Chapter Three NSSM 200, Pages 93-103


Population growth per se is not likely to impose serious constraints on the global physical availability of fuel and non-fuel minerals to the end of the century and beyond.

This favorable outlook on reserves does not rule out shortage situations for specific minerals at particular times and places. Careful planning with continued scientific and technological progress (including the development of substitutes) should keep the problems of physical availability within manageable proportions.

The major factor influencing the demand for non-agricultural raw materials is the level of industrial activity, regional and global. For example, the U.S., with 6% of the world's population, consumes about a third of its resources. The demand for raw materials, unlike food, is not a direct function of population growth. The current scarcities and high prices for most such materials result mainly from the boom conditions in all industrialized regions in the years 1972-73.

The important potential linkage between rapid population growth and minerals availability is indirect rather than direct. It flows from the negative effects of excessive population growth in economic development and social progress, and therefore on internal stability, in overcrowded under-developed countries. The United States has become increasingly dependent on mineral imports from developing countries in recent decades, and this trend is likely to continue. [** The location of known reserves of higher-grade ores of most minerals favors increasing dependence of all industrialized regions on imports from less developed countries.

The real problems of mineral supplies lie, not in basic physical sufficiency, but in the politico-economic issues of access, terms for exploration and exploitation, and division of the benefits among producers, consumers, and host country governments. **]

In the extreme cases where population pressures lead to endemic famine, food riot, and breakdown of social order, those conditions are scarcely conducive to systematic exploration for mineral deposits or the long-term investments required for their exploitation. Short of famine, unless some minimum of popular aspirations for material improvement can be satisfied, and unless the terms of access and exploitation persuade governments and peoples that this aspect of the international economic order has "something in * for them," concessions to foreign companies are likely to be expropriated or subjected to arbitrary intervention. [** Whether through government action, labor conflicts, sabotage, or civil disturbance, the smooth flow of needed materials will be jeopardized. Although population pressure is obviously not the only factor involved, these types of frustrations are much less likely under conditions of slow or zero population growth. **]


Projections made by the Department of Interior through the year 2000 for those fuel and non-fuel minerals on which the U.S. depends heavily for imports [Aluminium, copper, iron ore, lead, nickel, bin, uranium, zinc, and petroleum (including natural gas)] support these conclusions on physical resources (see Annex). Proven reserves of many of these minerals appear to be more than adequate to meet the estimated accumulated world demand at 1972 relative prices at least to the end of the century. While petroleum (including natural gas), copper, zinc, and tin are probable exceptions, the extension of economically exploitable reserves as a result of higher prices, as well as substitution and secondary recovery for metals, should avoid long-term supply restrictions. In many cases, the price increases that have taken place since 1972 should be more than sufficient to bring about the necessary extension of reserves.

These conclusions are consistent with a much more extensive study made in 1972 for the Commission on Population Growth and the American Future [Population, Resources and the Environment, edited by Ronald Ridker, Vol. III of the Commission Research Report].

As regards fossil fuels, that study foresees adequate world reserves for at least the next quarter to half century even without major technological breakthroughs. U.S. reserves of coal and oil shale are adequate well into the next century, although their full exploitation may be limited by environmental and water supply factors. Estimates of the U.S. Geological Survey suggest recoverable oil and gas reserves (assuming sufficiently high prices) to meet domestic demand for another two or three decades, but there is also respectable expert opinion supporting much lower estimates; present oil production is below the peak of 1970 and meets only 70 percent of current demands [For a recent review of varying estimates on oil and gas reserves, see "Oil and Gas Resources," Science, 12 July 84, pp. 127-130 (Vol. 185)]. Nevertheless, the U.S. is in a relatively strong position on fossil fuels compared with the rest of the industrialized world, provided that it takes the time and makes the heavy investments needed to develop domestic alternatives to foreign sources.

In the case of the 19 non-fuel minerals studied by the Commission it was concluded there were sufficient proven reserves of nine to meet cumulative world needs at current relative prices through the year 2020 [Chromium, iron, nickel, vanadium, magnesium, phosphorous, potassium, cobalt, and nitrogen]. For the ten others [Manganese, molybdenum, tungsten, aluminum, copper, lead, zinc, tin, titanium, and sulphur] world proven reserves were considered inadequate. However, it was judged that moderate price increases, recycling and substitution could bridge the estimated gap between supply and requirements.

The above projections probably understate the estimates of global resources. "Proved Reserves," that is known supplies that will be available at present or slightly higher relative costs 10 to 25 years from now, rarely exceed 25 years' cumulative requirements, because industry generally is reluctant to undertake costly exploration to meet demands which may or may not materialize in the more distant future. Experience has shown that additional reserves are discovered as required, at least in the case of non-fuel minerals, ant "proved reserves" have generally remained constant in relation to consumption.

The adequacy of reserves does not of course assure that supplies will be forthcoming in a steady stream as required. Intermediate problems may develop as a result of business miscalculations regarding the timing of expansion to meet requirements. With the considerable lead time required for expanding capacity, this can result in periods of serious shortage for certain materials and rising prices as in the recent past. Similarly, from time to time there will be periods of overcapacity and falling prices. Necessary technical adjustments required for the shift to substitutes or increased recycling also may be delayed by the required lead time or by lack of information.

An early warning system designed to flag impending surpluses and shortages, could be very helpful in anticipating these problems. Such a mechanism might take the form of groups of experts working with the UN Division of Resources. Alternatively, intergovernmental commodity study groups might be set up for the purpose of monitoring those commodities identified as potential problem areas.

Adequate global availability of fuel and non-fuel minerals is not of much benefit to countries who cannot afford to pay for them. Oil supplies currently are adequate to cover world needs, but the quadrupling of prices in the past year has created grave financial and payment problems for developed and developing countries alike. If similar action to raise prices were undertaken by supplies of other important minerals, an already bad situation would be intensified. Success in such efforts is questionable, however; there is no case in which the quantities involved are remotely comparable to the cases of energy; and the scope for successful price-gouging or cartel tactics is much smaller.

Although the U.S. is relatively well off in this regard, it nonetheless depends heavily on mineral imports from a number of sources which are not completely safe or stable. It may therefore be necessary, especially in the light of our recent oil experience, to keep this dependence within bounds, in some cases by developing additional domestic resources and more generally by acquiring stockpiles for economic as well as national defense emergencies. There are also possible dangers of unreasonable prices promoted by producer cartels and broader policy questions of U.S. support for commodity agreements involving both producers and consumers. Such matters, however, are in the domain of commodity policy rather than population policy.

At least through the end of this century, changes in population growth trends will make little difference to total levels of requirements for fuel and other minerals. Those requirements are related much more closely to levels of income and industrial output, leaving the demand for minerals substantially unaffected. In the longer run, a lower ultimate world population (say 8 to 9 billion rather than 12 to 16 billion) would require a lower annual input of depletable resources directly affected by population size as well as a much lower volume of food, forest products, textiles, and other renewable resources.

Whatever may be done to guard against interruptions of supply and to develop domestic alternatives, [** the U.S. economy will require large and increasing amounts of minerals from abroad, especially from less developed countries [See National Commission on Materials Policy, Towards a National Materials Policy: Basic Data and Issues, April 1972]. That fact gives the U.S. enhanced interest in the political, economic, and social stability of the supplying countries. Wherever a lessening of population pressures through reduced birth rates can increase the prospects for such stability, population policy becomes relevant to resource supplies and to the economic interests of the United States.**]


Outlook for raw materials

 I. Factors Affecting Raw Material Demand and Supply

Some of the key factors that must be considered in evaluating the future raw materials situation are the stage of a country's economic development and the responsiveness of the market to changes in the relative prices of the raw materials.

Economic theory indicates that the pattern of consumption of raw materials varies with the level of economic activity. Examination of the intensity-of- use of raw materials (incremental quantity of raw material needed to support an additional unit of GNP) show that after a particular level of GNP is reached, the intensity of use of raw materials starts to decline. Possible explanations for this decline are:

1. In industrialized countries, the services component of GNP expands relative to the non-services components as economic growth occurs.

2. Technological progress, on the whole, tends to lower the intensity-of- use through greater efficiency in the use of raw materials-and development of alloys.

3. Economic growth continues to be characterized by substitution of one material by another and substitution of synthetics for natural materials [Materials Requirements Abroad in the Year 2000, research project prepared for National Commission on Materials Policy by the Wharton School university of Pennsylvania; pp. 9-10].

Most developed countries have reached this point of declining intensity-of- use [United Nations symposium on Population; Resources, and Environment Stockholm, 9/26-10/5/73, E/Conf.6/CEP/3, p. 35]. For other countries that have not reached this stage of economic development, their population usually goes through a stage of rapid growth prior to industrialization. This is due to the relative ease in the application of improved health care policies and the resulting decline in their death rates, while birth rates remain high. Then the country's economy does begin to industrialize and grow more rapidly, the initial rapid rise in industrial production results in an increasing intensity-of-use of raw materials, until industrial production reached the level where the intensity- of-use begins to decline.

As was discussed above, changes in the relative prices of raw materials change the amount of economically recoverable reserves. Thus, the relative price level, smoothness of the adjustment process, and availability of capital for needed investment can also be expected to significantly influence raw materials' market conditions In addition, technological improvement in mining and metallurgy permits lower grade ores to be exploited without corresponding increases in costs.

The following table presents the 1972 net imports and the ratio of imports to total demand for nine commodities. The net import of these nine commodities represented 99 percent of the total trade deficit in minerals.

1972 Ratio of Imports


  |                          |     1972     | Ratio of Imports |

  |   Commodity              | Net Imports  | to Total Demand  |

  |                          | ($Millions)* |                  |


  | Aluminum                 |     48.38    |      .286        |

  | Copper                   |    206.4     |      .160        |

  | Iron                     |    424.5     |      .049        |

  | Lead                     |    102.9     |      .239        |

  | Nickel                   |    477.1     |      .704        |

  | Tin                      |    220.2     |      .943        |

  | Titanium                 |    256.5     |      .469        |

  | Zinc                     |    294.8     |      .517        |

  | Petroleum                |  5,494.5     |      .246        |

  | (including natural gas)  |              |                  |


The primary sources of these US imports during the period 1969-1972 were:


  | Commodity             Source & %                            |


  | Aluminum            - Canada 76%                            |

  | Copper              - Canada 31%, Peru 27%, Chile 22%       |

  | Iron                - Canada 50%, Venezuela 31%             |

  | Lead                - Canada 29%, Peru 21%, Australia 21%   |

  | Nickel              - Canada 82%, Norway 8%                 |

  | Tin                 - Malaysia 64%, Thailand 27%            |

  | Titanium            - Japan 73%, USSR 19%                   |

  | Zinc (Ore)          - Canada 60%, Mexico 24%                |

  | Zinc (Metal)        - Canada 48%, Australia 10%             |

  | Pertroleum (crude)  - Canada 42%                            |

  | Petroleum (crude)   - Venezuela 17%                         |


* The values are based on U.S.1972 prices for materials in primary form, and in some cases do not represent commercial value of the crude material. Source: Bureau of Mines.

II. World Reserves

 The following table shows estimates of the world reserve position for these commodities. As mentioned earlier, the quantity of economically recoverable reserves increases with higher prices The following tables, based on Bureau of Mines information, provide estimates of reserves at various prices. (All prices are in constant 1972 dollars.)

Aluminum (Bauxite)

         Price (per pound primary aluminum)

                  Price A    Price B    Price C    Price D

                    .23        .29        .33        .36

         Reserves (billion short tons, aluminum content)

           World   3.58       3.76       4.15       5.21

           U.S.     .01        .02        .04        .09


         Price (per pound refined copper)

                    .51        .60        .75

         Reserves (million short tons)

           World    370        418        507          

           U.S.      83         93        115          


         Price (per troy ounce) 

                  58.60         90        100        150

         Reserves (million troy ounce)

           World  1,000      1,221      1,588      1,850

           U.S.      82        120        200        240


         Price (per short ton of primary iron contained in ore)

                  17.80      20.80      23.80      

         Reserves (billion short tons iron content)

           World  96.7       129.0      206.0      

           U.S.    2.0         2.7       18.0      


         Price (per pound primary lead metal)

                   .15         .18        .20      

         Reserves (million short tons, lead content)

           World  96.0       129.0      144.0      

           U.S.   36.0        51.0       56.0


         Price (per pound of primary metal)

                   1.53        1.75       2.00       2.25

         Reserves (millions short tons)

           World  46.2        60.5       78.0       99.5

           U.S.     .2          .2         .5         .5


         Price (per pound primary tin metal)

                   1.77        2.00       2.50       3.00

         Reserves (thousands of long tons - tin content)

           World  4,180      5,500      7,530      9,290

           U.S.       5          9        100        200


         Price (per pound titanium in pigment)

                    .45        .55         .60

         Reserves (thousands short tons titanium content)

           World 158,000  222,000     327,000      

           U.S.   32,400   45,000      60,000


         Price (per pound, prime western zinc delivered)

                    .18        .25         .30

         Reserves (million short tons, zinc content)

           World    131       193         260      

           U.S.      30        40          50          


Data necessary to quantify reserve-price relationships are not available. For planning purposes, however, Bureau of Mines use the rough assumption that a 100% increase in price would increase reserves by 10%. The average 1972 U.S. price was $3.39/bbl. with proven world reserves of 666.9 billion bbls. and U.S. reserves of 36.. billion barrels. Using the Bureau of Mines assumption, therefore, doubling in world price (a U.S. price of $6.78/bbl.) would imply world reserves of 733.5 billion bbls. and U.S. reserves of 39.9 billion barrels.

Natural Gas:

         Price (wellhead price per thousand cubic feet)

                 .186        .34       .44         .55

                 Reserves (trillion cubic feet)

           World  1,156     6,130      10,240     15,599

           U.S.     266       580         900      2,349

It should be noted that these statistics represent a shift in 1972 relative prices and assume constant 1972 technology. The development of new technology or a more dramatic shift in relative prices can have a significant impact on the supply of economically recoverable reserves. Aluminum is a case in point. It is the most abundant metallic element in the earth's crust and the supply of this resource is almost entirely determined by the price. Current demand and technology limit economically recoverable reserves to bauxite sources. Alternate sources of aluminum exist (e.g., alunite) and if improved technology is developed making these alternate sources commercially viable, supply constraints will not likely be encountered.

The above estimated reserve figures, while representing approximate orders of magnitude, are adequate to meet projected accumulated world demand (also very rough orders of magnitude) through the year 2000. In some cases, modest price increases above the 1972 level may be required to attract the necessary capital investment.

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