COMMENTARY — The changing world of metals

New technologies are transforming the pattern of consumption and supply in metals markets.

Since the Bronze Age, prices of metals, minerals and energy fuels have shown steady declines (in terms of constant money) over hundreds of years. And the demand for key minerals and

metals has climbed and accelerated relentlessly over the past 200 years — that is, until the last two decades.

This recent change is attributable to two factors — the first being that new technologies have enhanced the ability to win economic metals from an increasingly low grade of ore; the second being that the rate of material substitution has increased at a rapid rate.

While it is true that developing nations use large quantities of metals to upgrade their industrial base and ensure that living standards are satisfactory, these same countries are also

perfectly capable of switching over to new technologies that may have the effect of reducing the level of metals they consume.

The willingness of societies to adapt to new technologies is an important consideration for several reasons. Developing countries are more likely to adapt to new approaches than the more advanced countries are, for the simple reason that their economies are generally so sickly that any change is embraced with open arms.

Moreover, there is little chance of such changeovers being

protested, as most industries are unable to afford such

resistance.

Consider the case of telephones in China. While the old telephone system in place is being upgraded, the country is also building, with the help of the American Telephone and Telegraph Company, a wireless system that will reach every single citizen. To have achieved this saturation level in the U.S. would have required millions and millions of tonnes of copper wire.

China will bypass this phase. And there will be no resistance to touchtone, push-button phones because most citizens will never have seen, let alone used, their predecessor, the dial phone.

Besides, the touchtone feature is perceived as the wave of the future, and the Chinese want to be part of it.

Other examples can be found in the steel and nuclear power

industries. A steel-making process under development in the U.S.

will all but eliminate coke (made from soft coal). And if the U.S. gets its act together, it could harness a new generation of nuclear reactors and pass them on to the rest of the world, at which point steam coal will waste away.

— The preceding is the gist of a recent article in “Minergia,” a newsletter published by Vermont-based Hugh Douglas & Co.