Natural resources, like money, have only one unpleasant tendency — they tend to end, and in the case of subsoils, they ‘become depleted’.
The world’s mineral resources are becoming really depleted, while the demand for some minerals, on the contrary, keeps growing.
It was because of such a rapid interest, first of all, in certain mineral deposits that a new subsoil category appeared in the world – it is critical raw materials. This article is the first in a series of NAMIU’s (National Association of Mining Industry of Ukraine) publications that will introduce you to the interesting world of ‘materials of the future’ — a group of minerals that will be most in-demand in the next 30 years.
Critical raw material origins
We need to understand by what criteria this or that raw material can be categorized to obtain a privileged status marked ‘critical’. The methodology for determining ‘critical raw materials’ was developed in 2008 in the United States, and it is based on the following three features: 1) the possibility to replace with other types of raw materials; 2) functional irreplaceability; 3) supply risk. These are the markers that allow describing a particular mineral as ‘critical’.
“In Europe, the first report on critical raw materials, which included 14 minerals, was published in 2011. In the following years, the policy of sustainable subsoil management within the Union was modernized. In 2017, the first methodology for assigning raw materials to the status of ‘critical’ was developed, and in January 2018, a report on the renewable industry prospects in the EU was published. The logical conclusion of this process was the creation of ERMA — an industrial alliance that formulated a more detailed definition of critical raw materials in this area,” Volodymyr Holovatenko, Senior Policy Adviser, EU Project New Subsoil Code of Ukraine, said in a conversation with the NAMIU.
According to Volodymyr Holovatenko, critical raw materials in the EU are first and foremost raw materials that are both economically and strategically important for the European economy and the production of which is associated with high supply risk. Materials used in green technologies, consumer electronics, healthcare, steel industry, defense industry, space, and aviation research are not only critical to key industries and future applications, but also the sustainable functioning of the European economy.
The important thing here is that these materials are considered scarce and therefore classified as ‘critical’ because:
In 2020, the European Commission issued a newsletter that contained a list of 30 minerals (including titanium, lithium, manganese, graphite, beryllium, and other minerals available in Ukraine), which are or will be critical to the European economy.
“Critical raw materials are particularly important for the EU’s mega-sectors and a wide range of commercial and governmental programs: green technology, telecommunications, space exploration, aerial imaging, aviation, medical devices, micro-electronics, transportation, defenсe, and other high-technology products and services. As a result, EU industry, the environment, and a quality and modern way of life depend on access and use of these important raw materials,” Volodymyr Holovatenko summed up.
To create a modern aircraft, we need about 80 metals. They include the following critical rare metals important for the high-tech industry: bismuth, cobalt, lithium, gallium, germanium, iridium, lithium, palladium, platinum.
Resources that are not enough to go around
What are the main trends in the use of metals today? On the one hand, more and more countries are involved in the production of metals, on the other — the production of some of them is monopolized: China has the largest share. It produces 50% of all metals, primarily intended for the high-tech industry, although its population is 19% of the world’s population. The economic appetites are growing, and the consumption of metals is growing accordingly. According to Ksenia Orynchak, the annual tin production has increased by 21%, and gallium —by 29 times in recent years.
“The development of technologies caused by the fight against climate change will also require a significant increase in metal consumption — up to 20 gigatons in a few years. Thus, the development of renewable energy will increase the consumption of aluminum, cobalt, and other metals required for the construction of wind-driven turbines by 300%, solar panels —by 200%, energy storage devices —by 1000%. What effect it may have? Just look at the situation with copper,” Ksenia Orynchak, Executive Director of the NAMIU, said.
According to Ksenia Orynchak, copper has been consumed since time immemorial, but its production growth has been an average of 3% per year for many years. At the same time, everything has changed significantly in recent years: as much copper was produced from 2013 to 2017as has been produced in human history.
“It is expected that after 2030, copper production will decline sharply due to depletion of resources. And, say, rhenium, which is a very important material, will be enough for about the same time,” Ksenia Orynchak said.
The next logical question is how to provide the ever-growing world population with metals, with further increase in their consumption? How to provide resources to the achieved standard of living and improve it through scientific and technical achievements?
Who controls the critical metals market?
The global market for rare earth metals (REM) is growing rapidly. Over the past 50 years, its volume has increased by 25 times (from 5 thousand tons to 125 thousand tons per year). The main areas of application of REM are: production of magnets (22% of REM consumption), various construction materials (about 19%), modern catalysts for petrochemicals (18%), as well as high-quality optics and glass, and devices based on them (about 15%). The main promising and fast-growing applications of REM are related to the production of hybrid vehicles, wind-driven turbines, defense, telecommunications, computer and television equipment, autocatalysts, and catalysts for oil cracking, lasers, superconductors and fuels, and unique metallurgical products.
The key REM consumers are the world’s largest economies: China (54%), Japan and South Korea (24%), European countries (mainly Germany and France, 13%), the United States (8%). Currently, the foreign market for rare earth products is quite saturated and supply exceeds demand due to the poorly predictable behavior of the People’s Republic of China as a major exporter in the world market. Prior to the coronavirus pandemic, it was predicted that global demand for REM would increase by 1.5-2 times and reach 185-200 thousand tons per year by 2021. Supply in the REM market is likely to still exceed demand, but this will be through excess lanthanum, cerium, and other light REM. In turn, medium and heavy lanthanides (samarium, europium, gadolinium, dysprosium, terbium, holmium, erbium, thulium, as well as ytterbium, lutetium, and yttrium) remain scarce and even extremely scarce.
Until recently, 97% of rare earth elements were produced in China, while that country controlled up to 42% of the world’s reserves. China’s dominant position in this market has led to the intensification of the development of a new EU course to provide itself with this raw material type.
Taking advantage of the raw material resources base, the lack of strict requirements, and low costs, Chinese REM manufacturers have been supplying REM to the global market at dumped prices for 10-15 years. As a result, prices for REM decreased by 2-4 times or more (depending on the liquidity of a REM). This led to the closure of REM production outside China due to unprofitability (half of metal concentrates and mixtures obtained during their initial processing were sent by the Chinese to separator plants in developed countries).
At the same time, developed countries relied on the production of the most complex and high-quality expensive products using REM. After its tactical victory, China localized the whole technological chain of REM production (carbonates, oxides, and individual metals, as well as finished REM products) on its territory and thus provides access to markets for final products with high-added value supplied for its own needs, and also for export to countries with developed high-tech industries (USA, Japan, etc.). It looks not so much as a well-thought-out strategy, but as a logical option to develop the Chinese economy, in which labor is valued more and more and resource, transport, and environmental constraints are becoming more evident.
Given that the use of rare earth materials is mainly strategic and defensive, as repeatedly stated by the Pentagon and the Defense Ministry of Japan, the governments of these countries have a clear strategy to organize joint production in third countries (Japanese Sumimoto in Kazakhstan, India, and Vietnam). In November 2012, the SARECO’s REM concentrate plant was launched. It is also planned to launch a REM separation and magnet production plant. South Korea, represented by the state-owned KORES company, is involved in the development of REM fields in South Africa. EU countries conclude cooperation agreements with REM-producing countries (Germany signed an agreement with Kazakhstan and Mongolia in 2012), as well as provide bank guarantees for the REM supply.
Map of EU’s critical infrastructure, in which Ukraine is not included yet. Source: European Commission
Focus on resource survey, not just consumption
Experts say that as for many critical metals (gallium, selenium, tellurium, vanadium, cerium-group rare earth elements, bismuth, cadmium, and some others), world reserves are not adequately assessed at all.
“The fact is that these metals are found naturally in three forms: in the form of minerals, in the form of impurities in other minerals, or as part of crystalline structures of other minerals. Usually, the reserves of the last two groups are not accurately determined, because it requires special methods of calculating reserves and analyzing the forms of these metals in ores,” Ksenia Orynchak said.
The executive director of the relevant Association explained that there were no deposits of cobalt, gallium, indium, rhodium, germanium, selenium, tellurium, or rhenium in the world. Their sources are copper, aluminum, zinc, and iron ores. The associated metal content in different ores may vary greatly, so it is very difficult to predict the quantitative product yield. Even if you know exactly how much copper is mined in the world, this does not mean that you can accurately calculate the tonnage of associated molybdenum, much less rhenium, which is obtained from molybdenum ores.
The estimated lithium production in the world. Forecast until 2030. Source: Statista
Geologists believe that the main way to solve this challenge is to discover new deposits. The second option is to improve technologies for the mining and processing of metals. The third option is related to recycling, ie re-extraction of metals. And the fourth one — to extract metals from technological waste. Thus, the academician Bortnikov stated that the Earth’s interior contains much larger amounts of metal reserves than previously thought. The reason is that most deposits discovered cropped out and were close to the surface, while many deposits were formed at depths of up to two or three kilometers (these are the so-called blind deposits that have been discovered just in recent years).
Therefore, it is necessary to develop technologies that would allow discovering deep-earth deposits. Mining dumps should be an important source of rare metals. We also should not forget about the resources of the World Ocean resources. For example, experts estimated that copper reserves in the ocean might be enough for six thousand years.