R. I. Grant-Suttie
RECENT YEARS have seen extensive development in the study of materials. As knowledge and understanding of the properties of traditional materials expanded, new applications have become possible. New materials have also been developed in response to specific needs created by technological change or as the commercial possibilities of research work were realized. As a result, established uses of materials have been challenged and few materials have been found irreplaceable in their various applications. The challenge to copper has come relatively late and the copper industry is still in the process of adjusting itself to competitive attack.
The encroachment on the market is difficult to assess. In recent years copper production has been expanding steadily; nevertheless the rate of growth would probably have been appreciably faster had substitution not taken place. Once copper has been replaced in a specific application, the process is not easily reversed. A production sequence has probably been adapted to the new material and capital expenditure for retooling and other purposes is usually involved. On occasion low copper prices have prompted fabricators and other industrial users to revert to copper, but this is not frequent. Substitution thus means not only the loss of a market but also the loss of the potential growth offered by that market. Although this evades measurement, the effects of substitution are long term and far reaching.
For those countries, such as Chile, Zambia, and the Democratic Republic of Congo, whose economies have been built round the production and export of copper, and whose development plans are directly linked to copper receipts, technological change presents a threat that is no less insidious for being largely indeterminable. Copper constitutes between 50 and 60 per cent of Congo’s export earnings, between 70 and 80 per cent for Chile, and over 90 per cent for Zambia. The threat of substitution may well become more acute. Copper prices are subject to wide fluctuations; supplies are continually being interrupted; and recently copper has become an expensive material. These factors have undoubtedly reinforced the resolution of consumers to reduce their dependence on it. To what extent substitution will affect the expansion programs which most copper producers are undertaking is impossible to say; nevertheless, it would be imprudent to underestimate the surreptitious erosion that has been taking place in the demand for copper. This is a matter of concern not only to the producing countries themselves but also to those international institutions concerned with balance of payments problems and development, particularly the’ International Monetary Fund and the World Bank.