M2i's Materials Scarcity Report

Material Scarcity

An M2i study

November 2009

Huib Wouters Corus Research, Development & Technology

P.O. Box 10,000

1970 CA IJmuiden

The Netherlands

T: 0251 – 497553

E: [email protected]

Derk Bol Materials innovation institute (M2i)

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The Netherlands

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E: [email protected]

Project MA.09160, Material Scarcity

© Stichting Materials innovation institute (M2i); 2009

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Summary

Material Scarcity

Material scarcity is about the shortages in metal and mineral resources which are expected in

the next decades. With a growing world population which is also getting more prosperous, the

demand for products increases and therefore also the demand for metal and mineral resources.

In the past century the increase in demand has been equalled by an increase in mining and

extraction of the required material resources. Exploration of new locations and technological

innovation in mining and extraction has kept the available and known material reserves on par

with the increase in demand. Will this continue in the 21st century as well? It is difficult to predict

a century ahead, but looking at a number of developments, we are afraid the answer is: no.

Developments

Which developments indicate that material scarcity may become a reality in the near future?

One is that for a number of material resources the peak production is already in the past. An

example is Zirconium, an element used for high temperature materials. Despite the ongoing

need for Zirconium and rising prices, the extraction rate is declining. Another development is the

continuing decrease in ore grade at which some materials are being mined. For instance, copper

with an ore grade of 25 % was available for mining in 1925, in 1985 the available ore grade for

copper mining was decreased to 0.8 %. This was made possible by ongoing technological

developments in mining and extraction techniques. But mining at lower ore grades requires

exponentially more energy. And energy being a scarce resource as well, it will not be possible to

extract resources at ever lower ore grades using more and more energy. Also geopolitical

developments can lead to material scarcity, sometimes on much shorter timescale. A recent

example is the plan of the Chinese government to restrict or stop the export of rare earth metals

to the rest of the world in 2009 – 2015. China produces 95 % of most of these elements, which

are used in the production of for instance iPODs, mobile phones and LEDs.

This study

Development of new materials and material applications for industry and society is the core

business of the Materials innovation institute M2i. If material scarcity has to be taken seriously,

and M2i is of that opinion, properly directed material innovation is needed to help solving

material scarcity. Therefore M2i has carried out the present study on the shortage of non-energy

raw materials: for the benefit of its industrial and university partners, to increase the awareness

for material scarcity and to support the discussion how to approach material scarcity in material

research and production. The study is also intended as a help for the government by highlighting

several aspects of material scarcity and the effect on the Dutch industry.

Solutions

As this report will show, material scarcity is a complex issue. The whole lifecycle of products has

to be considered, from mining of materials to the final disposal or better, recycling of the product

at the end of its lifetime. The stakeholders are not confined to one industry or one country.

Material scarcity is a global issue.

Let’s for the moment ignore the complexity of material scarcity, what are the main elements for a

solution? The first element is to reduce the use of materials, by more efficient production

processes and longer lifetime of products. The second element is to greatly enhance the

recycling of materials. The goal should be no less than ensure that materials are fully recycled to

serve as new materials for new products, which is the Cradle to Cradle philosophy. The third

element in the solution for material scarcity is to find alternatives for scarce elements and

reserve these scarce elements to be used in specific applications for which no alternatives are

yet available. These three elements or building blocks to work on material scarcity are combined

in this report into a Trias Materialis.

Universities, industry and government

Finding solutions for material scarcity will require the concerted effort of universities and

research institutes (to find substitutes for scarce materials and work on material innovation

which enables the recycling of the material constituents), industries (to develop new products

and production processes requiring less material and energy, and including recycling as fixed

element), and government (sponsoring long term research in material scarcity solutions and

providing a level playing field for industry to implement material scarcity solutions).

Transition to sustainable use of materials

No doubt, the transition to sustainable use of materials will be as difficult and time consuming as

fighting climate change or replacing fossil energy by other, sustainable energy sources. However

we can learn from the transitions currently being made in these fields. As an example, a recent

scenario study of Shell on energy transition has been translated in this report to the situation of

material scarcity. The outcome of this scenario study shows that a successful transition requires

the following ingredients: a number of bottom-up initiatives to study and work on material

scarcity (we hope this study will contribute to these initiatives), a government policy to combine

these initiatives at national level, and as a next step making connection with other countries to

come to coordinated plans, first on EU and than on global level.

Content of this report

In this report the information from literature study and interviews has been compiled into an

introductory report on material scarcity. The report provides an overview of the various aspects

of material scarcity. It contains data on for instance the availability of various materials and

references for further reading for those who want to study material scarcity in more detail. With

help of the industrial partners of M2i, the effect of material scarcity on industry is discussed for

two cases: the steel industry and the microelectronics industry. For policy makers the report

contains elements for finding solutions for material scarcity, in terms of the ‘Trias Materialis,

steps to a sustainable use of materials’, ways of thinking about scarcity and scenarios for

transitions.

Many sources have been used for this study and many persons provided advice. The authors

like to acknowledge Ton Bastein and André Diederen of TNO Defence, Security and Safety in

particular. They brought material scarcity to the attention of M2i and provided valuable

information and references on material scarcity.

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Contents

1. INTRODUCTION ................................................................................................................... 9

2. METHOD OF WORKING .................................................................................................... 11

3. MATERIAL SCARCITY ....................................................................................................... 13 3.1 SUPPLY OF MATERIALS ................................................................................................. 13 3.2 DEMAND OF MATERIALS ................................................................................................ 16 3.3 RATIO OF RESERVES TO ANNUAL EXTRACTION ............................................................... 20

3.3.1 Hubbert peak theory ..................................................................................... 21 3.3.2 Present estimates of ratio of reserves to annual extraction.......................... 26 3.3.3 Comparison with previous estimates............................................................ 28

3.4 TECHNOLOGICAL INNOVATION & EMERGING TECHNOLOGIES ........................................... 31 3.5 ORIGIN OF RAW MATERIALS AND TRADE......................................................................... 35

4. SCARCITY AND INDUSTRY .............................................................................................. 39 4.1 FLOW OF MATERIALS .................................................................................................... 39 4.2 MINING INDUSTRY ........................................................................................................ 41 4.3 IMPORT OF RAW MATERIALS TO THE EU ........................................................................ 47 4.4 MATERIAL SCARCITY AND DUTCH INDUSTRY .................................................................. 49

4.4.1 Material scarcity and the steel industry......................................................... 49 4.4.2 Material scarcity and the micro-electronics industry..................................... 50

4.5 MATERIAL SCARCITY ACTIVITIES ABROAD....................................................................... 52

5. SOLUTION PATHS ............................................................................................................. 53 5.1 ELEMENT TYPES........................................................................................................... 53 5.2 TRIAS MATERIALIS; TO A SUSTAINABLE USE OF MATERIALS ............................................. 59

5.2.1 Reduction of the demand or use of materials............................................... 59 5.2.2 Recycling of materials................................................................................... 60 5.2.3 Avoid use of materials with limited stocks and find alternatives ................... 60 5.2.4 Boundary conditions: energy, environment, return on investment................ 61

5.3 ON RECYCLING............................................................................................................. 61

6. THINKING ABOUT SCARCITY .......................................................................................... 65 6.1 FIXED STOCK PARADIGM ............................................................................................... 65 6.2 OPPORTUNITY COST PARADIGM .................................................................................... 66

7. SCENARIOS FOR TRANSITION........................................................................................ 67 7.1 SCRAMBLE SCENARIO................................................................................................... 67 7.2 BLUE PRINTS SCENARIO................................................................................................ 68

8. CONCLUSIONS AND RECOMMENDATIONS................................................................... 69 8.1 CONCLUSIONS ............................................................................................................. 69 8.2 RECOMMENDATIONS FOR THE WAY FORWARD ............................................................... 69

9. FURTHER READING .......................................................................................................... 71 9.1 ENGLISH LANGUAGE ..................................................................................................... 71 9.2 GERMAN LANGUAGE ..................................................................................................... 71

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Figures

FIGURE 1. THREE WAYS TO DEFINE THE AMOUNT OF AVAILABLE MATERIAL ................................... 13 FIGURE 2 TECHNICAL DEVELOPMENT OF DRILLING TECHNIQUES ................................................. 14 FIGURE 3. REDUCTION IN ELECTRICITY USE OVER PAST FIFTY YEARS IN PRIMARY

INDUSTRY ................................................................................................................. 15 FIGURE 4. GROWTH OF RESOURCES .......................................................................................... 16 FIGURE 5. GROWTH OF WORLD POPULATION .............................................................................. 17 FIGURE 6. RICHER PEOPLE USE MORE MATERIALS ...................................................................... 18 FIGURE 7. GLOBAL PRODUCTION OF REFINED INDIUM .................................................................. 19 FIGURE 8. BELL-SHAPED PRODUCTION CURVE, AS ORIGINALLY SUGGESTED BY

HUBBERT IN 1956 ..................................................................................................... 21 FIGURE 9. US OIL PRODUCTION (LOWER 48 STATES, CRUDE OIL ONLY) AND

HUBBERT'S HIGH ESTIMATE........................................................................................ 22 FIGURE 10. PEAKING OF LEAD ..................................................................................................... 22 FIGURE 11. PEAKING OF ZIRCONIUM............................................................................................. 23 FIGURE 12. PEAKING OF IRON ORE............................................................................................... 24 FIGURE 13. GLOBAL DISCOVERY RATE ......................................................................................... 25 FIGURE 14. FLOWSHEET OF MATERIALS ....................................................................................... 39 FIGURE 15. CONCENTRATION TRENDS IN THE PRODUCTION OF THE MINING

INDUSTRY, MARKETS SHARES OF THE 3 LARGEST MINING INDUSTRY

PRODUCERS IN 2005................................................................................................. 42 FIGURE 16. DEVELOPMENT OF THE PRICE FOR RAW MATERIALS FOR THE STEEL

INDUSTRY ................................................................................................................. 43 FIGURE 17. VERTICAL INTEGRATION............................................................................................. 45 FIGURE 18. GLOBAL MINING EXPLORATION EXPENDITURE (WITH 2008/2009

ESTIMATES) .............................................................................................................. 46 FIGURE 19 METAL CONCENTRATES AND ORES NET IMPORTS OF EU27 AS FRACTION

OF APPARENT CONSUMPTION IN 2008 ........................................................................ 47 FIGURE 20. MAJOR GLOBAL PRODUCERS OF SELECTED HIGH-TECH METALS (2006) ....................... 48 FIGURE 21. CRITICALITY MATRIX .................................................................................................. 53 FIGURE 22. THE THREE TYPES OF CHEMICAL ELEMENTS ............................................................... 54 FIGURE 23. THE TOOLBOX CONTAINING THE ELEMENTS OF HOPE, THE FRUGAL

ELEMENTS AND THE CRITICAL ELEMENTS (PGM = PLATINUM GROUP

METALS; REM = RARE EARTH METALS) .................................................................... 55 FIGURE 24. PROPORTION OF CONSUMPTION MET BY RECYCLED MATERIALS ................................... 62 FIGURE 25. A WASTE HIERARCHY ................................................................................................ 64

Tables

TABLE 1. PRODUCTION PEAK AND ULTIMATE RECOVERABLE RESOURCES FOR A

FEW MINERALS .......................................................................................................... 24 TABLE 2. ESTIMATES OF THE AVAILABILITY OF MINERALS AND METALS........................................ 27 TABLE 3. RESERVES IN 1972 AND 2004 ................................................................................... 28 TABLE 4. RESERVES AND R/P RATIOS IN 1972 AND 2004 ......................................................... 30 TABLE 5. PORTFOLIO OF EMERGING TECHNOLOGIES THAT ISI AND IZT ANALYSED ...................... 32 TABLE 6. SELECTED "HIGH-TECH MATERIALS" APPLICATIONS FOR INNOVATIVE

"ENVIRONMENTAL TECHNOLOGIES" ............................................................................ 33 TABLE 7. GLOBAL DEMAND OF THE EMERGING TECHNOLOGIES ANALYSED FOR

RAW MATERIALS IN 2006 AND 2030 RELATED TO TODAY'S TOTAL WORLD

PRODUCTION OF THE SPECIFIC RAW MATERIAL52 ......................................................... 34

TABLE 8. TOP THREE PRODUCING MINING REGIONS FOR SELECTED METALLIC

MINERALS (2006) ...................................................................................................... 36 TABLE 9. EXAMPLES OF NON-ENERGY RAW MATERIAL EXPORT RESTRICTIONS ............................ 37 TABLE 10. RECENT SUPPLY DISRUPTIONS................................................................................... 38 TABLE 11. WORLD TOP 10 COMPANIES IN NON-ENERGY MINERALS MINING IN 2007 ...................... 41 TABLE 12. LARGEST MINING MERGERS AND ACQUISITIONS IN 2007 .............................................. 44 TABLE 13. CRITICAL ELEMENTS .................................................................................................. 56 TABLE 14. FRUGAL ELEMENTS ................................................................................................... 57 TABLE 15. ELEMENTS OF HOPE .................................................................................................. 58

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1. Introduction

Materials play an increasingly important role in our everyday lives. They underpin everything that

is needed for daily life, from home to work and leisure. New materials have a huge impact on all

the areas that make life liveable, from transport, medical, security, information and

communications technology to advanced manufacturing. Examples are hybrid cars, the Airbus

A380, MRI scanners, personal healthcare equipment, safety sensors, multi-functional mobile

phones, navigation equipment and sports equipment.

To be able to continue to use and produce such products, it is necessary to have a sufficient

supply of raw materials. The recoverable amount of a raw material is limited and more often than

not, raw materials are not uniformly distributed over the globe. For example, about 60% of the

iron ore in the world comes from three countries: Australia, Brazil, and China.1 A shortage of raw

materials may have consequences for the raison d'être of a company of the metallurgical

industry. Recently China announced to further restrict the export of rare earth metals (REM) in

the period of 2009 – 2015.2 Rare earth metals play an important role in the production of hard

disks, mobile telephones, iPODs, fuel cells, etc. Since China has 95 % of the global production

of REM, this will urge the manufacturing industry in the rest of the world to search for replacing

materials.

The situation for certain non-energy raw materials and metals may therefore become similar to

energy raw materials, i.e. coal, oil, and natural gas. The lack of certain non-energy raw materials

may have consequences for society and for companies. The continued growth of the use of

materials, together with the challenges posed by health, climate change, energy supply and the

quest for durability put increasing pressure on innovation to solve the current conflict between

satisfying society’s demand and the need for sustainability.

The anticipated shortage of non-energy raw materials has drawn the attention of various

researchers.3 André Diederen and Ton Bastein of TNO Defence, Security and Safety

approached M2i with this challenge.

1 D. Huy

Kurzbericht zur Konzentration in der Weltbergbauproduktion (Fortschreibung Februar 2007)

Bundesanstalt für Geowissenschaften und Rohstoffe(BGR); Hannover, Germany; 2007

2 Rembrandt Koppelaar

www.peakoil.nl, posted on 25 August 2009.

3 G. Angerer et al.

Rohstoffe für Zukunftstechnologien (Schlussbericht)

Einfluss des branchenspezifischen Rohstoffbedarfs in rohstoffintensiven Zukunftstechnologien auf die zukünftige

Rohstoffnachfrage

Fraunhofer Institut für System- und Innovationsforschung ISI; Institut für Zukunftsstudien und

Technologiebewertung IZT GmbH

Fraunhofer IRB Verlag; Karlsruhe, Deutschland; 2009

D. Cohen

"Earth's natural wealth: an audit"

New Scientist, 23 May 2007, pp. 34-41

M. Frondel et al.

Trends der Angebots- und Nachfragesituation bei mineralischen Rohstoffen

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI Essen); Fraunhofer-Institut für System- und

Innovationsforschung (ISI); und Bundesanstalt für Geowissenschaften und Rohstoffe (BGR)

Berlin und Bonn, Germany; 2007

Materials innovation institute M2i

M2i is a public-private partnership between industry, knowledge institutes and the

government of the Netherlands. The mission of M2i is to develop new and durable

materials of world-class level that significantly improve the competitive and

innovative position of the industry in the Netherlands and that greatly contribute to

realizing a sustainable society. M2i and its predecessor NIMR have built up a

strong reputation in bringing science into business via knowledge application and

transfer projects.

M2i industrial partners are: Aleris, Allseas, ASML, Bekeart, Boal, Bouwen met

Staal, Corus, DAF, FEI, FME-CWM, Federatie Dunne Plaat, Fontijne Grotnes,

FujiFILM, Henkel, INPRO Innovationsgesellschaft, Lightmotif, Metaalunie, MTI

Holland, Nedal Aluminium, National Aerospace Laboratory (NLR), NXP

Semiconductors, Philips Electronics, Schelde, SELOR eeig, SKF, Stork NV,

Sunergy and TNO.

M2i university partners are: Delft University of Technology, Eindhoven University of

Technology, University of Twente, University of Groningen, Foundation for

Fundamental Research FOM, Radboud University Nijmegen, FOM institute for

Plasma Physics Rijnhuizen, RWTH Aachen, Utrecht University, Max Planck

Institute for Eischenforschung, Katholieke Universiteit Leuven, Cambridge

University, Oxford University, EPFL Lausanne.

M2i has set itself the goal to carry out a study on the shortage of non-energy raw materials for

the benefit of its industrial and university partners, to increase the awareness for material

scarcity and to start the discussion how to approach material scarcity in material research and

production. The study is also intended as a help for the government by highlighting several

aspects of material scarcity and the possible effect on the Dutch industry.

The report is structured as follows. Chapter 2 describes the method of working that was

adopted. The present situation is the subject of chapter 3. It describes the reserves and

resources, the ratio of reserves to annual extraction, the influence of economical factors, the

effects of the development of new products, the origin of raw materials, and their trade.

Chapter 4 then looks at the issue from the material users view; the manufacturing industry in

Europe. Chapter 5 describes solutions that might be used when a shortage of material would

occur. Scenarios for the future are presented in chapter 7. Chapter 8 contains the overall

conclusions and recommendations from this report. Suggestions for further reading are given in

chapter 8.

Many sources have been used for this study and many persons provided advice. We like to

acknowledge Ton Bastein and André Diederen of TNO D&S in particular. They brought material

scarcity to the attention of M2i and provided valuable information and references on material

scarcity.

John E. Tilton

On Borrowed Time? Assessing the Threat of Mineral Depletion

Resources for the Future; Washington, DC, USA; 2003

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2. Method of working

2.1 Overview

The method of working that is used consists of three steps; fact finding, interpretation and

concluding. Below some details about the followed way of working are given.

2.2 Fact finding

Via three routes an impression of the situation was obtained:

• searches for information on material scarcity in the literature,

• interviews with representatives of the industrial partners of M2i,

• discussion with René Kleijn, an expert on this subject in the Netherlands.

The interviews of the industrial partners of M2i revolved around:

• the extent to which effects of scarcity are noticed, with respect to price, supply, and

demand;

• the products that may be affected by it;

• the measures that may be taken by industry to mitigate the effects of scarcity, like:

o using less,

o recycling, or

o use of other materials; and

• the measures that may be taken by others to mitigate or solve these scarcity issues.

The subject was discussed with René Kleijn, assistant professor at the Institute of Environmental

Science (Leiden University). His work is discussed in an article on the earth's natural wealth in

the New Scientist.4

The method of working to find information on material scarcity in the literature consisted of the

reading of review articles, searches on the internet, and searches in the databases of the library

of Corus RD&T in IJmuiden, The Netherlands. Two sources that provide much of this type of

information are:

• Wikipedia, the free encyclopaedia (www.wikipedia.org)

• Ullmann's Encyclopaedia of Industrial Chemistry (Fifth, Completely Revised Edition)

It should be noted that the free online encyclopaedia Wikipedia is about as accurate on science

as the Encyclopaedia Britannica.5 The references of the literature used are listed in footnotes.

Suggestions for further reading are given in chapter 9.

4 David Cohen


New Scientist magazine, issue 2605 (23 May 2007), page 34-41

5 Jim Giles, 2005

"Internet encyclopaedias go head to head"

Nature, December 15, 2005: pp. 900-901

2.3 Reviewing

Once an image of the possible effects of material scarcity for the Netherlands has been

obtained, an opinion, i.e. an appraisal about a particular matter, can be formed. Discussions with

André Diederen6 and Jaap Weerheijm7 (TNO; Defence, Security and Safety) were very helpful

in this respect. Another important review was done by means of a presentation of the main

findings to the partners of M2i. On 30 June 2009 in Utrecht the results of the study were

presented to representatives from Corus, FujiFILM, Philips Consumer Lifestyle, TNO D&S, SKF,

TU Delft and M2i. Their conclusions were 1) the information gathered by the study has a great

added value to the understanding of material scarcity, 2) material scarcity has to be taken

seriously, and 3) M2i and TNO can certainly contribute to solving material scarcity but it is

necessary to team up with other stakeholders, like the government and international bodies like

the EU.

2.4 Reporting

The final step is reporting of the work. The presentation to the partners of M2i, has been used as

a "storyboard" for writing this report. The conclusions and the recommendations are based on

the discussions with the partners of M2i during the previously mentioned meeting.

6 André Diederen is a senior research scientist at TNO, where he has been working since 1997 on defence related

matters.

7 At TNO, Jaap Weerheijm is senior research scientist and he is responsible for the research on protective

materials under extreme conditions. In 2003 he joined the TU Delft for two days a week. There he is responsible

for the research field Impact Dynamics of Structures and Materials.

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3. Material scarcity

Material scarcity (or any scarcity) is controlled by only two factors: the supply of the material

versus its demand. “Supply” here should be interpreted as the raw material that is made

available to the industry. Typically this is done through mining activities. It must be noted that

recycling of raw materials would be an alternative supply stream. For reasons of readability, this

is not discussed in chapter 3, but treated separately in chapter 5. The demand for a material is

ultimately determined by the end users together with the effectiveness of the supply chain.

3.1 Supply of materials

To be able to have a meaningful discussion, it is necessary to set a few definitions that are

relevant to this subject. Figure 1 shows three different ways to look at the amount available. The

“Resource base” is defined as the entire pre-set endowment of the earth's crust with this raw

material.8 “Resources” are those quantities of a raw material that can be extracted

economically. The “reserves” form that subset of resources that at this moment are indeed

proven.

Figure 1. Three ways to define the amount of available material9

8 M. Frondel, P. Grösche, D. Huchtemann, A. Oberheitmann, J. Petersand, G. Angerer, C. Sartorius, P. Buchholz,

S. Röhling, and M. Wagner


Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI Essen),

Fraunhofer-Institut für System- und Innovationsforschung (ISI) & Bundesanstalt für Geowissenschaften und

Rohstoffe (BGR)


9 M. Ericsson (Raw Materials Group)

"Global Mining in 4643 Year of the Firedog"

Expert workshop on "Raw Materials Scarcity as a Risk of Conflict and an Impediment to Development"; Berlin,

Germany; 21-22 September, 2006

An important factor in the extraction of ores and the extraction of metals from ores is the energy

required for these activities. In case of unlimited energy supply, material resources are only

limited by the amount of mineral resources available in the Earth’s crust.10 As energy is as much

a scarce resource as materials are, the extraction of materials is limited. The energy

requirements of materials supply are discussed further below.

Reserves are more an economical than a geological quantity, and they largely depend on the

costs associated with the extraction of the mineral from the earth. These costs have come down

dramatically over the last decades, which have increased the reserves. This mechanism is

illustrated in Figure 2 which shows the development of the drilling speed (directly associated with

the drilling costs) over the last century.

Figure 2 Technical development of drilling techniques11

New techniques will enable an increase of both the extraction rate and the production rate of the

subsequent processes. Heavy machinery is needed in mining for exploration and development,

to remove and stockpile overburden, to break and remove rocks of various hardness and

toughness, to process the ore and for reclamation efforts after the mine is closed. Bulldozers,

drills, explosives, trucks and fuel are all necessary for excavating the land.

10 A.M. Diederen

Metal minerals scarcity: A call for managed austerity and the elements of hope

TNO Defence, Security and Safety; Rijswijk, The Netherlands; March 10, 2009 11 Magnus Ericsson (Raw Materials Group)

"Current trends in global metal markets – industry responses"

Presentation at Bergforsk

The 3rd Bergforsk Annual Meeting [organised by the Swedish Mining Research Foundation (MITU)]

Luleå, Sweden; 23-24 May 2007

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Once the ore has been mined, the actual minerals need to be extracted from it. This is normally

referred to as extractive metallurgy. It addresses mineral processing (mechanical means of

crushing, grinding, and washing) that enable the separation and the actual production of the

minerals from the ore (extractive metallurgy). Since most metals are present in ores as oxides or

sulphides, the metal needs to be reduced to its metallic form. This can be accomplished through

chemical means such as smelting or through electrolytic reduction, as in the case of

aluminium.12 An essential "ingredient" of all these processes is energy; as such reduction

reactions are typically strongly endothermic.

Figure 3. Reduction in electricity use over past fifty years in primary industry13

A noteworthy example is the production of primary aluminium via electrolysis.

Figure 3 shows the amount of electric energy that is necessary to produce a single kilogram of

aluminium. This amount decreased through the years, but even today nearly two-thirds of all

energy consumed by the aluminium industry is for primary aluminium production14. Even with

further efficiency improvements there is a lower limit that thermodynamics dictates; the

theoretical energy requirement is 6.25 kWh per kilogram of aluminium produced.15

12 "Mining"

From Wikipedia, the free encyclopedia

13 European Aluminium Association (EAA)

Aluminium for Future Generations

14 US Energy Information Administration, http://www.eia.doe.gov/emeu/mecs/iab98/aluminum/energy_use.html

15 W.B. Frank et al.

"Aluminum"

Ullmann's Encyclopedia of Industrial Chemistry (5th, Completely Revised Edition)

Volume A 1, pp. 459-480

eds. W. Gerhartz et al.

VCH Verlagsgesellschaft mbH; Weinheim, BRD; 1985

Figure 4. Growth of resources16

Also the “resources” from Figure 1 are not a static quantity. This is illustrated in Figure 4, where

it is shown that the resources for a number of elements have grown over the years as large

quantities of ore have been proven due to more and improved surveying activities.

In generic terms, it can be stated that the three categories of supply are correlated with the

short-, medium- and long-term potential supply of mineral commodities. The actual supply of a

certain mineral is of course even more volatile as it is determined by factors like market

dynamics, political decisions (especially relevant when a certain mineral is only found in

countries like China), political stability, etc.

3.2 Demand of materials

The demand of materials is even more volatile than the reserves and resources discussed

before. Roughly, the demand depends on the following parameters:

• the present use of materials;

• the growth of the global population;

• the growth of the prosperity of the people;

• the replacement of materials (the demand for material A drops when a specific

application is no longer made from it);

• the development of new products and emerging technologies.

The world population has more than doubled since 1950 and is set to increase by 40% by 2050;

see Figure 5.

16 Magnus Ericsson (Raw Materials Group)

"European mining in a global context - Threats & opportunities"

European Social and Economic Committee; Non-energy mining industry in Europe

Bucharest, Romania; 15 May 2008

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Figure 5. Growth of world population17

History has shown that as people become richer they use more energy and materials. To

foresee the influence of the growing economy on the sustainable use of resources, it is

important to take the consumption pattern into account. Economies in different stages of

development show a typically different consumption pattern. Figure 6 demonstrates this change

in consumption pattern by showing the metal consumption rate in relation to the GDP per capita.

For a general construction material like steel, a sharp rise of steel consumption with growing

GDP is observed for economies with a low GDP; typically the developing countries, in which

steel is consumed mainly for building and construction markets. As wealth increases the growth

in consumption with GDP drops off, because steel is used for other applications (e.g. consumer

goods) with lower associated volumes.

17 Shell energy scenarios to 2050

Shell International B.V.; The Hague, The Netherlands; 2008

Figure 6. Richer people use more materials18

On the contrary, a metal like silicon is mainly used in the aluminium and chemical industries19.

These typical applications are not amongst the basic needs of developing economies, mainly

building and construction, and the silicon consumption shows no drop of in growth rate with

increasing GDP. Noteworthy is that the semiconductor industry, which manufactures computer

chips and solar cells from high-purity silicon, accounts for only a small percentage of the total

silicon demand.

A German study on the influence of economy and emerging technologies on raw materials

demand20, shows two drivers for demand. The main driver discussed here is the growing world

18 Study on global flow of metals - An example of material recycling

National Institute for Materials Science; Tsukuba-city, Ibaraki, Japan; May 2008

19 U.S. Geological Survey

Mineral Commodity Summaries, January 2009

http://minerals.usgs.gov/minerals/pubs/commodity/silicon/mcs-2009-simet.pdf

20 G. Angerer, L. Erdmann, F. Marscheider-Weidemann, M. Scharp, A. Lüllmann, V. Handke, and M. Marwede,

2009

Rohstoffe für Zukunftstechnologien - Einfluss des branchenspezifischen Rohstoffbedarfs in rohstoffintensiven

Zukunftstechnologien auf die zukünftige Rohstoffnachfrage

Fraunhofer-Institut für System- und Innovationsforschung ISI; und

Institut für Zukunftsstudien und Technologiebewertung IZT

Fraunhofer IRB Verlag; Stuttgart, Germany; 2009

- 19 of 72 -

economy, which has grown on average by 3.8% annually over the past 20 years. A second

driver is emerging technology, such as the use of indium for flat screens.

Summarising the findings, the consumption of commodity materials with many applications,

such as iron, steel, copper and chrome, is dominated by world economic growth. The

consumption of specialities, like gallium, neodymium, indium, germanium and scandium, is

driven by technological development. Both drivers appear to be dominant for platinum metals,

tantalum, silver, titanium and cobalt. The influence of technological developments is discussed

in more detail in section 3.4.

The replacement of materials in products will affect the extraction and subsequent processing of

raw materials. Until the 1930s aircraft were made from wood, steel tube and fabric. The inter-

bellum period saw the rise of all-metal aircraft such as the Boeing 247 and Douglas DC-2. This

change had a huge impact on the aluminium industry.21

Figure 7. Global production of refined indium22

The development of new products will also have an effect on the extraction and subsequent

processing of raw materials (see section 3.4). An example is the increase in the demand for

indium that is used in the form of indium tin oxide in flat screen televisions and in the form of

indium gallium arsenide in solar cells.23 Figure 7 shows the global production of refined indium

that demonstrates a steep increase around the turn of the century.

21 M.B.W. Graham and B.H. Pruitt,

R&D for Industry, A century of technical innovation at Alcoa

Cambridge University Press; Cambridge, UK; 1990

22 Bill McCutcheon (Minerals and Metals Sector, Natural Resources Canada.)

"Indium"

Canadian Minerals Yearbook, 2001

Natural Resources Canada

23 "Liquid crystal display"


David Cohen



3.3 Ratio of reserves to annual extraction

The ratio of reserves or resources to the annual extraction is called the range, and this quantity

is used very frequently to estimate the number of years that a certain raw material will still be

present. The smaller the range, the more urgently is the necessity for investments into the raw

material exploration.24 This range is also known as static duration period.25

Estimates that others recently made of the range will be presented in section 3.3.2. The Club of

Rome raised considerable public attention in 1972 with its report "Limits to Growth". It predicted

that economic growth could not continue indefinitely because of the limited availability of natural

resources.26 Their estimates will be compared with the present ones in section 3.3.3.

The unit of reserves and resources is mass. The extraction rate is measured in mass per unit of

time. The range is the result of the division of the reserves or resources by the extraction rate.

Its unit is, therefore, time. Hence the error in the estimated range is determined by the errors in

the estimates of the reserve and the extraction rate.

It was shown before that both supply and demand are rather dynamic parameters. Nevertheless,

there are models that can be used in limited resource production-domains to be able to predict

the future supply of a certain element. A well-known model is the Hubbert peak theory.27 M.K.

Hubbert created and first used the models behind peak oil in 1956 to accurately predict that the






Rohstoffe (BGR)



National Institute for Materials Science; Tsukuba-city Ibaraki Japan; May 2008

26 "Club of Rome"


Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens III

"The Limits to Growth"

Universe Books; New York, NY, USA ; 1972

27 "Hubbert peak theory"


"Peak oil"


"Predicting the timing of peak oil"


M.K. Hubbert (Chief Consultant General Geology, Shell Development Company)

"Nuclear Energy and the Fossil Fuels"

Paper presented at Spring Meeting of the Southern District Division of Production, American Petroleum Institute

San Antonio, Texas, USA; 7-8-9 March 1956

Publication No. 95, Shell Development Company, Exploration and Production Research Division

Houston, Texas, USA; June 1956

Maarten Schinkel

"Komt na Peak oil straks ook Peak finance?"

NRC Handelsblad, 16 juni 2009, katern 2 (Economie), pagina 14 (Schinkels forum)

- 21 of 72 -

oil production of the United States would peak between 1965 and 1970. Scientists also applied

the Hubbert peak theory to minerals, which is discussed in more detail below.28

3.3.1 Hubbert peak theory

Peak oil is the point in time when the maximum rate of global petroleum extraction is reached,

after which the rate of production enters terminal decline. The concept is based on the observed

production rates of individual oil wells, and the combined production rate of a field of related oil

wells. The aggregate production rate from an oil field over time usually grows exponentially until

the rate peaks and then declines - sometimes rapidly - until the field is depleted. This concept is

derived from the Hubbert curve, and has been shown to be applicable to the sum of a nation’s

domestic production rate, and is similarly applied to the global rate of petroleum production; see

Figure 8.

Figure 8. Bell-shaped production curve, as originally suggested by Hubbert in 195629

Hubbert's logistic model, now called Hubbert peak theory, and its variants have described with

reasonable accuracy the peak and decline of production from oil wells, fields, regions, and

countries. Figure 9 shows a comparison for the United States. This theory also proved useful in

other limited resource production-domains. According to the Hubbert model, the production rate

of a limited resource will follow a roughly symmetrical bell-shaped curve based on the limits of

exploitability and market pressures.

28 Ugo Bardi (Professor; Department of Chemistry, University of Florence, Italy) and Marco Pagani

"Peak Minerals"

Posted at "The Oil Drum: Europe" by Chris Vernon on 15 October 2007

Retrieved 23 April 2009 from http://www.theoildrum.com/node/3086

A.M. Diederen


TNO Defence, Security and Safety; Rijswijk, The Netherlands; March 10, 2009

29 "Hubbert peak theory"


Figure 9. US oil production (lower 48 states, crude oil only) and Hubbert's high estimate30

Scientists applied the Hubbert peak theory to minerals as well. A historical peaking is that of

lead, that peaked in 1986; see figure below.

Figure 10. The data for the "ultimate recoverable resources" (URR) calculated from the fitting

(330 million tons) is in good agreement with the amount calculated from the United States

Geological Survey (USGS) data (290 million tons).31

Figure 10. Peaking of lead32

30 "Peak oil"



"Peak Minerals"



- 23 of 72 -

A more recent example of peaking is that of zirconium mineral concentrates, mainly zircon

(ZrSiO4), which is the main source of zirconium and zirconium oxide, two important materials,

often used as components of high temperature resistant materials; see Figure 11. There is no

doubt that the initial nearly exponential growth of production started slowing down in the 1970s

and that growth stopped in the 1990 to decline afterwards. The fit of the data gives the date of

the peak as 1994. According to the USGS data, the URR for this mineral should be about 670

million tons. The fitting of the production curve produces a smaller value, around 390 million

tons.

Figure 11. Peaking of zirconium33

Several minerals show sudden jumps in production that lead the production curve to abandon

the tendency to peaking of a few years before. One such case is that of iron ore, which shows a

sudden rise in the production data around the year 2000; see Figure 12. Here, it is difficult to say

whether the rapid rise in the past few years is due to inconsistencies in reporting or to an actual

increase of production that may be related to the quickly growing Chinese economy.

In general it can be said that the Hubbert peak theory helps to predict the peaking and decline of

the production of material resources. However, critics of the Hubbert theory say that the model

has very limited validity “because it does not consider likely resource growth, application of new

technology, basic commercial factors, or the impact of geopolitics on production.”34


"Peak Minerals"




"Peak Minerals"



34 Cambridge Energy Research Associates;

http://www.cera.com/aspx/cda/public1/news/pressReleases/pressReleaseDetails.aspx?CID=8444

Figure 12. Peaking of iron ore

Table 1. Production peak and ultimate recoverable resources for a few minerals35

Mineral Peak year

(logistics)

URR from

logistic fitting

URR from USGS: reserves +

cumulative production up to 2006

[ton] [ton]

Mercury 1962 (5.8 ± 0.4) 105 5.9 105

Tellurium 1984 (1.0 ± 0.4) 104 2.8 104

Lead 1986 (3.3 ± 0.2) 108 2.9 108

Cadmium 1989 (1.33 ± 0.09) 106 1.5 106

Potash (K2CO3) 1989 (1.54 ± 0.09) 109 9.5 109

Phosphate rock 1989 (8.1 ± 0.4) 109 2.4 1010

Thallium 1995 (4.7 ± 0.3) 102 7.6 102

Selenium 1994 (1.1 ± 0.14) 105 1.6 105

Zirconium minerals 1994 (3.9 ± 0.25) 107 6.7 107

Rhenium 1998 (1.0 ± 0.3) 103 3.3 103

Gallium 2002 (2.5 ± 0.5) 103 1.65 104 (?)

Bardi and Pagani examined 57 cases of mineral extraction from the USGS data. Of these, they

found 11 cases where a clear production peak can be detected. These cases are listed in Table

1. The table contains also the "ultimate recoverable resources" (URR) derived as the sum of the

amount of the already extracted resource and the amount of the reserves listed in the USGS


"Peak Minerals"



- 25 of 72 -

tables. This value can be compared with the amount that the logistic or Gaussian fitting of the

curve provides.36

For four minerals (Mercury, Lead, Cadmium and Selenium), Bardi and Pagani found a good

agreement of the URR determined from the logistic fitting with the URR determined from the

USGS data. For five minerals (Tellurium, Phosphorus, Thallium, Zircon and Rhenium), the URR

obtained from fitting is still acceptably close to the USGS data, although smaller.

The URR derived from the USGS data are significantly higher only for Gallium and Potash. This

discrepancy can be due to the high uncertainty of the data for gallium and potash; i.e. data on

world production of primary gallium are unavailable because data on the output of the few

producers are considered to be proprietary and data on the reserves and reserve base of potash

are rounded to avoid disclosing company proprietary data.

Figure 13. Global discovery rate37

The peak in the Hubbert peak theory suggests that at the end the number of deposit discoveries

will decrease. This effect is discernible in Figure 13, which shows the global discovery rate of

deposits. Furthermore, exploration and mining are becoming increasingly difficult for the

activities have to take place in remote locations under harsh conditions. The grades of the

discovered ores are lower, the pertinent ore-bodies are lying deeper and the permitting

processes last longer.38 Hence, the exploration expenses are increasing; see Figure 13. Not only


"Peak Minerals"




"Exploration in the Nordic Countries"

Presentation at Raw Materials Group 5th Exploration & Mining Conference

Stockholm, Sweden; 20 November 2008


"Exploration in the Nordic Countries"

Presentation at Raw Materials Group 5th Exploration & Mining Conference

Stockholm, Sweden; 20 November 2008

the exploration expenses go up, but also the energy needed for the exploration and extraction,

as well as the exploration risks.

3.3.2 Present estimates of ratio of reserves to annual extraction

Several authors estimated the ranges, i.e. the availability in years, for a number of materials.

Table 2 contains an overview of the findings of a few authors:

• André Diederen (2009)39 ,

• Stephen E. Kesler (2007)40 ,

• David Cohen (2007)41 ,

• Manuel Frondel et al. (2007)42 , and

• National Institute for Materials Science43 .

All authors mentioned above assume that both reserves or resources and extraction rates are

constant or change gradually. That is to say, their estimates are based on unaltered policies and

take no account for technological changes.

• Diederen assumed that the production of materials increases by 2% per year.

• Kesler calculated the ratios of global reserves to annual global production or

consumption, for most mineral and energy commodities for the year 1992.

• Cohen considered two cases: the global population continues to consume at the present

rate, and the global population starts to consume at half the rate of the USA.

• Frondel also assumed that the global population continues to consume at the present

rate.

• The National Institute for Materials Science, an independent administrative institution in

Japan, compiled a report at the request of the United Nations Environment Programme

(UNEP), to assist the International Panel for Sustainable Resource Management. This

report relates to the global flow of metals and material recycling.

39 A.M. Diederen



40 Stephen E. Kesler

"Mineral Supply and Demand into the 21st Century"

J.A. Briskey, and K.J. Schulz, eds.

Workshop on Deposit Modeling, Mineral Resource Assessment, and Sustainable Development

pp. 55-62 (paper 9)

U.S. Geological Survey Circular 1294, 2007

41 David Cohen


New Scientist magazine, issue 2605 (23 May 2007), page 34-41






Rohstoffe (BGR)



National Institute for Materials Science; Tsukuba-city, Ibaraki, Japan; May 2008

- 27 of 72 -

Table 2. Estimates of the availability of minerals and metals

Element Availability

Diederen

(2009)

Kesler

(2007)

Cohen

(2007)

Frondel et

al. (2007)

present rate ½ rate

of USA

reserves

[years] [years] [years] [years] [years]

Ag silver 12 10 - 25 29 9 14

Al aluminium 65 > 100 1027 510 157

Au gold 15 10 - 25 36 45 17

B boron > 100

Bi bismuth 38 25 - 50 65

C coal > 100

natural gas 50 - 100

oil 25 - 50

Cd cadmium 20 25 - 50 32

Co cobalt 59 50 - 100 135

Cr chromium > 70 > 100 143 40 46

Cu copper 25 25 - 50 61 38 32

Fe iron; steel 48 > 100 119

In indium 18 10 - 25 13 4 7

Li lithium > 70 > 100 203

Mg magnesium > 70 > 100 515

Mn manganese 29 25 - 50 41

Mo molybdenum 33 25 - 50 61

Nb niobium 40 > 100 129

Ni nickel 30 50 - 100 90 57 44

Pb lead 19 10 - 25 42 8 21

PGM Ru, Rh, Pd,

Os, Ir, Pt

> 70 > 100 360 42 177

REM Sc, Y, La etc. > 70 > 100 863

Re rhenium 36 50 - 100 60

Sb antimony 14 50 - 100 30 13 16

Sn tin 17 25 - 50 40 17 23

Sr strontium 11 25 - 50 12

Ta tantalum 53 50 - 100 116 20 38

Ti titanium 61 130

Tl thallium 28 10 - 25

U uranium 25 - 50 59 19

V vanadium > 70 > 100 323

W tungsten 25 50 - 100 39

Y yttrium 40 > 100

Zn zinc 15 10 - 25 46 34 23

Zr zirconium 19 50 - 100 45

3.3.3 Comparison with previous estimates

Estimates of the reserves and the periods of time that materials will be available have been

made before. A well-known example is the Club of Rome, a global think tank that deals with a

variety of international political issues, which raised considerable public attention in 1972 with its

report "Limits to Growth". It predicted that economic growth could not continue indefinitely

because of the limited availability of natural resources, particularly oil.44 Frondel and his co-

authors compared the findings of the Club of Rome with the data for 2004. Table 3 shows their

comparison for reserves of a number of non-energy raw materials.

Table 3. Reserves in 1972 and 200445

Material Reserves

1972 2004

(Club of Rome)

[million tonnes] [million tonnes]

bauxite 1,170 23,000

lead 91 67

chromium 775 810

iron ore 100,000 80,000

cobalt 2.18 7.00

copper 308 470

manganese 800 380

molybdenum 4.95 8.6

nickel 66.5 62

tungsten 1.32 2.9

zinc 123 220

tin 4.35 6.1

44 "Club of Rome"


Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens III

"The Limits to Growth"

Universe Books; New York, NY, USA ; 1972


S. Röhling, and M. Wagner, 2007


Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI Essen), Fraunhofer-Institut für System- und

Innovationsforschung (ISI) & Bundesanstalt für Geowissenschaften und Rohstoffe (BGR)


- 29 of 72 -

Despite the 32 years interval, the reserves increased for the materials bauxite, chromium,

cobalt, copper, molybdenum, tungsten, zinc and tin, whereas a decrease was observed for lead,

iron ore, manganese and nickel.

Table 4 shows the comparison for reserves and the R/P ratio, i.e. the ratio between reserves

and production. This ratio is also known as the static range. It should be noted that the R/P

ratios of the Club of Rome indicated that by the year 2000 we would have already depleted the

reserves of lead, zinc, and tin.

The Club of Rome computed the static range, by dividing the reserves by the exponentially

increasing extraction rate, instead of using the outputs at that time. That is to say, instead of

assuming a constant rate of usage, the assumption of a constant rate of growth of 2.6% annually

was used.

Static ranges obviously do not mark the end of raw material supplies. The crucial error with the

computations by the Club of Rome lies in the assumption that the reserves decrease

continuously while the exponential increase of raw materials use continues. Even if the

assumption of an exponential consumption appears justified, the examples shown in Table 3

demonstrate that the reserves of a raw material do not always decrease; on the contrary, they

even may increase.46

The increase of many reserves of raw materials is not necessarily due to higher prices, which

make mining of available resources more economical. The real prices of base metals and some

alloying elements have dropped, or have been approximately the same level since the beginning

of the 1970s. The increase of the reserves of raw materials for base metals is caused by other

factors. The main factor is the progress of technology, in particular technology for the exploration

and production of the corresponding ores, and for extraction of the metals from ores.







Table 4. Reserves and R/P ratios in 1972 and 2004 47

Base Metals Reserves R/P Ratio

2004 1972

(Club of Rome)

2004 1972

(Club of Rome)

[million tonnes] [million tonnes] [years] [years]

Bauxite 23,000 1,170 147 100

Lead 67 91 21 26

Iron Ore 80,000 100,000 64 240

Copper 470 308 32 36

Nickel 62 66.5 44 150

Zinc 220 123 24 23

Tin 6.1 4.4 24 17

47 M. Frondel (RWI Essen)

"Supply and Demand Trends of Mineral Resources"

Presentation at:

Expert workshop on "Raw Materials Scarcity as a Risk of Conflict and an Impediment to Development"

Berlin, Germany; 21-22 September, 2006

- 31 of 72 -

3.4 Technological innovation & emerging technologies

Technological innovation can have positive and negative effects on material scarcity. One the

one hand, new mining technologies can make the mining of yet unattainable resources possible

and profitable, hereby increasing the reserves (see Figure 1), and new production technologies

can lead to reduced use of materials. One the other hand, the rise of new products like flat

screen televisions or electric vehicles, can pose a demand on certain materials of which the

current reserves are insufficient. This section will look at product innovation and emerging

technologies which can lead to a radically different demand for materials.

The German Institute for Futures Studies and Technology Assessment IZT did a thorough study

into the effects of emerging technologies on material use48: "The efficient use of materials and

the closing of material cycles by recycling is a challenge for the future, which complies with

climate protection. The management of material efficiency relies on information about the

applications of materials in the industrial sectors, the technologies utilized there and the products

produced. The question here is which impulses for the raw materials demand will originate from

the future utilization of emerging technologies, and on which raw materials these innovations will

depend in particular. Emerging technologies are industrially exploitable technical capabilities

which cause revolutionary pushes of innovation far beyond the borders of individual industrial

sectors. Emerging technologies cannot be restricted to 5, 10 or 20 innovations. Rather, a

fundamental renewal of the economy is under way in all sectors, which is driven by the goal of

the industrialized high-wage countries to improve their position in the global competition due to

technological excellence."

A search for emerging technologies in the IZT study resulted in almost one hundred innovations

which may have impacts on the future raw materials demand. Of these, 32 technologies were

selected to anticipate their industrial utilization until the year 2030 and to assess the resulting

demand for raw materials in detail (see Table 5). A bottom-up approach was applied as foresight

method. This means the specific characteristics of the technology and its utilization and market

potential were deduced from a technical and economic innovation analysis.

A similar study was performed by the European Raw Materials Initiative49, which looked at

current technological challenges and their foreseen solutions. A list of these technological

challenges, possible solutions and their demand for raw materials is given in Table 6.

48 G. Angerer et al.

Raw materials for emerging Technologies - Final report

Fraunhofer Institute for Systems and Innovation Research ISI;

Institute for Futures Studies and Technology Assessment IZT

Karlsruhe / Berlin, Germany; 2009

49 The Raw Materials Initiative; Meeting Our Critical Needs for Growth and Jobs in Europe

Commission Staff Working Document accompanying the Communication from the Commission to the European

Parliament and the Council Commission of the European Communities

Brussels, Belgium; 4 November 2008; SEC(2008) 2741

Table 5. Portfolio of emerging technologies that ISI and IZT analysed50

Market Emerging technologies

Automotive engineering, 1 Light-gauge steel with tailored blanks

aerospace industry, 2 Electric traction motors for vehicles

traffic engineering 3 Fuel cells electric vehicles

4 Super capacitors for motor vehicles

5 Scandium alloys for constructing lightweight airframes

Information and communication 6 Lead-free solders

technology, 7 RFlD - Radio Frequency Identification

optical technologies, 8 Indium-Tin-Oxide (ITO) in display technology

micro technologies 9 Infrared detectors in night vision equipment

10 White LED

11 Fiber optic cable

12 Microelectronic capacitors

13 High performance microchips

Energy, electrical and 14 Ultra efficient industrial electric motors

drive engineering 15 Thermoelectric generators

16 Dye-sensitized solar cells

17 Thin layer photovoltaics

18 Solarthermal power stations

19 Stationary fuel cells - SOFC

20 CCS - Carbon Capture and Storage

21 High performance lithium-ion batteries

22 Redox flow batteries for electricity storage

23 Vacuum insulation

Chemical, process, production 24 Synthetic fuels

and environmental technology, 25 Seawater desalination

mechanical engineering 26 Solid state lasers for industrial applications

27 Nano-silver

Medical engineering 28 Orthopaedic implants

29 Medical tomography

Materials technology 30 Superalloys

31 High-temperature superconductors

32 High performance permanent magnets


Raw materials for emerging Technologies; Final report - Abridged



Karlsruhe / Berlin, Germany; 2 February 2009

- 33 of 72 -

Table 6. Selected "high-tech materials" applications for innovative "environmental

technologies" 51

Problem Solutions Raw materials (application)

Future energy supply Fuel cells Platinum

Palladium

Rare earth metals

Cobalt

Hybrid cars Samarium (permanent magnets)

Neodymium (high performance magnets)

Silver (advanced electromotor generator)

Platinum group metals (catalysts)

Alternative energies Silicon (solar cells)

Gallium (solar cells)

Silver (solar cells, energy collection /

transmission, high performance mirrors)

Gold (high performance mirrors)

Energy storage Lithium (rechargeable batteries)

Zinc (rechargeable batteries)

Tantalum (rechargeable batteries)

Cobalt (rechargeable batteries)

Energy conservation Advanced cooling technologies Rare earth metals

New illuminants Rare earth metals (LED, LCD, OLED)

Indium (LED, LCD, OLED)

Gallium (LED, LCD, OLED)

Energy saving tyres Industrial minerals

Super alloys (high efficiency jet engines) Rhenium

Environmental protection Emissions prevention Platinum group metals

Emissions purification Silver

Rare earth metals

High precision machines Nanotechnology Silver

Rare earth metals

IT limitations Miniaturisation Tantalum (MicroLab solutions)

Ruthenium (MicroLab solutions)

New IT solutions Indium (processors)

Tungsten (high performance steel hardware)

RFID Indium

(hand-held consumer electronics) Rare earth metals

Silver





The IZT study52 clearly demonstrates the consequences of the on-going technological change. It

introduced an indicator by dividing a raw materials demand of emerging technologies by today's

total world production. This indicator states what share of today's world production will be

required for emerging technologies in 2030. It is at the same time an indicator for the expansion

needs of the mining capacity.

For gallium the indicator reaches the value 6 and for neodymium 3.8., which means that in 2030

the technology-induced demand for these two raw materials will be 6 respectively 3.8 times

higher than their total present worldwide production. For indium, germanium, scandium, platinum

and tantalum it yields values higher than 1. The values for these and other critical elements are

given in Table 7.

Due to the dominance of the technical drivers on the demand, the elements listed in Table 7 are

at the same time raw materials that are of paramount importance for future technologies

development and their utilisation.

Table 7. Global demand of the emerging technologies analysed for raw materials in 2006

and 2030 related to today's total world production of the specific raw material52

Raw material 2006 2030 Emerging technologies (selected)

[fraction of

today's total

world

production]

[fraction of today's

total world

production]

Gallium 0.28 6.09 Thin layer photovoltaics, IC, white LEDs

Neodymium 0.55 3.82 Permanent magnets, laser technology

Indium 0.40 3.29 Displays, thin layer photovoltaics

Germanium 0.31 2.44 Fibre optic cable, IR optical technologies

Scandium low 2.28 solid oxide fuel cell, aluminium alloying element

Platinum low 1.56 Fuel cells, catalysts

Tantalum 0.39 1.01 Micro capacitors, medical technology

Silver 0.26 0.78 RFID tags, lead-free soft solder

Tin 0.62 0.77 Lead-free soft solder, transparent electrodes

Cobalt 0.19 0.40 Lithium-ion batteries, synthetic fuels

Palladium 0.10 0.34 Catalysts, seawater desalination

Titanium 0.08 0.29 Seawater desalination, implants

Copper 0.09 0.24 Efficient electric motors, RFID tags

Selenium low 0.11 Thin layer photovoltaics, alloying element

Niobium 0.01 0.03 Micro capacitors, ferroalloys

Ruthenium 0.00 0.03 Dye-sensitized solar cells, Ti-alloying element

Yttrium low 0.01 Super conduction, laser technology

Antimony low low Antimony-tin-oxides, micro capacitors

Chromium low low Seawater desalination, marine technologies


Raw materials for emerging Technologies; Final report - Abridged



Karlsruhe / Berlin, Germany; 2009

- 35 of 72 -

3.5 Origin of raw materials and trade

This chapter is looking into the definition of material scarcity, its effect and influencing factors.

Material scarcity is certainly a common issue for all mankind. Up to now we considered

resources to be global.

In the practise however, raw material resources are often regional; with a region defined here as

the EU or Northern America. Many raw materials are only found in certain regions of the world,

which are determined by geophysics of the earths crust. As an example iron ores are mainly

found on the Northern and Southern hemisphere, whereas a mineral like bauxite is mainly found

near the earths equator. An overview of the top three producing regions of selected metallic

minerals is given in Table 8.

The combination of regional resources or the lack of resources in the region, and trade

restriction or trade barriers can lead to material scarcity on a regional scale. Many of the

countries listed in Table 8 are not the main consumers of these materials, and in many cases

these countries impose some form of trade restrictions. As a result the advanced economies,

like Europe and Northern America, with a typically high consumption of raw materials but low

local reserves, are vulnerable to scarcity.

An illustrating example of trade restrictions is the recently proposed export restrictions of China

for the rare earth metals (REM) Neodymium (Nd), Europium (Eu), Cerium (Ce) and Lathanum

(La) to 35,000 ton per year, and completely stop the export of Thulium (Tm), Terbium (Tb),

Dysprosium (Dy), Yttrium (Y) and Lutetium (Lu). China states that it needs these REM resources

for its own economic development in the coming years. The plan is to implement these

restrictions in steps in the period 2009 – 2015. These exotic elements are used in many

products, like magnets, hard disks, wind turbines, mobile telephones, iPODs, electric engines,

fuel cells, etc. Since China alone takes care of 95% of the world production of REM elements,

this places the rest of the developed world for the task to find alternative rare earth metal

resources or find substitutes for REM elements quickly.

Table 8. Top three producing mining regions for selected metallic minerals (2006)53

Metal First Second Third Cumulative

country fraction country fraction country fraction

[%] [%] [%] [%]

Rare Earth

concentrates

China 95 USA 2 India 2 99

Niobium Brazil 90 Canada 9 Australia 1 100

Antimony China 87 Bolivia 3 South Africa 3 93

Tungsten China 84 Canada 4 EU 4 92

Gallium China 83 Japan 17 - 100

Germanium China 79 USA 14 Russia 7 100

Rhodium South Africa 79 Russia 11 USA 6 96

Platinum South Africa 77 Russia 11 Canada 4 92

Lithium Chile 60 China 15 Australia 10 85

Indium China 60 Korea 9 Japan 9 78

Tantalum Australia 60 Brazil 18 Mozambique 5 83

Mercury China 57 Kyrgyzstan 29 Chile 4 90

Tellurium Peru 52 Japan 31 Canada 17 100

Selenium Japan 48 Canada 20 EU 19 87

Palladium Russia 45 South Africa 39 USA 7 91

Vanadium South Africa 45 China 38 Russia 12 95

Titanium Australia 42 South Africa 18 Canada 12 72

Rhenium Chile 42 USA 17 Kazakhstan 17 76

Chromium South Africa 41 Kazakhstan 27 India 8 76

Bismuth China 41 Mexico 21 Peru 18 80

Tin China 40 Indonesia 28 Peru 14 82

Cobalt D.R. Congo 36 Australia 11 Canada 11 58

Copper Chile 36 USA 8 Peru 7 51

Lead China 35 Australia 19 USA 13 67

Molybdenum USA 34 China 23 Chile 22 79

Bauxite Australia 34 Brazil 12 China 11 57

Zinc China 28 Australia 13 Peru 11 52

Iron ore Brazil 22 Australia 21 China 15 58

Cadmium China 22 Korea 16 Japan 11 49

Manganese China 21 Gabon 20 Australia 16 57

Nickel Russia 19 Canada 16 Australia 13 48

Silver Peru 17 Mexico 14 China 13 44

Gold South Africa 12 China 11 Australia 11 34





- 37 of 72 -

Table 9. Examples of non-energy raw material export restrictions54

Raw material Country

Aluminium

(ores, concentrates, unalloyed unwrought metal)

China

Cokes Ukraine, China

Copper (ores, concentrates, intermediates, unwrought metal, master alloys)

China

Ferroalloys of chromium, nickel, molybdenum and tungsten China

Ferrous scrap Russia, Ukraine

High-tech metals

(Rare earth metals, Tungsten, Indium)

China

Iron ore India

Magnesium

(ores, concentrates, intermediates, unwrought metal)

China

Manganese China

Molybdenum

(ores, concentrates, intermediates, unwrought metal)

China

Nickel

(ores, concentrates, unwrought metal, electroplating anodes)

China

Non-ferrous scrap China, India, Pakistan, Russia

Wood Russia

A list of current trade restrictions for raw materials is given in Table 9, and this list is far from

complete. Many countries impose trade restrictions even for recycled materials. For example

most former Soviet countries and China forbid the export of aluminium scrap, because good

quality bauxite and/or energy that are required for primary aluminium production are not

abundant locally in these countries55. Because of the risk these trade restriction pose for the

local industry, the European Union and the United States filed a complaint against China with the

World Trade Organization on 23 June 2009.56


Commission Staff Working Document accompanying the

Communication from the Commission to the

European Parliament and the Council Commission of the European Communities


55 Proceedings of the 15th International Recycled Aluminium Conference, 2007, Munich, Germany.

56 Klacht tegen China bij WTO van EU en VS - Westerse industrie benadeeld

NRC Handelsblad, Woensdag 24 juni 2009, katern 2 (Economie), pagina 13

Table 10. Recent supply disruptions57

Year Material Major Source Problem Effect

1978 Cobalt Dem Rep. Congo Rebels invaded

copper-cobalt mining

region in Congo.

Rapid rise in price.

1993-1994 Antimony China Flooding was alleged

reason though some

industry sources

believe Chinese

suppliers withheld

material to increase

price.

Price per pound rose

from USD 0.80 to

USD 2.28 in 1995 and

from USD 1.61 in 2005

to USD 2.25 in 2006.

1994 Titanium (rutile). Key in

producing titanium

metal.

Sierra Leone has one

of the largest deposits

of rutile.

Production suspended

when rebels invaded

mining sites.

Global shortage.

2001 Tantalite. Used for

capacitors.

Australia Closure of facility in

Australia for long-term

maintenance.

Shortage, price rise,

and smuggling from

central Africa.

2005 Tungsten China dominates

supply and restricts

amount produced and

exported.

Exports reduced due to

alleged inadequate

supplies within China,

the largest consumer.

Steep price increase.

2005-2006 Rhenium. 65 percent

goes to aerospace (jet

engine blades and

rocket nozzles).

75 percent from two

companies—Molymet

in Chile (50 percent)

and Redmet in

Kazakhstan (25

percent).

Redmet exports

blocked due to dispute

over debt with copper

company that supplies

Redmet.

Price rose from

USD 1,000/kg to

USD 6,000/kg. Known

future production

increases are already

sold.

Besides trade restrictions, limited global resources make the consuming industries vulnerable to

other disruptions, like natural catastrophes or political conflicts. Examples of recent supply

disruptions are given in Table 10. Even in today’s world news many examples can be found of

conflicts over local resources. Examples are the Democratic Republic of the Congo with its

resources of cobalt and diamonds, and Burma with its tin resources58.

57 National Research Council, Committee on Assessing the Need for a Defense Stockpile

Managing Materials for a Twenty-first Century Military

National Academies Press / National Academy of Sciences; Washington, DC, USA; 2008

58 J. Oßenbrügge

"Ressourcenkonflikte; Umweltaspekte in der Friedens- und Konfliktforschung"

Vorlesung "Naturwissenschaft, Friedensforschung und internationale Sicherheit"

UniHH, Dept. Geowissenschaften, Institut für Geographie; Hamburg Germany; 9. April 2008

- 39 of 72 -

4. Scarcity and industry

In chapter 3, material scarcity was considered from a general point of view. Topics considered

were its cause by limited resources and demand, ways of forecasting scarcity, its dependence

on economic growth and technological developments and last but not least, the difference

between the more theoretical global scarcity and the more practical regional or local scarcity.

In this chapter, material scarcity will be considered from the industry’s point of view. How is the

European or Dutch industry affected by material scarcity, and what are the measures taken.

Section 4.1 looks at material trade between industries, section 4.2 deals with the mining industry

and the negotiating power this industry has when dealing with its customers, and section 4.3

looks at the flow of raw materials into Europe. The global materials flow, trade and negotiations

become even more concrete when section 4.4 focuses on this issue from the Dutch industry’s

point of view. How does the Dutch industry deal with limited material availability? Finally section

4.5 touches on the material scarcity activities abroad, to get a view on measures taken by other

countries to protect the competitive position of their industry.

4.1 Flow of materials

The primary route of materials as sketched before is far from complete. This becomes apparent

looking at a generalized picture of material flow (Figure 14). Raw materials or ores are taken

from the earth, processed to various forms of semi and end products, traded, used and wasted.

Figure 14. Flowsheet of materials59

59 M. Ericsson

"Rocky future"

Materials World, Vol. 13, No. 7 (July 2005), pp. 33-35

M. Ericsson, and P. Noras

"Minerals-based Sustainable Development - One Viable Alternative"

BHM: Berg- und Huttenmannische Monatshefte, Vol. 150 (2005), No. 12, pp. 424-431

In this renewed view on materials availability it is quite clear that a concept like recycling and re-

use of old materials was missing earlier, and that it can change the playing field completely. In

our modern world the focus on sustainability is present in our everyday lives; efficient use of

energy and materials, recycling and re-use of used materials are advocated actively by

politicians and the industry.

Even though recycling of metals has been around for decades, most of the metals consumption

depends heavily on mining and primary metals production. As will become apparent in section

4.2, the consuming industries are vulnerable to the large power of the mining industry.

Developments in recycling technologies that enable re-gaining of high-quality metals from waste

streams offers a unique opportunity for the industry in the advanced economies, like Europe and

Northern America to decrease their vulnerability to effects of material scarcity60.

60 Proceedings of the 15th International Recycled Aluminium Conference, 2007, Munich, Germany.

- 41 of 72 -

4.2 Mining industry

All of our materials streams start with the mining operation. For commodity materials like

aluminium, steel and copper, recycling nowadays plays a major role in the materials economy.

But even here, high-quality metal grades still require primary production from ores. This primary

metals stream is even more important for major alloying elements, which are difficult if not

impossible to retrieve from waste streams, or for speciality or precious metals, for which

relatively small quantities of highest purity are needed. It is apparent that the mining industry

plays an important, if not the most important, role in our current materials supply.

Table 11 lists the world top 10 companies in non-energy minerals mining. Even though these

companies are huge in terms of their revenue, their share in the world production seems

relatively small, with Vale owning just over 5% of the world non-energy minerals mining

business. However, this picture changes completely looking at the concentration in the

production of the mining industry for individual metals (Figure 15).

Table 11. World top 10 companies in non-energy minerals mining in 200761

World

Rank

Name Headquarters Share world

production

Metals Revenue 2007

[% of value] [Million USD]

1 Vale (CVRD) Brazil 5.45 Fe, Mn, Ni 33,115

2 BHP Billiton

Group

Australia / UK 4.92 Ag, Al, Cu,

Fe, Ni, Pb,

Ti, Zr

47,473

3 Anglo American UK 3.76 Cr, Cu, Fe,

Nb, Pd, Pt,

Rh, Ti, V,

Zn, Zr

25,470

4 Rio Tinto UK / Australia 3.59 Al, Cu, Fe,

Mo, Ti, Zr

33,518

5 Freeport

McMoRan

USA 3.28 Au, Cu, Mo 16,939

6 Norilsk Nickel Russia 2.91 Ni, Pd, Pt,

Rh

17,119

7 Codelco Chile 2.88 Cu, Mo 16,988

8 Xstrata Switzerland 2.72 Cr, Pb, Zn 28,542

9 Barrick Gold

Corp.

Canada 1.61 Ag, Au, Cu,

Ni

6,332

10 Grupo Mexico SA

de CV

Mexico 1.56 Ag, Cu, Mo 7,078

61 M. Ericsson

"Global Mining: New Actors!"

Nordic Steel and Mining Review; Bergsmannen, 2008/03, pp.112-118

The Raw Materials Initiative; Meeting Our Critical Needs for Growth and Jobs in Europe





Figure 15. Concentration trends in the production of the mining industry,

markets shares of the 3 largest mining industry producers in 200562

62 Kurzbericht zur Konzentration in der Weltbergbauproduktion – Fortschreibung Februar 2007

Bundesanstaltfür Geowissenschaften und Rohstoffe (BGR); Hannover, Germany; 2007

- 43 of 72 -

For many of the commodity materials the three largest mining companies own approximately

30% of the world business, whereas this number rises to 50 % or more for the more scarce

metals, like for instance titanium, tantalum and niobium.

For a commodity material like iron ore a figure of 30 % for the three largest players on the

market seems relatively small. However, most steel producing companies, and all steel

industries in the EU, have no local supply of iron ore and depend on ore transported from

overseas. The world top three iron ore producers (Figure 15) Companhia Vale do Rio Doce

(CVRD), BHP Billiton and Rio Tinto control 70 % of maritime trade in iron ore.63 Figure 16 shows

that the price of raw materials for the steel industry was approximately 2.5 x higher than the

1997 level, but the cost of freight shot up by as much as a factor 5.5.

Figure 16. Development of the price for raw materials for the steel industry64







64 L. Gronwald

"Rohstoffversorgung der Stahlindustrie am Beispiel ThyssenKrupp Steel AG"

Bergbau, 7/2008, pp. 318-321 (Steine und Erden)

Table 12. Largest mining mergers and acquisitions in 200765

Rank Buyer Share Target Sector Amount

[%] [million USD]

1 BHP Billiton 100 Rio Tinto Diversified 150,000

2 Rio Tinto 100 Alcan Alumina 38,100

3 NorilskNickel 100 Lionore Mining

International

Nickel 6,335

4 Teck Cominco 100 Aur Resources Copper 4,100

5 Uranium One 100 UrAsia Energy Uranium 3,407

6 Yamana Gold 10 Meridian Gold Gold 3,307

7 Xstrata 100 Jubilee Mines NL Nickel 2,900

8 Areva 95 UraMin Uranium 2,500

9 Uranium One 100 Energy Metals

Corp

Uranium 1,607

10 Newmont Mining

Corp

100 Miramar Mining

Corp

Gold 1,500

It is clear that the mining industry is governed by a few large companies, and this consolidation

in the industry has not stopped (Table 12). Furthermore, mining companies tend to integrate

vertically and include primary metal production in their business (Figure 17). Whereas the

relationship between mining companies and metal producers was traditionally that of ore

supplier and metals producer, nowadays, especially in the aluminium industry, primary metal is

produced by the mining company and the metal producer focuses on the production of value

added products.

65 M. Ericsson

"Global Mining: New Actors!"

Nordic Steel and Mining Review; Bergsmannen, 2008/03, pp.112-118

- 45 of 72 -

Figure 17. Vertical integration66

Recently there has been resistance in the steel industry against the mergers and acquisitions in

the mining industry. Industry sector associations, like the European Confederation of Iron and

Steel Industries (Eurofer), fear skyrocketing of the iron ore prices. These mergers and

acquisitions have to pass muster of competition authorities. Therefore, associations like Eurofer

contacted the competition authorities about their concerns.67


"Global Trends in Exploration & Mining"

Presentation at 6th Fennoscandian Exploration & Mining Conference

Rovaniemi, Finland; 28 November 2007

67 P. Depuydt

"Verzet in staalindustrie tegen mijnbouwfusies; Brancheverenigingen vrezen prijsopdrijvingen en stappen

wereldwijd naar mededingingsautoriteiten"

NRC Handelsblad, 26 juni 2009, katern 2, pagina 15

Figure 18. Global mining exploration expenditure (with 2008/2009 estimates)68

The consolidation and rising power of the mining industry has not been the main factor in the

sharp price increases of ores and metals over the last decade. The growing economy and

consequently growing demand for materials pushed the need for investments in the exploration

and production of raw materials. With limited availability of high-quality easily-accessible

resources, the mining industry reacted by investing heavily in more capacity and in exploration of

mining sites that are less accessible (Figure 18). These large investments and higher

economical risks that had to be taken have had obvious price consequences.






- 47 of 72 -

4.3 Import of raw materials to the EU

What are the consequences of material scarcity on the material flows for the industry in the EU?

Section 3.5 already touched on the vulnerability of an industrialised region without many natural

resources for disturbances in raw materials production, either by natural catastrophes or by

political conflicts. The EU is such an industrialised region without many natural resources. The

economy of an industrialised region like the EU depends heavily on manufacturing industry, but

it depends almost entirely on raw materials imports; as illustrated by Figure 19 and Figure 20.

Section 4.2 showed that the powers of the large mining industries make it difficult for EU-based

materials consuming industries to achieve a good negotiating position. The economic power of

the EU can warrant a fair playing field for our industries, using its negotiating power and by

antitrust legislation.

Figure 19 Metal concentrates and ores net imports of EU27 as fraction of apparent

consumption in 200869






Figure 20. Major global producers of selected high-tech metals (2006)70






- 49 of 72 -

4.4 Material scarcity and Dutch industry

What is the effect of material scarcity on Dutch industry, and how does Dutch industry react to

material scarcity? Answering these two questions would require an extensive research, which is

outside the scope of this study. With help from the industrial partners of M2i we can give here

two illustrative examples, on both sides of the spectrum of industries: the steel industry

manufacturing bulk products and the microelectronics industry making large number of products

with small quantities of material.

From the two examples below the following first conclusions can be drawn:

1. Material scarcity is already felt by the industry for key materials (like zinc and gold) which

are difficult to replace with other materials. This fuels research for substitutes or reduced

material use.

2. The rising price of materials is the prime indicator of scarcity, but industry also takes into

account the availability on the longer term by looking at the production of materials and

competing users of materials.

3. The added value of products is an important element in the decision to continue the use

of certain materials or start looking for substitutes. Small quantities of expensive and

scarce materials in products with high added value, like microelectronics, can remain

profitable, while use of less expensive and less scarce material in bulk products, like

steel strip, require serious research for alternatives.

4. Apart from costs, industry is also susceptible to social and environmental requirements.

Either imposed by law, or as part of the business ethics. This can form a good basis for

dealing with material scarcity on the long term.

4.4.1 Material scarcity and the steel industry

An example of the reaction of an industry, manufacturing bulk products, to limited materials

availability is the steel industry. This example is not specific for the industry in the Netherlands,

but it is common for the steel industry world wide. From the environmental and sustainability

reports of the major steel companies the two main goals appear to be: cost reduction and

profitability, and minimising the energy and CO2 footprint.71 However, two common topics in the

strategies of major steel producers indicate that these companies become aware of the limited

availability of materials and its impact on the sustainability and long term profitability of the

companies.

A first indicator is the focus on the availability of primary feedstock of coal and iron ores. Capital

investments show the integration of mines for strategic raw materials, and R&D expenditures

show the development of technologies that enable the use of lower grade raw materials and re-

use of waste materials that were previously valueless.

A second indicator is the goal to minimise the use of raw materials. An excellent example is

development of advanced zinc coating technologies. Although the construction and building in

developing countries uses mainly uncoated steels, in the developed countries approximately

30% of steel strip is zinc coated for corrosion protection. Well known examples are building and

71 Arcelor-Mittal, Corporate Responsibility Report, 2008.

Nippon Steel, Sustainability Report, 2008,

Tata Steel, Corporate Sustainability Report, 2008.

Posco, Sustainability report, 2008

automotive sheet materials. It was shown in section 3.3.2 that the ratio of zinc reserves to

current consumption is approximately 20 to 30 years.

Currently there is no real alternative for zinc coating, and it still offers the best corrosion

protection for steel strip. The zinc coating maintains its protection after forming and most welding

operations and after small damages of the coating layer. If no zinc were available at reasonable

costs for steel protection, a large part of the market for steel strip would shift to alternative

materials; for instance aluminium sheet for automotive applications.

Long time availability of zinc appears to be of key importance for the steel industry in the

developed countries, and research efforts shows developments of technologies for applying

lower coating weights, metallic coatings with lower zinc concentrations and improved methods

for recycling of zinc and zinc oxide from steel scrap. Although costs of zinc are often mentioned

as the prime driver for these developments, the market price seems to affects developments

only on the short term. As zinc becomes scarcer, the rising price will only fuel developments

further.

Noteworthy, world’s largest steel producer Arcelor-Mittal demands social and environmental

sustainable behaviour not only for its own operations, but also for its suppliers.72 Propagation of

its core values over the supply chain will discourage risky and irresponsible mining operations as

raw materials become scarcer (see section 3.3.1).

4.4.2 Material scarcity and the micro-electronics industry

Another example of the reaction of industry on material scarcity is that of the microelectronics

industry, in particular the development and production of semiconductor devices. This industry is

characterized by the use of small quantities of material in products with high added value. With

the ongoing miniaturization, the trend is that still smaller quantities of materials are used in

products, and the added value per milligram of used material will go up.

Gold (Au) en platinum (Pt) are two scarce elements used in semiconductor devices, which are

considered as critical elements (see figure 23, where the elements of the periodic system are

split in three categories of scarcity). Gold is used in applications like bonding and ultra high

frequency devices and platinum is applied in specialty devices for components like high density

capacitors and ferro-electric memories. Gold bonding is more and more replaced by copper

bonding. For platinum, no alternatives are available yet. Due to ever rising prices and the

competition of other industries – the use in catalytic converters for cars and the production of

jewelry – the semiconductor industry has started dedicated research efforts to look for

substitutes and alternative designs. A substitute for platinum could be to look for substrates

made of different conducting materials. An example of alternative designs with less use of

platinum is to go for thinner layers. This has the short term benefit of reduction of the use of

platinum, but an adverse effect on the long term: it makes recycling of platinum difficult or

impossible. In a harsh economic climate like we live in today, industry will tend to go for the short

term financial benefit.

The materials that end up in the semiconductor devices form only a small part of the materials

used in the overall production process. Much use is made of chemicals and purified water, and a

lot of effort is put into reducing the effect on environment. Recycling of materials and waste and

emission management are an integral part of the industry policy, because the environmental

72 Arcelor-Mittal, Corporate Responsibility Report, 2008.

- 51 of 72 -

requirements are already imposed by law for many years. Reducing the use of scarce materials

in semiconductor devices is currently only fuelled by economic motives.

Shortages of materials caused by export restrictions or regional conflicts are more difficult to

anticipate by the semiconductor industry. Take for an example the possible export restrictions of

China on REM elements (see section 3.5). REM elements are used in minute quantities in

devices like mobile telephones, in LED lights and in displays. Again, these products have a high

added value, so industry can afford high prices for these elements. However if shortages occur,

substitutes must be found. At present, the authors of this study are not aware of research on this

point.

The semiconductor industry is driven, as any industry, by economic factors like profit and

continuity. Research for substitutes for scarce materials is driven by the costs of these materials.

The industry is certainly susceptible for societal goals, like saving the environment and avoiding

use of toxic materials. The REACH73 regulation, which limits or forbids the use of certain

chemical elements, has triggered a serious research effort in the semiconductor industry and

resulted, for instance, in a strong reduction of the use of lead for soldering.

73 REACH is the Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals. It entered into

force on 1st June 2007. It streamlines and improves the former legislative framework on chemicals of the

European Union (EU).

4.5 Material scarcity activities abroad

Many countries have already conducted research into material scarcity for reasons of protecting

their own economies against future changes in technology, economy or political situation.

Examples are Australia, China, the EU, Germany, Japan, the UK and the USA.

In Europe, Germany has been most active in this field because its economy relies heavily on the

manufacturing industry, which consumes a large volume of materials, while lacking its own

natural resources. Other European countries such as the United Kingdom and France provided

for their need for raw materials from their colonies until the Second World War.74 This may

explain why Germany is more active in the field of scarce materials than other European

countries.

The institutes that have been invited by the German government to study relevant issues are:

• Bundesanstalt für Geowissenschaften und Rohstoffe (BGR)

• Institut für Zukunftsstudien und Technologiebewertung (IZT)

• Fraunhofer Institut für System- und Innovationsforschung (ISI)

• Rheinisch-Westfalisches lnstitut fur Wirtschaftsforschung (RWI)

For references to these studies, see section 9.2.

74 F. Woudenberg en J. van der Zanden

Wisselwerking tussen techniek, wetenschap en maatschappij

Vereniging voor Studie- en Studentenbelangen te Delft, Delftsche Uitgevers Maatschappij B.V.

Delft, Nederland; 1973

- 53 of 72 -

5. Solution paths

It may be clear from chapters 3 and 4 that a definite solution for material scarcity is not easy to

obtain. This would require a complete and real sustainable use of materials. It is not surprising

that in the field of material scarcity one often speaks of mitigating (the effects of material

scarcity). But if we want to work on mitigating and finally solving material scarcity, what are the

possibilities? What are the steps to be taken? Guidelines or building blocks can be found in this

chapter. Section 5.1 discusses the elements of the periodic system and their relative scarcity.

The possible steps towards a sustainable use are discussed in section 5.2 on Trias Materialis.

5.1 Element types

Figure 21 shows the material criticality matrix, which scores materials on supply risk and their

impact. The score for a certain element on the Y-axis is determined by three fundamental

issues. Firstly there is the option of substitutes. When element A can be easily substituted by

element B (or a range of other elements depending on the application), the score on the Y-axis

will be lower.

Figure 21. Criticality matrix75

Secondly, the actual application itself is of importance. If the depletion of element A will result in

the stoppage of the production of one specific niche product, then the impact will be much lower

compared to for instance a hypothetical stoppage in the production of for instance cars or

75 National Research Council

Committee on Critical Mineral Impacts of the U.S. Economy & Committee on Earth Resources

Minerals, Critical Minerals, and the U.S. Economy

National Academies Press / National Academy of Sciences; Washington, DC, USA; 2007

generic drugs. Indirectly this leads to the third factor; i.e. the point of reference that is chosen for

an analysis. A niche product to the world may very well be a major product for a country or a

specific industry or even individual manufacturer.

The score on the X-axis in Figure 21 is much less open for interpretation. Here the score is

dictated by measurable parameters like:

• Availability (the uncertainty is in the undiscovered reserves)

• Primary / secondary supply (partly determined by the effectiveness of recycling loops)

In summary, this means that graphs like Figure 21 can and maybe should be constructed but

only accompanied by a set of clearly stated boundary conditions. The actual construction of

graphs like Figure 21 is beyond the scope of the current discussion.

Figure 22. The three types of chemical elements

A more straightforward manner to plot the different elements is shown in Figure 22, in which the

probability of a supply disturbance is plotted against the period of availability. In this graph we

can distinguish three groups:

o Critical elements

o Frugal elements

o Elements of hope

Some metal minerals appear to be more critical than indicated by their ratio of reserves against

primary production. The study by Diederen76 showed that several metal minerals suffers from

relatively low absolute amounts of reserves and associated low extraction rates, effectively

making them non-viable large-scale substitutes for other metals which will be in short supply.

76 A.M. Diederen



- 55 of 72 -

For example it is up for debate whether lithium is a viable large-scale substitute for nickel in

accumulators for electric energy.

Other metal minerals, like for example manganese, have no acceptable substitutes for their

major applications. This is of special interest for those metals which will run out relatively fast at

the present course.

Even metals with a high ratio of reserves to primary annual production combined with large

absolute amounts of reserves and associated extraction rates, can be susceptible to future

supply constraints because they are located in just a few geographic locations. An example is

chromium which is mainly located in Kazakhstan and southern Africa.

Figure 23. The toolbox containing the elements of hope, the frugal elements and the critical

elements (PGM = Platinum Group Metals; REM = Rare Earth Metals)77

Summarising these considerations, Figure 23 splits a large number of elements into the three

described categories.

Critical elements: It is seen that there are over 30 elements that have reached the status of

“critical”. Table 13 shows the expected time period of their availability. Many of these (Zn, Li) are

also likely to score high on the impact axis from Figure 21 as they are used in societal critical

applications like automotive and battery technology. For these elements it would be advisable to

develop some sort of mechanism that ensures that they are used sparsely and only for those

applications where they cannot be substituted by other elements.

77 A.M. Diederen



Table 13. Critical elements78

Element Minimum availability Applications

[years]

Ag silver 12 Jewellery, alloying element for aluminium,

As arsenic 17 Semiconductors

Au gold 15 Jewellery

Be beryllium >70 inertial guidance systems, turbine blades, lasers, rocket engine

liners, springs, aircraft brakes, ball bearings, injection and blow

moulds, electrical contacts, X-ray tube windows, spark plugs,

electrical components, ceramics, gears, aircraft engines, oil and

gas, welding electrodes.

Bi bismuth 38 Soldering alloys, pharmaceuticals and chemicals, ceramics,

paints, catalysts, and a variety of minor applications.

Cd cadmium 20 Electronics

Co cobalt 59 Super alloys

Ga gallium ? Semiconductors

Ge germanium ? Industrial glasses, electronics, light and temperature sensors

Hg mercury 24

In indium ? Vacuum seals

Li lithium >70 Alloying element for aluminium, batteries

Mo molybdenum 33 Alloying element for steel

Nb niobium 40 Alloying element for steel

Nd neodymium ?

Ni nickel 30 Alloying element for steel, super alloys

Pb lead 19 Building

Pd palladium ?

PGM platinum etc. >70

REM rare earth metals >70

Re rhenium 36

Ru ruthenium ?

Sb antimony 14

Sc scandium ? Alloying element for aluminium

Se selenium ?

Sn tin 17 Steel coating

Sr strontium 11

Ta tantalum 53

Te tellurium >70

Tl thallium 28

V vanadium >70

W tungsten 25

Y yttrium 40

Zn zinc 15 Steel coating, alloying element for aluminium

Zr zirconium 19

78 A.M. Diederen



- 57 of 72 -

Table 14. Frugal elements79

Element Minimum

availability

Applications

[years]

Cr >70 • alloying element for (stainless) steel, nickel and aluminium alloys;

high speed tool steels contain between 3 and 5% chromium

• used as surface coating to prevent oxidation

Cu 25 • piping

• electrical applications

• architecture

• coinage

• alloying element for aluminium alloys;

Mn 29 • alloying element for steel and aluminium alloys;

• large amount of manganese dioxide is produced for the use as depolarizer in zinc-

carbon batteries and alkaline batteries

Ti 61 • 95% of titanium ore extracted from the earth is destined for refinement into titanium

dioxide (TiO2), a white permanent pigment

• Ti in metallic form is used in the transport

• alloying element for steel and aluminium alloys

Frugal elements: These types of elements are still less scarce than critical elements but they

should be used in a frugal (restrained, austere) manner. Table 14 gives an overview of the main

applications of the frugal elements. As with the critical elements, they should only be applied in

mass for applications in which their unique properties are essential. In this way their remaining

reserves will last longer (most notably copper and manganese).

Elements of hope: These are the most abundant elements available to mankind and can be

extracted from the earth’s crust, from the oceans and from the atmosphere. They constitute both

metal and non-metal elements. Table 15 lists the main elements of hope.

79 A.M. Diederen



Table 15. Elements of hope80

Element Minimum

availability

Applications

[years]

Al 65 • aerospace

• automotive

• packing

• building industry

Fe 48 • automotive

• yellow goods

• packaging

• building industry

Mg >70 • automotive

• aerospace

• electronic devices (mobile phones, laptop computers, cameras)

• alloying element (aluminium)

• removal of sulphur from iron and steel

• refining of titanium in the Kroll process

• additive agent in the production of nodular graphite in cast iron

Si ? • alloying element for steel, cast iron and aluminium;

• semiconductor industry

80 A.M. Diederen



- 59 of 72 -

5.2 Trias materialis; to a sustainable use of materials

In 1996, Erik Lysen of Novem introduced the term Trias Energetica in the Netherlands for a step

by step approach to achieve a CO2 neutral energy consumption.81 The three steps are:

1. Reduce the overall need for energy;

2. Use durable energy sources as much as possible; and

3. Use fossil fuels only if necessary.

The concept of Trias Energetica can also be adapted to materials to summarize the type of

measures necessary to come to sustainable use of materials.. We propose82 a Trias Materialis

consisting of the following steps:

1. Reduce the use of materials;

2. Recycle materials as much as possible; and

3. Avoid use of materials with limited stocks and find alternatives.

These steps to come to sustainable use of materials have to be taken within boundary

conditions with respect to energy, environment and return on investment. In the following

sections these steps as well as the boundary conditions are explained in more detail.

5.2.1 Reduction of the demand or use of materials

Using less material is an obvious first step to come to a sustainable use of materials. Especially

material with limited stocks should get priority here. Reduction of the use of materials consists of

the following elements:

• Increase the lifetime of production and consumer goods.

Every percent increase in the lifetime of goods means a percent reduction in use of

materials. Reparability of products will contribute to a longer life time. If possible, it is

better to refrain from using throw away products.

• Reduce the use of materials in products and in production.

Lighter, thinner, smaller products will reduce the use of materials. Also the generation of

less waste in production is an important element.

• Find alternatives for scarce elements.

As much as possible the use of scarce material resources must be avoided by finding

alternative solutions.

81 E.H. Lysen

"The Trias Energica: Solar Energy Strategies for Developing Countries"

Paper for the Eurosun Conference; Freiburg, Germany; 16-19 Sept 1996

82 Welmer and Ham use the term Trias Materia with a slightly different definition.

N. Welmer, and M. Ham (Eindhoven University of Technology)

"Zero energy housing with low environmental impact: The Trias Materia"

Paper for PLEA 2008 – 25th Conference on Passive and Low Energy Architecture

Dublin, Ireland; 22-24 October 2008

5.2.2 Recycl ing of materials

Recycling of materials is the key element for sustainable use of materials. Priority should be

given to material with limited stocks. Recycling consists of the following elements:

• Design products for recyclability.

Starting with the selections of materials, everything in the design of product must ensure

the possibility to recycle the materials. Alloys should be separated in the original

elements; the different layers in multi-materials should be delaminated from one

another. The ideal situation is to bring the materials back to their original substance so

they can be used for new high value products. This is the philosophy of Cradle to

Cradle.

• Close the recycle loop.

Recycling is already around for quite some time, but often products do not come back

for recycling. Closed systems must be set up to ensure a high percentage of recycling.

Section 5.3 discusses recycling in more detail.

5.2.3 Avoid use of materials with l imited stocks and f ind alternatives

Material resources with a limited stock should only be used for special purposes for which no

alternatives are available. The use of materials with limited stocks should consist of the following

elements:

• Carefully selection of the applications of materials with limited stocks.

This applies to elements in the categories "critical" and "frugal" as described in section

5.1. Only applications for which no alternatives are available should be chosen. For

these applications only small volumes of the mentioned element types should be used.

Bulk applications should be avoided.

• Continuously search for alternatives for applications of materials with limited stocks.

Scarce element types may be used for certain applications for which there are no

alternatives today, but alternatives may turn up in the future. To make this happen,

continuous research for alternatives for scarce elements must be undertaken.

An example could be rhenium, one of the rarest elements on earth, which is used to create a

high temperature resistant alloy for turbine blades in jet engines for airplanes.83 Recycling efforts

for rhenium have gone up in the last years. At present no alternative for rhenium is available.

One could reserve rhenium for application in jet engines under the provision that research is

carried out to find an alternative in 5 years from now.

83 H.G. Nadler, and H.C. Starck, 1993

"Rhenium and Rhenium Compounds"

Ullmann's Encyclopedia of Industrial Chemistry (5th, Completely Revised Edition)

Volume A 23, pp. 199-209

eds. B. Elvers et al.

VCH Verlagsgesellschaft mbH; Weinheim, BRD; 1993

Michael J. Magyar

"Rhenium"

U.S. Geological Survey Minerals Yearbook - 2004

- 61 of 72 -

5.2.4 Boundary condit ions: energy, environment, return on investment

Of course the measures described above only provide one side of the picture. To find real

sustainable solutions the following boundary conditions must be taken into account:

• Avoid or make careful use of scarce energy resources.

Energy must be brought into the equation when considering reduction of the use of

materials. Alternative production processes which require less use of materials must be

traded of against a possible extra use of energy. Energy should also be treated as a

scarce resource.

• Avoid detrimental effects on the environment.

Sustainable use of materials cannot go without sustainable use of the environment.

Processes for mining, production, and recycling of materials must be designed in such a

way that the burden on the environment is minimized.

• Industry should be able to make a return on investment.

All of the above measures and the two boundary conditions on energy and environment

cannot and will not be adopted by industry if there is no reasonable return on

investment. That is to say, the payback period, i.e. the pertinent period of time to recover

the costs, is short enough. For instance carrying out expensive research to find

alternatives for scarce elements requires a level playing field for a company and its

competitors. This could be created by EU regulations on the banning of the use of

certain type of elements. Another measure could be government sponsoring of

fundamental research on alternatives for scarce elements.

In chapter 6, the role of industry and the necessary boundary conditions are discussed in more

detail.

5.3 On recycling

In his article in New Scientist on the earth's natural wealth, David Cohen showed the proportion

of consumption that is met by recycled materials.84 Figure 24 shows his results.

It is advisable to avoid the downgrading of materials during recycling. That is to say, to use a

material for the same purpose before and after recycling. For example, used beverage cans

(UBC) are used in the United States and Sweden to make aluminium sheet that is used for the

production of new cans.85

84 D. Cohen



85 Ö. Clevesson and A. Lundström, 1994

"Melting of Used Aluminium Beverage Cans (UBC) Regained from the Swedish Recycling System"

Elektrowärme International, 52 (1994) B1, März, pp. B8-B15

Figure 24. Proportion of consumption met by recycled materials86

Although the automotive industry is the single biggest market in the United States for aluminium,

most American consumers most likely associate aluminium with soft-drink cans. Because of this

metal's sustained recyclability, manufacturers may repeatedly use and reuse aluminium without

a decline in quality. Thus, during the last two decades, aluminium recycling has become a

V. Newberry and R.F. Jenkins

"Advanced Technology Delacquering and Melting at Alcan Rolled Products, Oswego, New York"

3rd Int. Symposium on Recycling of Metals and Engineered Materials

eds. P.B. Queneau and R.D. Peterson

The Minerals, Metals & Materials Society; Warrendale, PA, USA; 1995

pp. 685 - 702

R.E. Sanders Jr., J.K. McBride, and M.W. Milner, 1985

"Recycling and Fabrication of Used Beverage Cans (UBCs) into 3004 Alloy Can Sheet"

Recycle and Secondary Recovery of Metals

Proc. Int. Symposium, pp. 407 - 415

Fort Lauderdale, FL, USA; 1 - 4 December 1985

eds. P.R. Taylor, H.Y. Sohn and N. Jarrett

TMS; Warrendale, PA, USA; 1985

G. Sjöberg and A. Lundström, 1992

"Channel Furnace for Melting Used Beverage Cans"

Aluminium, 68. Jahrgang (1992), Heft 7, pp. 576-579

86 D. Cohen



0

10

20

30

40

50

60

70

80

Ag Al Au Cr Cu Ga Ge In Ni Pb Sn Ta U Zn

Element

Fra

cti

on

re

cy

cle

d [

%]

- 63 of 72 -

widespread and cost-effective practice. Most recycled aluminium comes from beverage cans,

and most beverage cans now undergo recycling.87

Downgrading can be illustrated with the following example. Aircraft manufacturers use thick

plate of high strength aluminium alloys to make aircraft parts. To this end they employ several

metal removing operations, like milling, or drilling, during which approximately 80 – 90% of the

metal is converted to scrap; e.g. turnings, borings, chips, swarf88. The primary aluminium

suppliers recycle most of their internal scrap directly back into aircraft products. For the process

scrap generated at the aircraft manufacturers however, most scrap is sold to scrap dealers and

secondary aluminium smelters, which blend it into lower grade aluminium-silicon foundry alloys

using well established process technology.89

Of interest is furthermore the time materials may spend in a product before they are recycled.

For example, a single cycle of the recycling loop of aluminium cans lasts a few months90. Steel

rods and beams can be a part of a building for a few decades.

Recycling is a part of the waste hierarchy. The waste hierarchy refers to the 3Rs of reduce,

reuse and recycle, which classify waste management strategies according to their desirability.

The 3Rs are meant to be a hierarchy, in order of importance. The waste hierarchy has taken

many forms over the past decade, but the basic concept has remained the cornerstone of most

waste minimisation strategies. The aim of the waste hierarchy is to extract the maximum

practical benefits from products and to generate the minimum amount of waste.91

87 Angela Ellis and James D. Norris

"Nonferrous Metals"

Dictionary of American History; 2003

Retrieved 8 September 2009 from http://www.encyclopedia.com/doc/1G2-3401803002.html

88 Swarf = material (as metallic particles and abrasive fragments) removed by a cutting or grinding tool

In Merriam-Webster Online Dictionary

Retrieved 18 March 2009, from http://www.merriam-webster.com/dictionary/swarf

89 W.R. Wilson, D.J. Allan, O. Stenzel, M. Lorke, K.-W. Krone, and C. Seebauer

"Al-Li Scrap Recycling by Vacuum Distillation"

Aluminum - Lithium Alloys; Proc. 5th Int. Al-Li Conf., Vol. III, pp. 473 - 496

Williamsburg, VA, USA; 27 - 31 March 1989

Material and Components Engineering Publications; Birmingham, UK; 1989

90 M.B. He, 2006

Analysis of the Recycling Method for Aluminum Soda Cans

Dissertation Submitted in Fulfillment of Requirements of Degree of Bachelor of Engineering

University of Southern Queensland; Toowoomba, Australia; October 2006

91 "Waste hierarchy"


Figure 25. A waste hierarchy92

The waste hierarchy, which is shown in Figure 25, may be considered in product and package

development. It consists of the following issues;

• Prevention – Waste prevention is a primary goal. Packaging should be used only where

needed. Proper packaging can also help prevent waste. Packaging plays an important

part in preventing loss or damage to the packaged-product (contents). Usually, the

energy content and material usage of the product being packaged are much greater

than that of the package. A vital function of the package is to protect the product for its

intended use: if the product is damaged or degraded, its entire energy and material

content may be lost.

• Minimization (also "source reduction") – The mass and volume of packaging (per unit of

contents) can be measured and used as one of the criteria to minimize during the

package design process. Usually "reduced" packaging also helps minimize costs.

Packaging engineers continue to work towards reduced packaging.

• Reuse – The reuse of a package or component for other purposes is encouraged.

Returnable packaging has long been useful (and economically viable) for closed loop

logistics systems. Inspection, cleaning, repair and recoupment are often needed.

• Recycling – Recycling is the reprocessing of materials (pre- and post-consumer) into

new products. Emphasis is focused on recycling the largest primary components of a

package: steel, aluminium, papers, plastics, etc. Small components can be chosen

which are not difficult to separate and do not contaminate recycling operations.

• Energy recovery – Waste-to-energy and Refuse-derived fuel in approved facilities are

able to make use of the heat available from the packaging components.

• Disposal – Incineration and placement in a sanitary landfill are needed for some

materials.

92 "Packaging and labeling"


- 65 of 72 -

6. Thinking about scarcity

In the previous chapters, the situation concerning material scarcity has been described. The

problems, which are expected as result of material scarcity, are discussed and a number of

approaches have been presented. It is clear that without additional actions, material scarcity will

cause serious problems ranging from (very) high prices for materials, shortages of essential

materials, up to regional conflicts.

The question is in which way we can turn this uncomforting knowledge into action. To what

extent is it enough to tell this story to as many people as necessary? Should people be

convinced or perhaps forced by their governments to change to a more sober lifestyle to ensure

that future generations can also lead lives in peace and with some prosperity?

Or should society rely on the market forces and technological innovation to find solutions for

upcoming shortages, both by improving mining technologies as well as finding alternatives for

scarce materials? Up to now, the latter system worked reasonably well. However, it is doubtful

whether this will be true in the future as well since markets tend to have a fairly short time

horizon which might obstruct the development of longer term solutions.

To come to a balanced approach, this chapter discusses two conflicting paradigms for material

scarcity, put forward by John Tilton; the fixed stock paradigm and the opportunity costs

paradigm93.

6.1 Fixed stock paradigm

The fixed stock paradigm starts with the observation that since the earth is finite, the supply of

any mineral supply is finite, and hence there is a fixed stock. The demand for mineral supplies

however is a flow variable, it is ongoing and even growing exponentially with growing world

population and growing economic wealth. The depletion of mineral supplies is inevitable and

only a matter of time.

Despite the inherent logic, the fixed stock paradigm has a number of shortcomings. First, many

mineral resources are, like metals, not consumed when they are used, so recycling and reuse

are possible, at least in principle. Second, substitution of mineral resources by others will

alleviate the threat of mineral depletion. If depletion of one mineral resource drives the price up,

society will reduce their use and rely on alternatives. Third, the fixed stock of mineral resources

in the earth crust is huge. Although most of it will require too much energy, another scarce

resource, to mine it, the uncertainty in obtainable stock is large. This will fuel a constant debate

whether it is necessary to take stringent measures to curve material scarcity or not.

All in all, the fixed stock paradigm creates a grim outlook, which neglects the ingenuity of

mankind to find substitutes for scarce mineral resources. It will furthermore be attacked fiercely

and continuously by opponents on the assumed amount of available stock of mineral resources.

But most importantly the fixed stock paradigm takes away hope and with it the creativity to find

solutions.

93 John. E. Tilton

On Borrowed Time? Assessing the Threat of Mineral Depletion

Resources for the Future; Washington DC, USA; 2003

6.2 Opportunity cost paradigm

In this paradigm, the availability of mineral resources is determined by the costs of obtaining

resources, for instance another ton of copper or another kilogram of tantalum. A mineral

resource is economically depleted when it becomes too expensive to use. When the price of a

mineral resource is rising, this will eliminate the demand for this resource for one end use after

another. This economic depletion will happen long before physical depletion.

An implication of the opportunity costs paradigm is that depletion, economical or physical, is not

unavoidable. The costs of exploiting lower grade resources will drive the price up, but new

technology can reduce these costs or deliver alternatives. In the last century, the increase of the

costs of mining was counterbalanced by the cost reduction due to new technology and cheap

energy. This counterbalance has worked for many mineral resources. Of course there is no

guarantee that this will also be the case in the 21st century.

The great advantage of the opportunity cost paradigm is that it takes costs as determining

parameter for the availability of mineral resources. In this respect it is fully aligned with the

economic process for which cost is the ruling parameter. High costs of resources drive

innovation in the industry, resulting in more efficient use of scare resources and the use of

alternatives.

For this economically driven innovation to take place, it is necessary to include all costs in the

price of mineral resources. These costs are the value of the resources in the ground, plus the

mining, transportation and process costs for these resources. Also environmental costs of

mining the resources should be included. To reserve resources for next generations, one could

consider including a delta on the value of the resources in the ground.

However, also this paradigm carries a few disadvantages. Firstly, it may be not possible to

include all costs in the price of mineral resources. Not all costs are necessarily known at the time

that a price has to be established. Especially costs associated with environmental or health

damage that may or may not result from the mining or use of a specific mineral are difficult to

quantify and often not taken into account. This results in a too low price and therefore a too low

driving force for innovation to avoid detrimental effects for environment and health. A second

problem with the opportunity cost paradigm is that the costs do not cover uncertain future

developments like sudden changes in either supply or demand. This means that the

development of new technologies or finding substitutes necessary to cope with these sudden

changes in availability of resources is not triggered on time, and the society runs the risk of

being confronted with exploding prices.

To overcome the problems with the opportunity costs paradigm, it could be advisable for industry

to operate on the principle "forewarned is forearmed". In other words, if companies know about

material scarcity (which may not be “visible” from the price development) before it happens, they

can prepare for it. The problem of course lies in the creation of a mechanism that stimulates the

development in the right direction even in the absence of a direct (or generally expected) price

increase which can be expected to result in ‘normal’ investments in innovation. The search for

such a mechanism might be helped if we take a closer look at approaches that were developed

for the oil industry. This is done in chapter 7.

- 67 of 72 -

7. Scenarios for transition

Studying possible scenarios is another ingredient necessary to define an approach to tackle

material scarcity. What would happen if society or industry would take certain actions or would

refrain from them at all?

For energy scarcity already a lot of scenario studies have been carried out. In the study Shell

Energy Scenarios to 2050, two different scenarios are given as to how the efficiency of energy

use, the energy security and the reduction of emission of greenhouse gases may develop

globally in the period up to 2050.94 Depending on the actions taken and the cooperation between

the different actors, two rather different scenarios unfold, named "Scramble" and "Blueprints".

Because of the many parallels between the use and availability of energy resources and material

resources, e.g. both are exhaustible; these two scenarios may be applicable to material scarcity

as well. In the next two sections these two scenarios are translated to the case of material

scarcity.

7.1 Scramble scenario

Both scenarios start at the point that the public, industrial and scientific concern for the imminent

material scarcity has created a number of initiatives to tackle the problems. These initiatives are

varied and at that moment still isolated from one another.

In "Scramble", the following scenario unfolds:

• Although a lot of the initiatives contain important elements to mitigate material scarcity,

there is no clear policy from the government to combine the initiatives to a concerted

action. After some years, some kind of national policy is adopted reluctantly, but there is

no further effort to coordinate the national policies on material scarcity on an EU level or

a global level.

• The tightening supply of mineral resources is dealt with on national level, not on EU level

or global level. Supply of mineral resources is secured by trying to reach bilateral

agreements.

• The focus is on securing the supply of mineral resources, there is no policy to stimulate

the industry to improve the mineral efficiency or the search for alternatives.

• In the decade 2010 – 2020, the first crises in the supply of certain mineral resources will

occur: very sudden and strong price rises which will put some industries out of business,

large environmental damage to explore other less favorite locations, possibly a first

regional conflict over mineral resources. Crises with other mineral resources will follow

in the decades to come.

• Draconian measures are necessary to come to a global approach to tackle mineral

scarcity. Expensive and painful measures are required to increase the mineral efficiency

and the search for alternatives in short period of time. As a result, the economic growth

will be suppressed for at least some years.

94 Shell Energy Scenarios to 2050

Shell International BV, The Hague, 2008

7.2 Blue prints scenario

Starting with the same initiatives to tackle material scarcity, which have sprung up at different

places in industry, society and science, in "Blue prints" the following scenario unfolds:

• At an early stage the government develops a policy aimed at combining the various

initiatives at national level. At the same time connection is made with other countries in

the EU to come to a coordinated plan for material scarcity. Being a global issue, the EU

ensures that material scarcity is addressed on a global level.

• To have a good picture of material scarcity, the effects and the solutions, the national

governments sponsor research on these points and share the information on a global

level.

• The focus of research and industrial policies is on increasing the mineral efficiency and

the use of material scarcity friendly alternatives. On a national level, only the supply of a

few vital mineral resources is secured.

• Energy and mineral scarcity are combined into one integrated approach.

• Proposals are made for a pricing mechanism to include the environmental and other

social costs of mining and using mineral resources.

• International governance is set-up to come to European and global approach towards

energy and material scarcity

• A trading scheme for a limited number critical elements or mineral resources is

introduced in the decade of 2010 – 2020. With the following effects:

o Reduction of investment uncertainty and a level playing field for industry

worldwide

o Fuelling technological innovation to further reduce the use of these critical

elements, find alternatives and greatly enhance recycling.

• Trading schemes for the frugal elements and other mineral resources follow in 2020 to

2040.

• In 2050 a sustainable economic growth within the boundaries of minerals and energy

scarcity.

It should be noted that the "Blue prints" scenario, is probably the best avenue to ensure the

financial continuation of companies since there is time to adapt to future changes in the supply

of raw materials. Furthermore, it may enable continuous economic growth.

- 69 of 72 -

8. Conclusions and recommendations

8.1 Conclusions

The main conclusion of this study is that material scarcity is a real issue, and that there is

enough information to start taking actions.

In several studies, an estimate of material use has been made, accounting for a growth of the

world population, and the average economic growth; overall but especially in the developing

countries. Furthermore, the available resources of raw materials have been estimated. As a

result a number of critical materials have been defined; critical meaning that these materials are

used in such quantities and in such way that a change in supply has an impact on our current

lives, and that their resources will expire in the next two to five decades.

Focussing on a European or national scale, it becomes apparent that material scarcity is not just

a case of extraction rate and available resources, but that it is affected by a number of socio-

economic factors as well. Resources of many raw materials occur at a limited number of

geographic locations, and many of the industrialised countries have insufficient local resources.

As a result trade of raw materials is necessary, which makes that supply of scarce materials is

subject to disturbances by natural catastrophes, political instability and trade restrictions. For the

manufacturing industry this translates in unforeseeable price rises, and unreliability of supply.

Complicating the pricing and supply of raw materials to the manufacturing industry is the growing

power of the mining industry, which has seen changes by consolidation and by vertical

integration with primary metals production and transport. On the short term one could say that

the material scarcity experienced by the industry is more of an economic issue than an issue

determined by limited resources.

One way to get out of the spiral of rising cost and ever scarcer availability is to change the rules

of the game, by developing other sources of materials via recycling and re-use. The alternative

way means to minimise the use of scarce materials and develop sustainable alternatives where

possible, to use less materials by designing products differently and by advocating a sustainable

lifestyle of consumers, and to maximise recycling and re-use of materials by designing products

for recycling and development of new technologies for recycling.

8.2 Recommendations for the way forward

The questions we are now facing are: do we have to act to protect our economy and society,

what measures have to be taken, and how can we ensure these happen?

So far material scarcity has been most apparent in rising prices of raw materials, especially in

times of large economic growth. For the industry rising materials costs are the key incentive for

change in materials use. Long term effects, such as resource depletion, will not become

apparent on time for the industry to respond. This calls for a careful guiding role of the

government, and international collaboration on the issues.

The scenario exercise, discussed in chapter 7, learned that tackling material scarcity cannot be

left entirely with the industry. Government will have to play a role to help industry to anticipate

and avoid depletion of mineral resources on the longer term. Industry alone cannot cope with a

sudden interruption in the availability of mineral resources, caused by regional conflicts, or by

restrictions of exporting countries.

A first recommendation is that dealing with material scarcity, the problem is larger than national

level. Initiatives dealing with material scarcity should preferably be dealt with globally, but at least

on a European level.

Legislation on sustainability of products and responsible business operations will make the real

costs of resources visible. An excellent example is recent EU legislation on environmentally

responsible mining. Of course, such initiatives will be more effective if these are agreed on a

global level, which will warrant a level playing field for our industry. Through such an improved

cost mechanism, initiatives will arise with society, industry and academia to change to alternative

materials and more sustainable material use.

A further role of the government is to promote a more sustainable society. Recycling and re-use

of materials reduces our dependence on virgin materials. Actions are to promote a sustainable

lifestyle with consumers, legislation on product recycling, and stimulating research into new

recycling technologies and use of alternative sustainable materials.

The role of universities and research organisations on the issue of material scarcity is to develop

new technologies that enable sustainable use of materials, efficient recycling of materials, and to

develop alternative materials to replace the scarce materials.

For the industry itself, costs and supply reliability remain the key drivers for change. The cost

driver holds both for the manufacturing industry, as for the mining industry itself. More efficient

use of materials will become more important as costs of exploration or materials rise.

One could argue that industry should however look beyond costs and reliability. The choice for

sustainable materials, efficient use of scarce materials in products and to develop technologies

for recycling of old materials, is more than a modern trend. Even in today’s economy it can be a

choice for more profitable and less risky operations, through less dependency on costly and

unreliable supplies. In the end this choice could be a key factor for long-term survival.

- 71 of 72 -

9. Further reading

9.1 English language

• D. Cohen



• National Research Council

Committee on Critical Mineral Impacts of the U.S. Economy & Committee on Earth

Resources

Minerals, Critical Minerals, and the U.S. Economy

National Academies Press / National Academy of Sciences; Washington, DC, USA;

2007

189 pages

• National Research Council

Committee on Assessing the Need for a Defense Stockpile

Managing Materials for a Twenty-first Century Military

National Academies Press / National Academy of Sciences; Washington, DC, USA;

2008

159 pages

• John E. Tilton

On Borrowed Time?

Assessing the Threat of Mineral Depletion

Resources for the Future; Washington, DC, USA; 2003

158 pages

9.2 German language

• G. Angerer, L. Erdmann, F. Marscheider-Weidemann, M. Scharp, A. Lüllmann,

V. Handke, and M. Marwede

Rohstoffe für Zukunftstechnologien - Einfluss des branchenspezifischen

Rohstoffbedarfs in rohstoffintensiven Zukunftstechnologien auf die zukünftige

Rohstoffnachfrage

Fraunhofer-Institut für System- und Innovationsforschung ISI &

Institut für Zukunftsstudien und Technologiebewertung IZT

Fraunhofer IRB Verlag; Stuttgart, Germany; 2009

• M. Frondel, und C.M. Schmidt, 2007

"Von der baldigen Erschöpfung der Rohstoffe und anderen Märchen"

RWI : Positionen #19 vom 13. Juli 2007

Rheinisch-Westfälisches Institut für Wirtschaftsforschung; Essen, Germany; Juli 2007

• M. Frondel, P. Grösche, D. Huchtemann, A. Oberheitmann, J. Petersand, G. Angerer,

C. Sartorius, P. Buchholz, S. Röhling, and M. Wagner, 2007



Fraunhofer-Institut für System- und Innovationsforschung (ISI) &

Bundesanstalt für Geowissenschaften und Rohstoffe (BGR)


• S. Liebrich

"Die Suche nach den letzten Bodenschätzen"

Süddeutsche Zeitung, Nr. 276, Freitag, 30. November 2007, Seiten 26 & 27

Documents

M2i's Materials Scarcity Report