Mineral resources - Business in United States of America
Definition: Natural resources that include metals, coal, and stones
Significance: The abundance of mineral resources available in the United States has allowed the rapid growth of American businesses to meet domestic needs and enabled the country to become a global force. Mineral resources have provided the raw materials and energy needed by businesses to produce goods, construct infrastructure, and provide mass transportation.
Mineral resources are an important primary input of production for businesses. As economic development grew and became more sophisticated, increasingly larger amounts and more diverse mineral resources were needed for business activities. The availability of mineral resources depends on the geological abundance of the minerals and their distribution.
Some mineral resources such as stone, coal, and iron are widely distributed and are commonly found in useful concentrations in many parts of the world. Other mineral resources such as copper and platinum are scarcer and require a much higher level of concentration to be useful. This makes their worldwide distribution uneven and their availability more restricted. A geographically larger country is likely to have more favorable areas of geology than a smaller country. Important mineral producers include Australia, Brazil, Canada, China, the Democratic Republic of the Congo, Russia, South Africa, and the United States. Smaller countries such as Chile, Ghana, and Indonesia can also have important mineral resources based on their favorable geology, but such countries have less diversity in their products. The types and amounts of mineral endowment in a country will affect the way business develops in that country. This was particularly true for early American business, as the physical and political isolation of the new country made it difficult to transport bulky raw materials from other regions.
During the colonial period and the early years of the new American republic, business activities were based on primary production, especially agriculture. Energy for business activities came mainly from animals and people, with some supplementation from wood and water. American businesses were small scale and primarily focused on directly using or exporting natural resources. The northern colonies had been a disappointment to their colonizers in terms of mineral resources because there were no easily exploited outcroppings of gold or silver as in other explored regions of the Americas. However, there were numerous small sites of poorer grade iron ore that could be used for small metalworking business operations (as in Valley Forge) and other small deposits of useful minerals. Exploration of Pennsylvania found that the state was well endowed with large deposits of anthracite coal that would become a vital material for the development of steel and transportation industries as the country moved from wood to coal for heating purposes during the early business years.
The business direction of the United States began to change significantly early in the nineteenth century. The troubled relationship between the United States and its major trading partner, Great Britain, as exemplified by the Embargo Act of 1807 and the War of 1812, made it apparent that the United States needed to become less dependent on Great Britain and Europe. Greater economic independence would require that the United States had the ability to produce its own manufactured goods and the necessary transportation infrastructure to move resource inputs and products around a rapidly growing country.
As the United States grew in size with the Louisiana Purchase, the addition of Texas, the territory gained from the Mexican War, and later additions such as Alaska, Americans moved steadily westward to look for new business and economic opportunities. Mineral resources discovered and produced in the newly available lands were an important source of economic opportunity for many Americans and new immigrants, and the raw materials served as inputs for new manufacturing industries. The 1840’s and 1850’s were a time of development of important mineral resources: the California gold rush, the discovery of large copper deposits in the Upper Peninsula of Michigan, and the lead-zinc mines of Wisconsin. The development of these mineral resources corresponded with the beginning of the second phase of the American Industrial Revolution (around 1850) that radically changed the nature of business in the United States. This phase of the American Industrial Revolution was initially based on the introduction of the steam engine both in industry and in transportation (first steamboats and then railroads). Steam engines and the new railroads needed large amounts of coal and steel, and steelmaking requires iron ore, coal, and limestone. All of these minerals were abundant and conveniently located in the United States.
Mules pull a coal car from a mine in Starkville, Colorado, in the early 1900’s. Coal remains an important mineral for the United States. (Library of Congress)
American businesses went through a rapid period of growth and industrialization during the late nineteenth and early twentieth centuries as the United States became a manufacturing power. During this era, the country became the world’s largest economy and leading producer of manufactured goods. To fuel this growth in manufacturing and create a transportation infrastructure, the country depended on the efficient exploitation of its abundant mineral resources, particularly iron, coal, and copper, and other minerals in smaller amounts. For example, iron ore production went from 1 million metric tons in 1860 to 76 million metric tons in 1916. The United States was the world’s leading mineral producer of this era—both in quantity and in variety. Users of these minerals often sought to own and control these vital materials; for example, the United States Steel Corporation owned iron ore sites and the railroads owned coal mines.
Another resource abundant in the United States, petroleum, became very important in this era. The ready availability of oil—the fuel powering automobiles and trucks—allowed the mass production of cars for personal use and completely changed the nature of life and business in the country. As oil production grew, a whole new industry was created to discover, extract, and refine the crude petroleum. This activity led to the creation of one of the great trusts of the era, Standard Oil. Under the Sherman Antitrust Act of 1890, Standard Oil was broken up into a number of different oil companies. Meanwhile, coal usage shifted from powering steam engines to generating electrical power, which in turn dramatically changed the nature of life and business in the United States.
Natural gemstones were some of the earliest mineral resources used in the United States. Native Americans used gemstones such as chalcedony, freshwater pearls, tourmaline, and turquoise for tools and decorative purposes. In the twenty-first century, gemstones are used mainly for decorative purposes, with some limited industrial use (as with diamonds, feldspar, and garnet). Natural gemstones are found in all parts of the United States, and more than sixty different types have been mined and used at some time. Examples of commercially used gemstones include chalcedony, diamond, feldspar, garnet, opal, freshwater pearls, peridot, quartz, sapphire, tourmaline, and turquoise. Tourmaline was first commercially mined in 1822 in Maine, and the commercial mining of other gemstones followed during the 1800’s.
The gemstone industry tends to consist of small firms and individuals widely spread throughout the country, but it can be locally important, as in the cases of turquoise in the Southwest and freshwater pearls in Tennessee. The states of Tennessee, Oregon, Arizona, California, Arkansas, Alabama, Idaho, Montana, and Nevada account for most of the commercial value of natural gemstones produced in the United States. American resources are supplemented with imports and laboratory-created materials.
As the U.S. economy continued to grow during the twentieth century, mineral needs were also growing. Much of this demand continued to be met through the use of domestic sources. Petroleum and coal (largely bituminous coal resources at this time) were used to produce gasoline and electricity to supply energy needs. Iron ore and base metals such as copper, lead, and zinc were produced in large amounts to provide the raw materials necessary for manufacturing and mass production. Industrial minerals such as potash and phosphate rock were mined to provide fertilizers needed for intensive agriculture. Other industrial minerals were used by the chemical industry. Rock and gravel were consumed in huge amounts to produce new roads, bridges, and other construction.
The diversification of American business led to products and industries that required minerals not available domestically. This shift was evident by the 1940’s and the 1950’s. Tin and aluminum products needed imported raw materials. The creation of new specialty steel products such as stainless steel required the importation of metals such as chromium, cobalt, manganese, and nickel. Platinum and titanium had to be imported. Even for the minerals that American businesses could buy domestically, the 1950’s was a turning point. The rapidly growing economy and the depletion of the best domestic mineral resources had made it increasingly difficult for businesses to depend fully on domestic sources. Mineral output was not keeping up with demand, and new foreign sources cost less. American businesses were moving into a new era in which they could not depend solely on domestic sources of minerals for their needs.
Although American businesses have had to look to foreign sources of mineral resources to supplement their mineral needs, this does not mean that the United States can no longer view its domestic mineral resources as an important asset. The country is still one of the largest mineral producers in the world, but the ability to produce all the minerals its businesses need is gone. This is particularly true in energy production, where the country’s demand for petroleum products has grown much faster than the country’s ability to find and produce these products. The United States has gone from being self-sufficient to needing to import nearly half of its petroleum needs.
The nature of American business and its use of minerals has also changed since the peak of domestic mineral consumption during the mid-twentieth century. Large traditional, industrial users of minerals such as iron ore (steel) and base metals have slowed in growth or declined because of growing foreign competition, and new industries have arisen based on new technologies and services. These types of business do not depend as much on the availability of mineral resources. Service industries are usually less mineral-intensive in their business activities. High-tech industries require smaller amounts of specialized minerals that are easily transported and may or may not be available from U.S. sources. This means that the United States is now finding itself in the position of increasingly sourcing its iron ore and some base metals from other countries such as China.
The availability of some mineral resources is still a must for the success of American business. Coal is still the main fuel for electrical power generation, despite concerns about global warming. The United States (along with China) is one of the leading producers of coal in the twenty-first century and has the world’s largest reserves. There is no immediate substitute to meet the tremendous demand for electricity. U.S. businesses also depend on the availability of industrial and construction minerals. These types of minerals must be produced locally because of their low-value, high-bulk-per-unit nature. These minerals are absolutely necessary for road work, construction, cement, and industrial purposes. Most of the physical output of minerals and more than half the dollar value (excluding energy minerals) of U.S. mineral production are of these basic materials.
The mineral resources of the United States have played a very important role in the history of American business and continue to do so. It was the abundance of key minerals such as iron ore, coal, copper, and petroleum that allowed the country to undergo rapid industrialization, to become a world economic power, and to achieve high levels of wealth for its citizens. Despite the nation’s large consumption of minerals in the past, mineral resources are still adequate to meet many of the needs of business as business activity continues to evolve and grow.
Auty, R. M., ed. Resource Abundance and Economic Development. Rev. ed. New York: Oxford University Press, 2004. A scholarly book about the link between resources and a country’s economic development. The chapter “Natural Resources and Economic Development: The 1870-1914 Experience” is of particular interest.
Coyne, Mark S., and Craig W. Allin, eds. Natural Resources. Pasadena, Calif.: Salem Press, 1998. This three-volume reference set has numerous entries about natural resources and their use. A particularly useful entry is “United States, resources and resource use in.”
Peach, W. N., and James A. Constantin, eds. Zimmermann’s World Resources and Industries. 3d ed. New York: Harper & Row, 1972. This older reference book is an excellent source of information about the historical use of resources in society and business. Part 3 deals with minerals.
United States Geological Survey. Minerals Yearbook. Washington, D.C.: U.S. Government Printing Office, 2005. This three-volume reference periodical is published annually by the U.S. Geological Survey. It discusses the production and consumption of all commercial minerals in the United States and the rest of the world by mineral and location for the year and historically. It is an excellent introduction to the business use of particular minerals in the United States.
Vogely, William A. Economics of the Mineral Industries. 3d ed. New York: American Institute of Mining, Metallurgical, and Petroleum Engineers, 1976. This Seeley W. Mudd Series handbook is a good source of information about the historical use of minerals in society.
See also: Black Hills gold rush; Coal industry; commodity markets; exploration; Department of the Interior; Jewelry industry; Klondike gold rush; Petroleum industry; Steel industry.