Cycles In Mineral Prices

Currently, mineral producers are suffering through a major downturn in prices for their products, even though it has only been a few years since they were enjoying high prices. From an historical perspective, the current situation is another of the cyclical down-turns that often reoccur every 5 to 7 years or so. This paper uses time trend decomposition techniques to identify the cycles and statistical methods to find the duration of these cycles for a variety of mineral prices. Given some idea of how long and severe these cycles typically are, the mining industry can better plan to weather the downturns and take advantage of the upturns. For example, timing investments in new projects to take advantage of the cyclical upturns can dramatically improve project profitability.