Risky Race for Minerals

A durable conceit of the industrialized world was that it could always rely for its raw material needs on the cheap and bounteous natural resources of less developed countries. That notion has gone aglimmering in recent years. The voracious demand of booming U.S., European and Japanese economies stepped up the competition for basic materials, causing some global scarcities. A continuation of this increasingly cutthroat competition among major consuming nations could lead to strained political alliances, disruptions in the distribution and production of raw materials and further inflation. American businessmen are concerned because, while the U.S. is rich in many materials, it has also become dependent upon imports of some key industrial metals.

The prime beneficiaries of the change are the producing countries, many of them underdeveloped and determined to get more money for their resources. The ability of the oil-producing states to swiftly treble their prices --and the inability of consuming countries to counter them--has had an electric effect on countries that produce other key materials. They would like to emulate the Arabs' success.

Guinea has called a meeting in Conakry this week of representatives of other major bauxite producers and importing countries. The government of Leftist President Sekou Toure plainly desires higher prices. Last week Zaire's President Mobutu Sese Seko called for the formation of a "common front to fight for the highest possible prices for Africa's natural resources." Zaire and Zambia this month announced plans to coordinate copper-production policy in order to keep prices at or near the current record levels, if necessary by using the Arab technique of withholding sales.

Considerable Clout. The mineral-rich countries appear to be too diverse to create cartels in the foreseeable future with anything like the muscle of the Organization of Petroleum Exporting Countries. But they will wield considerable clout, partly because production of some basic metals is so concentrated. Fully 80% of the world's copper exports come from Chile, Peru, Zambia and Zaire. Two countries, Malaysia and Bolivia, export 70% of the world's tin. Guinea, Guyana, Surinam and Jamaica account for 95% of the exports of bauxite, from which aluminum is produced. Riches and power will continue to flow to producing nations as demand for their resources quickens. Luckily, with the possible exceptions of tin, zinc and some other items, the earth's mineral deposits seem sufficient to last for centuries, and new reserves are being found each year. Undersea mineral deposits are all but untouched.

The U.S. has increasingly come to count on the still relatively cheap resources controlled by mostly undeveloped countries. Like other industrial nations, America has already exploited many of its easily mined mineral deposits. Of a dozen basic materials considered crucial for modern industry, the U.S. imports relatively large amounts of seven of them: 53% of its zinc, 56% of its tungsten, 83% of its tin, 80% of its nickel, 89% of its bauxite, 97% of its manganese and 100% of its chromium. The Interior Department estimates that within the next decade the nation will be importing more than half of its supplies of iron ore and lead.

After decades of relative stability, world prices of these materials are taking off on what could be a long climb. Between 1968 and 1973, the average U.S. price of nickel went from 940 per Ib. to $1.53, tin from $1.48 to $2.20 and copper from 420 to 590. In addition, the U.S., in part because of its wealth and power, is unpopular in some Third World nations. With demand for minerals strong, several countries conceivably could reduce exports to the U.S. and find eager buyers to take its place.

In an emergency, the U.S. has enormous resources of its own to fall back on. Because they are either low-grade or relatively hard to get to, it is not now economically feasible to mine them. But the picture would change if the price of imported minerals became oppressively high. Though American bauxite reserves are limited, there is an abundance of other clays and ores from which aluminum could be produced--at increased cost. Rising foreign prices would also make it worthwhile to dig out less accessible mineral deposits and thus open up large new reserves of chromium, copper, iron ore and other materials. Proven American reserves of lead total 36 million tons, easily enough to last through this century--and probably a lot longer--because so much lead is recycled. In addition, U.S. industry could substitute amply supplied materials for scarce ones (plastics for tin, for example) or increase the life of most of its finished metals by using much more scrap.

Joint Ventures. Short of a wholesale breakdown in relations between the U.S. and the producing countries, such measures are not likely to be needed for the rest of this century. Indeed, a growing number of U.S. companies are taking a new, more conciliatory approach in their dealings in foreign nations. Instead of seeking total control of production, the firms are going into joint ventures with host countries. The companies are also acceding to demands to build more processing plants, which increase jobs, income and prestige in the producing states. Ultimately, growing prosperity in these states could provide the industrialized countries with rich new markets for an immense range of goods and services. The other side of the commodities coin, however, is not so bright. Many mineral-poor lands face economic trouble, unless the disruptive scramble for global resources slows down.

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