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Worrying about copper
15 Apr, 2010 12:15 pm
I travel much by railroad. In the last 6 months it happened twice that my train did not run because thieves had stolen the copper wires that are essential for operating the rail track.
Radetzky is one of the world great experts on copper resources and -production. In his paper Radetzky surveys copper use during the last seven thousand years and does a firm prediction about the future: ?The cost and price conditions as well as the expanding physical resource volumes should assure the availability of copper to consumers, to match demand developments, and at prices not much different from the average of the past decades, once the present commodity boom has ended?.
Well, thanks to the economic crisis caused by our bankers, the commodity boom might be expected to have ended in 2009. So, why are thieves stealing copper wiring? The reason was not hard to find. The price of copper had a brief dip in late 2008 and early 2009. But after this short dip the copper price has much increased over the year 2009 and the price remained high since. Business Week quoted a market analyst Blaze Tankersley, who stated that he found the high copper price ? almost fundamentally insulting?. That may well be, but the fact remains that in spite of the economic crisis the copper price is high.
It is not often that a firm prediction in a scientific paper seems to be falsified so soon. And this makes me wonder, there is much discussion about peak oil, peak gas, peak coal and peak phosphate, but what about copper?
The feeling that the copper price tends to be rather constant, which is reflected in Radetzky?s prediction, is not something that drops out of the air. A study about the real price of copper over the period 1870-2000 (2) found just that. This constancy is remarkable, as Marian Radetzky rightly pointed out. For instance, in the US the percentage of copper in copper ore dropped from about six percent to about 0.5% over the 1870-2000 period. A variety of innovations have underpinned the ability to produce copper from poorer grade ores at a roughly constant real cost. Radetzky apparently felt that there is no end to such innovations. However from Radetzky?s writings no clear picture arises about the actual nature of innovations that would ensure relatively low prices. Moreover, copper production is energy- and water intensive. And it may be that the costs of these inputs will substantially increase in the future.
As I am highly dependent on train transport, this leaves me worried. So, just by way of insurance, I would prefer that the railroad switches from copper to aluminum wiring, which can also do the job and is much less popular with thieves.
(1) Marian Radetzky. Seven thousand years in the service of humanity ? the history of copper, the red metal. Resources Policy 34 (2009) 176-184.
(2) Peter Svedberg & John E. Tilton. The real, real price of nonrenewable resources: copper 1870-2000. World Development 34 (2006) 501-519
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Interested readers would do well to review the data on global production and prices for copper and a variety of other minerals at the US Minerals Databrowser. This online, interactive tool presents a century's worth of historical data on mineral production and prices in a series of explanatory data graphics.
Reviewing the charts one sees that the idea that the price of copper has been constant is simply foolish. The 'Price Evolution' chart make it clear that we had enjoyed inexpensive copper during the 1980's and 1990's and are now returning to the kinds of peak prices we saw during the 1970's.
Are we at peak copper?
Looking at the 'World Production' chart I would say probably "yes in the US" but perhaps "not yet for the globe" as a whole.
Best Hopes for learning about the situation by reviewing the data on your own.