"The current prices of metals do not reflect their long-term irreplaceability or the environmental and social costs of their extraction," said Dr. Jeremy Richards, an economic geologist in the U of A Department of Earth and Atmospheric Sciences.
Richards believes international organizations and world governments--especially the dozen or so from the countries that produce the bulk of metals--should agree to set uniform royalty rates for producers to pay for the metals they extract. He adds that the rates should rise slowly from their current levels--typically less than three per cent of profits--and should be based on revenue, not profit.
"If you take a ton of gold out of the ground it should cost you a fixed amount regardless of where in the world you do it and how much you say you've made from selling it," said Richards, who authored a paper this month in the Journal of Cleaner Production and will speak next week at the 2006 World Mines Ministries Forum in Toronto.
The governments of Peru and Chile, two of the leading metal producing countries, are currently debating whether to raise royalty rates for metal extraction, Richards noted. On one side of the debate are those who want to keep fees low to attract investors; on the other side are those who don't want to sell an irreplaceable resource for a low price that does not factor in all the human and environmental costs involved.
Richards acknowledged that no one wants to pay more for anything, but he believes the extra money from higher royalty fees could serve to reduce the environmental impact of extraction and address social inequities related to resource exploitation, particularly in developing countries.
"From my research, I think the metal industry could handle higher fees if the fees brought greater market stability with them. Once producers know the rules of the game and know that the rules are stable, they can then make accurate economic assessments. The great fear for them is unexpected changes in taxation or royalty rates, which can invalidate the basis for investments that often exceed a billion dollars."
"The increases would have to be in incremental measures that the market can deal with and people can accommodate," said Richards, adding that the prices for finished products containing metals might increase only a few per cent, even if the price of raw metals were to double. This is because the actual value of metals in many products is only a small part of the final retail price, he said.
However, raising royalty fees is just one part of Richards' multifaceted approach to bring social equity and wider environmental responsibility to the metals industry. He also envisions a system in which car companies, for example, would retain ownership of the metal in their cars, and consumers would pay them merely for the manufacturing costs and usage of the product. When a consumer no longer wants to use the car (or can't pay to use it) the cars would be returned to the company or a central facility for reprocessing.
Such a move could "nudge us from being a consumer society to being an investor society," Richards said.
"Only fractional amounts of metals are recovered by recycling, and today, more than ever before, consumer products are designed to become rapidly obsolete to encourage replacement purchases. We should be building these products, such as computer printers, for example, so that the parts are strippable and easily reusable."
Richards does not consider himself an "activist", but he admits he is "unashamedly idealistic".
"A problem with activist messages calling for mining bans is that they provide no alternatives other than deprivation," he said. "Carefully planned and executed, a move toward proper valuation of non-renewable materials should leave society as a whole more wealthy--if quality of life and endowment for the future are considered as factors of wealth--and should help reduce the wide inequities between developed and developing countries."
Such "a move" requires leadership and public will, Richards added.
"It comes down to government," he said. "Our leaders have to be visionaries and make good decisions. The sustainable development of our species on this planet depends on it."
Dr. Jeremy Richards can be reached at 780-492-3430 or firstname.lastname@example.org.
Last reviewed: By John M. Grohol, Psy.D. on 21 Feb 2009
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