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Assessing the long-term supply risks for mineral raw materials--a combined evaluation of past and future trends

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Author Info

  • Rosenau-Tornow, Dirk
  • Buchholz, Peter
  • Riemann, Axel
  • Wagner, Markus
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    Abstract

    This paper develops a method for identifying and assessing long-term supply risks for mineral raw materials. The method is based on a combined evaluation of past and future supply and demand trends. By analysing raw material boom and bust cycles over the past 50 years, we have quantified indicators and defined benchmarks for identifying critical market situations. By applying the method, risks for supply shortage may be identified at an early stage. In addition, a numerical evaluation model has been developed for better comparison between various mineral raw materials. Compared to other assessment methods this method uses specific benchmarks for each raw material to better assess supply risks. The method is embedded within a systematic and comprehensive analytical approach. Based on this model, companies can make better informed decisions for their market assessment and may use suitable risk mitigation instruments to counteract problematic developments. Understanding future supply conditions is especially useful when selecting new technologies for products which require an intensive use of raw materials. As an example, the method is applied to the copper market as of 2006. It is important to emphasise that nobody can foresee the future of raw material prices. But we may aim to better understand the weaknesses of these markets which may lead to future supply shortages thus influencing price.

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    Bibliographic Info

    Article provided by Elsevier in its journal Resources Policy.

    Volume (Year): 34 (2009)
    Issue (Month): 4 (December)
    Pages: 161-175

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    Handle: RePEc:eee:jrpoli:v:34:y:2009:i:4:p:161-175

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    Web page: http://www.elsevier.com/locate/inca/30467

    Related research

    Keywords: Automobile industry Copper Indicators Market analysis Mining Procurement Raw material Mineral resources Resource management Risk mitigation Supply risk Supply and demand Security of supply;

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    Cited by:
    1. Gleich, Benedikt & Achzet, Benjamin & Mayer, Herbert & Rathgeber, Andreas, 2013. "An empirical approach to determine specific weights of driving factors for the price of commodities—A contribution to the measurement of the economic scarcity of minerals and metals," Resources Policy, Elsevier, vol. 38(3), pages 350-362.
    2. Stepanek, Christian & Walter, Matthias & Rathgeber, Andreas, 2013. "Is the convenience yield a good indicator of a commodity's supply risk?," Resources Policy, Elsevier, vol. 38(3), pages 395-405.

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