Raw Materials and Global Mining Industry Dynamics

Understanding Raw Materials and Feedstocks

A raw material or feedstock is the basic material from which a good product is manufactured or made, frequently used with an extended meaning. For example, the term is used to denote material that came from nature and is in an unprocessed or minimally processed state; e.g., raw latex, iron ore, logs, crude oil, or seawater. The use of raw material by non-human species includes twigs and found objects as used by birds to make nests.

The Global Mining Industry Landscape

Mining exists in many countries. London is known as the capital of global "mining houses" such as Rio Tinto Group, BHP Billiton, and Anglo American PLC. The US mining industry is also large, but it is dominated by coal and non-metal minerals, and various regulations have worked to reduce the significance of mining in the United States. In 2007, the total market cap of mining companies was reported at US$962 billion, which compares to a total global market cap of publicly traded companies of about US$50 trillion in 2007.

Industry Structure: Exploration vs. Production

While exploration and mining can sometimes be conducted by individual entrepreneurs or small businesses, most modern-day mines are large enterprises requiring large amounts of capital to establish. Consequently, the mining sector of the industry is dominated by large, often multinational companies, most of them publicly listed. (See this list of Mining Companies, or Mining Companies by Category).

It can be argued that what is referred to as the mining industry is actually two sectors:

• One specializing in exploration for new resources.
• The other specializing in mining those resources.

The exploration sector is typically made up of individuals and small mineral resource companies ("juniors") dependent on venture capital. The mining sector is typically large and multinational companies sustained by mineral production from their mining operations.

Support Industries and Financial Markets

In addition to these two sectors, various other industries such as equipment manufacture, environmental testing, and metallurgy analysis also rely on and support the mining industry throughout the world. Canadian stock exchanges have a particular focus on mining companies, particularly junior exploration companies through Toronto's TSX Venture Exchange; Canadian companies raise capital on these exchanges and then invest the money in exploration globally. Some have argued that below juniors there exists a substantial sector of illegitimate companies primarily focused on manipulating stock prices.