Strategically Important Metals

Strategic Metals Key to the UK Aerospace and Defence Industry

Inquiry on Strategically Important Metals

Disclaimer

The Materials and Structures National Technical Committee (NTC) membership is drawn from industry, academics, government agencies and independent experts with activities or an interest in the UK Aerospace and Defence Industries. The views and judgments expressed in this review reflect the consensus reached by the NTC and do not necessarily reflect the views of the organizations to which its membership is affiliated. While every care has been taken in compiling this report the Materials and Structures NTC and its members cannot be held responsible for any errors, omissions or subsequent use of this information.

1. Introduction 

This report aims to review the factors which are likely to impact on the provision and sustainability of the main strategic metal elements within the UK aerospace and defence supply chain, and to consider these within the context of the business environment risks, strategic risks, financial and operational risks faced by UK industry. This is a high level strategic consideration of the issues rather than a detailed analysis at product level.

2. Strategic Metals for The Aerospace and Defence Industries. 

The global economic recession of the last two years has impacted the production, selling price and market forecasts for all metal commodities. Whilst generally consistent, there are differences in the extent to which individual markets have been affected, and the time scales over which they are projected to recover. It is thus worth noting these effects separately for each metal.

Metals perceived to be of the highest concern for the aerospace and defence sector are Cobalt, Hafnium, Platinum and Rhenium.

2.1 Chromium 

South Africa and Kazakhstan account for about 62% of global chromite production, which is equivalent to approximately 70% of global ferrochrome production. Chromium-containing products include ferrochromium, chromium chemicals, and metallic chromium. Ferrochrome dominates the market. The major chromium-metal producing countries in the world are France, Russia, China, and the United Kingdom for aluminothermic chromium metal and the United States and Russia for electrolytic chromium metal. The aluminothermic process dominates global production, about 95%.

Security of Supply

There are no substitutes for chromium metal in stainless steel and super-alloy production. With the restriction environmental restrictions on hexavalent chromium alternatives to chromium plating for surface protection are beginning to become available. Given South Africa’s dominance in chromite production, any disruption there can impact significantly on global availability and price. In 2007-2008, electricity disruptions also impacted on global ferrochrome and metallic chromium. This supply constraint pushed prices up more than 100% over their average value in the preceding 12 months. Kazakhstan, like South Africa, is ranked "borderline" on the Failed States index, and in the poorest 15% of countries performing according to the Policy Potential index. Both scores suggest a moderate-to-high degree of risk associated with on-going production from both countries, however, global reserves suggest there is enough economically recoverable chromite for many years to come.

2.2 Cobalt 

Cobalt is a common alloying addition in steels, magnetic, wear resistant and high strength alloy systems e.g. superalloys. The Democratic Republic of Congo dominates global production, followed by Canada, Zambia, Australia and Russia. China is the world’s leading producer of refined cobalt, and much of its production is from cobalt-rich ore and partially refined cobalt imported from the Democratic Republic of Congo (this reflects Chinese investment in African minerals more generally).

Security of Supply

Cobalt is mostly produced as a co-product of other base metals, notably copper and nickel. Cobalt demand has focused attention on the reprocessing of copper tailings to recover cobalt. Waste processing costs are a variable, but this has not stopped considerable international joint-ventures in this area, to help stabilize global supply. The lower production figures in other countries, such as Australia, reflect the lower grade of cobalt in run-of-mine ores. The ability to ramp up cobalt production in countries other than the Democratic Republic of Congo is dependent on market demand for the primary coproducts. The Democratic Republic of Congo "Failed State" index position is a worry (it is the 5th most critical country), and there has been evidence of political interference, corruption, smuggling and other criminal activity associated with cobalt concentrate production in that country. Several internationally funded projects have been cancelled as part of a government review. Cobalt and its compounds are used in a wide variety of applications, including several emerging ones driven by technology innovation. The diversity and growth of other applications could put additional pressure on the metal’s use.

2.3 Hafnium 

World primary production figures for hafnium are not available. It is produced as a coproduct of zirconium from the titanium rich mineral sands industry. The hafnium to zirconium ratio is about 1:50, and physical separation is difficult. However, it is possible to get an indicative picture of hafnium production from the US Geological Surveys for zirconium, coupled to an indication of hafnium reserves. This results in an estimated global production to be of the order of 100 metric tonnes. Australia and South Africa dominate production. Both industries are well-developed, with the necessary infrastructures in place..

Security of Supply

The nuclear industry dominates hafnium usage (56%)with the aerospace industry using a further 33%. With the anticipated growth in nuclear technology for power generation, there will be an increased demand for hafnium. Also, the semi-conductor industry is looking to hafnium as a (partial) substitute for silicon. This new demand, coupled to that for capacitors, will place additional pressure on supply. Given that hafnium is a minor co-product in the mineral sands industry, additional supply capacity will be slow to materialize, due to industry inertia.

Using the 1:50 metric, there is no shortage of hafnium reserves into the medium term.

2.4 Lithium 

Chile is the leading lithium producer, followed by Argentina. Both countries recover the lithium from brine pools. In the United States lithium is recovered from brine pools in Nevada. Nearly half the world's known reserves are located in Bolivia. In 2009 Bolivia began negotiating with Japanese, French, and Korean firms to begin extraction. China may emerge as a significant producer of brine-source lithium carbonate around 2010. There is potential production of up to 55,000 tonnes per year if projects in Qinghai province and Tibet proceed. In the aeerospace industry the major uses of lithium are as an alloying addition for lightwieght aluminium strauctural alloys and in Li-ion batteries.

Security of Supply

There is currently no shortage of lithium and it is thought that world supply can comfortably meet demand. However this will change isf significant numbers of electric and hybrid cars start to be manufactured. The total amount of potentially available lithium worldwide has been estimated at 15 million tonnes, of which 6.8 million tonnes is currently economically recoverable.Using the figures of 6.8 million tonnes of Lithium and 400g of Lithium per kWh this gives a total maximum lithium battery capacity of 17 billion kWh which is enough for approximately 320 million electric cars with a 53kWh battery. This typeof demand may lead to sugnificant shortage of supply for structural metallic application s and for batteries in other industries.

2.5 Nickel 

The biggest reserve of nickel are in Australia, which has a well-developed mining infrastructure, and minerals investments are relatively low-risk; however, production in Canada, Indonesia and Russia now exceeded that in Australia. Other significant reserves include South Africa and Cuba. There was minimal fall-off in production in 2008 over the previous year which suggests that the demand for nickel has bottomed-out, and demand will likely increase as the global economy recovers. Roskill Metals and Minerals Reports, based on projections for stainless steel growth, predict a 3-5% increase in demand for nickel beyond 2010.

The global market is dominated by 6 countries; The USA, China, Japan, Germany, Taiwan and South Korea. Of these, only China mines some of its primary ore. Close to 70% of the global flow goes to stainless steel manufacture, and 60% of discarded nickel is recycled within the nickel and stainless steel industries. The total dissipative loss is 14% of the discarded amount. This global picture suggests that nickel management over its life cycle is reasonably good (certainly compared to other metal commodities such as

aluminium and copper).

Security of Supply

Whilst there is some potential to reduce nickel content of certain austenitic stainless steel

applications in construction, it is unclear whether similar reductions could be achieved in more specialist areas, e.g. superalloys, without invoking supply constraints for other specialty metals such as titanium or chromium. According to the Failed States Index Australia belongs to the subset of "most stable" countries. Canada is described as "stable". Russia, Indonesia and Cuba are all described as "in danger", and South Africa is "borderline". This picture does not change when the policy potential index is invoked. Here, Indonesia, Russia and South Africa are all in the bottom quartile. Cuba is not ranked. The situation is compounded by other performance measures. South Africa provides a good example of some of these. Firstly, its nickel deposits are associated with the largest global reserves of platinum group metals, and it is the refining of the latter which drives the production of nickel, copper and cobalt. Secondly, the country’s electricity supply network is at breaking point, and significant power outages have affected its mining operations in the last 2 years. This is exacerbated by conflicting policies and contradictory infrastructure resource plans. All of these factors contribute to the significant uncertainty which clouds minerals’ investments in this country, and could impact negatively on its metal output – not just for nickel and platinum.

Overall the supply of nickel seems secure.

2.6 Platinum 

Global supply of platinum is dominated by South Africa’s. The primary ore is a nickel, copper, cobalt deposit, with a platinum group metal concentration of less than 5 ppm platinum and palladium. Major uses are in coatings for corrosion protection, catalysis, electrical contacts, electrodes and thermocouples.

Security of Supply

South Africa’s problems with infrastructure provision (electricity and water), its relatively poor track record on mine safety, and political interference in mining operations, have, in the past, all contributed to price instabilities and supply problems. These pose the greatest threat to security of supply.

2.7 Rare Earths 

Global supply of rare earths is dominated by China with over 98.9% of world production (>124,000 tonnes as oxide per annum). Significant deposits exist in Russia and the United States but at the moment these are not being worked. Smaller amounts are produced by India, South Africa and Malaysia. Rare earths are essential alloying additions to a variety of products from metallurgical additions to bulk alloys (e.g. cerium to Mg alloys and steels, samarium and neodymium in magnets and scandium to aluminium alloys) to phosphors and as addition s to glasses and ceramics The major uses of rare earths in the defence and aerospace sector are in computer hard disc drives, batteries, superconductors, lasers, sensors, inertia guidance systems etc. Some of the more exotic aero-engine blade alloys also contain small amounts of rare earth additions.

Security of Supply

The rare earth market is complicated because of the large number of elements and their broad range of applications for which demand fluctuates over time, largely as a result of technological developments. The market has a history of abrupt change, e.g. in the 1960 samarium was the dominant rare earth due to the demand for samarium-cobalt magnets, by the 1980s this position had changed and a major demand was for neodymium in magnets has developed alongside the demand for samarium.

Rare earth elements are not openly traded commodities and there are low levels of transparency and a general lack of market information. However, prices are very volatile and spikes in excess of 300% have been observed.

Historically the balance of supply and demand has been fairly stable. However in the last 3 years the market has changed from a position of oversupply to one of demand shortages Also significant growth is forecast in most sectors of rare earth consumption, particularly for metals and magnets which have predict growth rates of 10 – 15 and 15 – 20 percent respectively.

Although China’s rare earth production has been increasing in recent years it has been reducing export quotas due to increasing domestic demand. China has also increased tariffs on the rare earths and their oxides. Closure of operations due to environmental concerns has further reduced supply. There is thus growing concern about the security of supply from China.

Spurred by increased demand and concern over China's effective control of the rare earth market, searches for alternative sources in Australia, Brazil, Canada, South Africa and the United States are ongoing. Mines in these countries were closed when China undercut world prices in the 1990s, and it will take a few years to restart production. One example is the Mountain Pass mine in California, which is projected to reopen in 2011. Other significant sites under development outside of China include the Nolans Project in Central Australia, the remote Hoidas LakeHoidas Lake project in northern Canada, and the Mount Weld project in Australia. The Hoidas Lake project has the potential to supply about 10% of the $1 billion of REE consumption that occurs in North America every year

Currently it is thought that of the rare earths of interest here only the neodymium supply may not meet demand.

2.8 Rhenium 

Rhenium is associated with the production of molybdenum, and principally from copper porphyry deposits. Its production is dominated by countries with significant copper mining and processing activity. Chile dominates primary production, with close to 50%, in 2008, followed by Kazakhstan and the USA. Close to 80% of production is consumed in super alloy manufacture for use predominantly in gas turbines. Its use in catalysts is a growing market.

Security of Supply

Price volatility is the hallmark of the rhenium market. Based on a 10 year market average price (1997-2007), this range is close to 30-fold. The peak in 2008 was a symptom of continued demand for super-alloys, as well as problems being faced by one of the world’s largest producers of refined metal. This volatility has challenged the aerospace industry to review its dependence on rhenium. The main issue with security of supply is the fact that the availability of rhenium concentrate is dependent on copper and molybdenum refining. The price of these primary metals dictates the dynamics of rhenium production.

2.9 Ruthenium 

Global production figures for ruthenium are not available. However, production / reserve figures can be estimated based on those of platinum as ruthenium is present in platimun group metal ores at less than 1 ppm. Annual production is estimated at 30 metric tons. South Africa dominates the global supply and all insights from the platinum analysis and apply equally to ruthenium. Dominant uses are in electrical applications and hard-drives. Use in superalloys has been contemplated but the economics are prohibitive. The demand in such an application would rapidly exceed supply, leading to extreme price sensitivity to any perceived application.

2.10 Tantalum 

Global supply of tantalum is dominated by Australia, followed by Brazil. Major uses are as an alloying addition to steels and superalloys and for capacitors.

Security of Supply

Events over the last 12 months have precipitated a crisis in the tantalum supply industry, despite reduced demand. The world’s largest supplier in Australia, which is singly responsible for more than 30% of global supply (Australia delivers about 70% of global production), has suspended its mining operations due to an expected continued decline in demand. This, coupled to a run down of global inventories, and growing calls to embargo purchases from central and east Africa, means that the tantalum industry faces considerable uncertainty until at least 2012.

2.11 Titanium 

The world production of titanium metal is based in the US, Russia, Japan, China, UK, France, Kazakhstan, Ukraine, and Germany and overall world production is predicted to exceed demand for the foreseeable future. The major application is in metallic structural systems for land, sea and air applications.

Security of Supply

Although supply is predicted to exceed demand globally there is an increasing demand on the high quality aerospace grades that UK aerospace and defence industry relies on. The UK titanium industry is focused on these grades, but there is growing dependence on Russia to supply these materials, based on their large cold war manufacturing facilities. To date this has not caused any problems, but with the political and economic uncertainty this position may change quite suddenly. China is also expanding its capabilities and is investing heavily in production and research and development facilities, mainly for domestic use but with an increasing world-wide presence.

2.12 Vanadium 

Vanadium is mined mostly in China South Africa and , Russia. In 2007 these three countries mined more than 95 % of the 58,600 tonnes of produced vanadium, with China dominating productiion. Approximately 85% of vanadium produced is used as ferrovanadium or as a alloying addition in steels and titanium alloys.

Security of Supply

World production of vanadium grew by more than 7%pa from 2003 to 2008. Initially, production increases were met by taking up spare capacity at existing operations but from 2006, capacity had to be increased to meet demand. Most of this expansion, however, was also at existing mines and plants, most notably in China. In the next few years additional supply could come from re-opening the mine and plant at Windimurra, a new mine and plant in Brazil, further expansion of slag output in Sichuan as well as an increase in by-product output from uranium processing in the USA and South Africa.

Overall the supply of vanadium seems secure

3. Substitution 

All the elements discussed above cannot easily be substituted in the aerospace and defence industries. The unique properties they engender in materials cannot be replicated by either using less of them or by replacing them with other elements. It is thus essential to UK industry that we have a long term, stable source of these materials. An example would be Rhenium and Ruthenium as alloying additions in the highest performing single crystal turbine blade alloys for gas turbines. In this application despite conferring unique property advantages, because of the economic constraints use has not been made of Ruthenium additions and lower Rhenium content alloys are being developed.

4. Recycling 

It is difficult to discuss recycling for a diverse group of metals like this as their use, and hence recycling challenge, differs depending upon the metal. They can however be grouped into two main types:

(1) Bulk materials – e.g. steels, titanium alloys, nickel alloys, magnets etc. In these cases the materials are widely used and in a bulk form. Recycling is thus relatively straightforward as removal, collection and recycling are organised on a large scale and the industry actively supports these activities today.

(2) Minor /trace additions, e.g. low alloying additions and trace amounts. These are more difficult to deal with as the strategic metals are widely dispersed, both physically and chemically, used in small amounts and are difficult to identify. In these cases it is often uneconomic to attempt recovery and they are lost to the production chain. Only where an element has an unusually high value or is particularly scare is this attempted and even then this is often restricted to within a company. It is in this area that most work is now going with attempts to identify viable recycling methods and routes. This is being done on a global scale by the industry as this is a common global problem to all users.

A recently developed source of rare earths is discarded electronics and other wastes that have significant rare earth components. New advances in recycling technology have made extraction of rare earths from these materials more feasible, and recycling plants are currently operating in Japan, where there is an estimated 300,000 tons of rare earths stored in unused electronics.

5. Mitigating Actions 

The uses of the majority of these elements are specific to particularly industries and hence the responsibility for taking mitigating actions lies with the major players in these sectors. In many cases these actions are underway.

Aerospace and Defence Knowledge Transfer Network,

Materials and Structures National Technical Committee (NTC)

16 December 2010