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Economics

What is the value of aggregates to the UK economy?

Introduction
     
Aggregates are basic raw materials used by the construction industry and continuing supplies are essential for the sustainable growth of the UK economy.
 
Minerals, including aggregates, play a fundamental role in underpinning growth in the economy and contributing to the UK's high standard of living. Aggregates are basic raw materials used by the construction industry and continuing supplies are essential for the sustainable growth of the UK economy. Like all minerals, aggregates are at the beginning of the supply chain and their true value lies in their downstream use.
     
Aggregates are at the beginning of the supply chain and their true value lies in their downstream use.
 
Sales of primary aggregates in the UK were some 226 million tonnes in 2003 with a value of £1 698 million based on estimated ex-quarry values. However, this figure significantly undervalues the contribution that aggregates make to the UK construction industry and the economy as a whole. Sales of some value-added products based on aggregates are shown in the diagram.

UK: Sales of selected aggregate-based products, 2003 chart.

UK: Sales of selected aggregate-based products, 2003 chart.

The construction industry is a critical sector of the economy. The Gross Value Added (GVA) of the construction industry in 2003 was £61.5 billion, or about 6.3% of the total for the UK. GVA is a key economic indicator and is defined as the difference between the value of output (e.g. revenues) and the cost of bought in inputs (e.g. fuel and other raw material, but not labour).

The total value of the work carried out by the construction industry in the UK continues to grow. In Great Britain the total value of construction work was £92.7 billion in 2003 of which £49.8 billion was new work and £42.9 billion repair and maintenance. With many new infrastructure projects, such as for the Olympics, and the need for many new homes, it is likely that the value of construction work will continue to rise.

Great Britain: Aggregates consumption and construction output, 1955-2003.

Great Britain: aggregates consumption and construction output, 1955-2003.

  London skyline
Intensity of use of aggregates and sustainable development
Consumption of aggregates is fundamentally driven by activity in the construction sector. Between 1955 and the mid-1960s the consumption of aggregates and the value of construction showed a good correlation (bottom left).

Thereafter the growth in the consumption of aggregates exceeded that of construction output until the early 1990s. During this period there was an increasing 'intensity of use' of aggregates, as increasing quantities of aggregate were used per unit of construction output. The reason for this was probably related to the major expansion in the road building programme. However, since the early 1990s the 'intensity of use' of natural aggregates has been declining. This is more clearly shown in figure below which plots aggregates consumption per unit (£1000) of construction output. This is an important sustainable development indicator and shows that the direct link between economic/construction output and resource use has been reversed, implying greater efficiency in the use of natural aggregates.

In the last 10 years there has been a continuous decline in the quantity of natural aggregate consumed per unit of construction output from 4.1 tonnes per £1000 output in 1994 to only 2.6 tonnes per £1000 in 2003.

Great Britain: Intensity of use of primary aggregates per unit of construction output, 1955-2003.

The reasons for the decline may be:
  • changes in the structure of the British economy with a decline in manufacturing and growth in service industries
  • a decline in the road-building programme
  • a decline in house building
  • the increasing use of alternative aggregates, mainly construction and demolition waste
  • changes in construction methods.
However, the decline in the intensity of use of natural aggregates cannot continue indefinitely and will stabilise and perhaps increase as improvements to the nation's infrastructure are required and major new construction projects arise.

 

 

 

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