Minerals-Supply Security and Mineral-Use Efficiency: Some Observations from the 1970–2005 Interval

Abstract

As a consequence of the powerful changes that have occurred over the last three decades in the principal ‘drivers’ of economic change, there have been significant realignments in the global patterns of production and consumption of natural resources, as well as in the intensity of their use, in the quest to raise the level of material wellbeing throughout the world. In this paper, three large minerals-consuming (and -producing) countries are examined – the USA, China and Russia – and the story of a generation's economic progress (or decline, as the case may be) is seen through the lens of resource consumption – the ‘stuff’ that comprises a modern ‘standard of living’. After presenting data on gross domestic product, population, the observed levels and annual growth rates of consumption and production of four non-fuel minerals over a 35-year interval ending in 2005 for these countries and for the world, the paper includes a description of these countries' growing import dependence (or, as the case may be, their enhanced or reduced role as an exporter to the world economy) for some, or all, of these critical resources over this time period. These changing trends contribute to one of today's ‘front-burner’ public policy issues: resource-supply security. The last section of the paper examines the changing ‘intensity-of-use’ of these minerals. The paper concludes with some remarks on the geopolitical/environmental dilemma associated with resources, which is intensifying as we approach the beginning of the second decade of the twenty-first century.

Acknowledgements

I am grateful to Linda Doman of the Energy Information Agency at the US Department of Energy for providing me with the GDP and population data covering the 1970–2005 period used in this study. I thank John DeYoung, Chief Scientist, Minerals Information Team at the US Geological Survey (USGS), for approving my request for the minerals production and consumption data for the four non-fuel minerals reviewed in this study. Special thanks are extended to the USGS Mineral Commodity Specialists – Lee Bray (aluminium), Dan Edelstein (copper), John Jorgenson (iron ore) and Peter Kuck (nickel) – for the time and effort they expended speaking with me and preparing the data that I requested. Grecia Matos is to be commended for organizing the data from the specialists and preparing the files for transmission to me. The data collection and dissemination effort was co-ordinated by Dave Menzie, Chief, International Minerals Section, and Scott Sibley, Chief, Mineral Commodities Section, and I am grateful to both of them. I am especially thankful to Richard Levine, Russia Country Specialist at USGS, for his valuable ‘telephone lecture’ on the pitfalls involved with Soviet/Russian non-fuel minerals data, especially the pre-1991 data for the individual Soviet republics.

I thank Rod Eggert, Director of the Division of Economics and Business at the Colorado School of Mines in Golden, Colorado, who facilitated my visit to CSM in the summer of 2008, where most of the work for this paper was carried out. I thank Claudia Binaghi for her great help in preparing the tables that gathered all the disparate data from many sources and organized them efficiently so they tell a coherent and convincing story of the changing role resources play over a large slice of time for three large global players. Finally, I acknowledge the Department of Economics and Finance, the School of Business and the Global Education Center at Montclair State University, who, jointly provided the required funding that enabled me to present the paper at the Tenth Annual Conference of the National Business and Economics Society in March 2009 on St. Kitts, BWI.

Notes

1. In fact, because the Soviet/Russian data for the non-fuel minerals were so ‘soft’ and ‘slippery’, no attempt was made to calculate the ‘intensity-of-use’ metrics.

2. Because this paper is ‘data-intensive’ and the data come from different sources (and, more importantly, are of uneven quality for some years and countries), it is useful to document the sources of the data, some of the problems that were encountered with this data, as well as how these problems were resolved. The macro-economic data – population and GDP levels (expressed in 2000 $US, ppp) – were provided by the Energy Information Agency of the US Department of Energy (EIA/DOE). As was mentioned, generally speaking, minerals data for Russia (proper) were not available before 1991. Therefore, some accommodations had to be made using the production data of the Soviet Union in 1970 and 1980 to estimate production levels for Russia in those years, and they were based on more recent ratios of Russia/former Soviet Union output levels. Since the consumption and production data are from different sources, for those knowledgeable about minerals data – especially data from 35 years ago – it would be nothing less than miraculous if world consumption and world production were equal. In my opinion, this loss of precision does not impair the general trends displayed by the data over the 35-year interval, nor the conclusions that are based on the analysis of the data.Because of information limitations there was no attempt to ‘break out’ Russian consumption and production data from the more inclusive Soviet levels for 1970, 1980 and 1990. Therefore, I use reported Soviet data for those years and reported Russian data for 2000 and 2005. Because of this problem I was forced to exclude the computations on Soviet/Russia ‘intensity-of-use’ in the fourth section of the paper. Readers who feel more secure than me on Russia's share of Soviet production and consumption levels for 1970–1990 are invited to ‘take the ball and run with it’!For the aluminium data, I was forced to adopt a ‘least bad solution’: data for aluminium consumption included primary and scrap, but extraction (or mine output) data were, of course, the metal content of the bauxite. In addition, the reported 2005 consumption number for China did not include scrap. To resolve these problems, I opted to ‘scale down’ the consumption figures – except for China in 2005 – in order to remove the scrap component in consumption. The scale factor that was applied equalled the per cent that would align world production of (primary) aluminium with world consumption of (primary) aluminium. Finally, the data for iron – not steel – represent mine output of iron content and consumption data are essentially residuals after netting reported iron imports and exports. As a result, the data in Table 5C are the iron content of mine output (production) and the calculated consumption of that mine output (called ‘primary’ consumption). It is important to clarify that this table does not refer to steel output, which, of course, would have a large scrap-iron component. Despite these obstacles – and the compromises they triggered – I believe that the tables in sections three and four still tell a credible story of the growing dependence on imported resources by the US and China and the potential geopolitical consequences that could bring on the one hand, and the increasing efficiency in the use of non-fuel minerals over time of these two large consumers of resources, on the other.

3. As mentioned previously, data limitations for the Soviet Union/Russia (pre-1991) precluded the inclusion of this region in Tables 7 –10.