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A Statistical Reconstruction. B. the Extractive Industries

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A Statistical Reconstruction. B. the Extractive Industries ISSN 2279-9362 Italian Industrial Production, 1861­1913: A Statistical Reconstruction B. The Extractive Industries Stefano Fenoaltea No. 413 May 2015 www.carloalberto.org/research/working-papers © 2015 by Stefano Fenoaltea. Any opinions expressed here are those of the authors and not those of the Collegio Carlo Alberto. Stefano Fenoaltea ITALIAN INDUSTRIAL PRODUCTION, 1861-1913: A STATISTICAL RECONSTRUCTION B. THE EXTRACTIVE INDUSTRIES 2015 ITALIAN INDUSTRIAL PRODUCTION, 1861-1913: A STATISTICAL RECONSTRUCTION Reader’s guide Acknowledgments A. Introduction B. The extractive industries C. The non-metallic mineral products industries D. The chemical, coal and petroleum products, and rubber industries E. The metalmaking industries F. The engineering industries G. The foodstuffs and tobacco industries H. The textile, apparel, and leather industries I. The wood and wood products, paper and paper products, printing and publishing, and residual manufacturing industries J. The utilities industries K. The construction industries ii ITALIAN INDUSTRIAL PRODUCTION, 1861-1913: A STATISTICAL RECONSTRUCTION B. THE EXTRACTIVE INDUSTRIES CONTENTS B. THE EXTRACTIVE INDUSTRIES B01. Introduction B01.01 The output data and estimates B01.02 The employment data and value added estimates B01.03 Output and real value added B02. Mining B02.01 Introduction B02.02 Iron ore B02.03 Copper ore B02.04 Lead and zinc ores B02.05 Silver, gold and manganese ores B02.06 Antimony ore B02.07 Mercury ore and pyrite B02.08 Solid mineral fuel B02.09 Sulfur B02.10 Rock salt, brine salt, crude oil, and natural gas B02.11 Asphalt rock B02.12 Boric acid B02.13 Graphite, alunite, and bauxite B02.14 Other metal ores B02.15 Sea salt B02.16 Peat B02.17 Mineral water B02.18 Aggregate rent and value added in mining B03. Quarrying B03.01 Introduction B03.02 Marble B03.03 Kiln materials B03.04 Other quarry products References 2 TABLES B.01 Reported labor force and factor employment in mining in 1911 B.02 Estimated output of iron ore, 1861-1913 B.03 Estimated output of copper ore, 1861-1913 B.04 Estimated output of lead ore, 1861-1913 B.05 Estimated output of zinc ore, 1861-1913 B.06 Estimated output of silver, gold, and manganese ores, 1861-1913 B.07 Estimated output of antimony ore, 1861-1913 B.08 Estimated output of mercury ore and pyrite, 1861-1913 B.09 Estimated output of solid mineral fuel, 1861-1913 B.10 Estimated output of sulfur ore, ground sulfur ore, and fused sulfur, 1861-1913 B.11 Reported output of rock salt, brine salt, crude oil, and natural gas, 1861-1913 B.12 Estimated output of asphalt rock, 1861-1913 B.13 Estimated output of boric acid, graphite, alunite, and bauxite, 1861-1913 B.14 Estimated output of other metal ores, 1861-1913 B.15 Estimated output of sea salt, 1861-1913 B.16 Estimated output of peat and mineral water, 1861-1913 B.17 Reported output of quarry products, 1898-1913 B.18 Reported labor force and factor employment in quarrying and in the manufacture of non-metallic mineral products in 1911 B.19 Estimated output of marble, 1861-1913 B.20 Estimated output of kiln materials, 1861-1913 B.21 Estimated output of other quarry products, 1861-1913 SUMMARY TABLES B.1 The extractive industries: physical output, 1861-1913 B.2 The extractive industries: value added in 1911 B.3 The extractive industries: value added at 1911 prices, 1861-1913 3 B. THE EXTRACTIVE INDUSTRIES B01. Introduction B01.01 The output data and estimates In the 1911 Censimento demografico and Censimento industriale the extractive industries are covered by categoria 2, divided into three classi that correspond respectively to mining (2.1), quarrying (2.2), and a residual covering sea salt, peat, and mineral water (2.3). In the aggregate, the industry seems defined almost exactly as in the ISIC ; in particular, in both classifications the industry includes both extraction proper and whatever further processing the extracted material undergoes before being shipped. For present purposes the extractive industries are divided into two groups: on the one hand, mining, broadly defined to include the first and third of the census classi , and, on the other, quarrying alone. This division reflects the nature of the output data provided, for both groups, by the Corpo delle miniere. Mining was of course that body’s first concern, and the corresponding output data are unusually complete and of high quality. A few unorthodox products were monitored annually only from near the middle of the period at hand, and mineral water remained always beyond the scope of their reports (save as the joint product of some other operation); but these are limited exceptions, and the industry is here covered by 27 product- specific series. For the Corpo delle miniere, quarrying was a secondary concern, and the quarrying data are almost a mirror image of the mining data. Only the production of (Carrara) marble was monitored closely enough to permit the reconstruction of the corresponding product-specific output series. Comprehensive output data for all quarry products (or for the corresponding kiln products) were collected only for 1865, 1890, and 1901. These are very detailed; but this entire output is here collapsed to distinguish only three kiln materials, marble, and a broad residual, and the annual series rely heavily on indirect estimates based on construction movements. B01.02 The employment data and value added estimates The estimates of value added in 1911 are here typically derived from the product- specific data provided by the Corpo delle miniere; the relatively aggregated census figures serve only to confirm the coverage of the Rivista mineraria . Exceptionally, two alternative estimates of value added are here provided (for almost every product: there are exceptions to the exception, returned to below). The first estimate is conceptually correct, the second is consistent with the conventions of the national accounts. Conventionally, value added in extractive activity is identified with the difference between the value of the goods produced and the value of purchases from other industries ( IRIS , pp. 1, 52 ff.). This simply repeats the language used for other industries as well; but because extractive activity is sui generis this usual formula produces an unusual measure. The problem turns once again on the identity of the results of activity whose value is to be measured, and stems from the pervasiveness of vertical integration; but unlike those discussed in section A03.01 above it exists even in a hypothetical world of perfect competition, zero taxes or subsidies, and perfect knowledge. Consider the valuation of a typical extractive activity, the mining of an ore. In the first place, the conventional measure normally overstates the value of the results of extractive activity because it does not deduct the scarcity rent accruing to the owner of the material that is being extracted. That rent is not a payment for services (activity), but the value of the principal goods consumed by the production process of the industry that transforms material in the 4 ground into material out of the ground. The transportation industries similarly produce goods at the point of delivery, and consume goods at the point of origin; their value added excludes the value of the latter, just as the value added of any manufacturing industry excludes the value of the raw materials it consumes. The value of these inputs is excluded from value added, and thus from gross (domestic or national) product, whether they are currently produced or not: in the former case, to avoid double-counting intermediate production; in the latter, because the reduction of inventories is not current production at all but disinvestment. If inventories of materials in the ground are to be treated like all other inventories -- if the production of extractive industries is to be measured on the same net basis as that of other industries -- the value of the reserves consumed by current production must be excluded from the value added of the extractive industries. In the second place, otherwise identical ores are not equally accessible: the effort (activity) required for extraction, and the consumption of ancillary materials (such as purchased fuel or power), are both greater, the less accessible the ore. With the usual measure, which deducts only purchased ancillary materials, a higher value added is attributed to the more accessible ores; at the limit, where the ore is so accessible that extraction proper is moot (as in the utilization of once worthless tailings), value added must be considered equal either to zero or to the full value of the product. For a given the value of the extracted ore, on the other hand, the value of the material in the ground is higher, the more accessible it is; as extraction costs decline the value of extractive activity and the properly measured value of its results (the value of the extracted ore less the value it had in the ground) both decline, and if extraction proper is moot the corresponding value added is in any case negligible. In the third place, extracted materials form the industry’s typical output but not its only output. Underground extraction in particular requires much preparatory or “overhead” activity (tunneling, draining, and so on) whose immediate product is not extracted ore but only an improvement in the accessibility, and therefore of the value, of the ore still in the ground. The value of such production is part of the current value added by the extractive industry; but it is not so counted on the usual definition of that measure. In sum, the current value added by the extractive industries cannot be properly measured as the value of the results of extractive activity without the price and quantity information with which to compute the value of the reserves destroyed by extraction and the increase in value of other given reserves at given output prices.
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