Famous forecasts — what happened?

The strong desire of metal consumers for price stability in the markets has had its effect on forecasts, public opinion and politics in the Western world since 1950.

At that time, the U.S. Paley Commission report looked ahead to 1975 and explained to us in five volumes, after only 18 months study, that consumption of almost all materials including metals was expanding at compound rates, thus putting a heavy squeeze on available resources supply, which was not growing at the same rate.

The commission explained that the problem was neither local nor temporary, where in the past it had found its solution in price changes which brought supply and demand back into balance. It said the terms of the materials problem the world faced in 1950 were “larger and more pervasive.”

Grim talk. That and the Korean War and the Marshall Plan then getting under way precipitated vast reconstruction and large U.S. stockpiling contracts for nickel etc., benefiting Canada, which could deliver. Catchphrase

On another tack, in 1972 the so-called Club of Rome came up with the notion growth in the Western world was held back by massive depletion of its non-renewable resources. This catchphrase spread rapidly and politicians everywhere climbed aboard and echoed the new gospel.

The Stockholm Conference went a similar route. Mining companies went under the microscope and the tax and environmental agencies started to add their burdens. These and other ventures were exercises by politically-oriented forces to mould the future of mining output.

Well, they did not — could not — foresee the enormous growth of Japanese consumption, the decline in the U.S. share of world mining output, the huge increases in the uses of platinum group metals and their prices, the tremendous growth in the output and prices of gold and silver, the super-successful rebirth of Germany, the growth of nickel, the emergence of major metal consumers such as South Korea, Taiwan, Hong Kong, etc., the disappearance of the British Empire structure, the riches of most oil- producing nations, the operation of auto plants by robot machines, the hundreds of millions of tv sets, transistors, vcrs, compact discs, lasers, fuel cells, computers, metals in medicine, the conquest of diseases such as polio, diphtheria, smallpox and so on. Prices shot up

The key lay in the hands of the world’s mining companies, mainly Canadian, British, Australian, South African, French and German, embracing both old and new areas and in the prices of the metals. Gold and silver shot up after 1968 when the prices of the two old precious metals were freed and there was, as is usual, some rub-off on base metals.

Price and the risk-taking of the mining companies and their bankers and the rapid growth of technology turned the prophecies of Paley, the Club of Rome and Stockholm on their heads. In fact, the world’s 1988 global mining industry is almost unrecognizably large when viewed through a 1950 telescope.

Of course, there have been casualties like some copper uses and the decline of the large Labrador- Quebec iron ventures. However, exports of excess metals from the huge continuing expansions of the Soviet mining industry have been absorbed fairly comfortably by the West and this should continue. The Soviet oil output alone is much larger than Saudi Arabia’s.

Prices are a product, a result, of supply-demand balances, as well as being a stimulus to new activity. Metal prices are made, but they also make a slipway for new wealth. The current sustained expansion of exploration for gold and platinum has been called, with some truth, the largest growth industry in North America and has spread throughout the English-speaking world. High prices are the major stimulus.

The years 1950-87 were just over a third of a century and saw truly remarkable progress, and 1988-2025 will provide more. Mining will play a major role still, with metal prices as the catalyst. T. P. (Tom) Mohide, a former president of the Winnipeg Commodity Exchange, served as a director of mining resources with the Ontario Ministry of Natural Resources prior to his retirement in 1986. This column is the fifth in a monthly series on “How metal prices are made.”