Increased extraction rate of natural resources has resulted in decreased costs of extraction. The Monte Carlo modeling is used to understand the economics of mineral exploration and extraction. The probability of finding minerals depends on the amount of natural resources in the given area of exploration. The occurrence of minerals is directly proportional to the availability of natural resources in the given area. More abundant natural resources lead to lower extraction costs. This comes as a result of all the labor resources being concentrated at one point, which allows easy accessibility.
Minerals play a vital role in the growth of the economy of a country. The mining industry is among those which are heavily taxed to support the economy. The sector also has contributed to economic growth by creating employment opportunities for the local people. On the other hand, many consider that the profits obtained by this industry are not evenly distributed, which is the result of passive economic costs. However, the costs of extraction, processing, use and disposal of minerals are usually hidden to the customers. If these costs were to be included in the market prices of the products containing minerals, the demand for the products would lower. This would have a negative impact on the economy.
The environmental damage as a result of mining would be too high for the mining companies to cover. Most of their profits would be drained in an attempt to cover the damages. This would result in many companies shutting down. The remaining few would monopolize the market and set high prices for their products. This would be done in order to recover the costs incurred during mining and processing. The demand curve for the products with minerals would experience a negative shift and slope as many consumers would change their spending habits and look for substitute products.