Thursday, February 2, 2006

Copper is an Exhaustible Resource

Original post: 1/18/06
A study published in the Proceedings of the National Academy of Sciences indicates that, if the world's population consumed copper at the rate of current consumption in North America, world copper reserves would be wholly exhausted by the middle of this century. Science   

Of course, they won't...the rate of consumption will never reach North American consumption...traditional natural resource economics assures us that prices will increase, demand will be reduced, and substitutes will be found.


But those of us who are less sanguine about the ability of the market to achieve these goals at the right time to avoid disruptions or who do not believe the market will allocate strategic minerals optimally and optimally encourage recycling / substitution might want to design a strategic minerals policy for hard rock minerals that assures equitable/strategic allocation and uses R & D and incentives to foster optimal recycling / substitution.  If you look at what we have in the US is not even close to a strategic minerals policy.  Strategic minerals policy description 

Based on my experience in the last three decades, US discussion of strategic minerals policy for the most part was limited to (1) how to increase US production and (2) how to avoid cutting off imports of strategic minerals from countries that violate human rights (i.e. anti-apartheid trade restrictions and strategic minerals exception).

Perhaps, we need a serious minerals policy -- in lieu of the never-ending battle over the resource gifts bestowed on foreign businesses by the General Mining Act.  For an example of the preoccupation with the General Mining Act and environmental protection, see National Mining Association Position on National Mining Policy, American Geological Institute Policy Brief on Mining , ELI Mining Center Description , and Earthworks

I understand that these issues are important.  Among other things, subsidies foster overconsumption of scarce strategic resources -- below-market valuation of minerals and unincorporated externalities are the economic sins of the General Mining Act and poor environmental protection policies. 

But, the US policy analysis needs to be broadened beyond those two issues -- which are divisive battlegrounds.  Someone should be looking toward the future.  How do we allocate our limited copper to the best uses?   How do we foster responsible metals recycling?  How do we encourage renewable substitutes?  How do we bridge the strategic gap between real world shortages that may occur and the market solutions to shortage (disruptive price spikes)?  These are policy questions that should be answered.

Updated 2/2/06:

Here are excerpts from the PNAS article by Gordon, et al, "Metal stocks and sustainability:"


Published online before print January 23, 2006, 10.1073/pnas.0509498103                
PNAS | January 31, 2006 | vol. 103 | no. 5 | 1209-1214


The relative proportions of metal residing in ore in the lithosphere, in use in products providing services, and in waste deposits measure our progress from exclusive use of virgin ore toward full dependence on sustained use of recycled metal. In the U.S. at present, the copper contents of these three repositories are roughly equivalent, but metal in service continues to increase. Providing today's developed-country level of services for copper worldwide (as well as for zinc and, perhaps, platinum) would appear to require conversion of essentially all of the ore in the lithosphere to stock-in-use plus near-complete recycling of the metals from that point forward....  The fraction of the stock of recoverable resources in the lithosphere already placed in use or in wastes from which it will probably never be recovered is currently {approx}26% for copper and 19% for zinc. We lack data, but suggest that similar proportions apply for the other industrially important, geochemically scarce metals. Because the remaining stocks of ore are large compared with current needs, prices of these metals do not yet reflect scarcity value. Additionally, improved extraction techniques have kept the average real prices of these metals nearly steady for over 50 years. There is no immediate concern about the capacity of mineral resources to supply requirements for the geochemically scarce metals. Limitations would arise only from restrictions on international trade or legislative restrictions related to the environmental consequences of mining, milling, and smelting lower-grade ores. Nonetheless, over time the widespread adoption of certain new technologies can be expected to encounter natural limitations in cases for which a particular material provides a unique service. We identify platinum as the most likely metal to face this limitation because of its unique catalytic properties and its desirability for such applications as alloys for high-temperature service. 

Data on the stock of copper used in the U.S. over the past century cast doubt on the idea that demand for metals eventually decreases as incomes rise. Although the nation's GDP has increased much faster than the copper stock-in-use, the rate of increase of the per-capita copper stock remains undiminished. We find that the per-capita copper committed to some services has decreased in the 20th century but that this decrease is overbalanced by the provision of new services. The demand for new services is deeply embedded in a western popular and political culture that sees growth and development as absolutes, quickly converting services originating as luxuries or entertainments for the wealthy into necessities for everyone. Scenarios depicting future use of copper resources anticipate worldwide spread of the metal services enjoyed by the postindustrial nations. These scenarios need to explicitly address the cultural factors that continue to increase the per-capita use of copper in wealthy societies and the use of alternative materials to provide copper services. 

Concern about the extent of mineral resources arises when the stock of metal needed to provide the services enjoyed by the highly developed nations is compared with that needed to provide comparable services with existing technology to a large part of the world's population. Our stock data demonstrate that current technologies would require the entire copper and zinc ore resource in the lithosphere and perhaps that of platinum as well. Even a lower level of services could not be sustained worldwide because a continuing supply of new metal is needed to make up for inevitable losses in the recycling of the metal stock-in-use. Substitution has the potential to ameliorate this situation, but one should not automatically assume that technology will produce a satisfactory substitute for every service at an affordable price and precisely when needed. 

The topic of resource constraints inevitably recalls the classic bet between Julian Simon and Paul Ehrlich in 1980, in which Ehrlich bet that the prices of five metals would increase by 1990. Instead, the grouped prices fell, and Ehrlich paid Simon $576.07 to settle the wager. Unlike Ehrlich, we do not imply that metal price is a satisfactory measure of the remaining amount of a resource. Rather, we merely point out the present state of affairs: that anthropogenic and lithospheric stocks of at least some metals are becoming equivalent in magnitude, that worldwide demand continues to increase, and that the virgin stocks of several metals appear inadequate to sustain the modern "developed world" quality of life for all Earth's peoples under contemporary technology. These facts compel us to ask two key questions: Do we really envision a developed world quality of life for all of the people of the planet? and If so, are we willing to encourage the transformational technologies that will be required to make that vision a reality? 

Notwithstanding the answers to the key questions posed above, it is clear that, as the proportion of the stock of ore remaining in the lithosphere diminishes relative to the stock-in-use and the stock dissipated, scarcity value will indeed eventually raise the real prices of the geochemically scarce metals and will stimulate intensive recycling well above today's levels. We anticipate that price increases are unlikely to trigger a lower rate of increase in metal services or sudden economic disruption. More likely, we will see a new engineering emphasis on using these metals more efficiently and increased use of abundant alternative materials, principally iron and its alloys, aluminum, and magnesium. We anticipate a gradual transition to reliance on these alternative materials, with the use of the scarce metals increasingly restricted to those services most difficult to obtain by material substitution.

Economics, Governance/Management, International, Mining, North America, Physical Science, Sustainability, US | Permalink

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Very nice informative post.These exhaustible resources are very important.

Posted by: x-ray fluorescence | Jan 19, 2009 12:50:46 AM

Yeah nice information in the article.These exhaustible resources are rarely available and use in the future.Most available mineral resources are iron, silver, gold, and copper.

Posted by: alloy analyzer | Dec 9, 2008 9:47:10 PM

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