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I was thinking about how the depletion of minerals (metals and all material we mine from the Earth) will affect the GDP of the world. I read somewhere that at the current extraction rate, we will run out of easily accessible iron ore in the next 60 years.

I found this Wikipedia article and it seems that about 1% of the world GDP is in extracted or mined minerals.

A simple prediction would be that the world GDP would drop by 1%, but thinking about this more and not I'm not sure if this is correct, I think the lack of mined metals and minerals would have a much bigger effect on the economy than 1% since this 1% actually contributes a huge sum to the rest 99% and without it, we will just end up with whatever we have and will not be able to construct, manufacture or build anything anymore.

So to make this simple and to make sure that energy sources are out of the equation, let's assume that humanity will never run out of sources of energy like oil, gas and coal, but will run out of all metals and minerals that we can mine so that there is no any additional minerals being added to our economic system. How would that affect the GDP of the world?

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You're correct that just because 1% of the economy is in mineral extraction, doesn't mean that stopping it would reduce global GDP by 1%. Similarly, roughly 10% of global GDP is on energy expenditure, and about the same on food, but if we stopped either of those, global GDP drops to pretty much zero.

Do bear in mind that we will stop using coal, oil and gas quite shortly - probably within 2-3 decades. Nevertheless, we've got no shortage of energy - we've got far more solar energy available than we can use.

However, minerals aren't going anywhere: very little of them leaves the planet. Which means almost all the elements we've ever mined, are still around. And retrieving valuable elements from waste is largely just a matter of energy, and a bit of know-how.

Let's think about what might happen if an element starts to become scarce.

First, its price goes up.

As a result, there's investment in substitutes, as they're now more competitive.

There's also investment in recovering the scarce material from waste streams, as this investment now has a higher payback - a higher financial return on investment.

The short-term effect on global GDP would be a small reduction. The longer-term effect could go in either direction. But, ultimately, the global effect on humanity will be positive: sooner or later, we're going to need to move a circular economy, and this transition will be part of it.

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  • $\begingroup$ That's a great answer, thank you. I found that what I might be confusing is the difference between the GDP and the economic growth. I read about steady-state economy and found that we can have a stable GDP without having to add any new minerals to the system provided that we keep the population constant without growth. So building on the circular economy concept you just pointed out, would it be possible to keep a stable GDP in a non-growing economic system without having to add any new minerals/materials depending on recycling and the use of solar energy? $\endgroup$ – Abanob Ebrahim Jan 27 at 14:26
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    $\begingroup$ This seems rather optimistic. 1) There is plenty of sunshine falling on the Earth, but capturing and distributing the energy in a usable form needs infrastructure requiring mineral materials. 2) Retrieving materials from waste requires equipment and therefore materials as well as energy and know-how. 3) While world population may eventually stabilize it is almost certainly going to continue to grow for several more decades, so even if all materials could be recycled we would also need to use them more efficiently to provide for more people. $\endgroup$ – Adam Bailey Jan 27 at 21:57
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A definition of GDP that is useful for this question is as the accumulated value-add from human activity that is vested in the sale price of final goods and services over the entire value-chain.

When we talk about mineral depletion, we usually mean that earthbound sources of said minerals will become uneconomical to produce. As @EnergyNumbers notes, "uneconomical" implies "with respect to current prices and based on an understanding of the evolution of relevant technology".

This situation can turn around, sometimes very rapidly - the history of Alberta's oilsands (in Canada) illustrates this very well, as it was a resource that conventional oil and gas producers regarded as fringe and not worth tapping into until a perfect storm of supply shocks occurred: the OPEC embargos of the 1970s as well as then-current predictions that conventional crude supplies in Alberta were rapidly dwindling. Today, unconventional (read: expensive to produce) oil production in Alberta outweighs conventional by roughly a factor of five.

The oilsands are a somewhat rare example of a government identifying a looming crisis well in advance, taking a strong position on technological advancement, and dragging industry along for its own good. These days, the political will to take such bold risks simply isn't there - Alberta got there in the end, but there were numerous dead ends that in today's political climate would spell the end of virtually any administration that tried.

Still - the moral of the story is that the risks you've identified are manageable, at least in principle.

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