicated that there was no appreciable interlocking of the iron and manganese minerals and the clay and silica waste particles of the materials retained on a 200-mesh screen. Clay was prominent in micron-size slimes. Silica was deleterious in the minus 20-mesh size.

Jan 1, 1965

By J. K. Afidenyo, J. Osei-Owusu

"The Obuasi Mine of AngloGold Ashanti Limited has been operating the world’s largest Biooxidation Plant at its Sulfide Treatment Plant (STP) in Ghana, using the Gencor Biox® technology since February 1994. The Biox® technology was preferred to other alternative methods of treating refractory sulfide ores such as roasting, pressure oxidation and nitric acid leaching due to among other reasons, its lower capital and operating costs, reduced technical risk, relatively benign environmental impact and its ease of operation and maintenance in a remote location.STP has since commissioning succeeded in operating this technology successfully but not without some operational problems. The Plant has seen a number of upgrades and modifications in its circuits which were motivated by cost, operational and throughput constraints.The objective of this paper is therefore to highlight the mine’s experience in the treatment of its complex carbonaceous refractory sulfide gold ores with emphasis on plant operations and improvements such as the Biox® reactors expansion, flotation concentrate upgrade project and neutralization circuit modifications. The Biox® Plant operating cost is also discussed.INTRODUCTIONThe Obuasi mine forms part of the AngloGold Ashanti Group of Gold Mines. It is located in the Adansi West District of the Republic of Ghana. The mine is primarily an underground operation, although some surface mining still takes place. Ore is processed by two main treatment plants: the Sulfide Treatment Plant (for underground ore) and the Tailings plant (for tailings reclamation operations). A third plant, the Oxide Plant, is used to batch-treat remnant opencast ore and stockpiles, of which there are adequate tonnages to keep the plant operational until 2008.Though reference is made in this paper to the Tailings and Oxide Treatment Plants, the main focus will be on the Sulfide Treatment Plant."

Jan 1, 2008

By Robert A. Bradburn

The Bureau of Mines has developed a miniature, portable two-level oxygen-deficiency alarm and produced three prototype models. Each operates from a 4.2-v dc power source, and the highest current drain of any model is 80 ma. An electrochemical cell, which produces an electrical output in proportion to the partial pressure of oxygen to which it is exposed, is used as an oxygen detector. The output of the cell is applied to an electronic circuit that detects two different levels of oxygen percentage below that of normal air, and produces distinct audible signals at these levels. The hazard alarm mode is activated when the oxygen percentage first drops below normal and produces a 500-cps "beep" tone with an intermittency of 1 cps. The danger mode produces a continuous 500-cps audible signal when the oxygen percentage drops still lower.

Jan 1, 1968

This paper sets out to discuss how alluvials - particularly mineral sands, tin and gold have adjusted to meet the problems of lower grade and more difficult physical political and economic conditions. The mineral sands industry seems to have adapted satisfactorily but less so with tin and gold.

Jan 1, 1996

By Granville S. Borden

MANY complaints have been filed by mine prospectors, explorers and producers about inequities in mining taxation. They have insisted upon improvement, and in the past 35 years there has been some progress. Many of the best taxation provisions made to date are those contained in the Revenue Act of 1951. Mining economics presents special problems, a fact even recognized by many textbooks. Certain provisions have been made to take care of mining taxation rights, but these have been made by Congressional act and do not represent basic, constitutional, guarantees. Despite special provision, in the form of depletion allowances, there remain injustices. The industry faces the problem of gaining adequate income tax allowances for exploration and development expenditures, operating losses, and bonus and subsidy payments. Problems in mine taxation arose soon after the adoption of the 16th Amendment. This amendment gave Congress the power to impose income taxes. Supreme Court decisions against a number of mining companies held that Congress, under its power to tax income, could tax net operating revenue before depletion allowance was deducted. The court also ruled that the right to deduct depletion is a matter of Congressional permission. There is no statute provision permitting mining stockholders to recover their investment out of dividends while the mine is being operated. The Supreme Court did not recognize that part of mining proceeds are actually amortization of the cost of mineral rights. Both these omissions stem from failure to recognize that by its very nature mining consumes its mineral rights and therefore that a part of gross proceeds are not income but recovery of capital. Suppose a Congress unfriendly to mining interests repeals the provisions that allow deductions for depletion. Under such a situation assume that a corporation buys a mineral deposit for $300,000. They mine the deposit and earn an operating profit of $500,000. At the current rates they would pay a Federal Income tax of in excess of $250,000. This venture results in a loss of $50,000 as shown in the table below. For the example given the absence of depletion provisions in income tax law would turn ore into waste rock, because the word "ore" connotes commercially mineable rock. [ ] In retrospect the conclusion is clear: If the Supreme Court had recognized that a part of mining proceeds represent in reality sales proceeds of mineral rights, then profits derived from such sales would have been taxed at the favorable long-term capital rates, instead of being taxed at the high normal, surtax and excess profits rates. It is a question whether percentage depletion allowances offset this tax situation. History The history of depletion allowances has been one of general improvement. The original act did not include depletion, but an allowance at the rate of 5 pct of gross proceeds was provided in 1913. The Acts of 1916 and 1917 allowed depletion upon cost of property, and in 1918 the law was further changed to permit depletion upon cost, or market value as of date of discovery. In 1932 metal, coal and sulphur properties were permitted to elect depletion in percentages of gross income, limited to 50 pct of net income, in lieu of cost depletion. Shortly thereafter the rule was changed and percentage depletion is now allowable in any case where it is higher than cost depletion. Since 1942 percentage depletion allowances have been extended to cover many nonmetals, and in 1951 the rate for coal mines was increased from 5 to 10 pct of gross income. It is interesting to note that these allowances have been retained, and even

Jan 1, 1952

By Elizabeth L. Robinson

INTRODUCTION The financial structure of the mining industry has changed strikingly over the last thirty years. The changes that have taken place in the last ten years include both the acceleration of adverse trends in familiar balance sheet numbers and ratios, and the subtle but extensive increase in the complexity and diversity of funding sources, both on and off the balance sheet. The objectives of this paper are: 1. to briefly trace the evolution of trends in the mining industry's financial structure; 2. to focus in more detail on changes in the last decade; and 3. to analyze those trends both within the framework of capital structure theory, and in the context of changes in business and economic conditions. This survey focuses primarily on the mining companies listed on the major U.S. stock exchanges, since financial data for these firms are readily available. The producers of minerals are a diverse lot, however, and the quantitative data on "the mineral industry" as characterized in this survey fails to encompass the financial arrangements for the bulk of production worldwide, whether owned by governments or private-sector enterprises. Even large portions of the U.S. minerals industry - subsidiaries of still larger firms, medium-sized privately-held companies, and the small miners - were not included in the quantitative part of the analysis. THE EVOLUTION OF THE INDUSTRY'S FINANCIAL STRUCTURE In the aftermath of the business failures of the Great Depression, most borrowers and lenders considered minimal debt on the balance sheet the soundest policy. By the 1950's, however, a body of literature was developing which demonstrated that the use of leverage could improve the value of the firm, given a corporate tax structure which allows interest, but not dividends, to be deducted from income. Optimal Capital Structure The objective of undertaking a new project is to improve the wealth of the current owners of the firm. If internally-generated funds are insufficient to allow growth at the desired rate, the company can raise funds either by issuing new equity, or by incurring debt. The most attractive source is the one which will provide the funds for the lowest cost. Both stockholders and lenders expect to receive compensation for use of their funds at a rate which reflects two things: (1) the return they could earn in alternative investments, and (2) the riskiness of the projected return. Factors which increase business risk include the variability of demand, sales prices and input prices, and "operating leverage", or the proportion of fixed to variable costs. In addition, from the investors' point of view, the use of financial leverage concentrates risk onto the shareholders, because lenders enjoy a prior claim in the event of bankruptcy. So although financial leverage can increase a project's expected rate of return, and therefore, presumably, earnings per share, too much debt will be perceived as uncomfortably risky by equity investors, and have a negative effect on stock prices. In theory, then, there should be an optimal level of debt which the firm's managers should seek to obtain in its financial structure. The desirable proportion of debt should in general be lower for a firm with a higher inherent business risk. In addition to their own judgement, financial managers are sensitive to the attitudes of lenders, rating agencies, and investment bankers in setting financial targets (Scott and Johnson). In practice, financial structure will also depend upon the company's growth rate and level of profitability, and conditions in the capital markets at a given time.

Jan 1, 1985