Wednesday, February 08, 2006

Scientific assessment of the mining issue

"WILL those hotshot economists and environmental scientists from the country's top schools please conduct a credible cost-benefit analysis of the mining industry in the Philippines?" asks Business Mirror in an editorial.

Feeling -ehem- alluded to in part (I'm not an environmental scientist by the way), let me dish out a reality check: There is no way you can conduct a benefit-cost analysis on mining per se. It simply does not work that way.

What you do is you point to a specific mining activity, over a particular location and time period, and then you can do retrospective benefit-cost analysis of the net benefits of that activity. Or you can identify a specific planned mining project to do prospective benefit-cost analysis. Then you can make a conclusion of "go" or "no-go" over such projects. Never for an industry as a whole.

Of course if you want to be academic about it then you can do some kind of rough-and-dirty, broad-stroke analysis covering a whole industry. However nothing beats an honest-to-goodness, empirical study. And for that one must go site-specific. And be ready to shoulder the cost of doing such studies. (As a percentage of mining revenues, such studies are not that expensive.)

As I understand it some kind of benefit-cost analysis is already de rigeur in the environmental impact assessment phase of mining project. The quality of this analysis is of course another issue. As with anything else - you need to call a professional.

2 comments:

Rizalist said...

Been studying the mining issue and have run into some amazing statistics about our potential in gold, copper and nickel. Even deuterium supposedly at the bottom of the Philippine Deep! I found a study by the Mines and Geophysical Bureau with quantitative listing of these metals and their abundances, plus an estimate of their ultimate worth. But do you know if these estimates are accurate. Who has the real scoop on what the Philippine mining industry might be worth?

Without Borders said...

dear rizalist: I understand Neda Secretary Romulo Neri was qouted by the Supreme Court saying that the total value of the mineral wealth lying hidden in the ground is $840 billion (P47 trillion). but i guess you know that these are just estimates and this value changes depending on the movements of metal prices in the world market.