Miners wait for big players to act Miners must envy their oil industry counterparts. When oil prices fall dramatically, the oil majors can wait for Opec, the oil cartel that controls more than a third of global supply, to cut production. Miners, on the other hand, have no such means of co-ordinating a supply cut, and must therefore rely on their own self-discipline in a falling price environment. That is a big ask. Not only is it costly and difficult to close a mine or smelter, but it is also hard to justify economically - even if it is losing money. If you can hold out until your competitor is forced to shut down, you not only avoid the costs of closure but you also enjoy the benefit of the resulting tighter supply-demand balance. The result of this conundrum is that the metals and mining industry is engaged in a game of chicken - with painful consequences all around. According to Macquarie, marginal producers of iron ore, zinc, thermal coal, ferrochrome, nickel and aluminium are all losing money at current prices. The industry is looking to the market leaders to act first. In the platinum industry, all eyes are on Anglo American, the largest producer, which is undertaking a much-hyped strategic review. In aluminium, rivals are waiting to see whether Rusal will follow through on its announcement that it was "considering" cutting 4-6 per cent of its capacity. And the copper and potash industries are waiting to see which of BHP Billiton's Olympic Dam (copper and uranium) or Jansen (potash) projects will be delayed as the world's largest miner reins in its capital spending. It is not obvious that the largest miners should oblige their smaller competitors by cutting first. Their scale should allow them to withstand low prices better than their smaller rivals. Many - such as BHP - have made a virtue of investing in high quality "tier 1" assets that in theory should remain profitable throughout the economic cycle. Nonetheless, there are several reasons why it may be in their interests to bite the bullet. First, as the largest suppliers by definition, they have the greatest ability to influence the supply-demand balance of a market by cutting production. Second, by announcing their intentions publicly, they make it easier for other companies to follow suit: it is less of challenge to convince politicians and investors that cutting supply is necessary if the largest company in the sector is doing the same thing. Finally, just as Saudi Arabia, as the top oil producer, can exert a powerful influence on market sentiment, so too can the largest miners in a sector simply by announcing their intentions. BHP has fired the starting gun on the supply-side response with its move to reassess its capital expenditure plans. That is certainly easier than shutting mines and firing workers. But in much of the metals sector, that is the inevitable next stage. The Commodities Note is the daily online comment from the Financial Times