Critical Raw Materials

Critical Raw Materials
Dr. Henrike Sievers
Bundesanstalt für
Geowissenschaften und Rohstoffe
Aspects of criticality
Criticality of supply
•
central part of all studies and discussions on raw material security.
•
includes aspects like the import dependence of consumer countries, the concentration of
production in certain countries or companies, the availability of secondary raw materials
and substitutes, price volatility, success of exploration and new projects coming into
production
•
includes (geo)political risks associated to concentrated production in countries of ‘strategic
distrust’ (which could be termed “political criticality”) or in unstable countries
Environmental/social criticality
•
Social and environmental risks associated with raw material production
•
includes the conflict related mineral production
Physical criticality
•
dealing with the question whether the earth can provide the resources for the global future
demand.
Supply risk indicators
Geostrategic risks:
Country risks
Concentration trends
Env./social aspects
Market power:
Country concentration
Company concentratiom
Demand changes/adaption:
recycling, substitution,
material efficiency,
domestic raw material production,
stock piling
Geological availability:
Lifetime of deposits
Exploration
Technical availability:
Supply/demand
capacity, stocks
transport
Production costs, technologies
Import dependence:
Degree of dependence
Importance of raw materials in the supply chain
Global raw material consumption
Share of the five major comsumers of the global demand 2005
%
Anteil der Top 5 Länder am Weltverbrauch 2005
80
44,1
Consumption [%]
70
31,4
60
25,3
27,1
32,0
50
40
CN
10
JP
D
USA
JP
USA
USA
D
D
KOR
KOR
AlAlu
28,6
Blei
Pb
CN
CN
CN
CN
20
18,2
CN
30
USA
21,1
USA
JP
KOR
IND
JP
D
KOR
KOR
Kupfer
Cu
Nickel
Ni
Zink
Zn
CN
USA
USA
JP
JP
D
D
KOR
TAIW
Zinn
Sn
USA
Stahl
steel
CN
USA
9,0
CN
JP
RUS
IND
IND
RSA
JP
Erdöl Steinkohle
oil
coal
Global raw material consumption
Consumption [%]
Share of the five major comsumers of the global demand 2010
Al
5
Pb
Cu
Ni
Zn
Sn
steel
oil
coal
EU Import Dependence
Vanadium
Titanium
Tellurium
Tantalum
Rhenium
REE
PGMs
Niobium
Molybdenum
Magnesium
Indium
Germanium
Cobalt
Antimony
Bauxite
Gold
Manganese
Iron Ore
Lithium
Tungsten
Zinc
Nickel
Copper
Aluminum
Chromite
Silver
0%
10%
20%
30%
40%
50%
60%
EU Import Dependence
(Quelle: BGR, Fraunhofer ISI)
70%
80%
90%
100%
Country concentraion of the global gold and
tungsten production
Gold
Tungsten
Source: Raw Materials Group, 2009
Source: Raw Materials Group, 2009
Weighted country risk:
7,0
Lr 

x
i 1
PLänder  G WB
6,0
noncritical
1,0
0,5
5,5
4,5
moderate
0
4,0
3,0 BGR
crititcal
-0,5
Sum of country values (% of global production) of raw material production (P) weighted
with the Governance-Index (WGI) of the world bank (WB)
-1,0 WGI
Global cobalt production 2007
Russia
Canada
Kazakhstan
China
Marokko
Cuba
Indonesia
Congo, DR (Zaire)
Brasil
Zambia
Botswana
Zimbabwe
New Caledonia
Australia
South Afrika
Country risk
Mine production
-2.5 - -1.0
-1.0 - -0.5
Herfindahl-Index
noncritical
-0.5 - 0.5
>0
moderate
critical
2.000
1.000
10.000
0.5 - 1.0
1.0 - 2.0
Mine production
Cobalt production (mine) 2007 [t]
Country risk
noncritical
unkritisch
7
1
Data source: Worldbank, 2008; BGR database
2
36
moderate
m
äß ig
4
55
6
critical
bedenklich
74
8
9
3
THE RAW MATERIALS INITIATIVE — MEETING OUR CRITICAL NEEDS FOR GROWTH AND JOBS
IN EUROPE
{COM(2008) 699}
China main producer
Source: „Critical raw materials for the EU“, European Commission 2010
Geological availability
http://ccgm.free.fr/index_gb.html Commission for the Geological Map of the World
10
Ore Deposits are unevenly distributed
Global location of porphyry copper deposits
(Source: „Minerals, critical minerals and the US economy“, US National Research Council, S. 50, 2007)
11
Exploration and mining projects of copper 2011
Ore grades depend on type of deposit
Porphyry copper deposits
Sediment hosted copper deposits
(Source: P. Crowson, Rescources Policy, 2012)
By-products
Das Metallrad nach Reuter et al. und Verhoef et al.
Hauptmetall
Nebenprodukte
von der EU als
kritisch bewertet
Al Mn
Zn
Cr Ti V
Cu
Mn
Cu As Ti Fe
Mg
Li
Mg Sn
Ni
Cr
As Pb
B Br
Ni
V
Ga
Co Fe
Mn
Al Cu
Al
oxidische
Ca/Si
Zn
Cl
Fe
Pb
Sn
Mg
V
Fe Al
Al Fe
Fe
Cr
Mn
Mg
Al
Nb
PGM
V
Zr Mg
Cr
Ti
Erze
Ta Mn
Zn W
Ga
Sn Ag
Mg
Zn
Au
As
In
Cu
Ge
Mn
von der EU als potentiell
Sb Bi
Ni Ag
In
Pb
kritisch bewertet
Fe
Pb Nb
Cd
Cu Pt
Cu
Ag
Ta
Se
Cu
Ir
Ag
Co
Mg
Zn Au
Ru
Pb
Te
Hg
Au
Mo
As
Sb Fe
Co Rh
Sb
Pd Os
Te
Bi
Sulfidische +
Os
Cr
Ru Pt
Hg
Ti
Ni
Rh
As Se
As
oxidische Erze
Sulfidische
Ir Co Bi In
Ca/Si
Ca/Si
Erze
Fe
Sb
Ca/Si
Hg
14
Ca/Si
By-products
(Source: European Copper Institute, 2006)
Critical raw materials – not a new topic

Paley Commission, 1952: US President's Materials Policy Commission

National Security Study Memorandums (NSSM),1974: The Critical
Imported Materials

European Community 1975: The supply of the Community

U.S. Congressional Budget Office, 1983: Strategic Critical Nonfuel
Minerals: Problems and Policy Alternatives

National Research Council, 2007: Minerals, Critical Minerals, and the
U.S. Economy

Resource Efficiency KTN, 2008: Material Security - Ensuring resource
availability for the UK economy

European Commission, 2010: Critical raw materials for the EU
But the framework is changing
Overarching regime Political regimes
Minerals
1945
WWII -1980s:
State involvement in resource sector
Strategic interest, security concerns
Thinking in blocks
1950
1955
Interventionism &
1960
socialism
Decolonialisation, cold
war
US-Soviet Rivalry
1965
1970
1975
1980
1985
1990
Liberalism, MNCs rise
Liberal capitalism
1995
US hegemony
2000
2005
2010
2015 ? State capitalism
2020
Rise of Brics
Emerging economies,
resource nationalism,
emerging state companies
1980s/90s:
end of cold war increases interregional
trade flows and globalization of supply
less state engagement
privatisation
China as producer
2000s:
China biggest raw material consumer
protectionist measures and securing
the access to resources in foreign
countries
concerns over the security of supply in
EU and other industrialized countries
Long-term criticality
Criticality of materials in the long term
Long-term criticality
Criticality of materials in the long term: tantalum as example
Long-term criticality
Existing models on criticality:
 assessment of potential short term supply shortages
 do not serve as predictive model or scenarios
 models are only a snapshot in a dynamic system
 studies from 70s and 80s followed similar approach, with defining other minerals as
critical
 in the 70s and 80s chromium, aluminum etc were defined as critical, today it is RE,
PGM, Ge, Ga – what will be critical in 2040?
Concern of western industrialized countries is that the raw material supply is
disrupted, because a functioning supply chain is the base of their economy.
Fear that raw materials could be used as a political instrument by countries to gain
political or economic power.
Concern that markets conditions are different for the participating stakeholders. This
would not lead to supply shortages but unequal opportunities for countries.
A further concern: extraction and production activities could be responsible for
regional environmental and social problems and contribute to conflicts.
Long-term criticality
(1) Accidental supply disruptions or price hikes
supply disruption (and ensuing price hike) might be the result of, a natural disaster or political
instability in a major producing country
(2) Intentional supply disruptions by the use of exports or pricing as a political
instrument
concern is that raw materials could be used as a political instrument by some actors. Those in
control of production or exports could use raw materials to gain political or economic power
e.g. by issuing embargoes, restricting exports or price gouging. In such cases an artificial
supply crisis (real or feared) could put political pressure on other countries and bring
disadvantages for the industries of countries depending on raw materials imports.
potential problems: embargoes, cartels, greater processing in exporting countries (i.e. shift in
the value chain), supply disruptions from events other than embargoes and exorbitant shortterm price increases. (The Study on Critical Imported Materials, 1974)
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Confidentiality level
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Long-term criticality
(3) Unequal market conditions causing an uneven economic playing field
Tensions can arise when market conditions are different for the participating stakeholders.
This need not lead to supply shortages but could cause unequal opportunities for countries,
influencing economic competitiveness. Examples include:
 Different internal/external pricing of resources for different countries
 Unequal access to crisis mechanisms in case of a supply disruption or unequal impact of a
price hike (price asymmetries)
 Unequal market access or investment opportunities
(4) Governance issues related to the resource sector
Concern that extraction and production activities could be responsible for regional
environmental and social problems and contribute to conflicts.
Examples of measures: Kimberley Process (dealing with so-called ‘blood diamonds’) and the
legislation on Conflict Minerals that is part of the Dodd-Frank Act (Section 1502) in the United
States (responsibility of companies to ensure their mineral supplies are not related to any
conflict zone)
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Confidentiality level
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Concluding remarks
 Aspects to be considered:
criticality of supply,
environmental/social criticality,
physical criticality
 Long-term vs short/medium-term criticality
 Views on criticality are changing over time - depending on political
situation and technological development
 Important factors:
geological conditions (e.g. by-products),
emerging technologies,
stability of producing countries,
changing behaviors of stakeholders (investments, legislation, etc),
security of transport,
location of refined metal production,
…