Michigan State University Extension
Ag Experiment Station Special Reports - 03289581
07/28/98
January 1995 Special Report 81
Status and Potential of Michigan Natural Resources
Michigan Agricultural Experiment Station,Michigan State University
SPECIAL REPORT
Nonrenewable Resources Lead Author: Peter Kakela
DIVERSITY EQUALS STRENGTH FOR MICHIGAN MINERALS
Michigan's mineral industries are something of a mystery to many people in the state. Some people think of Michigan's minerals primarily in historic terms, as "the minerals we used to have but no longer produce." For others, mining Michigan's minerals is less retrospective and more real, but still very negative. Many think of the environmental damage or depletion of scarce reserves that surely must be occurring at whatever mining pits still exist. This report is intended to clear up some of the mystery surrounding Michigan's minerals by shedding light on the current status and potential of the state's mineral industries.
Collectively, the mineral industries in Michigan have two outstanding characteristics. One is their strength in the Michigan economy. The other is their diversity, in terms of both the wide variety of minerals produced in Michigan today and the many regions of production throughout the state.
Michigan's nonrenewable resources are very valuable. Michigan's mineral and fuel resource industries contributed some $2.4 billion to the state's economy in 1991 (Tables 1 and 2). Statewide this industry employs over 12,000 individuals. Furthermore, Michigan's mineral and fuel resource industries contribute the raw materials that support the state's automotive and agricultural industries.
MICHIGAN RANKS HIGH AMONG STATES
The key to Michigan's strong minerals industry is its diversity. In Michigan, companies produce a wide range of metallic and non-metallic minerals, as well as construction minerals and oil and gas.
Michigan ranked first, second or third nationally in the production of 11 non-fuel minerals in 1991. It was the nation's leading producer of peat, calcium chloride, iron oxide pigments and magnesium compounds. It ranked second in production of iron ore, portland cement and bromine. It ranked third nationally in sand and gravel for construction, salt, natural gas wells and industrial sand (Wood and Gere, 1993a) (Table 3).
The Upper Peninsula is well known for its hard-rock minerals, including iron ore, copper and, at times, gold. Diamonds and uranium have also been sought in the Upper Peninsula.
Mineral production and exploration are by no means confined to the Upper Peninsula, however_they are spread rather evenly throughout the state. In fact, there are three times as many people directly employed in mineral production in the Lower Peninsula than in the Upper Peninsula, and the Lower Peninsula easily accounts for three of every four dollars produced by Michigan's mineral industries. The Lower Peninsula contains virtually all of the oil and gas production in the state. It also supports such urban-connected mineral production as sand and gravel for highway and building construction, as well as substantial amounts of gypsum, salt, peat, limestone and portland cement (Table 4).
The economic strength of Michigan's mineral industries enabled the state to rank fourth among the 50 states in total value of non-fuel minerals produced in 1991, as well as 13th in natural gas production and 16th in crude oil production. Overall, Michigan ranked 11th nationally in fuel and non-fuel mineral production in 1991, not including coal. Only the very large oil-producing states of Texas, Alaska, Louisiana, California, Oklahoma, New Mexico, Wyoming and Kansas, along with the biggest non-fuel mineral-producing states of Arizona and Nevada, ranked ahead of Michigan overall. The combination in Michigan of a good oil and gas industry with an outstanding set of non-fuel mineral industries produces the high national ranking (Table 5-8 and Figure 1).
MINERALS' IMAGE PROBLEMS
One of the major problems that the Michigan mineral industries face is their negative image. Too often, mining is thought of as bad. It is often portrayed as damaging to the environment, squandering of our natural resources, even raping the natural heritage of the state. Mining is sometimes referred to as the extractive industries; on other occasions, mining is classified as producing nonrenewable resources in a period when we are all being encouraged to seek out renewable resources and turn our attention increasingly toward recycling.
But there is still a great need for fuels and minerals to produce the products our society demands each year, and Michigan continues to help fill this need. Michigan's iron ore industry, for example, produces between 11 million and 15 million tons of ore a year. That is enough to make the steel for about half of all the automobiles manufactured in this country each year. This industry contributes approximately $500 million dollars per year to the state's economy. In the Lower Peninsula, the cement, sand and gravel, and stone producers-lumped together as a group of construction-oriented mining operations-produce more than 100 million tons of materials per year. They contribute well over $500 million dollars to the state's economy each year. The oil and gas producers of the Lower Peninsula contribute almost $900 million per year to the Michigan economy, as well as approximately $50 million per year in severance taxes to the state's general fund and another $35 million in royalty and bonus payments to the state (Independent Petroleum Association of America, 1993).
In spite of all this, the mining companies and mineral producers of Michigan still have a negative public image. Improving this image should be a major goal of the mineral industries. Vital educational and public policy avenues are available to them to begin to change this image. What is needed is a much larger measure of cooperation among the various industries and producers than currently exists. Maybe this issue of overcoming a negative image could help bind these industries together. One outcome could be a broader based Minerals Trade Association in Michigan that would attempt to educate the public as well as the industry in addition to carrying on its current lobbying efforts.
Terms need to be changed and labels adjusted. It was not long ago that our sanitary landfills were generally called garbage dumps and our wetlands were called swamps. New labels do not change the physical reality, but they can alter how we think about our resources and the ways we manage them.
Overall, Michigan's fourth place ranking nationally in non-fuel mineral production accounted for about 4 percent of the nation's non-fuel mineral value in 1991 (Wood and Gere, 1993b). Its 16th ranking nationally in oil and 13th ranking in gas production accounted for about 1 percent of the nation's oil and gas revenues in 1991.
The combination of hard-rock minerals, construction materials, and oil and gas production in Michigan strengthens the state's total mineral output stature considerably. In fact, Michigan's combined production exceeds that of some states that are better known for their mineral production but produce only a small selection of commodities. For example, Michigan's overall production is greater than that of Alabama, a rather well known oil-producing state. Michigan also outperforms Minnesota, Colorado and Utah, three prominent hard-rock mineral-producing states.
OIL AND GAS IN MICHIGAN
Michigan's oil and gas industry is small compared with those in the giant producing states, but it still contributes a substantial amount to the overall minerals industry of the state and strengthens the diversified base of Michigan's minerals sector. Michigan's oil and gas industry is only about 3 percent of Texas's, but it contributed $680 million to Michigan's economy in 1991, or about 30 percent of the total produced value of Michigan's minerals.
The state produced some 186,515,912,000 cubic feet of natural gas and 17,616,499 barrels (42 gallons each) of oil in 1991. These production volumes enabled Michigan to rank 13th nationally in gas production and 16th among the states in oil production. In 1991, natural gas became the most important hydrocarbon fuel produced in Michigan, climbing in value to $529 million vs. oil at $364 million. The primary reason for this shift from oil to natural gas as the leader is the drop in oil prices, both nationally and on the world market, since 1985-86.
STRENGTH FROM DIFFERENT STRUCTURES
The prominent mineral industries in Michigan differ greatly in structure. These differences contribute to the strength of the overall minerals industry of Michigan. For example, the minerals industry includes some very large and concentrated segments, such as the iron ore industry in Michigan. The only iron ore producer in Michigan is Cleveland Cliffs, Inc., with just two large mines here. One of these mines has more than 1,200 employees; the other, more than 800. Together, Michigan's two mines account for about 25 percent of all the iron ore produced in the United States.
In contrast, the construction sand and gravel industry in Michigan is composed of at least 240 companies or government agencies producing from 314 operations. Sand and gravel was commercially produced in 72 of Michigan's 83 counties in 1990 (West and Gere, 1992). Most of these companies have 10 or fewer employees; the average is just seven employees (Table 9). They are local producers, the "mom and pop" operators of the mineral industries. They are widespread and often referred to as "urban mines" because they supply construction material for highways and building sites in our cities and towns.
Altogether, more than 12,000 people are directly employed in mineral and fuel production in Michigan. Three-quarters of these mining jobs are located in the Lower Peninsula.
MINERAL EMPLOYMENT MOSTLY IN LOWER PENINSULA
Statewide, approximately 9,000 people were engaged in non-fuel mining in 1991, with just over 3,000 more engaged in oil and gas extraction (West and Gere, 1992). About 3,400 of the miners are located in the Upper Peninsula, where there are many more bedrock outcrops and where, concomitantly, most of the hard-rock mining occurs.
The Lower Peninsula, however, clearly captures the vast majority of mining jobs as well as virtually all of the oil and gas exploration jobs. Oil and gas are produced in some 58 of the 68 Lower Peninsula counties. Also, most of the Lower Peninsula is covered with a veneer of glacially deposited gravelly till or moraine. Some 5,600 miners and 3,011 people in oil and gas extraction were employed south of the Mackinac Bridge in 1991. About 75 percent of the jobs involving mineral production in the state are located in the Lower Peninsula. The importance of construction materials in Michigan means that many of the primary mineral producers are located very close to our urban areas.
The pay rate for mining in Michigan is about 22 percent higher than the average for all industries in the state. The average annual pay for Michigan miners, which includes all sections of the non-fuel producers, was $31,029 in 1990, compared with the annual wage of $25,376 for workers in all industries in Michigan that year (U.S. Department of Labor, 1991).
RESEARCH AND DEVELOPMENT MOSTLY IN UPPER PENINSULA
Despite the fact that more than 75 percent of the employment associated with mineral production is located in the Lower Peninsula, most of the research related to minerals is housed at universities and company research stations in the Upper Peninsula. This helps to perpetuate the myth that most mining in Michigan is done in the Upper Peninsula. Well-established units at universities in the U.P. do turn out nationally known mining engineers, but many other aspects of mining would benefit from a more diverse approach to their issues, problems and needs.
One area is mineral policy. Both the interpretation of national policies and the nurturing of state mineral policies would benefit from a wider perspective that numerous researchers at several institutions might bring to them. Mineral economics is another aspect of the mineral industry that deserves wider attention at more research and teaching institutions in Michigan. Also, the environmental impacts of mining and the development of suitable mitigation strategies deserve wider attention in this state.
Much research on mineral policies, mineral economics and environmental impacts of mining in Michigan has been done outside of the Upper Peninsula. Recent examples of such research include Marcus et al., 1994, Kakela, 1994, and Marcus et al., 1993.
Other examples include research conducted by Michigan State University graduate students. One is the recently completed Ph.D. dissertation by Joseph Daubenmire of the Department of Resource Development, "Some Unintended Impacts on Great Lakes Shipping as a Result of the 1990 Clean Air Act" (Daubenmire, 1993). In it, Daubenmire examines the historic movement of bulk commodities on the Great Lakes-primarily iron ore, coal, limestone and grain-and how lower lake utilities' switching to cleaner western coal to comply with the U.S. Clean Air Act may put pressure on Great Lakes ship capacity. Another example is Nancy Tomboulian's Master's thesis at MSU on used motor oil generated in Michigan, which evaluates whether supply is sufficiently concentrated in a collectible region to justify a new re-refinery being built in the state (Tomboulian, 1989).
Policy, economic and environmental aspects of mineral production in Michigan have been receiving attention from a broader base of institutions than strict mining engineering concerns have. Policy is a very broad societal issue, and mineral policies deserve even wider attention by Michigan institutions than they now receive.
MINERALS START A VALUE-ADDED PROCESSION
Another point of confusion about minerals is their lowly role in the production and manufacturing processes. Minerals, like virtually all other natural resources and agriculture, are at the bottom of the production process and therefore their importance is often denied or overlooked by our increasingly sophisticated service-oriented populace.
In this report, all values reported are at the primary level of production. This means the value of the raw minerals and fuels as they are passed through the initial stage of production. This is called the well head value for oil and gas and the mine mouth value for non-fuel minerals. These are comparable to the farm gate value for livestock and agricultural crops. Another popular way of referring to this is FOB mine value, or freight-on-board as it is leaving the mine.
In our economy, the unknown occurrence of minerals in the ground carries the lowest value. Discovering the existence of the mineral deposits, exploring their magnitude and, subsequently, producing the proven economic deposits add value. Much more value is added to these minerals as they are refined, purified, reformed and ultimately manufactured into the products that we use in our everyday lives, from a hammer and nails to an electrical extension cord to gasoline for our automobiles.
Minerals, along with all other natural resources, are very low on the value-added chain, but they are fundamental to it. The subsequent links get larger and larger, but they are possible only because of the primary producers.
Iron ore is an example of the inverted pyramid of value-added that exists in the iron and steel industry (Figure 2). In this example, the iron ore natural resource is priced at about 1.1 cents per pound at the mine mouth ready for shipment, but it is worth approximately 45 cents per pound when manufactured into nails or about $2.50 per pound when used in an automobile. All agricultural and natural resources are similar. They are relatively small in absolute value, but they play pivotal roles in the economy that go far beyond their direct dollar value.
Jobs in the mineral sectors exhibit a similar inverted-pyramid pattern. There are few at the primary production level, but they expand with each processing or refining step until the largest sector becomes the one having direct contact with the ultimate consumers.
Jobs related to oil and gas production, refining and distribution in Michigan illustrate this point (Figure 3). Note that Michigan is not self-sufficient in oil and gas exploration or refining, but it is in retailing and probably in wholesaling. Therefore, a completely balanced case would have a somewhat larger extraction and refining sector, but the pyramid effect would clearly persist. Each of these job categories is a separate group. Retailing, for example, does not include oil and gas exploration, refining or transport_it includes only the final sales, such as at gas stations.
MICHIGAN MINERALS GAVE BIRTH TO OUR INDUSTRIAL HERITAGE
The development of the entire American industrial economy, as well as Michigan's strong industrial base, has been linked to Michigan's rich mineral resources. Only a limited supply of iron was produced during the colonial American period because known iron ore deposits were very low grade. Much of the ore in the colonies was, in fact, just bog iron ore, a hydrated ferric oxide of modest iron content. These deposits were small, located in swamps, and scattered throughout the eastern part of the country. They supported the very small-scale American iron industry from its inception in 1644 on the Saugus River near Lynn, Massachusetts, through early statehood to the mid-1800s.
The localized deposits and the high cost of shipping seemed to destine the new United States to being an agricultural nation. The discovery of the vast, high grade iron ore deposits in the Lake Superior region of Michigan in 1844, exactly 200 years after the first American iron works, altered the nation's destiny. This ore commonly contained 50 to 60 percent iron in the ground. Michigan's rich iron ore deposit, together with the inventiveness of some of its residents, may have been the greatest single factors in shaping the industrial economy of this country.
The importance of minerals to Michigan was recognized even before the rich Lake Superior iron ore was discovered. When the first state legislature met in 1837, it created the Michigan Geological Survey as the first state agency and appointed Dr. Douglass Houghton as its first state geologist (U.S. Department of Interior, 1976). Michigan is currently (1994) celebrating 150 years since iron ore was first discovered in the Lake Superior region. One of the events was the sesquicentennial conference in Marquette, September 22-25, 1994, titled "Forged From Iron: Industry, Society and Culture on the Michigan Iron Ranges." More than 1 billion long tons of iron ore have been produced from Michigan mines.
OIL PRODUCTION ALSO STARTED EARLY IN MICHIGAN
Oil production, too, has a long history in Michigan_more than 100 years. The first oil was produced in Michigan in 1886 near Port Huron. The discovery was inspired by Canadians who had drilled several productive wells in the southern tip of Ontario and were following the oil-bearing formation westward toward the United States. Charles Bailey, a farmer on the edge of Port Huron, watched the fledgling Canadian oil industry develop new fields across the nearby international border.
The story has it that Bailey, convinced that oil must lie under his property, went out and persuaded 17 local businessmen to contribute $500 each to drill what turned out to be the first productive oil and gas well in Michigan (Ennis, 1986). The Bailey well was 515 feet deep in what became known as the Port Huron field.
Many producing wells in Michigan are shallow wells like Bailey's, but there are also some much deeper drillings, too. Several recent major finds have been as deep as 12,000 feet in what is called the Prairie du Chien field. Most of these are located in the northern part of central Michigan. Over the past 107 years, more than 40,000 wells have been drilled in Michigan, with 13 percent hitting producible natural gas and 36 percent striking oil. Dry holes accounted for 51 percent of the efforts. Cumulative production in Michigan has been in the order of 3.4 trillion cubic feet of gas and 1.1 billion barrels of oil. The cumulative wellhead value of oil and gas production in Michigan is over $12 billion (Independent Petroleum Association of America, 1992).
POLICIES
A number of current policies are affecting the mineral industries of Michigan, and many potential policies could enhance these industries.
The state approved final rules in 1991 to implement the 1988 Michigan Mining and Resources Development Act (Public Act 188 of 1988). This legislation will allow for grants and loans to be made for projects involving new technologies, products and processes that will help the state's forest and mineral resources industries.
The primary activity in the Lower Peninsula for the Michigan Geological Survey is to regulate the oil and gas industry. Duties include issuing drilling permits, monitoring production, plugging oil and gas wells after production has stopped, and overseeing final restoration of sites to their predevelopment environmental condition. The Geological Survey also regulates mine reclamation at Lower Peninsula open pit mines and quarries; permits and regulates the industrial sand mining operations to protect critical dunes; assists in the taxation of metallic mining operations; coordinates the statewide groundwater data base effort; and assists in metallic and nonmetallic mineral lease sales.
In fiscal year 1990, Michigan Technological University received research and allotment grants totalling $338,697 from the U.S. Bureau of Mines under provisions of Public Law 98-409 and Public Law 100-483, the State Mining and Mineral Resources Research Institute program. The basic allotment grant of $145,000 was supplemented by additional funds for specific research projects. Funds provided under the act support basic research in the mineral sciences and engineering, and they are matched by state funds on a 2:1 basis. Since designated a participant in the Mineral Institute Program in 1979, Michigan Technological University has received more than $3 million in federal funds through provisions in the program (West and Gere, 1992).
POTENTIAL POLICY TO AID MICHIGAN'S MINERAL INDUSTRIES
Many policies have been enacted elsewhere that could, if tried in Michigan, help the mineral industries. Minnesota has been a national leader in developing state-level policies to aid its mineral industries while still maintaining a very strong environmental protection attitude. Many of the ideas listed below come from our sister state of Minnesota.
1. Set aside a small portion of the tax on various minerals for acquisition of equipment and facilities, or research and development that will reduce costs or improve safety. Expenditures must be approved by a joint committee of hourly and salaried employees at the mining operation. In Minnesota, this new policy is called the Taconite Economic Development Fund. It earmarks 10.4 cents per ton, or about 5 percent of the taconite production tax, for approved projects, which have run between $250,000 and $500,000 per mine.
2. An annual statewide conference where prominent mineral industry practitioners, suppliers, key government agency personnel and university researchers come together to hear status and prospects reports and to coordinate policy initiatives and strive to clarify the permitting processes, to improve the regulatory climate and to speed up the adoption of more efficient production processes. Minnesota's Mineral Coordinating Committee has held ten annual Current Mineral Activities Forums, each with positive results.
3. A Minnesota Governor's Taconite Task Force has held public informational hearings for the past two years for that industry.
Some of these efforts could be interpreted and adapted to Michigan conditions. A more active Minerals Trade Association in Michigan could nurture these and other ideas. It could sponsor educational efforts aimed at improving the image of the mining industries in the state. The Minerals Trade Association could do more to focus attention on the various public policy issues affecting the mining industries. This is only one vehicle for improving the mineral industries in Michigan. What is clear is that there is room for improvement. One of the first steps is to reduce the mystery surrounding mineral production in Michigan.
RESEARCH IS NEEDED
Much research needs to be done to improve Michigan's mineral policies. A small selection of research issues is listed below to illustrate the scope of the need. Future research could address the following issues:
1. Many public policies have been enacted elsewhere that could, if tried in Michigan, help the mineral industries. Minnesota has been a national leader in developing state-level policies to aid its mineral industries while still maintaining a very strong environmental protection attitude. Therefore, it would be helpful to evaluate the Minnesota experience and suggest whether Michigan should attempt some of the policies Minnesota has tried.
The research design for this objective could include an analysis of the key iron ore taxing policies in Minnesota and how they compare to Michigan's. As the new technology for pelletizing iron ore was emerging in the mid-1950s, Minnesota and Michigan adopted policies that capped iron ore taxes at about 40 cents per ton in today's dollars. During the 1970s, however, Minnesota added three earmarked taxes to iron ore production to accommodate the downside of the boom and bust cycle of mining. These taxes established special funds to cover environmental cleanup, local economic redevelopment and retraining programs for displaced workers. Michigan has not added taxes like these. The end result is that Minnesota's primary tax on iron ore has grown to approximately $2 per ton while Michigan's has remained at about 40 cents per ton. The analysis would examine the local benefits gained from these added taxes in Minnesota to see to what extent they have justified their costs and determine if some comparable taxes should be promoted in Michigan.
2. Mining companies and mineral producers in Michigan have a negative public image. Improving this image should be a major goal of the industries. Vital educational and public policy avenues are available to them to begin to change this image. What is needed is a much larger measure of cooperation among the various industries and producers than currently exists. Maybe the process of overcoming the negative image could help bind these industries together.
The research design to accomplish this objective could involve publishing reports for both scholarly and lay audiences describing the current status and potential of minerals in Michigan, developing and testing educational materials about mining and how minerals are used in everyday life, and surveying the industry to determine the amount of cooperation that currently exists and see if greater coordination is needed.
3. There are real costs associated with the production of natural resources that often are not included, or not fully included, in their market price. For example, mining, logging and the production of other natural resources can be dangerous. Despite increased safety standards, injuries still occur and lives are lost in the production of basic raw materials. The human cost of resource production cannot be directly incorporated in market prices. How much has this human cost of resource production been reduced over time and which public policies have been most effective?
The research design for this objective could analyze the general trends of mining safety to determine to what extent certain public policies, such as worker's compensation, improved mining safety, and major social trends, such as unionization, improved safety. Mining could be compared to other natural resources industries, such as logging, to determine if there are similar relative risks and similar or different changes in risk over time.
4. The rate of introduction of a few key technologies in mining has either allowed these basic resource industries to stay competitive or held them back. In iron ore and steel, for example, pelletized iron ore is one of those key technologies. Others include the growth of basic oxygen furnaces, the introduction of electric furnaces at "mini-mills," and the increase in ship size and efficiency since the 1950s. Today, direct reduced iron ore is being evaluated. Has the rate of adoption of technological innovations kept the U.S. mining industries competitive? Have government incentives helped?
The research design for this objective could involve analyzing the key competitors to Michigan's mineral production in today's market. The rate of adoption of new products and the adoption of new technologies in the past could be analyzed to determine if U.S. production has been able to maintain its fundamental competitiveness or if it has been protected by governmental subsidies.
5. In recent years, a number of oil and gas exploration companies have added a section to their so-called standard lease that shifts additional production costs to landowners and thereby reduces landowners' net royalty proceeds. The amount of this cost shift and the alternatives to it are not well understood by most landowners. How much added cost is involved and how can landowners avoid or reduce this cost?
The research design for this objective could involve surveying recent Michigan oil and gas lessors to identify specifics of their leases. An economic analysis of various lease options could be conducted using data already gathered that reflect an average Michigan oil or gas well. The results could be used to assess the benefit or cost of various options to Michigan landowners.
6. Waste oil in Michigan currently is either burned as a fuel oil substitute or transported to re-refineries in Indiana or Ontario, Canada. Re-refining is an energy-efficient process. Additional collection of waste oil could also reduce an environmental pollutant. Why is this not being done?
The research design for this objective could involve contacting pertinent collection and distribution companies to determine what is currently being done with waste oil generated by Michigan vehicles today and exploring the possibilities of more organized collection and reuse. The potential of biodegradable marine oil for power boats on Michigan waters could also be explored.
Table 1. Michigan's major mineral and fuel resources, 1991.
MI'S PRODUCTION VALUE (million $) MI'S
---for 1991--- at well head or RANK AMONG
COMMODITY Quantity Units mine mouth THE STATES
(in millions)
Iron ore(1)12.7 metric tons $445.00 2
Natural
gas(2) 186.5 mcf $528.90 13
Oil,
crude(3) 17.6 barrels $363.70 16
Cement(4) 5.1 short tons $244.40 2
Sand and
gravel(4) 46.9 short tons $150.70 3
Stone (crushed)
(4) 41.0 short tons $129.50 13
Lime(4) 0.6 short tons $31.00 10
Gypsum(4) 1.7 short tons $13.10 4
Clays(4) 2.1 metric tons $8.77 4
Peat(4) 0.3 short tons $6.40 1
Combined: calcium chloride, copper, iron oxide pigments,
magnesium, compounds, potash, salt, silver,dimensional
stone, plus others...
XXX XXX $484.40 1 to 11
TOTAL VALUE (1991) $2405.87
Sources: (1) Marquette County Mine Inspectors Report, 1993 (for production) and Skillings Mining Review, March 13, 1993 (for prices). (2) Independent Petroleum Association of America, "The Oil & Natural Gas Producing Industry in Your State--Michigan," Petroleum Independent (September 1993), pp. 98-104; and "Michigan Oil and Gas News" (May 29, 1992), p. 11. (3) Ibid., pp. 98 & 103. (4) Robert Wood and Milton Gere, "Michigan: Annual Report," U.S. Bureau of Mines, July 1993.
Table 2.Relative value of Michigan's mineral and agricultural industries.
Sectors 1991 Minerals Sectors of Michigan value as % of as % of economy (billion $) other sectors minerals Minerals 2.4 100 100 All crops 2.0 123 81 All livestock 1.3 188 53 All Agriculture 3.2 74 135
Table 3. Michigan's rank in U.S. mineral production, 1991.
Commodity Rank Leading
among state
states
Peat 1 MICHIGAN
Calcium chloride 1 MICHIGAN
Iron oxide pigments 1 MICHIGAN
Magnesium comp. 1 MICHIGAN
Iron ore 2 Minnesota
Cement 2 California
Bromine 2 Arkansas
Sand & gravel-const. 3 California
Sand-industrial 3 California
Nat. gas wells drilled 3 Texas
Salt 3 Louisiana
All non-fuel minerals 4 Arizona
Gypsum 4 Indiana
Clays 4 Alabama
Slag, iron & steel 4 Ohio
Copper & silver 5 Arizona
Iron & steel scrap 5 Indiana
Iron & steel 5 Indiana
Iron & st.scrap ex. 8 New York
Lime 10 Missouri
Total minerals 11 Texas
Natural gas 13 Texas
Stone-crushed 13 Pennsylvania
Perlite 14 New Mexico
Oil, crude. 16 Texas
Sources: U.S. Bureau of Mines; Michigan Agricultural Statistics, Michigan Department of Agriculture.
Table 4.Mining jobs in Michigan, 1991.
Commodity Upper Peninsula Lower Peninsula Statewide Oil & gas 0 3011 3011 Non-fuel 3400 5600 9000 Total 3400 8611 12011 % of total 28% 72% 100%
Sources: U.S. Bureau of Mines and Independent Petroleum Association of America.
Table 5. Nonrenewable resource revenues by state, ranked by non-fuel mineral revenues, 1991 (millions $/year).
State Oil, Natural Non-fuel TOTAL Rank
crude gas minerals $ by state
Arizona 2.2 3.0 2829.1 2834.3 1
California 4787.9 842.9 2532.0 8162.8 2
Nevada 59.7 0.0 2392.9 2452.6 3
MICHIGAN 348.3 331.8 1503.3 2183.4 4
Florida 82.1 10.7 1396.1 1488.9 5
Georgia 0.0 0.0 1298.6 1298.6 6
Minnesota 0.0 0.0 1288.9 1288.9 7
Texas 13373.1 9269.5 1264.7 23907.3 8
Utah 489.1 223.1 1153.7 1865.9 9
New Mexico 1362.6 1441.3 985.5 3789.4 10
Wyoming 1731.8 836.8 929.2 3497.8 11
Missouri 2.7 0.0 880.0 883.1 12
Pennsylvania 49.3 386.7 844.0 1280.0 13
New York 8.4 55.6 698.7 762.7 14
Ohio 179.4 370.9 683.6 1233.9 15
Illinois 384.9 1.1 673.3 1059.3 16
Montana 355.8 69.7 590.3 1015.8 17
N.Carolina 0.0 0.0 552.9 552.9 18
Tennessee 8.7 3.8 547.8 560.3 19
Alabama 355.0 442.7 539.9 1337.6 20
Alaska 6668.5 678.9 494.1 7841.5 21
Washington 0.0 0.0 482.7 482.7 22
Virginia 0.2 29.8 428.0 458.0 23
Indiana 60.8 0.7 403.3 464.8 24
Kansas 1129.5 828.6 365.7 2323.8 25
Arkansas 186.0 249.0 360.9 795.9 26
Louisiana 8440.0 7781.4 351.8 16573.2 27
Maryland 0.0 0.0 348.2 348.2 28
Iowa 0.0 0.0 344.0 344.0 29
Kentucky 108.8 138.7 343.1 590.6 30
Source: U.S. Bureau of Mines; Independent Petroleum Assoc. of America.
Table 6. Nonrenewable resource revenues by state, ranked by natural gas revenues, 1991 (millions $/year).
State Oil, Natural Non-fuel TOTAL Rank
crude gas minerals $ by state
Texas 13373.1 9269.5 1264.7 23907.3 1
Louisiana 8440.0 7781.4 351.8 16573.2 2
Oklahoma 2117.6 3359.6 275.5 5752.7 3
New Mexico 1362.6 1441.3 985.5 3789.4 4
California 4787.9 842.9 2532.0 8162.8 5
Wyoming 1731.8 836.8 929.2 3497.8 6
Kansas 1129.5 828.6 365.7 2323.8 7
Alaska 6668.5 678.9 494.1 7841.5 8
W.Virginia 36.4 541.4 116.9 694.7 9
Alabama 355.0 442.7 539.9 1337.6 10
Pennsylvania 49.3 386.7 844.0 1280.0 11
Ohio 179.4 370.9 683.6 1233.9 12
MICHIGAN 348.3 331.8 1503.3 2183.4 13
Colorado 626.0 330.9 338.4 1295.3 14
Arkansas 186.0 249.0 360.9 795.9 15
Utah 489.1 223.1 1153.7 1865.9 16
Mississippi 477.5 174.9 101.9 754.3 17
Kentucky 108.8 138.7 343.1 590.6 18
N.Dakota 674.4 72.4 17.4 764.2 19
Montana 355.8 69.7 590.3 1015.8 20
New York 8.4 55.6 698.7 762.7 21
Virginia 0.2 29.8 428.0 458.0 22
Florida 82.1 10.7 1396.1 1488.9 23
Oregon 0.0 4.0 197.9 201.9 24
Tennessee 8.7 3.8 547.8 560.3 25
Arizona 2.2 3.0 2829.1 2834.3 26
Nebraska 109.6 1.7 89.4 200.7 27
Illinois 384.9 1.1 673.3 1059.3 28
S.Dakota 31.9 1.1 289.9 322.9 29
Indiana 60.8 0.7 403.3 464.8 30
Source: U.S. Bureau of Mines; Independent Petroleum Assoc. of America.
Table 7. Nonrenewable resource revenues by state, ranked by crude oil revenues, 1991 (millions $/year).
State Oil, Natural Non-fuel TOTAL Rank
crude gas minerals $ by state
Texas 13373.1 9269.5 1264.7 23907.3 1
Louisiana 8440.0 7781.4 351.8 16573.2 2
Alaska 6668.5 678.9 494.1 7841.5 3
California 4787.9 842.9 2532.0 8162.8 4
Oklahoma 2117.6 3359.6 275.5 5752.7 5
Wyoming 1731.8 836.8 929.2 3497.8 6
New Mexico 1362.6 1441.3 985.5 3789.4 7
Kansas 1129.5 828.6 365.7 2323.8 8
N.Dakota 674.4 72.4 17.4 764.2 9
Colorado 626.0 330.9 338.4 1295.3 10
Utah 489.1 223.1 1153.7 1865.9 11
Mississippi 477.5 174.9 101.9 754.3 12
Illinois 384.9 1.1 673.3 1059.3 13
Montana 355.8 69.7 590.3 1015.8 14
Alabama 355.0 442.7 539.9 1337.6 15
MICHIGAN 348.3 331.8 1503.3 2183.4 16
Arkansas 186.0 249.0 360.9 795.9 17
Ohio 179.4 370.9 683.6 ,1233.9 18
Nebraska 109.6 1.7 89.4 200.7 19
Kentucky 108.8 138.7 343.1 590.6 20
Florida 82.1 10.7 1396.1 1488.9 21
Indiana 60.8 0.7 403.3 464.8 22
Nevada 59.7 0.0 2392.9 2452.6 23
Pennsylvania 49.3 386.7 844.0 1280.0 24
W.Virginia 36.4 541.4 116.9 694.7 25
S.Dakota 31.9 1.1 289.9 322.9 26
Tennessee 8.7 3.8 547.8 560.3 27
New York 8.4 55.6 698.7 762.7 28
Missouri 2.7 0.0 880.4 883.1 29
Arizona 2.2 3.0 2829.1 2834.3 30
Source: U.S. Bureau of Mines; Independent Petroleum Assoc. of America.
Table 8. Nonrenewable resource revenues by state, ranked by total mineral revenues, 1991 (millions $/year).
State Oil, Natural Non-fuel TOTAL Rank
crude gas minerals $ by state
Texas 13373.1 9269.5 1264.7 23907.3 1
Louisiana 8440.0 7781.4 351.8 16573.2 2
California 4787.9 842.9 2532.0 8162.8 3
Alaska 6668.5 678.9 494.1 7841.5 4
Oklahoma 2117.6 3359.6 275.5 5752.7 5
New Mexico 1362.6 1441.3 985.5 3789.4 6
Wyoming 1731.8 836.8 929.2 3497.8 7 Arizona 2.2 3.0 2829.1 2834.3 8 Nevada 59.7 0.0 2392.9 2452.6 9 Kansas 1129.5 828.6 365.7 2323.8 10 MICHIGAN 348.3 331.8 1503.3 2183.4 11 Utah 489.1 223.1 1153.7 1865.9 12 Florida 82.1 10.7 1396.1 1488.9 13 Alabama 355.0 442.7 539.9 1337.6 14 Georgia 0.0 0.0 1298.6 1298.6 15 Colorado 626.0 330.9 338.4 1295.3 16 Minnesota 0.0 0.0 1288.9 1288.9 17 Pennsylvania 49.3 386.7 844.0 1280.0 18 Ohio 179.4 370.9 683.6 1233.9 19 Illinois 384.9 1.1 673.3 1059.3 20 Montana 355.8 69.7 590.3 1015.8 21 Missouri 2.7 0.0 880.4 883.1 22 Arkansas 186.0 249.0 360.9 795.9 23 N.Dakota 674.4 72.4 17.4 764.2 24 New York 8.4 55.6 698.7 762.7 25 Mississippi 477.5 174.9 101.9 754.3 26 W.Virginia 36.4 541.4 116.9 694.7 27 Kentucky 108.8 138.7 343.1 590.6 28 Tennessee 8.7 3.8 547.8 560.3 29 N.Carolina 0.0 0.0 552.9 552.9 30
Source: U.S. Bureau of Mines; Independent Petroleum Assoc. of America.
Figure 1. Non-fuel mineral revenues for 1991.
Figure 2. Non-fuel mineral revenues, 1991.
Table 9. Sizes of mines differ greatly in Michigan, 1991.
Commodity Mines Employed Emp/mine Iron ore 2 2105 1053 Sand& gravel 314 2320 7
Sources: Marquette Co. Commissioners Annual Report, 1991, and U.S. Bureau of Mines.
Figure 3. Oil and gas jobs in Michigan, 1991. (Thousands of jobs in Michigan)
Appendix
HIGHLIGHTS OF KEY MINERALS IN MICHIGAN
The following information has been excerpted from West and Gere, 1992. The figures are for 1990 unless stated otherwise.
CALCIUM CHLORIDE: Michigan again led the nation in calcium chloride production, outranking California, the only other producing state, by a considerable margin. Dow Chemical Co. produced calcium chloride pellets and flake at its well brine operation near Ludington in Mason County, and Wilkinson Chemical Corp. sold calcium chloride solution from its operation near Mayville in Lapeer County. Calcium chloride is used for melting snow and ice from streets and highways, for dust control, road base stabilization, thawing coal and other bulk materials, concrete set acceleration and other miscellaneous uses.
PORTLAND CEMENT (AND MASONRY CEMENT): Michigan ranked third among the 38 states producing portland cement and fourth among the 36 states producing masonry-cement. The value of portland cement increased 4 percent to a record $263.6 million. Among the non-fuel minerals produced in Michigan in 1990, only iron ore contributed more to the total state value of mineral production. The average price of Michigan's portland cement was $44.64 per ton, compared with the U.S. average of $48.72.
Michigan's five cement plants operated at 93 percent of their finish grinding capacity of 6.1 million short tons in 1990. About 75 percent of portland cement sales were to ready-mixed concrete companies; other customers included concrete product manufacturers (11 percent), highway contractors (9 percent), building material dealers (4 percent) and other miscellaneous customers. Most of the cement was transported by truck in bulk form to consumers.
Raw materials consumed in the manufacturing process included 7.1 million short tons of limestone, 1.6 million short tons of clay and shale, 669,000 short tons of clinker, 295,000 short tons of gypsum, and smaller amounts of anhydride, fly ash, iron ore, sand and slag.
CLAYS: Michigan ranked seventh in common clay output among the 43 producing states. Most of the tonnage was captive production by cement companies; the remainder was for use in pottery and brick manufacture.
GYPSUM: Michigan again ranked third among the 20 states producing gypsum. Michigan has two important gypsum-producing areas: Domtar Gypsum, Inc., and Georgia Pacific Corp. operated underground mines near Grand Rapids in Kent County, and Michigan Gypsum Co., National Gypsum Co. and USG Corp. operated open pit mines in Iosco County. USG's Alabaster Mine and National Gypsum's Tawas Mine ranked third and seventh, respectively, among the 58 U.S. mines active in 1990.
Gypsum is commonly used in wallboard and other building products and also as an agricultural fertilizer, in dental castings and toothpaste, and as a filler in food products, glass and plastics.
LIME: Michigan ranked 10th of 32 states in lime production. The average price per short ton was $49.68, compared with a national average of $51.77. Five companies reported production of quicklime from eight plants in seven counties. The product is sold for a variety of uses, including steel making, sugar refining, water treatment and pollution control.
MAGNESIUM COMPOUNDS: Three companies produced magnesium compounds from natural well brine at operations in Manistee and Mason counties in west central Michigan. Total output allowed the state to continue as the leader among six producing states in 1990. In fact, Michigan provided most of the nation's output. Compounds produced included caustic calcined magnesia, magnesium carbonate, magnesium hydroxide and refractory magnesia.
PEAT: Michigan continued to lead the nation in peat sales, ranking first among 22 producing states in 1990 and supplying one-third of the U.S. total. Eleven companies sold 280,000 short tons of peat from bogs in 10 counties.
Reed sedge was the predominant type produced, with smaller quantities of humus and sphagnum also reported. About 89 percent of the peat sold was for general soil improvement. The rest was used as an ingredient in potting soils; for mushroom beds; on golf courses; by nurseries; for vegetable growing; for packing flowers, plants, shrubs, etc; and for earthworm culture. Two-thirds of the product was sold in packaged form; the remainder, in bulk.
SALT: Michigan ranked eighth among 14 salt-producing states. Salt was solution-mined by Akzo Salt, Inc., in Manistee and St. Clair counties and by Morton International, Inc., in Manistee County. The vacuum pan process was used at each of the operations to obtain salt from brine. Salt is sold for a variety of uses, including animal feed, chemical industrial processing, highway deicing, human consumption and water treatment.
SAND AND GRAVEL: Michigan again ranked second, behind California, among the numerous states producing construction sand and gravel. A record high output of construction sand and gravel was reported in 1990, with tonnage and value increasing 12 percent and 16 percent, respectively, over 1989. It accounted for 11 percent of the state's non-fuel mineral value; only iron ore and portland cement contributed more. In 1990, 240 companies and government agencies reported production from 314 operations in 72 of the state's 83 counties.
INDUSTRIAL SAND: Michigan ranked third among 38 producing states, yielding to California the second place ranking it had held for 10 years. Illinois continued as the No. 1 producer. Seven companies reported output from 14 Michigan operations in 11 counties, mainly from coastal dunes along Lake Michigan. Each of the companies sold sand for foundry applications, a use that consumed about 92 percent of the production. The remainder was sold for making glass, fiberglass manufacture, sandblasting, refractories, traction sand and other miscellaneous uses.
CRUSHED STONE: Though Michigan ranked only 12th among the 49 states producing crushed stone, it is the site of some of the nation's largest quarries. Data from 1989 indicate that the average output of the state's 30 active limestone dolomite quarries was 1.3 million short tons, compared with a national average of 322,000 short tons. Michigan Limestone Operations' Calcite Quarry and Presque Isle Corp.'s Stoneport Quarry, both in Presque Isle County, ranked second and fourth, respectively, in production among the nation's 3,416 active crushed stone operations.
Limestone dolomite constituted more than 90 percent of the crushed stone sales, with marl, sandstone, traprock and quartzite accounting for virtually all of the remainder.
COPPER AND SILVER: Nationally, Michigan ranked fifth among 12 states in copper production and ninth among 19 states in silver production. Virtually all of the output was from Copper Range Co.'s White Pine Mine, Smelter and Refinery complex in Ontonagon County. The operation employs approximately 1,000 people.
IRON ORE: The state continued to rank second, behind Minnesota, among the nine states shipping iron ore. Iron ore also remained the chief contributor to Michigan's non-fuel mineral value. Michigan regularly accounts for approximately 25 percent of the nation's total iron ore production.
Only two mines remain active in Michigan, the Empire and the Tilden mines. They are both located within 25 miles of Marquette. The Empire mine employed approximately 1,250 people in 1992; the Tilden employed approximately 885 people.
About 98 percent of the Michigan ore is regularly hauled by rail to Escanaba or Marquette and then transported by lake vessels to lower lake ports for delivery to blast and steel furnaces. The remainder is shipped entirely by rail to various steel consumers.
IRON OXIDE PIGMENTS: Michigan ranked first among the five states reporting shipments of iron oxide pigments. All shipments were by Cleveland Cliffs, Inc., from a stockpile at its Mather Mine in Marquette County.
IRON AND STEEL: Michigan ranked fourth in production of raw steel, following Indiana, Ohio and Pennsylvania. Michigan mills produced 8.1 million short tons of raw steel in 1990. Its three Detroit-area steel mills provided about 8 percent of the 98.9 million tons produced nationwide. Most of the steel produced at Michigan mills was used by the automobile industry.
Note: Iron and steel production is not included in the totals for mineral production or value of minerals in Michigan as it is technically a manufactured product. It is mentioned here only as a prominent associated industry present in Michigan.
IRON AND STEEL SLAG: Michigan ranked fourth among 28 states processing iron and steel slag in 1990. Only Ohio, Indiana and Pennsylvania reported greater sales. Two companies processed iron and steel slag from steel mills in Wayne County and electric arc furnaces in Jackson and Monroe counties. The material was marketed mainly for road base material, with lesser amounts used for a variety of other purposes.
References
Daubenmire, J. 1993. Some Unintended Impacts on Great Lakes Shipping as a Result of the 1990 Clean Air Act. East Lansing, MI: Michigan State University Dissertation.
Ennis, D. 1986. "Michigan Energy: The Second Hundred Years." The Lamp (Amoco Oil Company's Quarterly Magazine to Shareholders). p. 16.
Fedewa, D.J. and S.J. Pscodna. 1993. Michigan Agricultural Statistics, 1993. Lansing, MI: Michigan Department of Agriculture, Michigan Agricultural Statistics Service, p. 2 and p. 45.
Independent Petroleum Association of America. 1992. "The Oil and Natural Gas Producing Industry in Your State-Michiga
Independent Petroleum Association of America. 1993. "The Oil and Natural Gas Producing Industry in Your State-Michiga
Kakela, P. 1994. "The Iron Ore Industry." In The Steel Strategist, Edition #20. New York: PaineWebber, Inc., pp. 164-170.
Marcus, P., K. Kirsis, and P. Kakela. 1993. "Winners to Outnumber Losers." World Steel Dynamics. New York: PaineWebber, Inc., 84 p.
Marcus, P., K. Kirsis, and P. Kakela. 1994. "Cleveland Cliffs to Acquire Cyprus Northshore: A Maverick Captured!" World Steel Dynamics. New York: PaineWebber, Inc., 22 p.
Tomboulian, N.R. 1989. Assessment of the Feasibility of a Used Motor Oil Re-refinery in Michigan. East Lansing, MI: Michigan State University Master's Thesis.
U.S. Department of Labor. 1991. Average Annual Pay by State and Industry, 1990. Washington, D.C.: U.S. Department of Labor, U.S. Bureau of Labor Statistics, p. 25.
U.S. Department of Interior. 1976. "The Mineral Industry of Michigan." Mineral Yearbook. Washington, D.C.: U.S. Department of Interior, U.S. Bureau of Mines.
West, W.J. and M.A. Gere, Jr. 1992. "The Mineral Industry of Michigan." Minerals Yearbook, 1990, Vol. II. Washington, D.C.: U.S. Department of Interior, U.S. Bureau of Mines.
Wood, R.H., II, and M.A. Gere, Jr. 1993a. "Michigan." Annual Report-US130M. Washington, D.C.: U.S. Department of Interior, U.S. Bureau of Mines, 13 p.
Wood, R.H., II, and M.A. Gere, Jr. 1993b. "The Mineral Industry of Michigan." Minerals Yearbook, 1991, Vol. II. Washington, D.C.: U.S. Department of Interior, U.S. Bureau of Mines, pp. 255-269.
Status and Potential of Michigan Natural Resources List of Reports
Acknowledgements
Overview Reports SR 67 --SAPMINR Highlights SR 68 --Michigan Natural Resources Policy SR 69 --Demographic, Social and Economic Trends SR 70 --Integrated Natural Resource Systems
Special thanks go to Drs. Raleigh Barlowe and Milton Steinmueller, Professors Emeritus, Department of Resource Development, Michigan State University, for their often unwitting support and encouragement of investigation of Michigan's mineral resources. Also, the U.S. Bureau of Mines' collection of relevant data on Michigan's mineral production is vital and, in particular, Mr. William Kirk, the current Ore Commodity Specialist, has been most helpful.
Focus Reports SR 71 --Timber and Timberland Resources SR 72 --Lumber, Furniture, Composition Panels and Other Solidwood Products SR 73 --Pulp, Paper, Allied Products and Wood Energy SR 74 --Fisheries SR 75 --Wildlife SR 76 --Tourism SR 77 --Boating and Underwater Recreation SR 78 --Camping, Trails and Dispersed Recreation SR 79 --Water Resources SR 80 --Land Resources SR 81 --Nonrenewable Resources SR 82 --Natural Resources and Communities
Reports on the Status and Potential of Michigan Natural Resources
This special report is one of a series (listed below) prepared for a project of the Michigan Agricultural Experiment Station (MAES) called the "Status and Potential of Michigan Natural Resources" (SAPMINR).
The project was designed to take an inventory of the current status of Michigan natural resources, identify emerging trends, and appraise future opportunities. The purpose was to assist MAES in establishing priorities and planning programs.
Both overview and focused topic assessments have been made. The overview reports provide background information on the political, economic, and social environments influencing Michigan natural resources. The focus reports examine specific resources, including timberland resources, fisheries and wildlife resources, parks and recreational resources, and land and water resources.
The SAPMINR project began in early 1993. At that time, interdisciplinary teams of MSU faculty members, graduate students, federal and state government officials, and others collaborated to develop preliminary reports. In March 1994, a SAPMINR conference took place during MSU's Agriculture and Natural Resources Week. The objective of the conference was to provide a public forum for discussion of the preliminary reports. Based on interaction with conference participants, the authors prepared the final drafts of the special reports (SR).
This report should not be considered final. Efforts to analyze the past and forecast the future are ongoing. Even so, this report is a base for dialogue on both the status and potential of Michigan natural resources.
To receive any of the reports listed below, contact: MSU Bulletin Office, Room 10B Agriculture Hall, Michigan State University, East Lansing, MI 48824-1039.
The Michigan Agricultural Experiment Station is an equal opportunity employer and complies with Title VI of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972.
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