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Efficiency performance of the world's leading corporations in phosphate rock mining

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  • Geissler, Bernhard
  • Mew, Michael C.
  • Weber, Olaf
  • Steiner, Gerald

Abstract

The prominence of phosphorus (P) is represented by three major aspects: first and most important, P is essential for all life on Earth; second, no other element or substance can act as a substitute for P; and third, P is considered a non-renewable resource and thus finite. In regard to global food security and P as one of the three major macronutrients, the world faces an extensive challenge to utilize this finite and unsubstitutable commodity in the most effective as well as the most efficient way. Efficiency in general has increasingly become of major importance over the last several decades, especially within competitive commodities. Practically all PR used for chemical fertilizers originates from exploitable deposits that are concentrated in a rather small number of countries and mined vastly by only a limited number of global enterprises. Whereas these enterprises differ in factors such as size, vertical and horizontal integration, legal form, or type of ownership, their overall goal as corporations remains the same-the optimization of their operations. Consequently, firms can strive to (a) minimize their inputs at constant output levels; (b) maximize their outputs at constant input levels; or (c) increase their efficiency ratio by adjusting inputs and outputs at the same time. In contrast to the oil industry, the PR market is demand driven, which means that not everything that could be produced is immediately consumed. This study attempts to measure, compare, and analyze the technical efficiency performance of the major global corporations involved in PR mining by using the BCC (Banker, Charnes, and Cooper) and CCR (Charnes, Cooper, and Rhodes) models of data envelopment analysis. The analysis includes total technical efficiency as well as the disaggregated pure technical and scale efficiency and a breakdown of the factors accounting for inefficiency. The 24 firms included in the analysis account for 67.3% of the global phosphate rock ore capacity and 61.4% of phosphate rock concentrate capacity. Based on the BCC and CCR modeling a higher percentage (36% vs. 20% – Model 1; 36% vs. 10% – Model 2) of publicly quoted companies (such as PotashCorp) are classified as efficient compared to state-owned companies (such as OCP). However, the frequencies of efficiency performance do not differ in such a way that a Fisher Exact Test would suggest statistical significance for these data. This indicates that general assumptions regarding the different strategies of state-owned and publicly quoted firms are not necessarily valid.

Suggested Citation

  • Geissler, Bernhard & Mew, Michael C. & Weber, Olaf & Steiner, Gerald, 2015. "Efficiency performance of the world's leading corporations in phosphate rock mining," Resources, Conservation & Recycling, Elsevier, vol. 105(PB), pages 246-258.
    • Handle: RePEc:eee:recore:v:105:y:2015:i:pb:p:246-258
    DOI: 10.1016/j.resconrec.2015.10.008
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    1. Geissler, Bernhard & Steiner, Gerald & Haneklaus, Nils & Mew, Michael, 2023. "Phosphate price peaks and negotiations – Part 1: Fundamentals and the 1975 peak," Resources Policy, Elsevier, vol. 83(C).
    2. Ahmad Hosseinzadeh & Russell Smyth & Abbas Valadkhani & Amir Moradi, 2018. "What determines the efficiency of Australian mining companies?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 62(1), pages 121-138, January.
    3. Zhang, Junfeng & Fang, Hong & Wang, Hongxia & Jia, Mingshun & Wu, Junjie & Fang, Siran, 2017. "Energy efficiency of airlines and its influencing factors: A comparison between China and the United States," Resources, Conservation & Recycling, Elsevier, vol. 125(C), pages 1-8.
    4. Sorin-Romulus Berinde & Laura-Maria Herța, 2021. "Performance Improvements for Romanian SMEs and Their Predictors," Sustainability, MDPI, vol. 13(15), pages 1-13, July.
    5. Steiner, Gerald & Geissler, Bernhard & Watson, Ingrid & Mew, Michael C., 2015. "Efficiency developments in phosphate rock mining over the last three decades," Resources, Conservation & Recycling, Elsevier, vol. 105(PB), pages 235-245.
    6. Mew, Michael & Steiner, Gerald & Haneklaus, Nils & Geissler, Bernhard, 2023. "Phosphate price peaks and negotiations – Part 2: The 2008 peak and implications for the future," Resources Policy, Elsevier, vol. 83(C).

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