MINERALS AND FUEL
Population growth per se is not likely to impose serious
constraints on the global physical availability of fuel and non-fuel
minerals to the end of the century and beyond.
This favorable outlook on reserves does not rule out shortage
situations for specific minerals at particular times and places.
Careful planning with continued scientific and technological
progress (including the development of substitutes) should keep the
problems of physical availability within manageable proportions.
The major factor influencing the demand for non-agricultural raw
materials is the level of industrial activity, regional and global.
For example, the U.S., with 6% of the world's population, consumes
about a third of its resources. The demand for raw materials, unlike
food, is not a direct function of population growth. The current
scarcities and high prices for most such materials result mainly
from the boom conditions in all industrialized regions in the years
1972-73.
The important potential linkage between rapid population growth
and minerals availability is indirect rather than direct. It flows
from the negative effects of excessive population growth in economic
development and social progress, and therefore on internal
stability, in overcrowded under-developed countries. The United
States has become increasingly dependent on mineral imports from
developing countries in recent decades, and this trend is likely to
continue. [** The location of known reserves of higher-grade ores of
most minerals favors increasing dependence of all industrialized
regions on imports from less developed countries.
The real problems of mineral supplies lie, not in basic physical
sufficiency, but in the politico-economic issues of access, terms
for exploration and exploitation, and division of the benefits among
producers, consumers, and host country governments. **]
In the extreme cases where population pressures lead to endemic
famine, food riot, and breakdown of social order, those conditions
are scarcely conducive to systematic exploration for mineral
deposits or the long-term investments required for their
exploitation. Short of famine, unless some minimum of popular
aspirations for material improvement can be satisfied, and unless
the terms of access and exploitation persuade governments and
peoples that this aspect of the international economic order has
"something in * for them," concessions to foreign companies are
likely to be expropriated or subjected to arbitrary intervention.
[** Whether through government action, labor conflicts, sabotage, or
civil disturbance, the smooth flow of needed materials will be
jeopardized. Although population pressure is obviously not the only
factor involved, these types of frustrations are much less likely
under conditions of slow or zero population growth. **]
Reserves
Projections made by the Department of Interior through the year
2000 for those fuel and non-fuel minerals on which the U.S. depends
heavily for imports [Aluminium, copper, iron ore, lead, nickel, bin,
uranium, zinc, and petroleum (including natural gas)] support these
conclusions on physical resources (see Annex). Proven reserves of
many of these minerals appear to be more than adequate to meet the
estimated accumulated world demand at 1972 relative prices at least
to the end of the century. While petroleum (including natural gas),
copper, zinc, and tin are probable exceptions, the extension of
economically exploitable reserves as a result of higher prices, as
well as substitution and secondary recovery for metals, should avoid
long-term supply restrictions. In many cases, the price increases
that have taken place since 1972 should be more than sufficient to
bring about the necessary extension of reserves.
These conclusions are consistent with a much more extensive study
made in 1972 for the Commission on Population Growth and the
American Future [Population, Resources and the Environment, edited
by Ronald Ridker, Vol. III of the Commission Research Report].
As regards fossil fuels, that study foresees adequate world
reserves for at least the next quarter to half century even without
major technological breakthroughs. U.S. reserves of coal and oil
shale are adequate well into the next century, although their full
exploitation may be limited by environmental and water supply
factors. Estimates of the U.S. Geological Survey suggest recoverable
oil and gas reserves (assuming sufficiently high prices) to meet
domestic demand for another two or three decades, but there is also
respectable expert opinion supporting much lower estimates; present
oil production is below the peak of 1970 and meets only 70 percent
of current demands [For a recent review of varying estimates on oil
and gas reserves, see "Oil and Gas Resources," Science, 12 July 84,
pp. 127-130 (Vol. 185)]. Nevertheless, the U.S. is in a relatively
strong position on fossil fuels compared with the rest of the
industrialized world, provided that it takes the time and makes the
heavy investments needed to develop domestic alternatives to foreign
sources.
In the case of the 19 non-fuel minerals studied by the Commission
it was concluded there were sufficient proven reserves of nine to
meet cumulative world needs at current relative prices through the
year 2020 [Chromium, iron, nickel, vanadium, magnesium, phosphorous,
potassium, cobalt, and nitrogen]. For the ten others [Manganese,
molybdenum, tungsten, aluminum, copper, lead, zinc, tin, titanium,
and sulphur] world proven reserves were considered inadequate.
However, it was judged that moderate price increases, recycling and
substitution could bridge the estimated gap between supply and
requirements.
The above projections probably understate the estimates of global
resources. "Proved Reserves," that is known supplies that will be
available at present or slightly higher relative costs 10 to 25
years from now, rarely exceed 25 years' cumulative requirements,
because industry generally is reluctant to undertake costly
exploration to meet demands which may or may not materialize in the
more distant future. Experience has shown that additional reserves
are discovered as required, at least in the case of non-fuel
minerals, ant "proved reserves" have generally remained constant in
relation to consumption.
The adequacy of reserves does not of course assure that supplies
will be forthcoming in a steady stream as required. Intermediate
problems may develop as a result of business miscalculations
regarding the timing of expansion to meet requirements. With the
considerable lead time required for expanding capacity, this can
result in periods of serious shortage for certain materials and
rising prices as in the recent past. Similarly, from time to time
there will be periods of overcapacity and falling prices. Necessary
technical adjustments required for the shift to substitutes or
increased recycling also may be delayed by the required lead time or
by lack of information.
An early warning system designed to flag impending surpluses and
shortages, could be very helpful in anticipating these problems.
Such a mechanism might take the form of groups of experts working
with the UN Division of Resources. Alternatively, intergovernmental
commodity study groups might be set up for the purpose of monitoring
those commodities identified as potential problem areas.
Adequate global availability of fuel and non-fuel minerals is not
of much benefit to countries who cannot afford to pay for them. Oil
supplies currently are adequate to cover world needs, but the
quadrupling of prices in the past year has created grave financial
and payment problems for developed and developing countries alike.
If similar action to raise prices were undertaken by supplies of
other important minerals, an already bad situation would be
intensified. Success in such efforts is questionable, however; there
is no case in which the quantities involved are remotely comparable
to the cases of energy; and the scope for successful price-gouging
or cartel tactics is much smaller.
Although the U.S. is relatively well off in this regard, it
nonetheless depends heavily on mineral imports from a number of
sources which are not completely safe or stable. It may therefore be
necessary, especially in the light of our recent oil experience, to
keep this dependence within bounds, in some cases by developing
additional domestic resources and more generally by acquiring
stockpiles for economic as well as national defense emergencies.
There are also possible dangers of unreasonable prices promoted by
producer cartels and broader policy questions of U.S. support for
commodity agreements involving both producers and consumers. Such
matters, however, are in the domain of commodity policy rather than
population policy.
At least through the end of this century, changes in population
growth trends will make little difference to total levels of
requirements for fuel and other minerals. Those requirements are
related much more closely to levels of income and industrial output,
leaving the demand for minerals substantially unaffected. In the
longer run, a lower ultimate world population (say 8 to 9 billion
rather than 12 to 16 billion) would require a lower annual input of
depletable resources directly affected by population size as well as
a much lower volume of food, forest products, textiles, and other
renewable resources.
Whatever may be done to guard against interruptions of supply and
to develop domestic alternatives, [** the U.S. economy will require
large and increasing amounts of minerals from abroad, especially
from less developed countries [See National Commission on Materials
Policy, Towards a National Materials Policy: Basic Data and Issues,
April 1972]. That fact gives the U.S. enhanced interest in the
political, economic, and social stability of the supplying
countries. Wherever a lessening of population pressures through
reduced birth rates can increase the prospects for such stability,
population policy becomes relevant to resource supplies and to the
economic interests of the United States.**]
Annex
Outlook for raw materials
I. Factors Affecting Raw Material Demand and Supply
Some of the key factors that must be considered in evaluating the
future raw materials situation are the stage of a country's economic
development and the responsiveness of the market to changes in the
relative prices of the raw materials.
Economic theory indicates that the pattern of consumption of raw
materials varies with the level of economic activity. Examination of
the intensity-of- use of raw materials (incremental quantity of raw
material needed to support an additional unit of GNP) show that
after a particular level of GNP is reached, the intensity of use of
raw materials starts to decline. Possible explanations for this
decline are:
1. In industrialized countries, the services component of GNP
expands relative to the non-services components as economic growth
occurs.
2. Technological progress, on the whole, tends to lower the
intensity-of- use through greater efficiency in the use of raw
materials-and development of alloys.
3. Economic growth continues to be characterized by substitution
of one material by another and substitution of synthetics for
natural materials [Materials Requirements Abroad in the Year 2000,
research project prepared for National Commission on Materials
Policy by the Wharton School university of Pennsylvania; pp.
9-10].
Most developed countries have reached this point of declining
intensity-of- use [United Nations symposium on Population;
Resources, and Environment Stockholm, 9/26-10/5/73, E/Conf.6/CEP/3,
p. 35]. For other countries that have not reached this stage of
economic development, their population usually goes through a stage
of rapid growth prior to industrialization. This is due to the
relative ease in the application of improved health care policies
and the resulting decline in their death rates, while birth rates
remain high. Then the country's economy does begin to industrialize
and grow more rapidly, the initial rapid rise in industrial
production results in an increasing intensity-of-use of raw
materials, until industrial production reached the level where the
intensity- of-use begins to decline.
As was discussed above, changes in the relative prices of raw
materials change the amount of economically recoverable reserves.
Thus, the relative price level, smoothness of the adjustment
process, and availability of capital for needed investment can also
be expected to significantly influence raw materials' market
conditions In addition, technological improvement in mining and
metallurgy permits lower grade ores to be exploited without
corresponding increases in costs.
The following table presents the 1972 net imports and the ratio
of imports to total demand for nine commodities. The net import of
these nine commodities represented 99 percent of the total trade
deficit in minerals.
1972 Ratio of Imports +--------------------------+--------------+------------------+
| | 1972 | Ratio of Imports |
| Commodity | Net Imports | to Total Demand |
| | ($Millions)* | |
+--------------------------+--------------+------------------+
| Aluminum | 48.38 | .286 |
| Copper | 206.4 | .160 |
| Iron | 424.5 | .049 |
| Lead | 102.9 | .239 |
| Nickel | 477.1 | .704 |
| Tin | 220.2 | .943 |
| Titanium | 256.5 | .469 |
| Zinc | 294.8 | .517 |
| Petroleum | 5,494.5 | .246 |
| (including natural gas) | | |
+--------------------------+--------------+------------------+
The primary sources of these US imports during the period
1969-1972 were: +-------------------------------------------------------------+
| Commodity Source & % |
+-------------------------------------------------------------+
| Aluminum - Canada 76% |
| Copper - Canada 31%, Peru 27%, Chile 22% |
| Iron - Canada 50%, Venezuela 31% |
| Lead - Canada 29%, Peru 21%, Australia 21% |
| Nickel - Canada 82%, Norway 8% |
| Tin - Malaysia 64%, Thailand 27% |
| Titanium - Japan 73%, USSR 19% |
| Zinc (Ore) - Canada 60%, Mexico 24% |
| Zinc (Metal) - Canada 48%, Australia 10% |
| Pertroleum (crude) - Canada 42% |
| Petroleum (crude) - Venezuela 17% |
+-------------------------------------------------------------+
* The values are based on U.S.1972 prices for materials in
primary form, and in some cases do not represent commercial value of
the crude material. Source: Bureau of Mines.
II. World Reserves
The following table shows estimates of the world reserve
position for these commodities. As mentioned earlier, the quantity
of economically recoverable reserves increases with higher prices
The following tables, based on Bureau of Mines information, provide
estimates of reserves at various prices. (All prices are in constant
1972 dollars.) Aluminum (Bauxite)
Price (per pound primary aluminum)
Price A Price B Price C Price D
.23 .29 .33 .36
Reserves (billion short tons, aluminum content)
World 3.58 3.76 4.15 5.21
U.S. .01 .02 .04 .09
Copper
Price (per pound refined copper)
.51 .60 .75
Reserves (million short tons)
World 370 418 507
U.S. 83 93 115
Gold
Price (per troy ounce)
58.60 90 100 150
Reserves (million troy ounce)
World 1,000 1,221 1,588 1,850
U.S. 82 120 200 240
Iron
Price (per short ton of primary iron contained in ore)
17.80 20.80 23.80
Reserves (billion short tons iron content)
World 96.7 129.0 206.0
U.S. 2.0 2.7 18.0
Lead
Price (per pound primary lead metal)
.15 .18 .20
Reserves (million short tons, lead content)
World 96.0 129.0 144.0
U.S. 36.0 51.0 56.0
Nickel
Price (per pound of primary metal)
1.53 1.75 2.00 2.25
Reserves (millions short tons)
World 46.2 60.5 78.0 99.5
U.S. .2 .2 .5 .5
Tin
Price (per pound primary tin metal)
1.77 2.00 2.50 3.00
Reserves (thousands of long tons - tin content)
World 4,180 5,500 7,530 9,290
U.S. 5 9 100 200
Titanium
Price (per pound titanium in pigment)
.45 .55 .60
Reserves (thousands short tons titanium content)
World 158,000 222,000 327,000
U.S. 32,400 45,000 60,000
Zinc
Price (per pound, prime western zinc delivered)
.18 .25 .30
Reserves (million short tons, zinc content)
World 131 193 260
U.S. 30 40 50
Petroleum
Data necessary to quantify reserve-price relationships are not
available. For planning purposes, however, Bureau of Mines use the
rough assumption that a 100% increase in price would increase
reserves by 10%. The average 1972 U.S. price was $3.39/bbl. with
proven world reserves of 666.9 billion bbls. and U.S. reserves of
36.. billion barrels. Using the Bureau of Mines assumption,
therefore, doubling in world price (a U.S. price of $6.78/bbl.)
would imply world reserves of 733.5 billion bbls. and U.S. reserves
of 39.9 billion barrels.
Natural Gas: Price (wellhead price per thousand cubic feet)
.186 .34 .44 .55
Reserves (trillion cubic feet)
World 1,156 6,130 10,240 15,599
U.S. 266 580 900 2,349
It should be noted that these statistics represent a shift in
1972 relative prices and assume constant 1972 technology. The
development of new technology or a more dramatic shift in relative
prices can have a significant impact on the supply of economically
recoverable reserves. Aluminum is a case in point. It is the most
abundant metallic element in the earth's crust and the supply of
this resource is almost entirely determined by the price. Current
demand and technology limit economically recoverable reserves to
bauxite sources. Alternate sources of aluminum exist (e.g., alunite)
and if improved technology is developed making these alternate
sources commercially viable, supply constraints will not likely be
encountered.
The above estimated reserve figures, while representing
approximate orders of magnitude, are adequate to meet projected
accumulated world demand (also very rough orders of magnitude)
through the year 2000. In some cases, modest price increases above
the 1972 level may be required to attract the necessary capital
investment. |