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Abstract

Mineral-resource mining is a pillar of many state economies and, in many cases, it determines the welfare of the society. The mining of mineral resources provides the market with the raw materials that are traded and drives the economic and social development of countries, although it can also be a source of tensions and crises (e.g. the “curse of wealth”, “Dutch disease”). The trade of raw materials is conducted by exchanges, bilateral deals and other forms of transactions, and is regulated by trade regulations and contract agreements, and in most cases, constitutes a source of income for exporters. In this paper, the use of game-theory modelling for creating the selling price of mineral products on the basis of Polish export quotas for refined copper raw materials is proposed. Using a characteristic function created on the basis of reported export values, possible cooperation arrangements are defined and solutions are calculated for an n-person game of hypothetical coalitions of the major (in terms of volume) recipients of refined Polish copper, i.e. Germany, Italy and France. Alternative markets and possible supplies of cheaper raw material are excluded from the analyses, while the price spread between the rates paid by the buyers is taken into consideration. Among the many possibilities, the game core, the Shapley imputation and the Gately point are arbitrarily adopted as permissible solutions to the defined system. The obtained results are used for a speculative analysis relating to the possibility of renegotiating prices between the producer and recipients of the raw material. Marginal contributions resulting from Shapley’s solution are taken into account as is the power of individual trading-participant coalitions. The paper demonstrates that the recognition and adoption of solutions based on the n-personnel game model as impartial would require the redefinition of contracts and the rates paid for the raw material.
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Authors and Affiliations

Mariusz Krzak
1

  1. AGH University of Science and Technology, Kraków, Poland
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Abstract

The development of human civilization ignites a demand for various natural resources. Nowadays, these resources include not only useful minerals, soil, water, air, flora, or fauna, but also natural forces and other environmental assets determining the quality of human life, such as geographic space, landscapes, and microclimates. Among so many categories of natural resources, minerals - which are for the most part non-renewable - often constitute a deciding influence on the level of human well-being. Within the study of the utilization of natural resources, a series of models have been developed which are aimed - mostly in a dynamic mode - at maximizing the level of social well-being determined by the consumption of specific resources. The paper discusses, while recalling selected, established economic theories, the problem of the use and protection of non-renewable mineral resources at the stage of their economic exploitation. The author examines, based on the theory of sustainable development, Hotelling's model and its later modifications of the difficulties in implementing a resource protection policy. The paper approximates a new approach to the concept of mineral resources use in light of the N-person Prisoner's Dilemma. The conclusions were illustrated by simplified cases, conducted with the assumption of an absence of perfect unlimited substitutes.

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Authors and Affiliations

Mariusz Krzak
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Abstract

Mineral markets, in spite of many common features with other goods markets, are distinctive. Their functioning sometimes deviates from the rules of the free market. This feature results from the specificity of acquiring the good being an object of trade. In general, changes in the supply of strategic raw materials are indicated earlier (characterized by a lengthy investment cycle from deposit reconnaissance to mining development), develop slowly, andare inelastic. Demand for common mineral raw materials often has a clear and economic character. However, mineral markets as well as markets of other goods have a common feature - the fact that both are a place where an incessant game is being played. In general, two types of strategic behaviours are distinguished: competition or cooperation. This paper recalls an existing model known as the oil market game. Based on a three-entity market of aggregate producers, an attempt has been made to model entrepreneurs' behaviour. The analysis applies n-person game theory. Game theory enables the evaluation of diverse potential coalitions forming. Possible strategies of activity coming from the prospect of cooperation (or its omission) are presented. Expected payoffs are estimated for possible alliances. Proposals for the division of the payoffs among the participants forming the coalition are also suggested.

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Authors and Affiliations

Mariusz Krzak
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Abstract

The basis for a mineral deposit delimitation is a qualitative and quantitative assessment of deposit parameters, qualifying a deposit as an economically valuable object. A conventional approach to the mineral deposit recognition and a deposit detailed parameters qualification in the initial stages of development work in the KGHM were presented in the paper. The goals of such recognition were defined, which through a gradual detailed expansion, resulting from the information inflow, allows for the construction of a more complete decision-making model. The description of the deposit parameters proposed in the article in the context of fuzzy logic, enables a presentation of imprecise statements and data, which may be a complement to a traditional description. Selected non-adjustable and adjustable s-norm and t-norm operators were demonstrated. Operators effects were tested for selected ore quality parameters (copper content and deposit thickness) by constructing adequate membership functions. In a practical application, the use of chosen fuzzy logic operators is proposed for the assessment of the qualitative parameters of copper-silver ore in the exploitation blocks for one of the mines belonging to KGHM Polish Copper S.A. The considerations have been extended by including the possibility of using compensation operators.

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Authors and Affiliations

Mariusz Krzak
Paweł Panajew
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Abstract

Steel and cast-iron products, due to their low price and beneficial properties, are the most widely used among metals; their consumption has become an indicator of the economic development of countries. The characteristics of iron raw materials, in relation to current metallurgical requirements, are presented in the present this article. The globalization of the trade and development of steelmaking technologies have caused significant changes in the quality of raw materials in the last half-century forcing improvements in processing technologies. In many countries, standard concentrates (at least 60% Fe) are almost twice as rich as those processed in the mid-20th century. Methods of quality assessment have been improved and quality standards tightened.

The quality requirements for the most important raw materials ‒ iron ores and concentrates, steel scrap, major alloy metals, coking coal, and coke, as well as gas and other energy media ‒ are reviewed in the present paper. Particular attention is paid to the quality testing methodology. The quality of many raw materials is evaluated multi-parametrically: both chemical and physical characteristics are important. Lower-quality parameters in raw materials equate to significantly lower prices obtained by suppliers in the market.

The markets for these raw materials are diversified and governed by separate sets of newly introduced rules. Price benchmarks (e.g. for standard Australian metallurgical coal) or indices (for iron concentrates) apply. Some raw materials are quoted within the framework of the commodity market system (certain alloying components and steel scrap). The abandonment of the long-established system of multi-annual contracts has led to wide fluctuations in prices, which have reached a scale similar to that of other metals.

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Authors and Affiliations

Mariusz Krzak
Andrzej Paulo
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Abstract

The operational mineral deposit reconnaissance tends to evaluate its parameters to conduct safe and profitable production. Particular deposit parameters, important from the point of mineral deposit management, are estimated on the basis of observations carried out by mining geological surveys. These observations usually involve sampling, drilling, laboratory analyses and others. The use of fuzzy description to assess the parameters of the mineral deposit was proposed in the paper. In the fuzzy characteristics, an imprecise descriptive description appeared in place of a particular numerical quantity. This approach was used to description of the ore deposit features (metal content, volume, and metal yield) by assigning them specific characteristic functions, whose distributions were based on basic statistical quantities. Characteristic functions can be used to prepare operational strategies for any configuration of required deposit parameters resulting from the production management needs. For this purpose, selected logical operators of fuzzy sets were used. In the next approach to fuzzy modeling, an opportunity to characterize the deposit in a subjective approach was indicated, where the assessment of the deposit parameters is based on rough, in some way, discretionary observation and evaluation. Such model construction enabled the overall assessment of the deposit from the point of view of any parameters. Through the implementation of appropriate inference rules, adequate fuzzy control planes were obtained, which may also be useful in the context of operational mine strategy planning.

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Authors and Affiliations

Mariusz Krzak
Paweł Panajew
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Abstract

An attempt to summarize the primary iron raw materials and steel market’s hundred years history as well as influence of economic indicators on the iron ore deposit qualification for extraction has been undertaken in the paper. Steel products are crucial to the world economy, and their production has a major impact on the environment. The main factor is the huge scale of the production and growth rate, unprecedented among minerals. Iron ore and concentrates production has increased more than thirty times over the past century, and the geological resource base at the current level of consumption has provided almost 250 years of sufficiency. There have been tremendous changes in the world geography of the ore and steel industry. The iron ore mining industry is the driver of other economic activities (land transport, freight, metallurgy) and involves huge capital and human resources. The consumption of iron raw materials is also considered as an important indicator of the countries development and current or even future economic situation. Population growth remains one of the key stimulating factors. The prices of ore and iron concentrates depend on the quality of the raw material, delivery conditions, market balance and the weight of the ordered cargo. They are usually the subject of negotiations. In the past, they were long-term contracts, while short-term (yearly, quarterly) and current spot transactions are now significant. The prices of ores and concentrates in relation to steel prices are showing a strong correlation. The average iron content of the reserves has been reduced in the largest producers in the 21st century, however it does not translate into the quality of mining output. Exploitation of the richer parts of the mineral deposit is usually carried out. The high content of iron in the output is a response to the technological requirements of the metallurgy where the blast furnace charge should contain at least 56% Fe and 5–8% FeO. The current surplus of geological-mining supply (large resource base) justifies that a mineral deposit choice, destined for excavation, is economic profit maximization as well as social and environmental considerations.

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Authors and Affiliations

Mariusz Krzak
Andrzej Paulo

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