As the massive economies of China and India tap into valuable mineral resources worldwide, the fallout is stretching far beyond the Asian geographic sphere of influence.
How far? Think the U.S. West.
Specifically, those needs mean that communities in Colorado and other states are confronting mineral shortages, according to Vince Matthews, state geologist and director of the Colorado Geological Survey.
Matthews, an AAPG member, said he first began to notice the impact of China’s and India’s demands on Colorado a couple years ago.
“There are some startling statistics on recent mineral prices and I began to follow those, Matthews said. “I had also given a talk on energy and thought it might be fun to pull some of these numbers. But the more I looked at it, the more shocking the effect I found.
“It has adverse effects on Colorado and every other state,” he said.
Matthews will be speaking on this subject at the AAPG Annual Convention in Long Beach, Calif., as the guest speaker for the Energy Mineral Division luncheon.
As the state geologist, Matthews and his office is charged with promoting responsible production of mineral resources here.
“That means that anything that affects demand affects us,” he said.
“We have communities on the western slope of Colorado that are being told they won’t be able to get rural electricity because of a shortage of core steel due to China,” he added.
The Big Driver
In the last 15 years the world has increased its use of electricity by six terrawatts (a trillion watts); according to Matthews, China, India and the United States account for 3.4 terrawatts -- more than half -- of that amount.
“China is the big driver in this,” he said. “Yet there’s another half that comes from the rest of the world, from Bangladesh to Africa. The population keeps growing everywhere, although China has put some limits on its population growth.
“It’s ironic that there is a shortage of molybdenum here, yet Colorado is the major producer of molybdenum in the nation,” he said (it’s used as a hardener for steel). “There are companies here that have trouble getting it because China needs it.”
A cement shortage in Colorado also is due directly to the demands of China, and “many other things like that are affecting us as well,” Matthews said.
Although China’s growth has been fairly steady, there has been a huge increase in demand since 2003.
“We’ve seen a real explosion in China in their use of raw materials and global shortages,” he said. “When you look at prices of virtually every commodity from selenium to titanium, all have exploded since then. Some have dropped back in price to where they’re only seven times what they were in 2003. But I certainly think in the next decade it will be a tight market in all of these.”
Because the demand is worldwide it affects raw materials in Colorado and every other state, he said.
“In Colorado we particularly need to think about it because we’re so rich in natural resources,” he said. “There’s a global shortage of minerals, and people are looking here.”
Skyrocketing Demands
In his EMD luncheon talk Matthews will show statistics and give examples of the skyrocketing demand for minerals.
“There are a lot of things people aren’t aware of,” he said. “In the U.S. we have increased our generation of nuclear power in the last 10 years but we haven’t built any new plants. Most people aren’t aware we are by far the leading producer of nuclear power in the world. That means we’ll be doing even more nuclear power. However, there’s a shortage in uranium and the price keeps growing.
“Very few people are aware of this,” he continued. “They’re aware that there’s a shortage of oil and natural gas, but they’re not clear why there’s so much drilling in Colorado.”
Both China and India are drastically increasing their use of all natural resources. Although China has large resources of its own, they are insufficient to fill the internal demand, he said.
Since 2001 the price of nearly every natural resource commodity has escalated enormously to meet the demand of these two countries’ exploding economies, he said.
Matthews has served as an executive in the natural resources industry for Amoco, Lear, Union Pacific and Penn Virginia, exploring for oil and gas in virtually every basin in the United States.