An iron ore deposit is a mineral collection of sufficient size, iron-content, and chemical composition with physical and economic aspects that makes it a viable source of iron either immediately or potentially. Economic viability is essential. No definite limits can be set on the size, grade, or mineral composition since there are considerable acceptable limits in the physical and chemical parameters for a commercially minable iron ore deposit. Geographic location, other competitive iron ore sources, the size and location of the market, minability, grade, and concentrate ability, are critical in defining the economic viability of an iron-bearing deposit. In the process of winning the vast quantities of iron ore from the mines, about double amount of waste is generated and piled up in and around the mining pits covering cast stretches of land (Faure & Skogh, 2005). One of the most pertinent issues/problems facing iron ore mining is environmental pollution. This paper is an economic analysis of environmental pollution as a current issue or problem facing the iron ore industry.
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Iron ore mining, like other mining processes, is one of the most pollution causing operation and the most environmentally damaging activity (Faure & Skogh, 2005).Environmental issues that have an economic impact on the iron ore industry include air pollution from industrial emissions, such as sulfur dioxide,deforestation, and a threat to animal habitats, pollution of water bodies through industrial discharges, land resource conservation, and management, preservation of biodiversity and control of environmental hazards such as landslides. Others include solid waste disposal and management, environmental management of mined-out areas, limitations of environmental regulation, transfer of environmental research to commercial practices, alternative sources of energy, and implementation of clean, green technology. All these have a significant economic impact on the iron ore industry since the effect it in different ways, such as a reduction in total production, increased production costs, and sometimes, the complete halting of mining and production (Faure & Skogh, 2005).
Although the iron ore mining industry has many positive and significant impacts on the economic development of a region or country as a whole, it also gives rise to some adverse environmental impacts. Some are directly related to the unique features of the iron mining industry and others to destructive mining practices and poor environmental management. These environmental impacts have significant negative economic effects on the iron ore industry and could critically lessen the economic gains and benefits of the iron ore industry. The negative economic effects associated with environmental problems usually stem from the large volumes of mining wastes generated because of the high overburden-to-ore ratio (approximately 3:1) (Faure & Skogh, 2005). This induces a serious problem concerning disposal and land-use management, especially as regards the optimal use of space available for waste dumps. These dumps are located in the upper parts of the valley areas and thus, represent a significant source of erosion/sediment loading in the watercourses, especially during the rainy season. Moreover, the waste materials are generated in bulk and have to be dumped far away from the sites. Moving large amounts of overburden and waste material in large open-pit mines, often on the order of millions of tons per year, requires mining companies to make significant investments in loading and hauling equipment. For instance, in the Tata iron mining plant, the disposal costs of overburden are in the range of Rs. 75 to 100 Rs/t of waste (Faure & Skogh, 2005). In addition, the activity of moving the wastes has a hidden cost also in terms of bringing the operations to a halt simply because something has gone wrong with the process of moving the wastes out.
Iron ore mining is typically done through open-pit mining to the depths of more than 60 m (Faure & Skogh, 2005). In most regions, this is below the water table and requires de-watering of the pits, thus contributing to the degradation of the surface water quality (high concentrations of particulate matter). Iron ore tailings are contaminated with parts per million levels of heavy metals, including copper, uranium, zinc, molybdenum, and lead(Faure & Skogh, 2005). Many of these potentially toxic elements reach and become water pollutants. Studies indicate that high concentrations of toxic heavy metals such as copper, iron, manganese, zinc, chromium, nickel, molybdenum, and cobalt have been found in mine water (Faure & Skogh, 2005). It has also been reported that high concentrations of heavy metals are also found in the soils surrounding localities. Heavy metal poisoning and water pollution results in high economic costs to a country; for instance, in China, lost wages due to premature deaths caused by water pollution cost about $ 9000 in urban areas and $ 4800 in rural areas per person (Faure & Skogh, 2005).
Premature deaths caused by water pollution cost about $14 billion a year under willingness-to-pay valuation and $ 2 billion a year under the human capital valuation (Faure & Skogh, 2005). The health and productivity losses associated with pollution, including that contributed by the iron ore industry, range from hospital and emergency room visits, lost work days, to the deliberating effects of chronic bronchitis. Collectively, they are estimated at more than $ 20 billion a year, making them the single largest environmental cost in China today (Faure & Skogh, 2005). The Sasa mine in northeastern FYR Macedonia best illustrates the economic effects of environmental pollution from iron ore industry (Faure & Skogh, 2005). On 29 August 2003, the mine released some 486,000 tons of mine residues into River Kamenicka. Deposits of enormous amounts of poisonous heavy metals such as zinc, lead, arsenic, nickel, cadmium, manganese and copper and the discharge of acidic run-offs to the surface and ground water resulted in acidification and toxic contamination of water, accrual of metals in dregs and accumulation of bio-hazards, with detrimental ecological effects (Faure & Skogh, 2005). This accidental spill-over from the mine contaminated the water supplies used for irrigating approximately 25,000hectares of arable land, significantly decreasing economic, ecological and farming viability (Faure & Skogh, 2005).
Iron ore industries are some of the largest emitters of pollutant gases such as sulfur dioxide (NO2), carbon dioxide (CO2), and nitrogen dioxide(NO2). For instance, in the state of Goa, India’s home to the largest iron ore industries, the use of more than 1000 trucks to transport the ore to the beneficiation plants and barge loading points situated along Mandovi River, is the main contributor to dust and SO2 and NO2emissions along the public roads (Faure & Skogh, 2005). Besides, they cause regular traffic congestions of large truck fleets using high-sulfur diesel fuel. These sulfur and nitrogen pollutants react with atmospheric water and oxygen causing acid rain. Acid rain is associated with various types of damage from effects on human health, food crops to destruction of boreal and subtropical evergreen forests.
Areas receiving acid rainfall also show a higher rate of material corrosion in exposure tests. Total air and water pollution costs are conservatively estimated at over $54 billion a year, or roughly 8 percent of GDP (Faure & Skogh, 2005).In China, surveys by the Chongqing Environmental Protection Bureau found that about 24 percent of the vegetable crop was damaged by acid rain in 1993, amounting to a loss of about 62 million yuan (Faure & Skogh, 2005). Similar losses in yields were found for cereal crops, with losses totaling about 184 million yuan. Total losses for the forestry sector (both trees that have died and for reduced growth) were estimated at 169 million yuan (Faure & Skogh, 2005).Estimates from studies on acid rain contributed by iron ore industry and other mining activities indicate the economic costs from crop and forestry losses alone is more than $4 billion annually (Faure & Skogh, 2005). This is a conventional approximation, because it does not include impacts on materials or human health.
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As environmental considerations become more fundamental factors in policy decisions and planning, the need becomes more compelling for reliable and precise indices of environmental use. This need becomes especially apparent when one is confronted with alternative policies, among which some selection must be made. Considerable environmental problems arise from mining and smelting of iron ore. The deterioration of environmental quality due to unwanted by-products was the cause of society’s introduction of environmental regulations. The iron ore industry shows that environmental problems and scarcity of raw materials have in the pastbeen a stimulus to the invention and implementation of new production techniques. Although pollution lessening techniques exist for harmful materials, their use in developing countries is restricted to a few economically sustainable industries. For instance, in January 2000, a dam holding tailings from iron mining spilled over in Baia Mare in Romania, discharging approximately100,000 cubic meters (m3) of waste, including about 70 tons of cyanide and other heavy metals (Faure & Skogh, 2005). The leak affected nearby rivers, contaminating the domestic water supply for over 24 hours and killing several thousand tons of fish. After this catastrophe, the European Union and individual countries enacted numerous directives and legislations to increase the safety of mining activities, and as a result, most mining companies are now using improved technology (Faure & Skogh, 2005).
Not all environmental issues facing iron ore industry have a negative economic impact. Environmental regulations require that mined out areas and inactive or dead dumps be rehabilitated. On several occasions, these rehabilitation efforts have created new economic problems for the residents, the governments as well as the mining companies. For example, in the iron ore mines of Goa as in the rest of India, the favored form of rehabilitation has been re-vegetation (Faure & Skogh, 2005). On reject dumps where no further dumping is possible the plantation of various species has been developed by the mining firms. The forest department had undertaken afforestation on dead dumps and according to them Acacia auriculiformis is the most suitable species for these dead dumps (Faure & Skogh, 2005). Not only it establishes itself in this inhospitable conditions; it also invades such similar areas in the neighborhood besides regenerating in the area where it is planted. Moreover, the rate of growth is satisfactory, and it acts as a catalyst in the process of succession. This finding has helped develop a shift towards faster growing of trees. Besides, these rehabilitative efforts have been adopted in other areas with positive results.
Environmental problems and the resultant scarcity of raw materials due to environmental regulations have in the past been a stimulus to the invention and implementation of new production techniques. Utilization of by-products permits an increase in the efficiency of a production process and contributes to an improved economic position in the sector. An analysis of structural change in the iron industries shows that new environmental regulations have had a considerable influence on their evolution in the last decades. Environmental policy often constitutes an incentive for the industry to implement end-of-pipe environmental protection measure. However, we could also observe that iron industries have altered their production process in order to avoid the unwanted by-products. The introduction of new techniques was a prerequisite for the substitution of expensive raw materials.
For instance, in the iron and steel manufacturing in Luxemburg, more expensive iron ores have been replaced by scrap (Faure & Skogh, 2005). The changes in the iron industry have improved the efficiency of the production processes. It is possible to produce a higher output with the same amounts of outputs. This, in turn, has led to a reduction of production residues and, at the same time, to a decrease in energy consumption by the iron industry. Iron scarp recycling conserves energy, landfill space and raw materials. For example, in 2008, the domestic iron industry recycled or exported for recycling more than 82 million metric tons of appliances, automobiles, cans, construction materials and other iron products (Faure & Skogh, 2005). This resulted in an overall recycling rate of greater than 83%. The re-melting of fragments necessitates less energy than the extraction of the by-product of iron from its ore. Recycling of scrap to produce iron saves the energy equivalent to power used by roughly one-fifth of households in America (Faure & Skogh, 2005).
Regulatory frameworks to safeguard the quality of land, water, and air as a result of iron ore mining and processing as well as other mineral processing activities are growing in number and complexity. Environmental regulations designed specifically for mining and mineral processing have, until recently, been uncommon in developing countries, although most countries have now in place basic standards for water quality and, less commonly, air quality. A few countries developing countries such as Chile and Brazil have recently adopted extensive regulatory frame works (Faure & Skogh, 2005). This growing concern about environmental degradation is occurring during a period of rapid economic liberalization in developing countries. In India, an approach for sustainable closure of iron mines has been depicted which fins expression in new polices to promote foreign investment, privatization schemes, and the availability of loan capital (Faure & Skogh, 2005). These conditions also influence the regulatory regime of developing countries.
Environmental concerns are one of the key issues facing the iron ore industry today. They have both positive and negative economic effects on the iron industry. Positive economic effects include better methods of rehabilitation of old iron mines through tree planting, a shift to better production techniques and encouraging the recycling of used scrap to produce iron. Negative economic effects include air and water pollution which leads to additional healthcare costs as well as loss of human life and damage to property. It also leads to acid rain, which results in, widespread destruction of food crops, forest covers and vegetation.
Faure, M. and Skogh, G. (2005). The economic analysis of environmental policy and law: an introduction. Northampton, MA: Edward Elgar Publishing, Inc.