SIMILARITIES AND DIFFERENCES IN THE ECONOMICS OF METALS AND INDUSTRIAL MINERALS

Notwithstanding similarities in their origin and recovery, metals and industrial minerals display significant differences in their economic behaviour. While an empirical investigation of a range of metals and industrial minerals provides little evidence of systematic differences in demand patterns, it provides clear evidence of lower price volatility in industrial minerals. The reasons for this latter difference are examined and found to lie in the more highly differentiated nature of industrial minerals, in market segmentation, in differences in industry and cost structures, and in the existence of a less developed stocks function in industrial minerals' markets. An implication is that, in contrast to metals projects where price is generally the critical variable, industrial minerals projects tend to be more sensitive to volume considerations.