An econometric model of the world nickel industry

The Third United Nations Conference on the Law of the Sea has been concluded in the spring of 1982 with the adoption of a convention text. The acceptance of this text (signature and ratification) by the necessary number of states is still highly uncertain. The major disagreements relate to the convention's seabed mining regime, in particular the provisions for production controls and technology transfer. Among the four metals which can be recovered from the seabed - manganese nodules containing manganese, cobalt, copper and nickel - over half of the potential revenues would come from nickel. Conditions in the nickel market will have an impact on investment decisions in seabed mining and the nickel market itself may be significantly affected by nickel output from manganese nodules. The purpose of this paper is to present and estimate an econometric model for the world nickel industry. Furthermore, in order to quantify the impact of alternative seabed mining regimes on the future price of nickel as well as on the output of nickel from current land-based sources, a simulation analysis is provided. Such a simulation model is also helpful in estimating the revenue losses that land-based producers might incur as a result of seabed mining.