Discussion - Copper and Its Byproducts – Technical Papers, MINING ENGINEERING, Vol. 35, No. 4, April 1983, pp. 343-347 – Lonoff, M.

The paper by M. Lonoff looks at the importance of byproduct prices on copper production. The paper develops several interesting points on this topic, but there are some points in the theoretical discussion that could use further development. A couple of these theoretical topics will be considered here using the paper's framework of assumptions without concern about how realistic the assumptions are for the copper industry. Lonoff’s theoretical model is based on a static, homogenous world where all copper/byproduct deposits are identical, and these deposits are the main source of these metals. Due to the importance of the byproducts to the production decision, the term coproducts will be substituted for the term byproducts to reflect more accurately this condition. The conclusion is drawn that a rise in coproduct prices necessitates a decrease in copper prices because copper production is increased as a consequence of increased coproduct production. The observation that real world behavior does not always follow this pattern is dismissed as "speculation." However, it can be easily shown that within this simple framework market forces might create the observed behavior. The key question to be answered is what causes coproduct prices to rise. Three possible cases will be used as illustrations. The first case is the one implicity assumed by Lonoff. Here, the demand for coproducts increases at all prices (an outward parallel shift of the demand curve) with the demand for copper remaining constant. As reported in the paper, the results are higher coproduct prices, an increase in coproduct production, and lower copper prices due to the resulting increase in copper production. The second case is when the supply of coproducts are constrained-leading to higher market prices. Copper production, as required by the simple model, is also reduced which