Example – adequate revenue of copper
Generic product activity or name
Context and background
Copper concentrate is produced with several by-products one of which is Molybdenum concentrate. There is an increasing demand for both Copper and Molybdenum alloy. In this example we will identify which of the two metals is the determining product.
Presentation of example
For the average copper mine, represented by the global dataset for “copper mine operation” in ecoinvent v3, we have the following prices:
0,71 USD2004/kg for Copper concentrate (Cu) and 22 USD2004/kg for the by-product Molybdenum concentrate (Mo), and the output volumes of the concentrates are 35,4 E9 (Cu) and 180 E9 (Mo) respectively.
This gives a relative revenue of Copper concentrate:
and for Molybdenum concentrate of: 180E6*22/(35.4E9*0.71+180E6*22)=13.6%
The gross operating surplus (net profit margin) of the mining industry is typically above 15%, which means that marginal production costs are below 85% (Statista 2014). This shows that Copper concentrate alone can provide enough revenue to maintain the overall production, and can therefore be identified as the determining product of the average mine operation. The data used are global averages (in case you are making your own foreground data it is recommended to obtain site-specific data).
Information sources used
Statista (2014). http://www.statista.com/statistics/208725/net-profit-margin-of-the-top-mining-companies/, accessed January 1, 2014
Ecoinvent database (2014) http://www.ecoinvent.ch/, accessed January 1, 2014
Author of this example
How to reference this
Weidema B P (2017), Example –copper mine operation. Version: 2017-05-22 www.consequential-lca.org