What Is the Metals and Mining Sector? What's Included

The metals and mining sector is the industry dedicated to the location and extraction of metal and mineral reserves around the world. Global reserves of metals and minerals are mined for profit and then used in jewelry-making, industrial applications, and investments. The sector has a significant number of companies located internationally and operates with large revenues.

Precious Metals and Industrial Metals

Metals are classified into two categories; precious metals and industrial metals. Precious metals include gold, platinum, and silver. Precious metals are considered to be rare and can have a high economic value associated with them. Precious metals also derive their value from what they're used for, such as gold, which is considered a safe-haven investment in times of economic uncertainty. Some precious metals are used in industrial and manufacturing processes. Palladium, for example, is used in electronics.

Industrial and base metals are used in the construction, manufacturing, and technology industries and include copper, aluminum, steel, and zinc. Copper and steel are heavily used in manufacturing, particularly in China and India. The price of copper is closely watched by investors since it can serve as an indicator of economic growth. If copper prices are increasing along with demand, it can indicate that manufacturing activity is also on the rise, which could lead to higher economic growth globally.

Typical activities in the metals sector include metals production, metals trading, and metals investing. The majority of revenues are a direct result of these activities. Metals have a wide range of uses, and extraction increases as market demand grows. Industrial and jewelry uses grow as economic activity grows, while a slowed economy typically increases the use of precious metals for investment purposes. Minerals also have a heavy industrial use and are increasingly mined when economic demand necessitates mining growth.

Mineral Mining

Mineral mining is the extraction of minerals such as coal and precious gemstones. Coal is a significant mining product produced in substantial amounts all over the world. This mineral provides around 38% of global energy and is heavily relied upon for electricity production. Environmental concerns have led some countries to decrease coal production, yet many developing nations rely heavily on increasing coal production to sustain continued economic growth.

Diamonds, a popular mineral for the jewelry industry, are also produced for industrial use. Diamonds are used to produce strong abrasives, saws, and cutting tools since this mineral is the strongest substance available. Often, industrial diamonds are manufactured artificially. This keeps costs low by reducing the need to obtain diamonds by mining. The popularity of diamond jewelry keeps demand for diamonds strong and encourages further diamond mining and the search for new reserves.

The Mining Industry

The mining industry at large has boom and bust cycles that closely follow global economic conditions. As such, the sector relies on other industries to continue to find new uses for metals and minerals and support the continued need for mining. New uses for minerals support the mining sector when economic conditions are not favorable for investment use or the production of jewelry.

The variety of ways investors may purchase and hold mineral investments has supported their investment popularity and made minerals investments available to more members of the public via mutual funds and precious metals shares. The mining industry, while supported by the many uses of precious metals, faces new challenges that increase the difficulty involved in developing and expanding mining activity. Government regulation, environmental challenges, and other issues add to the cost of mining and complicate new operations.