PvP Only Pilot Warning: *bail* *bail* *bail* ... Incoming industrial post...
Ok, now that I've scarred all the PvPers, on with the actual content of this post:
As some of you are aware, there has been some "fiddling" with insurance rates on Sisi lately. Now as an industrialist with a PILE of BPOs this does not bother me. The people who should be afraid are the miners and to a lesser degree the mission runners. Why is this you ask? Mainly because of the mineral floor. But, Letrange, what is a mineral floor you ask?
The mineral "soft" floor is determined by the Plantinum Insurance rate for T1 ships. Basically what happens is that there's an over supply of a specific mineral on the market relative to other minerals. This provides some downward pressure on the price of said mineral (you can buy it for less and it sells for less). With the changes to 0.0 and wormhole space of the recent expansions, the high end minerals - Zydrine and Megacyte are flooding the market. As the sellers compete against each other in order to sell faster, the price comes down. This is when manufacturers get in on the action.
Anyone who manufactures T1 ships should, in their spreadsheets, track the manufacturing costs of their builds. What one then does is add some extra columns to the spreadsheet showing Platinum insurance payout, Platinum insurance cost and net recoverable (i.e. one payment and kaboom the ship). Now in the real world if one makes use of insurance - the rates go up. Not so in EVE (they have the universes worst insurance adjusters). One can then track cost of ships manufactured vs net recoverable. One can even show this as a net gain. This will show the largest gain per manufacturing slot. Or one could look at the percentage of invested isk (net gain minus manufacturing cost) divided by (manufacturing cost plust platinum insurance cost) and use this to determine the most bang for invested isk (useful if you can't make use of your maximum manufacturing rate due to insufficient resources).
Once these values go above a certain percentage of "net profit per invested isk" it's worth while building and self destructing (or otherwise disposing of) ships. What does this do? Well the manufacturer then puts a lot of buy orders on the market - which sucks up minerals in proportion to the usages in the BPOs. Which if extended over time will lower supply even more relative to the minerals in over supply. Which causes some upward pressure on those mineral prices as the market runs out. This in turn, if gone on long enough, pushes the average cost of a ship close to and eventually above the "mineral floor". The only thing that pulls the "mineral basket" off the floor are extended high intensity wars. We have not seen this with the new sovereignty system. Mass capital ship death tends to provide such a demand for minerals that the end result is more demand than supply and price increases.
That's the basic idea behind the mineral floor in EVE. There are some other considerations: The high ends: Megacyte and Zydrine are much more mobile than the lows: Tritanium and Pyerite and to a certain extent Mexallon. This means there is arbitrage to be made on the lows that are not available on the highs. I've been following the changes of the mineral basket for the last couple of years and see no reason to doubt this reasoning.
Eventually if the current trend will continue - I expect all primary ores to have a roughly equivalent value per m³ with the ones containing large quantities of low ends slightly more valuable except in high sec. The big losers of course will be the low sec ores since they are more of a mix of ores than Veldspar/Scordite or the ABCs.
Then there are the non mining sources of minerals: Running missions and drones. The drone stuff will be affected just like mining. Missions however will be less affected as the drops represent a much smaller percentage of their wealth generation. The Isk bounties on NPC rats (or the value of tags for the navies) does not change.
So those represent the sources of minerals in EVE for the most part (there are a few others but they are irrelevant to this discussion.
Now on Sisi, people have noticed a difference in the insurance costs and payouts. The big one here is that it seems currently pegged close to the market average of the value of the minerals when the mirror was taking. This leads us to suspect that they will peg insurance costs and payouts to some eve-wide average. Which is fine except for the miners that suddenly see their floor disapear out from under them. "Mineralpocalyps" to quote Atika T.
This means that over supply minerals can fall as much as they want. This is not going to be however as big an issue as people make out. Sure the miners will be borked, and the mission runners will have a slight reduction in their income, but for the rest of us it simply means cheaper T1 ships (including dreads and what not).
T2 ships also seem to have some insurance adjustments. We'll need to see if this helps or hinders the issues (won't change the prices of T2 but it could affect the ability of pilots to buy replacements which would be a good thing - increasing demand).
Now what do I think about this? Humm, the intentional blindness of the QEN on the issue of the mineral floor may simply be a reflection on the fact that Dr. E may not have wanted to tip his hand. Personally I don't have too much of a problem with the mineral floor dropping out of the market. Being a jack of all trades I can focus on the most profitable activity I wish to engage in at any moment in time. Characters who have over-specialized may find their desired game style impacted. Tough luck, there are no unions in EVE to pop up the value of minerals.
On the other hand if you're a miner, what do you do. I suggest most miners start cross training into mission running if they want to keep an income going and simply wait for the price point where it's worthwhile for them to mine again once the basket gets low enough. One of the things people loose track of in EVE is that unless you buy and sell characters, no character in EVE looses their old skills as they acquire new ones (unless they don't update their medical clone). This means that since I can fly hulks I'll always be able to fly hulks. That will never go away. I can simply park my Hulk if it's not profitable for me to mine.
If the only change is the insurance rates, and if they are pegged to the 20 day running average for the entirety of the EVE market, so that it is never profitable to engage in insurance fraud, then I can see a time where mining and level 3 mission running will provide about the same level of income. At this point, all except extremely dedicated miners will probably switch to mission running as it really does not take long to get into level 3 missions. There will probably be a few whiners who will quit the game (can I have your hulks?) because they will consider CCP to have "ruined" their game. The macro-ers will probably finish switching over to macro mission running instead of macro mining.
Honestly I hope there are other changes packaged with this one such as some changes to T1 mission loot. If not the impact on miners risks being "serious".
One way or the other expect some instability in the mineral market come Tyrannis.