Strategically Important Metals

Written evidence submitted by the British Metals Recycling Association (SIM 14)

Inquiry into strategically important metals

Introduction

1. The British Metals Recycling Association (BMRA) is the trade association for ferrous and non-ferrous metal recycling companies throughout the UK and represents some 300 businesses from multi-national companies to small family-owned enterprises, which between them handle over 95% of the metal recycled in the UK. This £4-5 billion industry processes over 15 million tonnes of metal annually into valuable secondary raw material for metals manufacturing both here in the UK and in a wide variety of export markets.

2. We welcome the Committee’s inquiry examining the importance of strategically important metals. This is an area that has attracted increasing attention over the past twelve months and due consideration must be given to what remedies, if any, are required. The BMRA strongly believes that care must be taken over which metals are defined as strategically important and, particularly, that the definition is not extended to metals that are not rare but whose markets are volatile. Moreover, besides being a well regulated low carbon industry, the value of the materials handled by metals recyclers mean that operators observe the highest environmental and public health standards.

Question 1: Is there a global shortfall in the supply and availability of strategically important metals essential to the production of advanced technology in the UK?

3. The widespread use of the listed metals in consumer and industrial products is a relatively recent phenomenon and therefore there is not a significant volume recovered through the Waste Electrical and Electronic Equipment (WEEE) recycling market at this time, although these opportunities will increase as equipment comes to the end of its useful life.

4. Our understanding of the primary sources of most of those metals described as strategically important is that these are plentiful although the extraction process may have a very high cost attached to it or the deposit concentrations are very low, making extraction at the prevailing price uneconomic. We have no evidence that the metals listed are intrinsically "scarce" only that the availability of them (in the medium term) will be determined by the price that the market is prepared to pay for them. In other words, the market for these metals will behave in exactly the same way as all other metal or commodity markets.

5. We would also the ask the Committee to resist requests from some interested parties to broaden the list of "strategically important  metals" to include metals that are in no sense "rare" but whose markets are volatile.

Question 2: How vulnerable is the UK to a potential decline or restriction in the supply of strategically important metals? What should the Government be doing to safeguard against this and to ensure supplies are produced ethically?

6. UK manufacturers that employ metals that are subject to market volatility in their manufacturing processes need to secure their sources of supply by using the variety of market mechanisms that are readily deployed in these situations, such as hedging, forward purchase or stockpiling. Historically manufacturers have always looked at opportunities for substitution in order to avoid over reliance on a single material or source of supply.

7. There is a real danger that any intervention by a single government on behalf of a manufacturer or processor will disrupt and distort the market in that commodity. Naturally the manufacturer wishes to secure a source of supply at the lowest possible price but that should not be the basis for a market distortion. The UK should resist some of the narrower interests present in Europe at this time who would seek to restrict the export of valuable recycled metals in order to artificially deflate the price of this material to European manufacturers, who in turn wish to export the goods.

8. This pressure to restrain free international trade in secondary raw materials will have wide ranging consequences for the UK – not only in undermining the position of UK metals recyclers as Europe’s leading exports of recycled metal but also in encouraging protectionist behaviour more broadly.

Question 3: How desirable, easy and cost-effective is it to recover and recycle metals from discarded products? How can this be encouraged? Where recycling currently takes place, what arrangements need to be in place to ensure it is done cost-effectively, safely and ethically?

9. It is highly desirable that we maximise the recycling and recovery of metals from all end-of-life products for the benefit of the environment and the economy. The recycling of metals is generally cost effective and it is notable that BMRA members buy every ton of "waste" metal that they process, unlike any other part of the waste industry.

10. A number of mechanisms are being employed to encourage an increase in recycling and recovery rates for such materials as packaging, WEEE and end-of-life vehicles (ELV) with considerable success. Notably the European target for the recovery of ELVs is currently 85% and rising to 95% in 2015. The UK is on target to achieve its increased ELV targets.

11. WEEE recovery rates are much lower and are largely determined by the effectiveness of municipal collection rates, but of the WEEE available to UK recyclers around 90% is recovered in some of the most sophisticated WEEE recycling facilities in the world operating to the very highest ethical and environmental standards.

12. BMRA would be pleased to host a visit by members of the Select Committee to UK ELV and WEEE recycling facilities

Question 4: Are there substitutes for those metals that are in decline in technological products manufactured in the UK? How can these substitutes be more widely applied?

13. No comment

Question 5: What opportunities are there to work internationally on the challenge of recovering, recycling and substituting strategically important metals?

14. The processes involved in recycling and recovery of strategically important metals are already well established although the market is limited at present (See Para 2) and will be deployed by a relatively small number of multi-national companies who specialise in the mechanical separation of metals and then their thermo-chemical recovery. The market is truly international and highly competitive. On this basis we do not anticipate any great demand for collaborative working.

British Metals Recycling Association

December 2010