By "overshooting" I mean overshooting the stable point in the system. The longer the lead time for anything (and the political issues you describe add to the lead time) the more unstable the system. The very high fixed costs of these large projects also means they will be willing to produce at a loss if need be, just so long as they exceed the marginal cost of production. What that implies is you can go through very long periods of low prices, which is obviously devastating for the NPV of any company in the industry.
It's particularly bad for companies in countries with strong currencies - thus South Africa was able to survive decades of relatively low gold and commodity prices because the Rand steadily depreciated against the dollar.
Each commodity is going to have a different marginal cost and demand curve, so from an investment perspective you have to look at each one individually. I personally have only ever invested in oil/gas and oil service, so I don't have anything useful to say about other areas - I'm just raising the general point about potentially long periods of oversupply.
Peter
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