The varied difficulties experienced by the copper industry after the depths of the

Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...

were followed by the idea of getting relief through some form of

collective action Collective action refers to action taken together by a group of people whose goal is to enhance their condition and achieve a common objective. It is a term that has formulations and theories in many areas of the social sciences including psych ...

in order to reduce the intensity of competition. In this way on March, 28th, 1935, the International Copper Cartel (ICC) was formed. There were five members in the cartel and two friendly foreign observers. The voting members were:

Anaconda Copper The Anaconda Copper Mining Company, known as the Amalgamated Copper Company between 1899 to 1915, was an American mining company headquartered in Butte, Montana. It was one of the largest trusts of the early 20th century and one of the largest min ...

(United States),

Kennecott Copper Kennecott Utah Copper LLC (KUC), a division of Rio Tinto Group, is a mining, smelting, and refining company. Its corporate headquarters are located in South Jordan, Utah. Kennecott operates the Bingham Canyon Mine, one of the largest open-pit co ...

(United States), Roan Antelope Copper (Northern Rhodesia), Rhokana Corporation (Northern Rhodesia) and the Union Minière du Haut-Katanga (Belgian Congo), while the non voting members were Bor (Yugoslavia) and Rio Tinto (Spain). Combined, these seven companies accounted for more than half of the global output of refined copper at that time. The main difference between this and the previous copper cartels is that the ICC members did not attempt to set uniform prices. Rather, they merely wanted to influence prices indirectly, smoothing out wide price fluctuations (Walters, 1944). Despite the immense profits earned by the ICC's members in the following decades, the ICC was never reproached for charging exorbitant prices, as opposed to what happened in the case of previous cartels. Indeed, in Herfindahl’s opinion the cartel did not have any significant effect on price. These are born out in USGS annual price data showing the annual average price of copper in US Dollar per pound (2204.3 lb per metric ton), if one adjusts for the US Consumer Price Index. Herfindahl (1959) posits that the cartel members returned to the Nash-Cournot competition once the pivotal or trigger price was exceeded. On the other hand, Montero and Guzmán (2005) posit that the cooperative behavior could have continued in booms, but using output-expanding strategies in order to restrict the entry of the competitive fringe.

Further reading

See also