Mining Investor's Handbook

BACK IN 1937, AS Washington planners realised they may be drawn into war, the Americans recognised that they faced a problem. Without tungsten, the defence plants could not make armour or ammunition tough enough and sufficiently heat-resistant. The metal was already used in railway lines, chisels, hacksaws, armour plate and armour-piercing bullets and shells; in tool-steels, the tungsten content could be as high as eighteen per cent. For war purposes, only tungsten would do: its main attribute is strength at high temperatures, its melting point being 3,420°C - the highest melting point of all metals. Most of America's tungsten before 1937 came from China, but China was being conquered by the Japanese; and the territory still in Chinese government hands was being cut off by a Japanese naval blockade. The United States needed to turn to both obtaining more tungsten from South America and finding deposits at home. As the war got closer the problem grew; in 1940, the U.S. was able to import 16,157 tons of tungsten but, by 1942, imports had dropped to 4,500 tons.

Here's the point: back then, two-thirds of the world's tungsten was supplied out of China; in 2013, China was producing four-fifths of the world's supply of that metal. (The more things change, the more they stay the same, as someone once said.)

By August 1937 The Wall Street Journal was reporting that tungsten's price had increased ten-fold since 1933. It had been the fierce fighting around Shanghai, as Japanese and Chinese forces engaged in a bloody battle for control of that city, that had started the price soaring. A few days later, the Journal ran a more extensive analysis of what it saw as a looming tungsten crisis, with the U.S. at that stage consuming thirty-one per cent of global supply (and American mines able to supply only eight per cent of world output).

Tungsten - critical metal in 1937, critical metal in 2014. In the following pages, you will find plenty of stories that might change your thinking about where metals are going in the years, and the decades, ahead.

Two things (mainly) have happened to the metals world since 1937. One, is that the problems of supply have remained and, indeed, become worse. As with tungsten, China is the dominant supplier of many commodities, including rare earths, graphite and antimony, and the rest of the world still has not found or developed sufficient sources of many critical minerals to be assured of security of supply. As the low-hanging fruit has been mined in the developed world, and consumption soared - the world consumes 57,530 tonnes of copper a day - so the industrialised world has had to seek new supplies from jurisdictions that have higher financial and political risk; hence Africa is now being combed and explored for resources.

The other change is that technology has required far many more minerals than it was possible of which to dream in 1937. Think graphite, think lithium. Then there are the metals of which there may not be enough in the decades ahead (tin, for one), the now scorned (uranium and thorium), or those without which the world will not be able to feed itself (potash and phosphate). And there will also be a few metals that are not so much critical but in for changing times - aluminium being a prime example.

From antimony to zinc, from cobalt to silver (yes, it is increasingly a technology metal), this book is about the future. And about some of the countries that might emerge as the next generation of metal players.

There will need to be a great deal of lateral thinking in the years ahead, such as this: Japanese trading house Sojitz in 2012 was finding its way into the great shale gas/oil story via barite. Sojitz moved to acquire a stake in the world's largest barite mine, located in Mexico. As the Nikkei news service explained at the time, barite - which has a high specific gravity - plays a key role in the drilling of shale gas wells: when the mineral is mixed with water and injected into drill holes, dirt and rock float to the surface, making them easier to remove. And we know how the shale gas business is booming these days.

The metals world never sleeps.