Wall Street Journal had a piece taking about mining companies ramping up production to meet world demand. They mention how host governments want them to invest in value added production rather than just ship out the raw materials. This is a genuine concern of governments. Although they are often looking at it from a simple local employment perspective, there are a lot of problems with countries that become dominated by low-input (aka: commodities) exports. We have discussed this here in the past as the Dutch Disease. The also mention such issues slow government permits, cost of labor and cost of machinery.
Then buried in the middle of the article:
Rio Tinto Chief Executive Tom Albanese says that miners have cash available but that progress in developing or expanding new mines is slowed by delays in government permits, escalating costs for labor and machinery, and limited ports and railways. Companies have already developed the most accessible reserves and now have to dig deeper, which adds costs. They also have to extract more tons and refine them more because the reserves may not be as pure.
"Even when we do find the new resources and our engineers are ready to go, we find that it's actually taking longer than it would have 10 to 20 years ago to deliver them to the market," Mr. Albanese told investors in Hong Kong last week. "Five years ago it was hard to look at a project without spending at least $500 million. Today I would have to say it's hard to look at a project without spending at least $2-$3 billion." By ROBERT GUY MATTHEWS Money Pours Into Mines: Demand for Commodities Likely to Outrun Mining Giants' Expansion Projects, Wall Street Journal, March 28, 2011.
I realize that they don’t want every story in the paper to be about resource depletion – shoot even here in final thoughts land we talk about the flue occasionally – but some of the major minerals have a lower R/P number (reserves/production) than oil: as discussed here.
You would think that some sort of follow up questions might be in order - Are you running out of metals to mine? - would be in order.