Chapter 3 



Minerals Supply, Demand, and Future Trends 



INTRODUCTION 



Commoclities, materials, and mineral concen- 

 trates — the stuff made from minerals — are actively 

 traded in international markets. An analysis of do- 

 mestic demand, supply, and prices of minerals and 

 their products must also consider future global sup- 

 ply and demand, and international competition. 

 This is important to all mining and minerals ven- 

 tures, but particularly so for seabed minerals, which 

 must not only compete with domestically produced 

 land-based minerals, but which must also match 

 the prices of foreign onshore and offshore pro- 

 ducers.' 



The commercial potential of most seabed min- 

 erals from the EEZ is uncertain. Several factors 

 make analysis of their potential difficult, if not im- 

 possible: 



• First, very little is known about the extent and 

 grade of the mineral occurrences that have 

 been identified thus far in the EEZ. 



• Second, without actual experience or pilot 

 operations, the mining costs and the unfore- 

 seen operational problems that affect costs can- 

 not be assessed accurately. 



• Third, unpredictable performance of domes- 

 tic and global economies adds uncertainty to 

 forecasts of minerals demand. 



• Fourth, changing technologies can cause un- 

 foreseen shifts in demand for minerals and ma- 

 terials. 



• Fifth, past experience indicates that methods 

 for projecting or forecasting minerals demand 



'J. Broadus, 

 p. 835. 



'Seabed Materials," Science, vol. 235, Feb. 20, 1987, 



fall short of perfection and are sometimes in- 

 correct or misleading. 



Mineral commodities demand is a function of de- 

 mand for construction, capital equipment, trans- 

 portation, agricultural products, and durable con- 

 sumer goods. These markets are tied directly or 

 indirectly to general economic trends and are nota- 

 bly unstable. With economic growth as the "com- 

 mon denominator" for determining materials con- 

 sumption and hence minerals demand, and with 

 recognition of the shortcomings in predicting global 

 economic changes, any hope for reasonably ac- 

 curate forecasts evaporates. 



It is probably unwise to even attempt to specu- 

 late on the future commercial viability of seabed 

 mining, but few can resist the temptation to do so. 

 The case of deep seabed manganese nodule min- 

 ing offers a graphic example of how external in- 

 ternational and domestic political events and eco- 

 nomic factors can affect the business climate and 

 economic feasibility of offshore mining ventures. 

 After considerable investment in resource assess- 

 ments, development and testing of prototype min- 

 ing systems, and detailed economic and financial 

 analyses, the downturn of the minerals markets 

 from the late 1970s through the 1980s continues 

 to keep the mining of seabed manganese nodules 

 out of economic reach, although many of the in- 

 ternational legal uncertainties once facing the in- 

 dustry have been eliminated through reciprocal 

 agreements among the ocean mining nations. As 

 a consequence, several deep seabed mining ven- 

 tures have either shrunk their operations or aban- 

 doned their efforts altogether. 



TRENDS IN MINERALS CONSUMPTION 



Minerals consumption for a product is deter- 

 mined by the number of units manufactured and 

 the quantity of metal or material used in each unit. 

 Total demand is influenced by the mix of goods 



consumed in the economy (product composition), 

 because each consumes different materials as well 

 as different amounts of those materials. Finally, 

 minerals demand is closely related to macroeconomic 



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