The Age of Minor Metals
Easing Supply Concerns Amid Volatile Markets
The progress of mankind has been classified by some in terms of the key resource of their age, such as stone, iron and bronze. Mineral resources that have enabled economic and cultural development have usually never been scarce, however, the technologies to extract, and exploit them have been guarded. As we look to the future, with progress increasingly driven by advanced technologies, the resources that we are increasingly relying on are unknown to most of us today, yet these metals have become critical to maintaining and improving our quality of life.
Access to such mineral resources will be essential in the future, yet just as important will be the technologies for extracting and processing them. Many countries are rich in mineral resources, but are not necessarily reaping the full benefits of their wealth. Recent friction in the field of rare earths and platinum group metals demonstrate that it will be essential to find a mutually beneficial outcome for the mineral wealthy and the technology rich.
In the past few hundred years, the production of iron and steel has been an essential catalyst for economic development. Advances in technology for the mass production of iron and steel in the UK was one of the foundations for the industrial revolution that heralded an unprecedented and sustained period of economic growth.
Much of the raw material for the increase in iron production such as coal, iron ore and limestone was produced in the UK, allowing rapid expansion of projects without fear of supply disruptions. This production of iron and steel enabled growth of the heavy manufacturing industries such as shipbuilding, rail and major infrastructure projects in the UK. It was a period of transition for the UK economy as it evolved from a light agricultural based economy to one reliant on manufacturing and overseas export.
The last few decades have seen China take over from western nations as the leading producer of iron and steel, mirroring the industrialisation of the UK in the 18th century. This rise in production has been necessary for China to develop into an export driven heavy manufacturing economy. This has been a conscious effort driven by the Chinese political leadership who recognised that foreign capital earned via export was essential for the development of its infrastructure and economy. This strong leadership has resulted in some of the most impressive reductions in poverty levels and deprivation in history.
The Rise of the Minor Metals
Developed economies have benefited enormously from the rise of China, although the closure of many heavy industries due to foreign competition has had a lasting impact on some regions as the workforce has struggled to adapt and find new opportunities. The benefits for western nations have been cheaper goods and a shift to a service-led economy.
This new economy has been driven by the advent of the ‘Information Age’ with the widespread adoption of devices such as PCs and mobile phones. Whilst the demand for PCs, laptops and mobile phones has in some cases been exponential, there has also been an important linear increase in global demand for flat screen TVs and other consumer electronic goods. All of these devices have advanced rapidly in their capability and have come to increasingly rely on minor metals to provide a competitive advantage in the marketplace by making products thinner, lighter and longer lasting.
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Minor metals are traditionally defined as metals whose global production levels are lower than base metals such as iron and aluminium, and which are not traded freely on the London Metal Exchange.
This increasing reliance on minor metals is reflected by the higher percentage rise in demand for metals such as indium, lithium and rare earth elements (REE) as compared to iron and steel. It is important to note that iron and steel production still far outweighs that of all of the other metals, however, the importance of these minor metals for future technologies indicates that we have started the transition from the age of iron and steel to that of the minor metals.
Current technologies that are utilising indium and lithium are consumer electronics. Indium is used in touchscreens as it provides touch-sensitive conductivity, whilst lithium is a major component of re-chargeable batteries that are commonly used in mobile phones and digital cameras.
Although we can highlight some metals that are of particular use in today’s technologies, it is somewhat more difficult to ascertain which metals will be important to the technologies of the next few decades and beyond. The UN, the EU and the US government have all attempted to establish which metals will be crucial to further economic development. They all suggest that there is likely to be increasing usage of consumer electronics – no great surprise to many – but there is also a realisation that energy efficency will be a major growth area, especially if there is a concerted effort to tackle global warming.
The US Department of Energy (DoE) has been bold enough to state that the transition to a clean energy economy has already begun with an increasing emphasis on natural gas and sustainable energy sources such as wind and tidal power. They also predict a greater focus on energy efficiency and clean energy technologies of the future such as batteries, electric vehicles, photovoltaic thin films and fluorescent lighting.
Wind turbines and electric vehicles require high strength permanent magnets currently made using neodymium and dysprosium which are more than 10 times as strong as conventional iron magnets per unit weight. Battery electric vehicles also use rare earth metals, with the current Toyota Prius, for example, using between 10 to 15 kg of lanthanum per vehicle. Demand per vehicle is predicted to double in the near future as consumers demand better performance.
Traditionally solar cells using photovoltaic thin film have relied on silicon, yet, as performance expectations rise, the use of indium, gallium and tellurium will increase unless substitute materials are found.
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Energy efficient lighting can significantly impact production of greenhouse gas emissions, but the phosphors required for these products include lanthanum, cerium, europium and terbium, all rare earth metals. These were just some of the elements identified by the US DoE, but there will be others whose supply will also be stressed as demand increases.
Upward demand pressures will also occur due to higher economic growth rates in developing countries creating an affluent middle-class with the purchasing power to demand the latest consumer technologies. In addition, these same countries will begin to invest in clean energy technologies with increasing international pressure to reduce greenhouse gas emissions.
The changing demand scenario will, in the next few decades, lead to difficult choices for many countries as they seek to secure supplies of metals they perceive as being critical to their economic development. This scenario poses a conundrum for developed nations whose domestic mining industries have shrunk due to foreign competition and lower public tolerance of large scale mining operations. These countries are particularly vulnerable to supply restrictions for critical metals as short term volatility will never be enough to justify long term supply solutions like the re-opening of mines.
The minor metals mentioned in this article are traded via low volume opaque markets where prices are volatile, unlike major metals markets which function with a transparent and globally distributed supply chain. The known ore reserves of minor metals are, however, concentrated in traditionally mineral rich countries such as China, Australia, Brazil and South Africa.
By some estimates, China has captured between a 30 to 40% market share of global minor metal production. This is probably due to a combination of large known ore reserves in China, but also because the costs of extraction and processing tend to make mining more commercially viable due to lower electricity, water and labour costs.
An additional factor complicating supply is that minor metals are usually harvested as by-products of major metals, for example, indium is usually a by-product of zinc production, a major metal. Today, demand levels for the major metals are such that there is no supply shortage of the minor metals, however, this cannot be expected to last if demand for the minor metals were to increase dramatically. Such interactions are likely to prevent the global market from responding effectively to demand variations for the minor metals thereby causing volatility in pricing.
There are steps that states can take to mitigate supply risks associated with these important metals. These begin with an increased public awareness of the role such metals play in our daily lives. The processing of these metals is often perceived as being environmentally damaging, as it involves harsh acids, a high consumption of water and energy, and in some cases hazardous and toxic reagents.
So far, these difficult processes are usually carried out in developing countries whose economies require foreign capital for economic progress. But this will not continue indefinitely, as countries like China, Australia, South Africa and Brazil are all actively seeking to benefit from their mineral wealth and to develop industries that add value to the extracted metals within their own borders.
There is a perception within these countries that they are selling their mineral wealth far too cheaply, and at the cost of the local environment and communities. Recent violent incidents at the Marikana platinum mine in South Africa have exposed tensions between local communities and the mine operators. This tension was generated not only by demands for higher wages, but also by reports of complaints about the domestic water supply being cut-off by mining operations during the day – a fact that was not widely reported in the media.
It is necessary for developed nations aiming to procure critical metals to diversify their supply sources. Businesses are doing this already, and are also building up larger inventories of metals to offset any short term volatility. However, although businesses have identified critical metals for their own production processes, governments have to ascertain for themselves which metals are at risk of supply disruptions that could affect the wider economy.
Once identified, establishing a more globalised and transparent supply chain for these metals will deter the implementation of protectionist policies. If those policies are a result of a predicted domestic supply pressure in the longer term, the argument for maintaining them will be weakened.
To do this effectively, government agencies and the private sector should fund mineral exploration globally which would ease the burden on those countries with the largest known reserves. The Japanese government has already identified this as a key policy, and may also go a step further in easing the capital requirements for building processing plants by providing loan guarantees to support production.
It is a long and difficult process to commercialise a mine and processing plant, often taking five to ten years, with significant time and effort being spent navigating the relevant regulatory environment to gain the sufficient environmental approval necessary for operation. Streamlining regulations required for mining and metal processing ventures in the more developed nations is necessary, while maintaining high levels of environmental stewardship.
Mining is a high risk industry, not least due to the low public tolerance for preventable environmental damage. Businesses that choose to take on this challenge can be encouraged by tax rebates on exploration and loan guarantees for high capital projects that will create jobs and establish an export industry.
Another method of minimising the risk of economic harm due to supply disruptions is to promote and establish recycling. The UN Environmental Program released a report in 2010 that found that there were functional recycling rates of less than 1% for most of the rare earth elements. Stricter regulation of recycling of certain metals would spur further research and industrial participation in this area.
Finally, the development of new technologies and materials with the potential to ease the coming supply pinch, has to be encouraged. Funding for industrial laboratories and academic studies will not only increase technical know-how, but also generate a pool of talent and knowledge. A strategic approach to funding for mineral extraction and processing as well as recovery and recycling will yield benefits in the medium to longer term, especially if there is collaboration between academia and industry.
Moving Beyond the Majors
The world is moving beyond iron, steel and the major metals into a future powered by advanced technologies that rely on minor metals traded in opaque markets with an often volatile supply and pricing pattern. Developed nations are particularly vulnerable to supply disruptions due to a complicated supply chain where the raw material processors are concentrated in a few nations, some of whom are seeking to secure resources to feed their predicted domestic demand.
Confrontational actions that seek to pressurise those nations are likely only to result in a more subtle protectionist stance. Instead, a range of policy actions by national governments is required to create a transparent and globalised supply chain that eases the burden on existing producers and processors. There is evidence that the international community is beginning to identify the critical metals of high interest and are starting to develop and implement policies with the potential to minimise the risk of a supply disruption, which would hinder the development of advanced technologies – and especially clean energy technologies – of the future.
Dr. Kartik Rao is an Associate Director at Metalysis Ltd., a metals extraction technology company. He holds a doctorate in extractive metallurgy from Imperial College London. The opinions expressed in this article are those of the author and do not in any way reflect those of Metalysis Ltd.