Beyond Resource Wars: Scarcity, Environmental Degradation, and International Cooperation

10. Responses to Alternative Forms of Mineral Scarcity

Humans have used mineral resources since prehistoric times. People with access to flint were more successful hunters. People who could build sturdy shelters were protected from the elements and potentially from enemies as well. Those with stores of precious metals had an advantage in trade. Over time, the technologies of mineral exploration, extraction, processing, and use have advanced. Both the variety of resources exploited and the applications to which they are put have expanded dramatically. Today, minerals are essential inputs to economic systems, the driving force for some local, regional, and national economies, and the basis of the built environment. Governments have an interest in ensuring a stable supply of minerals to support their economies and provide for the defense of their nations, and throughout history have been willing to use a variety of means to do so. This has led to conflict in some cases and cooperation in others. A major driver of mineral-related conflicts and cooperative actions is real or perceived scarcity. Malthusian fears about the adequacy of resource stocks have been revived in recent years, partly in reaction to the rising world population, which is predicted to reach eight billion people by 2025. Of most pressing concern with respect to minerals are the expanding economies of high-population, developing nations such as India and China. The consumption of resources increases as incomes rise and the middle class grows larger in these countries. Figure 10.1 below illustrates recent trends in mineral resource consumption in China. Dianzuo Wang (2005) predicts that the growth in demand for minerals in China will increase rapidly for the next fifteen to twenty years, with the annual consumption of steel reaching 330 million tons as early as 2015. John DeYoung reports that China’s consumption of copper in 2020 could equal the level of worldwide consumption in the mid-1990s 10 Responses to Alternative Forms of Mineral Scarcity: Conflict and Cooperation Deborah J. Shields and Slavko V. Šolar 240 Deborah J. Shields and Slavko V. Šolar (quoted in Darmstadter 2001). Increased demand has dramatically affected mineral prices. In 2006, the price of copper (in US$) was $2.25 per pound, the price of lead was $0.50 per pound, and the price of gold was $550 an ounce (Andrews 2008). By April 2008, those prices had reached $4.35 per pound, $1.45 per pound, and $947 per ounce, respectively (LME 2008; GFMS 2008). By December 2008, however, prices had dropped to $1.41 per pound, $0.44 per pound, and $810 per ounce, respectively (LME 2008; GFMS 2008), reflecting the decreased demand stemming from the turmoil in financial markets and concerns about the global recession. Economic downturns do not last indefinitely, though; demand has already begun to rebound. A portion of China’s mineral commodity consumption is used in the production of goods that are subsequently exported. Thus, decreased demand for manufactured goods in developed countries could temper the rate of increase in China’s mineral consumption, at least in the short term. A reduction in export earnings could also negatively impact China’s booming construction sector. In response, the Chinese government announced plans for an economic stimulus package of US$586 billion, which will largely be directed toward infrastructure projects. Regardless of current market fluctuations, in the long term Chinese consumption is expected to rise even further than it already has. Experts predict similar increases in India (Menzie 2006). Moreover, the increased demand for minerals in the developing world is not being offset by comparable 6,000 5,000 4,000 3,000 2,000 1,000 0 Steel (10Mt), Copper, Aluminum (1,000t) 1980 1985 1990 1995 2000 2005 Year 1980 1985 1990 1995 2000 2005 Year Aluminum Copper Steel 16 14 12 10 8 6 4 2 0 Coal Cement Bt Figure 10.1 Trends in resource consumption in China, 1980–2005 (Wang 2005). Note: 10 Mt = 10 thousand tons; 1000 t = thousand tons; Bt = billion tons Responses to Alternative Forms of Mineral Scarcity 241 decreases in consumption levels in developed nations (Moll, Bringezu, and Schütz 2005). In a keynote speech to the World Mines Ministries Forum, Somit Varma (2008) stated that “high prices and perceptions of scarcity have made it clearer that meeting growing demand is not easy, but requires secure access to resources and substantial, timely investment.” It will also require the discovery of new deposits to replace those being depleted. Yet serious...