Energy market and the mineral market are main producers of electrical energy. Electrical energy is a form of clean energy that derives from the mineral components and natural sources. Energy exists in primary sources that need to be tapped to derive the electrical energy as the final product. The discussion on energy that this paper anchors on two parts.
The first part is the energy market and the second part is the mineral market. The mineral market constitute minerals such as uranium, limestone, gemstone, and coal. Minerals are primary sources of energy that are used by firms and industries. Mineral processing industries target the wider market of the demand for the minerals due to their energy potential. The potential of the inputs in the processing of the minerals must be optimized for the mineral industry to achieve maximum profit attainable.
Electrical energy is the highly consumable form of energy all over the world. Electrical energy is derived from various sources such as nuclear power plants, thermoelectric power plants, and hydroelectric power plants. Energy is a necessary factor in deriving the global economy. The recent years has seen a remarkable increase in the production quantities of electrical energy. Energy market regulates the prices of energy and its related components. The energy market is in charge in determining the cost of production of energy from all energy sources. The energy market acknowledges the primary sources of energy and set the regulatory standards that are used in deriving maximum utilization of the energy. The demand for electrical energy poses reason to explore varied mechanisms for the production of electricity through various sources such as nuclear production, thermoelectricity, and hydropower. Other mechanisms that are utilized for the production of electrical energy are solar power and wind power. Electrical energy is a clean form of energy that many environmentalists agree.
Production of electrical energy not only drive the economic cogs of the countries that produce them or set them up, but also enable the human life to be more comfortable. Besides electrical energy running industries and lighting homes, electrical energy also supports basic human life. Electrical energy enables the critical machinery that support human life within the hospitals to ensure maximum support for the humans. The need to have a twenty-four hour economy also creates more need and demand for electrical energy thereby affirming the need to have an increased production of electrical energy. The United States of America takes a lead role in the production and consumption of energy, particularly, electrical energy. This paper discusses the energy market and the mineral market in view of their prices and availability.
Energy is the main driver of power. Energy enables an individual or a machine to do work. In physics, one is not able to destroy energy. Instead, energy exists in particles that can change from one form to another form. There are different forms of energy. They include: solar, geothermal, wind, hydro, nuclear and chemical. Trading of the forms of energy happens in the energy market. The energy marker comprises of market players who dictate the sellable units of energy. The players also determine the price of each unit of energy (Tester, Drake, & Driscoll, 2005). On an international scale, energy markets integrate the oil and gas sector. Energy markets are created by companies that produce the energy from their primary forms and distribute to the end consumer. The renowned characteristic an energy market is the production and distribution of electricity. Electricity is one of the widely used sources of energy as it powers homes, businesses, plants, and industries. Besides the players in the energy markets, there are a myriad of regulations that guide the business ethics that is determined. The regulations base on the need to cushion the end consumer on the privileges that the players have in influencing higher costs of energy.
The availability of the energy resources further delves on the forms of energy. Renewable and non-renewable energy vary in their degree of availability. Renewable energy is replenished, therefore relatively available compared to non-renewable energy. Renewable energy includes solar, wind and geothermal energy. The non-renewable energy includes oil and gas. Availability of the energy resources further delves on the extent to which a geographical area is endowed with natural resources. There are distinct areas of the Middle East, the United States of America and Sub-Saharan Africa that have oil deposits, for example. The availability of the energetic resources further pegs on the demand that is posed by the populace. Currently, there is a scarce availability of energetic resources.
Cost of the Generation of Electrical Energy
Thermoelectric power plant derives energy from geysers. Geysers provide steam that the energy engineers tap and fix turbines to derive the energy that they need. The cost of production of electricity from a thermoelectric power plant is relatively higher during the setup process. Continual production is, on the other a cheaper means of producing electricity. Thermoelectric power plants produce more than half of the electricity that is consumed in the United States of America. The cost of electricity generation in a thermoelectric power plant is approximately $1.84 million per megawatt per year on average. Though the figure depicts the cost to be expensive, thermoelectric power plants are highly reliable in three different ways. First, most thermoelectric power plants are located in the oceans and the seas. The ocean beds experience volcanic activities that are easily tapped for the production of electricity. The cost of production minimizes with the years of production.
The United States of America currently has approximately 62 nuclear power plants. The nuclear power plants contribute to the national grid of the United States. Electricity production in the nuclear plants is expensive. According to the estimates of the Nuclear Energy Agency, the cost of producing electricity from a nuclear plant is approximately $ 3,850 per kilowatt. The cost of electricity production in a nuclear plant can further be subdivided into the different process of electricity production. The processes include the cost of Uranium, conversion process, enrichment, and fabrication of fuel. The cost for the three process is $ 1160, $83, $880 and $240 respectively. The figures are drawn from the nuclear energy agency of the United States of America. The above costs produce up to 360000 kilowatts of electricity. Nuclear plants produce electricity from the burning of Uranium in the nuclear reactors. The cost of producing nuclear energy is made higher by the regulatory requirements that are needed in its establishment. The decommissioning and safe disposal of the wastes that results from the nuclear plant inflate the cost of its establishment. The general effect is an increase in the cost of electricity production as is already aforementioned. There are also costs in the establishment of a nuclear plant such as the cost of pumps, the nuclear reactors and the total capital costs that are incurred.
Third, the cost of producing electricity from hydroelectric power is relatively lower than the cost of producing electricity from nuclear plants. The hydroelectric power plants are established along the rapids and major waterfalls. The cost of producing electricity through the hydroelectric power plants vary based on the size of the power plant and the quantity of electricity to be produced. The only cost incurred in the production of electricity within the hydroelectric power plants is the establishment costs that can run up to $50 million. Other costs that are incurred in the production of electricity within the hydroelectric power plants are general maintenance costs.
Minerals play a major role in most of the industrial processes. Without the existence of the industrial minerals, nearly or probably most of the industrial products would not have existed. From the domestic to the industrial aspects, the minerals are very important for the day to day operation. Minerals are extracted either in their natural or from the synthetic form. They are non-renewable forms raw materials injected as inputs in major manufacturing processes. They can either be metallic or non-metallic. Some of these minerals include clays, talc, gypsum, potash, coal, limestone, pumice, sand, bauxite, quartz amongst others.
The prospects, growth and the survival of any business demand that the revenue margins exceed the operation cost. Income and profits most are obtained so as to pay for the utility costs and manage expenses. Just like any business, the mineral company is tasked with optimizing on the potential of the inputs in a bid to maximize profits. The forces of demand in the market must be counteracted by increased production of the mineral products as the sales are maximized.
Mineral marketing focusses on the search for new prospective customers and retaining the loyal customers so as to have a competitive edge in the demand market. This will be determined by the quality of minerals the company produces and the quantity. In the current trend, mineral mining and processing have increased with some new companies emerging from the already existing ones expanding the operations. This then confirms that there are no monopolies in the industry. The market scope for the mineral products, however, is wide.
The key stakeholders and managers in this industry have to think and innovate key marketing strategies so as to maximize the sales. Proper knowledge of the demand and product market is necessary. This calls for proper coordination of all the marketing stakeholders in the mineral firm. The marketing intelligence demand that all the forces that affect and influence the demand market are analysed and evaluated. Current trends in the domestic and international mineral marketing should not be side lined in evaluating the marketing strategies. The mineral industry will need to assess the state of technology it is in co-corporation in the production process and compare with other players in the industry. Modern technology should be adopted and injected in the production chain so that the quality of the products manufactured are high. Moreover, the latest technology will lead to efficiency in production and save on the operational costs
Revenue generation for the mineral market largely depends on the marginal costs of input and the output income obtained. The market price plays a major role in determining the cost of the products charged by the industry. The price, of the minerals, as set by the industry, need not be too high or too low. High prices will deter new customers, and the loyal customers lost. Low prices, on the other hand, hampers the profitability of the business.
The final products of the mineral processing need to be readily available in the demand product. Intensive advertisement by the firm is important for the industry so that potential customers are familiarized by the firm and the products produced. Advertising will also inform the prospective buyers of the prices and the point of sale for these products. The access points for these minerals produced need to be readily defined and easily established.
The profitability of the mineral business banks on the maximum yields on the returns on the investment capital. One of the most business to establish in the world probably could be the oil and mineral industries. The initial and operational costs incurred are high. Intelligent managerial practices are key so that the potentials of the inputs required for the operation are optimized so as to maximize on the outputs. This will improve the profitability and affirms the existence and growth of the business in the demand market.
The blueprint of the established mineral industry should clearly stipulate all the inputs that are required and the cost used defined. Production in the industry vary with the nature of the production processed, and the final product required. The utility costs, labour costs and the costs incurred in the extraction will form the major cost the mineral industry is likely to incur. Moreover, the costs incurred in the logistics will also form part of the operational cost. The costs will depend on the capacity of the industry and its location from other auxiliary services. The utility and labour cost greatly determines the profitability of the business. Costs such as rent, power costs, machinery servicing cost and the costs of labour should be accurately accounted for as they form part of the leakages to the industry. Since they are incurred on day to day basis, they must be considered. , the marginal costs incurred in the production should not supersede the gross revenue obtained. Other cost such as the advertisements also need consideration.
Energy as the basic source of power forms the driving wheel in the corporate, industrial and domestic sectors. On the other hand, minerals are key production inputs that all the manufacturing and processing industry require. Some of these minerals are also required for domestic use. The energy and minerals therefore greatly influence the normal operational activities globally. Their demand market is high prompting the producing and processing industries to make a lot of profits. However, to maximize the revenue, the industries need to optimize on the potentials of the inputs to increase the output quantity. Moreover, the costs of production and the forces of the demand market coupled with the product pricing are paramount considering that there are other key players in the market.