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Resource-proximate siting

Business Model & Unit Economics · Value-chain position

What it is

Locating a plant at the source of its bulkiest input - the mine mouth, the port, the oilfield or the crop belt. Where freight is large relative to product value, proximity is a permanent cost advantage that efficiency elsewhere cannot offset

It explains the clustering of cement near limestone, ferro alloys near ore, sponge iron near coal and steel, and food processing near the crop

Impact on industries

  • Eliminates rather than reduces freight on the heaviest input, giving a structural cost gap over competitors who must rail material in
  • Clusters develop shared infrastructure, power, labour skills and supplier ecosystems that compound the original locational advantage
  • Concentrates an industry in one district, creating common exposure to state royalty policy, local disruption and evacuation bottlenecks
  • It ties the plant to a depleting resource, and inverts where market freight dominates - which is why some industries site at consumption centres instead

Industries affected