Problems of Mineral Supply
It is almost an article of faith within a fairly large slice of informed opinion that we are entering into a period in which much of the world will be faced by a scarcity of non-renewable minerals. The oil crisis has been instrumental in making this a vital issue; although the Club of Rome report and its offshoots must be given their due. However, a global shortage, in the sense of having to face a situation where this or that natural resource is definitely extinct, is a long way off. In the short run, or so the theory goes, the prospect is for some kind of limited economic warfare, brought about by attempts by certain of the less developed countries to exploit their position as important producers of primary commodities. The machinery for doing this would be cartels on the pattern of OPEC; and perhaps even multi-cartels, in which producers of different raw materials come together for the purpose of forcing up the price of their products.
KeywordsIndustrial Country Price Rise Copper Producer Real Price Primary Commodity
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Notes and References
- 1.In billions of dollars for nine major minerals: Bauxite, Copper, Iron Ore, Lead, Manganese Ore, Nickel, Phosphorus, Tin, and Zinc.Google Scholar
- 2.Estimated.Google Scholar
- 3.This problem is gradually accumulating a fairly rich literature, beginning with: Hotelling, H “The Economics of Exhaustible Resources”, Journal of Political Economy, April 1931. Pages 137-75.Google Scholar
- 4.In the case of buildings, for example, investments were made in heating plant that should have been made in insulation.Google Scholar
- 5.If we make our calculation using 1973 as the base year, the real price of oil initially rose to 12 dollars. As for adjustments, the problem is that these were the wrong kind — namely, inflation and unemployment.Google Scholar
- 6.See, for example, Banks, F E “The World Copper Market: An Econo mic Analysis”, Ballinger Publishing Company, Boston, 1974; and “Copper is not Oil”, New Scientist, 1 August 1974.Google Scholar
- 7.Although a marginal market in the sense that only a very small percentage of the copper sold in the world is physically traded on its premises, the London Metal Exchange (and in the US Commodities Exchange) reflects very closely the supply-demand situation in the world for a number of commodities.Google Scholar
- 8.Remember that this stock would only amount to about 40 percent of the yearly consumption of copper, since this is the amount supplied at present by the less developed countries. The cost of a stock that would last one year would be about 1.1 billion dollars plus storage costs. This is no small amount, but the reader should remember that it would be spread across some of the richest countries in the world, and that at present the non-socialist industrial countries are carrying stocks of oil that cost at least twenty times as much. In addition, when the cartel broke down, the carrying costs, and perhaps some of the capital costs, could be shifted to the producers in one sense or another.Google Scholar