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

Author

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

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.

Suggested Citation

  • Rosenau-Tornow, Dirk & Buchholz, Peter & Riemann, Axel & Wagner, Markus, 2009. "Assessing the long-term supply risks for mineral raw materials--a combined evaluation of past and future trends," Resources Policy, Elsevier, vol. 34(4), pages 161-175, December.
    • Handle: RePEc:eee:jrpoli:v:34:y:2009:i:4:p:161-175
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    References listed on IDEAS

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    1. Frondel, Manuel & Grösche, Peter & Huchtermann, Dirk & Oberheitmann, Andreas & Peters, Jörg & Angerer, Gerhard & Sartorius, Christian & Buchholz, Peter & Röhling, Simone & Wagner, Markus, 2007. "Trends der Angebots- und Nachfragesituation bei mineralischen Rohstoffen: Endbericht. Forschungsprojekt Nr. 09/05 des Bundesministeriums für Wirtschaft und Technologie (BMWi)," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 70880.
    2. Radetzki, Marian, 2006. "The anatomy of three commodity booms," Resources Policy, Elsevier, vol. 31(1), pages 56-64, March.
    3. repec:wbk:wbpubs:12425 is not listed on IDEAS
    4. World Bank, 2005. "World Development Indicators 2005," World Bank Publications - Books, The World Bank Group, number 12426.
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