Why the Resource Supercycle Is Still Intact

“Strengthening copper prices, for example, do not immediately result in increased copper production in many market cycles, because the production cycle requires new deposits to be discovered, financed, and constructed—a process that can consume a decade.  Price declines—even declines below the industry’s total production costs—do not immediately cause massive production cuts. The ‘sunk capital’ involved in discovery and construction of mining projects and attendant infrastructure (such as smelters, railways, and ports) causes the industry to produce down to, and sometimes below, their cash costs of production.”

http://www.caseyresearch.com/articles/why-the-resource-supercycle-is-still-intact

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