Economic drivers of mineral supply

Abstract

The debate over the adequacy of future supplies of mineral resources continues in light of the growing use of mineral-based materials in the United States. According to the U.S. Geological Survey, the quantity of new materials utilized each year has dramatically increased from 161 million tons2 in 1900 to 3.2 billion tons in 2000. Of all the materials used during the 20th century in the United States, more than half were used in the last 25 years. With the Earth?s endowment of natural resources remaining constant, and increased demand for resources, economic theory states that as depletion approaches, prices rise. This study shows that many economic drivers (conditions that create an economic incentive for producers to act in a particular way) such as the impact of globalization, technological improvements, productivity increases, and efficient materials usage are at work simultaneously to impact minerals markets and supply. As a result of these economic drivers, the historical price trend of mineral prices3 in constant dollars has declined as demand has risen. When price is measured by the cost in human effort, the price trend also has been almost steadily downward. Although the United States economy continues its increasing mineral consumption trend, the supply of minerals has been able to keep pace. This study shows that in general supply has grown faster than demand, causing a declining trend in mineral prices.