Another look at non-renewable resource exhaustion

Miner Econ (2014) 27:3341 DOI 10.1007/s13563-014-0044-x

ORIGINAL PAPER

Another look at non-renewable resource exhaustion

John Dobra & Matt Dobra

Received: 24 September 2013 /Accepted: 11 April 2014 /Published online: 27 May 2014 # Springer-Verlag Berlin Heidelberg 2014

Abstract This paper challenges the widely held hypothesis, considered in some circles as accepted scientific consensus, that modern industrial society is rapidly exhausting non-renewable resources. We argue that this paradigm is amiss and use copper availability as an example to demonstrate the problems with this consensus. In the 80 years for which reasonably reliable estimates of copper reserves and reserve life are available, there is no evidence of resource exhaustion. In addition, an analysis of the economics of resource exploration indicates that mining companies will treat exploration as an inventory control problem and trade off using limited capital resources between expanding inventories of reserves and generating current revenue through production. In the case of the copper industry, it is argued that there is little incentive for major copper producers to explore for more resources. Non-producers, exploration companies do have an incentive for expanding reserves, but this does not change the conclusion that new copper resources are effectively not worth looking for. We also conjecture that, except for in rare and temporary circumstances, this conclusion is applicable to many non-renewable resources. Ultimately, this implies that aggregate reserve-life calculations for all types of non-renewable resources are inherently flawed.

Keywords Mining . Sustainability . Copper

JEL codes Q3 . L7

Introduction: challenging the depletion orthodoxy

This paper examines a widely held belief held by advocates industrial ecology, resource sustainability, and modern day Malthusians that modern industrial society is rapidly depleting natural resources at an unsustainable rate. The focus here is on perhaps the most vulnerable class of resources in this belief system: non-renewable resources and, more specifically, metals.

The Non-renewable mineral availability section reviews some of the basic literature on mineral availability and the peak resources hypothesis applied by those concerned about resource sustainability to non-renewable resources. The Copper as an example section looks at the peak resources hypothesis applied to copper. We find no evidence of peak copper in spite of claims to the contrary. Copper reserve life,i.e., how long society can continue consuming copper from known reserves, is...