2 BGU APES 2017/2018

Liceo Campoverde

Cookie Mining Lab

Objective
Acquire a mine and extract the mineral ore in a way that is profitable as well as socially and environmentally
acceptable.

Purpose
The purpose of this lab is to give an introduction to the economics of mining and make possible an
understanding of the social and environmental obligations associated with the mining of mineral ores. If a
mining operation is to be profitable, the sold value of the mined ore must be greater than the sum of all of the
costs, including land purchases, compensation of local communities, operational expenses, environmental
restoration, and fines or penalties.

Overview
The mining of mineral resources is not just a simple matter of locating the desired ore, digging it up and
marketing it. Important economic, social and environmental considerations are incorporated into any mining
venture, as well as compliance with national or federal regulations. The costs include purchasing property or
land for mining purposes, compensating local communities and seeking their cooperation, purchasing or hiring
equipment, machinery and labour, operating the mine, and restoring the land or possibly paying environmental
fines.

In this lab, you will purchase a cookie (the mining property) and attempt to profitably extract chocolate chips
(mineral ores), and do this in a way which is socially and environmentally acceptable.

Materials

 Starter money of $25 - this is your initial investment and is a loan from the bank
 Graph paper and pencil - for calculating the area of your mining 'property' - the cookie
 1 Chocolate chip cookie - this is your mining property, containing chocolate chips which is the ore you
want to mine, and is chosen from 3 possible options of different value
 Mining tools - flat or round toothpicks, or paper clips
 Stopwatch or phone timer
 Paper towels for cleaning up

Instructions
1. Create a mining corporation to run your mining operation. Decide the mining style of your corporation
and use that information to decide the outlay you will make, including selection of your 'property'
(cookie), the most appropriate investment in the local communities and the best tools for the mining
operation. Record the name of your mining corporation on the Cookie Mining Worksheet.
2. Visit the bank and collect your loan of $25.
3. Purchase your 'property' - one only of the following.
a. Lorena galletas $7.00
b. Chokis Clásica $6.00
c. Chips Ahoy Original $5.00
4. Determine the dimensions of your 'property' by placing it on the graph paper and use a pencil to trace
the exact outline of the cookie. Count each square falling inside the outline. Count each partially filled
square as a full square. Record this number on your Cookie Mining Worksheet.
5. Rent your mining tools - up to 2 of any of the following:
a. Paper clip $6.00
b. Round toothpick $4.00
c. Flat toothpick $3.00
Record your purchases on the Cookie Mining Worksheet.
Since you are renting your tools, any which are damaged at the end of the mining operation will have to
be replaced at double the rental price.
6. You have an obligation to collaborate with the local communities. Choose one of the following:
a. $8.00 for building a school and a health clinic, after which you will pay no taxes from your
income to the local communities
b. $4.00 for employing a local work force, after which you will pay a tax to the local communities
of 5% of your income from the sale of ore
c. $2.00 for propaganda and posters, after which you will pay a tax to the local communities of
10% of your income from the sale of ore
Record this expense on the Cookie Mining Worksheet.
7. Decide for how long you will mine your cookie. Think very carefully about this! Mining costs are $1.00
per minute (or fraction of a minute), including land restoration time. The sale of each chocolate chip
(ore), mined from the cookie, brings income of either $2.00 if it is still coated by gangue, or $3.00 if it is
clean. (Broken chocolate chips can be combined to make whole chips.)
8. Now start the watch and begin mining! You are not allowed to use hands or fingers at any stage of
the operation, including for land reclamation. Fines of $5.00 will be imposed for use of hands and
fingers.
9. When you have finished extracting chips from the cookie, you must restore the property by using your
mining tools only, to scrape all crumbs and waste back inside the drawn outline of the cookie.
10. Decide when you have mined as many chips as is profitable and you have restored the mine property as
far as you can, and stop the watch.
11. Record the number of minutes you were mining and restoring land, on the Cookie Mining Worksheet.
Fractions of a minute are counted as a full minute.
12. Total the number of chocolate chips (and combined pieces) which you have mined and write the total
into the Cookie Mining Worksheet.
13. An EPA Inspector will now check the restoration of the property. Fines ranging from $1.00 (1 square of
crumbs) up to $10.00 (10 squares equivalent of crumbs, or more) will be imposed for discrepancies
from the original shape and area of the property. Write the fines into the Cookie Mining Worksheet.
12. Complete the Cookie Mining Worksheet, to determine whether you have made a profit or a loss from
your mining operation. Make sure that you include community tax payments, if required.

Critical 'business' decisions which you must make before you start mining
Take your time to properly prepare your mining operation and plan your strategies. Read ALL the instructions
carefully before making decisions. You do not get any practice time; mistakes will result in profit loss. Try to
write down some rough calculations before you commit yourself to operating choices.

1. CHOICE OF COOKIE: Which cookie might realise the most chocolate chips, be the easiest to 'mine' and
result in the least mess which needs restoration?
2. COMMUNITY COLLABORATION: What should be your investment in the local communities? Weigh up
the advantages and disadvantages of a one-off large investment or having to pay taxes on your income.
3. TOOLS: What tools will allow you to efficiently 'mine', as well as restore the mess?
4. TIME: How long should you 'mine' your cookie? Restoration also costs $1 a minute. Don't try to mine for
too long - your returns diminish and your mess increases, making it harder to restore the property and
make a profit. Before you start mining, have a good idea of the amount of ore (chocolate chips) which you
need to extract in order to make a profit. Decide whether you should spend time cleaning the ore and
removing the gangue, in order to sell at a higher price.
Name: Date:

COOKIE MINING WORKSHEET

Name of Mining Corporation:

OPERATIONAL COSTS
MINING PROPERTY - 1 single purchase
Type Unit cost Cost
Lorena galleta 7.00
Chokis Clásica 6.00
Chips Ahoy Original 5.00
Cookie cost: 1.

MINING TOOLS - < 2 tools

Type Quantity Unit cost Cost
Flat toothpick 3.00
Round toothpick 4.00
Paper clip 6.00
Total mining tools cost: 2.

COMMUNITY COLLABORATION - 1 only

Type Unit cost Cost
School & health clinic (No further payments to local communities) 8.00
Labour employment (5% of ore sales goes to local communities) 4.00
Propaganda/posters (10% of ore sales goes to local communities) 2.00
Community collaboration cost: 3.

MINING OPERATION
Mining & restoration time (minutes) Unit cost Cost
1.00/min 4.

TOTAL OPERATIONAL COSTS (1 + 2 + 3 + 4): 5.

INCOME
EXTRACTED ORE
Type Quantity Unit price Value
Clean Chocolate chips, free of gangue 3.00/chip
Chocolate chips still coated by gangue 2.00/chip
Total value of extracted ore: 6.

PROFITS/LOSSES
TOTAL VALUE OF MINING OPERATION (6 - 5): 7.

RESTORATION FINES & OTHER PENALTIES: 8.

COMMUNITY TAXES (0% or 5% or 10% of 6): 9.

REPLACEMENT OF DAMAGED TOOLS (2 X): 10.

CORPORATION PROFIT/LOSS (7 - 8 - 9 - 10): 11.

Lab report and analysis

Answer these questions:

1. Briefly summarise the choices you made - cookie, tools, community collaboration and time. Were they
the best choices? What choices would you make differently if you were to repeat the mining operation?
Why?

2. Why is it so critical to invest in the collaboration of local communities if a mining operation is to be

successful? What might be the results if this collaboration is ignored?

3. How successful was your restoration of the mined property? Apart from cleaning up and restoring the
land to its previous state, what other activities might a mining company undertake in order to ensure that
its operation does not leave a permanent scar on the environment and does not result in recurring
hostility amongst local residents or visitors? Consider animals, plants, soil, water, pollution, access
roads and erosion.

4. You began the operation with a $25 loan. Assuming that you must repay the loan, plus 15% interest,
after the operation, what now would be your profit or loss?

5. Research and find out what resources, ores and minerals are mined in Ecuador. Say where the mines are
located. (Do not include oil extraction in your answer.)

6. Before any mining operation is allowed, it is necessary to undertake an EIA. What is an EIA?

7. Write a summary and conclusion of your lab results.