Technology forecasting for commodity projections: A case study on the effect of substitution by aluminum on the future demand for copper

Abstract

This paper deals with the possible use of technology forecasting in commodity projection and, to a lesser extent, in resource allocation for research and development. As a specific example, technology forecasting was used to estimate the effect of substitution of copper by aluminum on the future demand of copper in 1980 and 1990. and to identify a future technology for extracting aluminum from clay; a technology which could be especially useful in the developing countries. Basic predictions were made for functional units of the major common end uses of copper and aluminum in 1980 and 1990, including electrical conductor and heat exchanger applications. The amounts of copper required in each application in 1980 and 1990 were estimated for three substitution scenarios. In the first of these, substitution is assumed to take place according to a logistic type function, resulting in a predicted copper demand of 3.70 million tons in 1980 and 4.91 million tons in 1990. In the second scenario, substitution is assumed to progress at past linear rates, resulting in a predicted copper demand of 4.3 million tons in 1980 and 6.41 million tons in 1990. In the third scenario, no further substitution is assumed, resulting in a predicted copper demand of 4.81 million tons in 1980 and 7.77 million tons in 1990. The effective date of the technology monitoring that produced these predictions is July 1974, and the predictions are current as of the date. The then current forecasts for copper demand made by the U.S. Bureau of Mines and other agencies using compound growth and regression models, corresponded to the unlikely scenario of no further substitution, and therefore needed correction in view of these anticipated technological changes.