Obama administration ups USGS budget as demand returns

By Siobhan Lismore-Scott
Published: Friday, 06 February 2015

The latest set of figures released from the USGS underpins the different trends in mining across the world, as well as in the US. Obama’s pledge to increase the budget for 2016 in an election year perhaps indicates that mining will form a bigger part of political manifestos going forward.

President Barack Obama has pledged an extra $150m more for the US Geological Survey (USGS) in his proposed 2016 budget, taking the organisations final budget, if approved, to $1.2bn in total.

"The FY16 budget reflects the vital role the USGS plays in advancing the President’s ongoing commitment to scientific discovery and innovation to support a robust economy, sustainable economic growth, natural resource management, and science-based decision-making for critical societal needs," the USGS said after the budget was announced.

The Industrial Minerals Association of North America (IMA-NA) explained meanwhile that since 1995, with the dissolution of the US Bureau of Mines, "funding has been repeatedly cut to the minerals science programmes".

   "The proposed FY16 budget shows some potential movement, including a request for just under $1m for the Mineral Resources Programme," IMA-NA said.

"The money is specifically to continue life-cycle analyses for critical minerals and R&D to reduce the impact of mining on the environment, the association explained."
President Obama has pledged an extra $150m to the USGS budget for 2016  

Demand returns?

Minerals are back on the agenda in the US — and not before time. As the impact of the global financial crisis starts to ebb, demand for industrial minerals, which go hand in hand with a growing consumer base and urbanisation, has started to creep up.

In the last year, a globally recognised vehicle manufacturer, Tesla Motors, has stated that it will need more supply of minerals such as lithium and graphite to build a battery Gigafactory in Nevada for its cars.

Not only that, but if the company is seeking to produce automobiles on a grander scale than it already has done, it will need other minerals such as talc, boron, silica sand, iron oxide, titanium dioxide (TiO2) minerals, rare earths (neodymium) and silicon carbide (SiC), among many others.

This is not the only facet driving industrial minerals growth. The Middle East is experiencing a construction boom on the back of increased urbanisation – and of course the FIFA World Cup is being held in Qatar in 2022, which has prompted plans for stadiums and related facilities.

Much has been made of slowing growth in China in the short term, but many major industrial minerals companies – including Rio Tinto and leading speciality alumina producer Almatis — believe that in the medium to long term, China will drive growth in mineral demand through increased urbanisation.

Diversification

The US has been resolute in its intention to diversify its mineral supply away from China and other countries and build up its own minerals industry. This has translated into government support for domestic producers and regulation which makes it harder for countries to 'dump’ cheaper materials on its shores.

For fossil fuels, the US pledge to concentrate on local industry and decrease reliance on exported oil and gas saw companies invited to explore unconventional options such as fracking in the mid-to-late 2000s. This has led to a explosion in demand for minerals associated with hydraulic fracturing, such as silica (frac) sand and other proppants, as well as those minerals used in drilling muds –bentonite and barite (barytes).

   Following the  Deepwater Horizon disaster of 2010, all deep sea drilling was cut in the US, which impacted demand for minerals used in conventional drilling, such as barite and bentonite – although industrial minerals were relied upon in the  clean up effort.

The return to deep sea drilling and the 'shale gale’ which hit the US has meant a spike in demand for these minerals, something which is recognised by the US – notwithstanding the recent slide in the  oil price.
Following the Deepwater Horizon disaster, demand for oilfield minerals has returned  

Water challenges highlighted

With increased exploration, both of fossil fuels and in the production of minerals (like iodine) comes the challenge of managing water supply. This has also been highlighted in the FY2016 Budget, which has pledged an increase of $14.5m above the 2015 budget to support programmes which look into sustainable water management.

"As competition for water resources grows for activities such as farming, energy production, and community water supplies, so does the need for information and tools to aid decision-makers," the USGS said.

Fracking trends highlighted

The USGS has put together a report which highlights fracking trends from 1947 to 2010 which specifically identifies trends in drilling and the use of proppants, treatment fluids and water.

The 24-page report demonstrates that the largest amount of wells fracked were in Texas, followed by Pennsylvania and then Oklahoma in the 2000-2010 period.

Unsurprisingly, the data shows that the use of sand in fracking spiked alongside the wells themselves and shows that in the last 10 years water usage rose to more than double its level in 2000 in 2010, but has since fallen off.

There were, in 2000-2010 – a ten year period — an average of 2,464 horizontal gas wells drilled, compared to 654 in the years 1953-1999, a 46 year period.

Minerals data

The USGS released its global mineral data for 2014 this week – another service which is invaluable to those prospecting or looking to expand their facilities.

The data, which has been contested by some, shows that magnesia capacity in Austria has slipped 9% over the year, with 200,000 tonnes produced.

North Korean magnesia production has expanded by 14% in 2014, meanwhile, to 80,000 tonnes.

 magnesia table  For natural graphite, USGS data shows that production worldwide grew by almost 5% year-on-year (y-o-y) in 2014, as new capacity came online in Canada (50% more graphite produced in 2014), Madagascar and Mexico, which boosted capacity to 8,000 tpa from 7,000 tpa in 2013.

Production in Brazil slipped by 15.8% in 2014 when compared to the previous year, to 80,000 tonnes.
 Source USGS  

Lithium production meanwhile is expected to have increased by 2.3% y-o-y.

For mineral sands, the optimisation taking place across the sector as demand dwindles is seen in the data. Ilmenite production slipped 50% in the US in 2014, by 30% in Brazil and 20% in Norway.

Value of minerals production increases in US

Elsewhere, the report shows how the estimated value of mineral production increased in the US in 2014.

The estimated value of mineral raw materials produced at mines in the US in 2014 was $77.6bn, an increase of 4.6% from $74.2bn in 2013.  

"US economic growth supported the domestic primary metals industry and industrial minerals industry, however, weak global economic growth and the strong US dollar limited processed mineral exports, which decreased to $108bn in 2014 from $129bn in 2013," the body explained.

IM’s Drilling Grade Barite report is now available to purchase. To order your copy or to receive a report brochure please contact Emma Hughes, Special Projects Editor, on ehughes@indmin.com or +44 (0) 207 827 6449.



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