Ch. 1— Summary, Issues, and Options • 13 



MINERALS SUPPLY, DEMAND, AND FUTURE TRENDS 



Commodities, materials, and mineral concen- 

 trates — the stuff made from minerals — are traded 

 in international markets. There is nothing special 

 or unique about marine minerals that makes them 

 different from those obtained domestically onshore 

 or from foreign sources. They must, nevertheless, 

 compete for price, quality, and supply reliability 

 with other foreign and domestic mineral suppliers. 

 To be competitive, marine minerals probably must 

 either prove to exist in large, high-quality depos- 

 its, and/or to be cheaper to mine and process than 

 their onshore counterparts. Major questions remain 

 as to where marine minerals may fit in the future 

 economic pecking order of producers. 



The commercial potential of marine minerals 

 from the U.S. EEZ is uncertain because develop- 

 ment, when it occurs (or if it occurs in the case of 

 some minerals), is likely to be in the distant future. 

 It is difficult to foresee the future of marine minerals 

 for several reasons: 



• Little is known about the extent and grade of 

 the mineral occurrences that have been iden- 

 tified in the EEZ. 



• Little actual experience and few pilot opera- 

 tions are available to evaluate seabed mining 

 costs and operational uncertainties. 



• Erratic performance of the domestic and global 

 economies adds uncertainty to forecasts of 

 minerals demand. 



• Changing technologies can cause unforeseen 

 shifts between demand and supply of minerals 

 and materials. 



• Past experience indicates that methods for pro- 

 jecting or forecasting minerals demand are not 

 dependable. 



Materials are constantly competing with one 

 another for applications in goods and industrial 

 processes. Total consumption of a mineral com- 

 modity is determined by the amount (volume or 

 number) of goods consumed and by the amount 

 of a commodity used in manufacturing each unit. 

 The former is linked to the vitality of the economy 

 and customer preference, while the latter is related 

 to technological trends which also may be related 

 to economic factors. Substitution of new or differ- 

 ent materials, conservation through more efficient 



manufacturing, and recycling of used materials can 

 reduce the demand for virgin materials. 



Major changes in domestic and world economies, 

 coupled with technological advancements and 

 changes in consumer attitudes, have significantly 

 altered consumption trends beginning in the late 

 1970s and continuing through the present. For most 

 of the commodities derived from marine minerals, 

 the amount used relative to the goods produced has 

 decreased for chromium, cobalt, manganese, tin, 

 zinc, lead, and nickel from 1972 to 1982. Only 

 platinum and titanium increased in use intensity. 

 Consumption of goods and consequently the de- 

 mand for mineral commodities used to produce the 

 goods — with the exception of platinum and titani- 

 um — also decreased (but less abruptly than use in- 

 tensity) during the same period. 



Mining capacity increased — particularly in the 

 mineral-rich Third World — in the early 1970s when 

 mineral prices were high, consumption strong, and 

 the economic outlook bright. In the 1980s, demand 

 softened, prices dropped, and the world economy 

 slowed, causing significant excess world mining ca- 

 pacity for most of the minerals that occur in the 

 U.S. EEZ. It is unknown whether technological 

 trends toward miniaturization, substitution, and 

 lower intensity of use of the commodities derived 

 from marine minerals will continue in the future, 

 or whether domestic and world economic growth 

 will rebound to new heights or merely continue 

 sluggishly on the current course. These uncertain- 

 ties will affect the utilization of existing capacity 

 and determine the need for new mineral develop- 

 ment in the future, including minerals from the 

 seabed. 



As a result of excess world capacity, the U.S. 

 minerals and mining industry has met with sub- 

 stantial foreign competition. Metals prices remain 

 low, and, until recently, production costs in the 

 United States and Canada have been well above 

 the world average for copper, zinc, lead, and other 

 metals used in large industrial quantities. Compe- 

 tition from low-cost foreign producers, with advan- 

 tages of lower capital and operating costs and higher 

 grade ores, have resulted in a depressed domestic 



