He has been described as Australia’s most influential economist. A hard call - but certainly Ross Garnaut is certainly one of the most influential, so what he has to say should be taken very, very seriously.
In a paper prepared for release alongside Rio Tinto’s latest financial results, Garnaut and colleague Associate Professor Song Ligang painted a fascinating outlook for the world of metals.
They concluded that in 20 years, China was likely to consume more energy and metals than all industrialised countries do today.
The press report said this conclusion was reached by comparing what happened in Japan and the tiger economies - South Korea, Singapore and Taiwan - after they reached the level of industrialisation where China now is.
The two economists expect, over the next 20 years, that China’s economic output will multiply by a factor of eight, and that use of resources will escalate by at least that factor.
That is clearly good news for the mining industry. Metals demand up, more and more successful mining companies and a flow of profits and - yes, believe it or not - actual dividends.
But the outlook is both far more exciting - and worrying - than just the demand side.
Match that demand picture outlined by Garnaut and Song with the supply one, and you get an explosive mix that could conjure up extraordinary profits for companies pulling metals out of the earth.
Recently the New Scientist ran a cover story which painted a pessimistic picture of the world’s ability to keep supplying metals.
If, it postulated, each of the 500 million vehicles on the globe’s roads today were re-equipped with fuel cells, not just catalytic converters, the world’s known platinum would be exhausted within 15 years.
Indium, which the magazine reports is being used in unprecedented quantities in making liquid crystal displays for flat-screen television sets, is on the metals “endangered” list.
One German specialist is quoted saying that, at best, there is only enough known indium for about another 10 years. No wonder indium prices went from US$60 per kg in 2003 to US$1000/kg a year ago.
New Scientist did a series of calculations assuming that, in 20 years from now, every person on this planet consumed metals at half the rate that Americans do now on a per capita basis. The magazine conceded the calculations were crude, but even so the results were alarming.
They turned out - in indium’s case - worse than even the German calculation. Five years and it would all be gone. Silver, 10 years. Antimony, 15 years.
Using that same rough calculation, known uranium would be exhausted in 19 years if the globe was consuming U3O8 at half that rate the US now does.
Zinc would have just 34 years supply left. Lead - eight years, platinum 42 years, tantalum 20 years.
Nickel was interesting: 90 years at present consumption rates, 57 years at half the US rate of today being consumed. Presumably, most of that would be in the form of laterite deposits.
But even though nickel appears to be far from critical, it is worth considering this outlook in the light of how (relatively) few big nickel discoveries there have been in recent years, especially of sulphide deposits.
The LME nickel stockpile figure, while at a 52-week high this week of just under 17,000 tonnes, is still razor-thin in terms of global consumption - and a pointer of how close we are sailing to the wind in our use of the metal.
Good news for beer canners, though. The magazine calculates that aluminium supplies are safe for another 510 years.
