In spite of an ever-growing supply of metals, actors have long feared metal shortages. This thesis – departing from an understanding that metals scarcity is not an objective geological fact, but an experience, a fear of a shortage – explores why business and state actors have experienced metals as scarce and how they coped with scarcity from 1870 to 2015. The underlying reasons for scarcity experiences originated in high prices, a lack of substitutes, domestic unavailability, limited infrastructure and increased demand. In the view of businesses and the state, a shortage of metals could hinder successful industrialization. Defining metals as scarce was a first step in their attempts to ensure access through exploration, recycling, substitution, and trade agreements. This dissertation presents five case studies which provide insights into three selected aspects of metals scarcity that have been overlooked in previous studies. First, while small countries experienced and coped with metals scarcity in a similar way to large nations, they were more vulnerable because of their dependence on transnational flows controlled by larger countries. Yet if they remained neutral in international conflicts, they could enjoy other opportunities to import resources than their larger rivals. Second, industries experienced metals scarcity before World War I; with the onset of the Second Industrial Revolution, at the very latest, new technologies were often dependent on metals which had never before been used commercially – there were not yet any extraction systems in place. However, once these metals began to circulate, state actors became aware of the international traffic and began to classify certain metals as critical. Thirdly, technological change has affected – and been affected by – metals scarcity. If a metal was scarce, manufacturers were likely to embark on a different path to production. Inversely, sometimes new technologies were able to alleviate perceptions of scarcity. / <p>QC 20171206</p>

This thesis explores the application of Markowitz' Modern Portfolio Theory onto 220 years of financial returns for 13 metals and 21 poly-metallic ore types. The interdisciplinary research shows that poly-metallic ores can be described as naturally occurring portfolios that were diversified by natural geological processes. Safest and optimal portfolios for metals and ores can be computed for different time horizons using portfolio optimization algorithms. Results for optimized ore portfolios are thereby subject to geological constraints. The study revealed that commodity cycles last between six and twenty years and exhibit clockwise and counterclockwise motions in the risk-return framework. The cycle length differences for clockwise cycles are statistically significant and thus specific to all investigated metals and ores. By incorporating novel cycle parameters into decision making tools it is suggested that current industry decisions for resource development can be improved. Insights into the performance of metals and ores through the industrial cycles, as well as into the frequency of profitable super cycles can assist Metals & Mining executives in strategic planning and investment.:Introduction 1 Data 3 Metals & ore types studied 5 2.1 Metals.......................................... 5 2.2 Ore types ........................................ 5 2.3 Prices .......................................... 10 2.4 Summary ........................................ 12 II Analysis 13 3 Modern Portfolio Theory 15 3.1 Overview ........................................ 15 3.2 Definitions........................................ 15 3.3 Assumptions ...................................... 17 3.4 Discussion & Conclusion................................ 18 4 Poly-metallic ores as natural portfolios 19 4.1 Objectives........................................ 19 4.2 Results.......................................... 19 4.3 Summary & Discussion................................. 24 4.4 Conclusion ....................................... 25 5 Static portfolio optimization 27 5.1 Objectives........................................ 27 5.2 Assumptions ...................................... 27 5.3 Results.......................................... 27 5.4 Summary & Discussion................................. 31 5.5 Conclusion ....................................... 32 6 Dynamic portfolio optimization 33 6.1 Assumptions ...................................... 33 6.2 Results.......................................... 34 6.3 Summary & Discussion................................. 44 6.4 Conclusion ....................................... 45 7 Commodity cycles & metal assets 47 7.1 Commodity cycles ................................... 47 7.2 Commodity cycle observations ............................ 54 7.3 Summary ........................................ 76 7.4 Discussion........................................ 77 7.5 Conclusion ....................................... 78 III Application 81 8 Commodity cycles & resource development strategies 83 8.1 The timing of mine development and mining start-up................ 83 8.2 Lead times from discovery to operation........................ 88 8.3 Exploration....................................... 89 8.4 Project valuation considerations............................ 91 8.5 Summary & Discussion................................. 92 8.6 Conclusion ....................................... 93 9 Industrial cycles & modern history 95 9.1 The Metal Markets Indicator-MMI ......................... 95 9.2 The Metal Markets Indicator & the economy .................... 97 9.3 The MMI & military conflict ............................. 105 9.4 MMI cyclicality..................................... 115 9.5 Summary & Discussion................................. 122 9.6 Conclusion ....................................... 123 10 Industrial cycles & metal performance 125 10.1 Methodology ...................................... 125 10.2 Metal performance during technological epochs ................ 126 10.3 Discussion........................................ 133 10.4 Conclusion ....................................... 137 11 Industrial cycles & ore type preferences 139 11.1 Coal Age ........................................ 139 11.2 Oil Age ......................................... 142 11.3 Atomic Age....................................... 144 11.4 Discussion........................................ 146 11.5 Conclusion ....................................... 150 12 Industrial cycles & ore provinces 151 12.1 Ore genetic models and industrial cycles....................... 151 12.2 Ore geology and geography .............................. 154 12.3 Ore provenances and mining technology ....................... 156 12.4 Discussion........................................ 157 12.5 Conclusion ....................................... 157 13 The state and future of the M&M Industry 159 13.1 The current state.................................... 159 13.2 The dawn of a new Industrial Age .......................... 163 13.3 The future........................................ 164 13.4 Summary & Discussion................................. 167 13.5 Conclusion ....................................... 168 14 Summary 169 15 Conclusion 171 IV Appendix 173 Bibliography 233 Index 245