Good News: Here’s Why We Won’t Run Out Of Minerals (Including Oil)

 | Jul 27, 2017 05:21AM ET

Summary: Among the fear barrages of the past 50 years, “running out of resources” has been the most persistent. Here is why we won’t run out of minerals. As for other kinds of resources, that is a more complex story for another day.

The history of America since WWII has been a succession fear barrages rained on us by the Left, the Right, and the government. Many of these were sold to the public despite their contradiction by science. Today we have the doomster narratives of climate change, exaggerations of the findings of the IPCC. People casually talk about our certain doom from the weather, just as ten years ago people talked about civilization’s certain collapse when the “oil ran out.” Since these fears are clearer in retrospect, let’s see why peak oil was clearly bogus.

h3 Why we don’t “run out” of minerals/h3

The short version, the key fact about mineral resources: there is an inverse relationship between the quantity and the quality of reserves. Low quality deposits are more common than high quality. That is just common sense. Also common sense is that the march of technology lowers the cost of extracting and refining deposits. These two competing factors determine the price-supply curve for every mineral.

The first factor, geology, pushes up the the cost (capital expenditures plus operations) of extracting a marginal barrel of new oil. The first wells in the great Texas and Saudi fields could be tapped almost by sticking a straw into the ground. Slowly wells went deeper, then to offshore, then to deep offshore — such as the fantastically deep and geologically complex wells that were seen as Brazil’s future (with oil over $100/barrel). High quality light oil was tapped, then heavy and sulfur-rich oils requiring extensive refining. Eventually we tapped bitumen (aka oil sands), than can be processed into petroleum products. Eventually we might tap deposits that are only somewhat like oil, such as kerogen (aka oil shale) or converting coal to oil.

Once we have explored the world for a mineral resource, rising prices drives this evolution to lower quality deposits. The high quality deposits become insufficient to meet growing demand, so prices rise to economically justify tapping lower quality deposits.

Technology, the second factor, reduces the cost of extracting a marginal barrel of new oil.

The constant tug-of-war between these two complex factors — plus swings of capital investment, supply, and demand — make reliable predictions of commodity prices impossible over all but the shortest time horizons. All this has been known since the 1970s, as shown in this classic text about mining by the famous Ronald Prain.

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Read this and it will change forever how you read about commodities, and especially stories about our certain doom from limited mineral resources. Images and red emphasis added.

h3 Sir Ronald Prain (1975)./h3 h3 Excerpt from chapter ten: The Future./h3

Meditating on the nature of time in the first of his Four Quartets , T. S. Eliot wrote:

“Time present and time past
Are both perhaps present in time future,
And time future contained in time past.”

If this be so, it should not be too difficult to give some preview of the next 25 years as they will affect the copper industry and certainly it is possible to outline some of the factors which will be of importance between now and the end of the century, for so many of them have their origins in the past.

However, whilst encouraged by Eliot, I am cautioned against trying to peer too far by his distinguished contemporary, the philosopher-poet Santayana who reminds us that :

“Our knowledge is a torch of smoky pine
That lights our pathway but one step ahead.”

…Future copper supply will obviously depend on the volume of the world’s physical resources of the metal and man’s ability to exploit these resources, both technically and economically.

h3 Deposits./h3

It has become abundantly clear over the past few years that the march of material progress which began with the Industrial Revolution cannot continue at its present rate unless the world’s reserves of minerals, fuel and food are similarly expanded. Nor, incidentally, can the damaging changes to the landscape and the pollution of air and water, which have followed in the wake, be allowed to continue if the human race is not to destroy all natural beauty and ultimately poison itself.

In regard to minerals, few matters have generated more controversy than the various attempts which have been made to quantify the resources, both in the earth and beneath the sea, which will be available for exploitation by future generations. This is a field in which neither computers nor the best human brains — nor a combination of both — can be relied upon to come up with the right answer. One has only to consider some of the forecasts which have been made over the past 50 years or so to see how totally wrong such predictions can be.

In 1931, for example, Professor C. K. Leith, of the University of Wisconsin, and later an adviser to the United States Government in the Second World War, wrote that “the best and most available of the world’s minerals …are being rapidly depleted, and yet more than 40 years later the world’s known resources are very much greater than they were then.

In 1952 the — popularly known as the Paley Commission, after its chairman — produced a very pessimistic report in which it foresaw the end of certain metal supplies within a generation.

More recently a great deal of world attention has been attracted to a report by that group of international scientists, savants and industrialists known as the Club of Rome , which throws much gloom on the prospects of the world being able to continue its present growth rate because of the exhaustibility of resources. In the case of copper the report indicates that on the basis of known reserves and current usage, supplies of new material will dry up in 36 years and will last 21 years at the present rate of growth; even if reserves were five times as great as they are now known to be, supplies would run out in 50 years.

{Ed.note: The above paragraph does not accurately represent the conclusions of the Club of Rome (see