Thanks Sharon. Switching from mining to recycling can be an alternative. Nevertheless, the volume of recycling seems to be quite small to serve the demand from technological goods (cell phones, tablets, computers, cars, energy, batteries, etc.). I agree with you that environment and water are essential public goods.

Sharon. I would suggest increased recycling is more of a long term structural impact on metal markets rather than a cyclical impact. The level of recycling of metals varies from 0% for many minor metals (ie rare earths) to something like 50% for lead. In general it has increased as a share of production over the last decades, however it is a slow, steady change rather than the cause of recent falling prices. We are moving towards a society that recycles more, however change is slow as you actually need quite a lot of 'metal' in the economic system 'above ground' to match annual demand for metals. For example if copper is installed as wiring in a block of apartments it may be several decades, or even a century before the apartments are knocked down and the metal can be recycled. As such to maintain the system you require several decades worth of consumption to be in the system for total recycling to occur - we simply have not mined enough metal to do this yet - though theoretically we could do this in the future. Though even then it is a moving target as consumption of metals is always increasing (exponentially) so the amount needed to be maintained in the system increases exponentially too - for example in the next 30 years we will consume more copper than has been mined in the history of mankind so far, so to move to a full recycling system we'd have to strip all of the copper out of its current uses, for new uses - clearly not practical. Even a full recycling system would require a small amount of mining as no recycling process is 100% efficient so some new metal would still need to be mined albeit from a very diminished mining industry. All this been said the price impact of recycling on metals is not necessarily downwards. It can act to increase supply, lowering prices, or it can simply replace mine supply with a neutral price impact, or even in a toughly regulated environment replace mine supply with higher cost recycled supply, that actually increases metal prices. Recycling metals still has a cost - in the inputs to the process - energy, acids, labour etc, it is just whether it is cheaper than mining from the point of the economist. From the perspective of an environmental scientist the question is obviously whether mining or recycling has the biggest environmental impact. Again the answer is not clear cut although mining has a clear environmental impact, so does recycling (ignoring the environmental cost of the original mining of the metal before recycling). Recycling can be very energy intensive and use undesirable chemicals. Dependent on what you are trying to reduce the impact of - carbon emissions, water contaminants, air pollution, etc., you may choose mining over recycling, or even to use a different metal entirely, once a full materials cycle cost is done.

Victor. I suspect this is simply the end of a traditional mining industry cycle. Demand is dynamic changing rapidly whereas supply is slow to respond often many years or decades before new mines can be built. As such there is always a boom in prices after a surge in demand (this time from China, India etc) as we wait for new supply to arrive. Regards this mining cycle, I suspect new low cost supply has finally come on stream, combining with some lowering of the input costs of mining (especially oil) and a slowing of the rate of increase in metals demand which is stretching the cost curve less, reducing the requirement for high cost, marginal supply which props up metal prices. Although there has been a general China led cycle, different metal markets are all in different parts of the cycle - some like uranium never really got going, others like nickel boomed early and faded away, some like copper have only recently entered the down part of the cycle. I will send you some papers on the subject when I'm next at my desktop.

I believe the cost to tackle environmental impact after mining is the main issue. Multi-national companies are seeking alternatives to traditional metal usage. For example, steel, titanium, tungsten has virtually replaced precious metals in making jewelries. Though this are still metals, but a similar substitute or recycling might completely replace either of them. Frankly, primary metals in the system are not lost hence more investments are into recycling.

Thanks John and Kayode. In a global market economy prices define if a commodity is worth, under certain technological capabilities, to be supplied.  A boom (and consequently a fall) in prices can be a demand, a supply or a systemic driven phenomenon. At the peak, the Chinese appetite and the delay of the industry to respond were key factors.  Additionally, a weak US Dollar and the virtually free interest rate favored a disproportionate resource response.  Now, with demand at the bottom levels and the US Dollar strengthening, the price signals depend upon specific technological developments (lithium and hybrid cars).

The mining industry, particularly the metaliferous part of it, has always been cyclic in response to:

• changes in demand (war, new usages, declining demand (eg tin)
• new uses for commodities such as copper and gold,
• metallurgical advances and
• availability of capital to establish new mines and refurbish existing treatment plants.

Lets take copper for an example. When prices are high new mines are brought into production, there is a premium for recycling of existing metal and high-cost (mature/sub economic) mines continue to produce. This leads to a situation when the supply exceeds demand as happened in the 1890s, 1919/20 (end of WW1), 1945 (end WW2), mid 1970s (introduction of bulk mining related to porphyry Cu deposits), 1990s ((metal substitution) and more recently (slow down in economic growth and more efficient use of metals). Thus the price crashes, high cost mines close and investors are reluctant to invest capital in new plant/mines.

Metals have always been high value commodities, for example tin was produced in Cornwall in pre-Roman times and traded widely throughout the Mediterranean basin. The same can be said for copper, gold, lead, tin, and iron.

Please remember that the time taken between ore body discovery and establishment of a new mine can be 10 to 30 years (with examples such as Porgora and Hemlo being identified in the 1930s but not brought into production until the 1980s. Thus when the next upturn in metal demand occurs it is usually the deposits that were identified in the previous cycle that are brought into production. Most new mines try to be in the lower 1/4 cost quartile thus undercutting existing established producers and allowing them to repay the investment capital.

Recycling is important but please remember that the metal being recycled (eg iron, aluminium, copper etc) was often produced 5 to 30 years ago and only can partially fill the demand for new metal. Also some usages preclude the metal being recycled into high value products.

Thanks Peter for your comprehensive answer. The question then is whether the last “super-cycle” was a traditional industry phenomenon or not. It seems to me that the increases in prices and the array of metals involved made it a particular phenomenon than deserves further assessment.   

The only thing that made this last cycle unusual is that it had a longer duration (?8 or 9 years) than several previous cycles (e.g. the early 1980s gold boom, mid 1980s boom that was terminated with the  Wall Street Crash (1987), mid 1990s etc - these generally lasted around 5 years or so). Please note that some of the older cycles had a duration longer than the last cycle (e.g the cycle up to the end of WW1 (copper, tin, tungsten, iron etc - ?15-18 years), and the 1960s cycle (iron ore, base and nickel - ?12 years) that terminated around 1973 or 1974 (in part driven by the Vietnam war and industrialization of Japan)).

Factors that lead to the longevity of this last cycle can be largely attributed to the rapid growth of China and to a lesser extent India, development of new technologies (mobile phones, solar panels etc) and increased consumerism from Africa. It seems to me that the global financial crisis (2008) was largely felt by the USA and Europe both areas where growth is low. 

Victor, I'm trying to find some useful papers to help this discussion. There's a couple I've written myself. The attached paper looks at the history of metals mining. I'm in agreement with Peter that one of the distinctive things about this cycle has been the broader range of metals - in particular so called 'technology metals'. That been said the traditional metals such as steel, copper and gold have remained by far the most important in market value terms.

Article Discovery, supply and demand: From Metals of Antiquity to cr...

With respect to the nature of minerals cycles themselves, I also contributed to a conference paper recently talking about the nature of the cycles - the delay in supply in response to demand, and the different features of parts of the cycle.

Conference Paper Perspectives on Mineral Commodity Price Cycles and their Rel...

The attached Radetzki (2006) paper looks at three main commodity cycles in the last century. The other papers look more specifically at the recent boom - though from 'during' the boom. I'm not aware of any good post-boom analyses at the moment.

Some more papers on this theme.

Thanks Peter and John, the discussion has been enriched by your very deep and well supported points of views.