Strategically important metals - Science and Technology Committee Contents


Written evidence submitted by Nicholas Morley (SIM 02)

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?

1.1  In absolute terms, there is no scarcity of metals. Copper is the only element where this subject has been seriously debated, but even in this case the resource optimists appear to have the most convincing arguments at present.

1.2  At the start of the Industrial Revolution many metals were mined in the same country in which they were consumed (although of course international trade in certain metals such as tin goes back thousands of years). There is an increasing, long term trend of metals being mined in different countries from which they are consumed. Poor governance in some of these countries, limited commitment to free markets, increased demand for metal resources due to increased population and wealth, and use of certain speciality metals in applications important for the "Green Economy" are all factors in the increased interest in strategic metals

1.3  China is a special case where there is a combination of large speciality metal reserves, a potentially huge internal market for products made from these metals, and an explicit economic development strategy to supply high value added products rather than commodity metals or their ores.

1.4  New mines typically take 7-10 years to develop. Therefore there will a lag between the imposition of short term measures such as quotas and the introduction of new supplies. There is also the complication that many speciality metals are by-products or co-products from the manufacture of other metals. Hence the output of these metals are influenced by the demand for metals in other applications and material cycles.

1.5  Arguably, UK and Western companies have paid too little recent attention to raw material risk which has allowed dominant positions that China in particular now has in some metals. So to a extent the problems in rare earths and some other metals is caused by what might now be seen in hindsight as a naïve belief in the permanency of free markets for their raw materials and an unwillingness to pay a premium in order to reduce raw material supply risk.

1.6  How quotas play out in terms of availability of metals can be complex. There may be no shortage of metals but rather increasing competition between different applications for strategic metals, with their inclusion in products where price sensitivity is the least important. There will be increasing competitive advantage for companies located inside China (in the case of rare earths) for both price and availability. This has to be set against the risk of locating factories in China that will for example be dependent on supplies of rare earths from mines with generally poor environmental records and where the other issues of doing business in China such as intellectual property protection may be significant.

1.7  In the medium to long term we believe that a greater number of mines in different countries will be developed and the problem will correct itself. In the short to medium term there may well be supply issues with certain metals and consequent price volatility.

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?

2.1   The impact on the UK is likely to be less than in countries such as Japan and Germany, due to its smaller high technology manufacturing base. There will be some direct impacts, but we believe that mostly the impacts will be indirect through suppliers in other countries. An example is the defence supply chain, which is rightly concerned about restrictions of supply based on geopolitical issues, and where countries such as the USA are far more exercised on this issue than the UK. We are not aware of studies to define the significance of the risk to the UK apart from a current Defra project on resource risks, which might have addressed this issue and which will report shortly. Hence it is difficult to comment on the degree of vulnerability. However energy security issues in our opinion could have a far greater direct impact on the UK than material security issues.

2.2 There are four responses possible to material security issues:

  Negotiate privileged access.

  Stockpile.

  Substitute.

  Resource efficiency measures such as minimise use, extend product lifetime and recycle.

Possible stockpiling at an EU level, similar to what occurs in Japan has been proposed, but is generally not preferred in free market economies such as the UK. Also the timescale over which it could operate (typically months rather than years) is not sufficiently long to address some of the speciality metal supply issues.

2.3 If supplier countries are members of the WTO (such as China), then mechanisms do exist to encourage the removal of restrictions on free trade. Although to comment on these is beyond our area of competence, this would seem an obvious arena in which the UK Government could act.

2.4 The Government, through the Technology Strategy Board, could provide innovation funding to develop substitutes, although the timescales on commercialising these is likely to be of the same order as opening new mines as sources of supply.

2.5 A mix of resource efficiency measures could be implemented more quickly and would be a useful role for government and would contribute to security of supply and is highly likely to contribute to overall greenhouse gas reduction. Likely measures include a combination of design for remanufacturing/recycling, minimisation of use through use of existing substitutes, product longevity strategies such as remanufacturing, voluntary closed loop recovery systems and recycling technologies. It is important that resource efficiency is not seen as simply recycling. Allied with this would be policy change measures at an EU level to move away from simple percentage recycling rate for ELVs and WEEE to one that takes greater account of strategic metals occurring in automotives and in electrical and electronic goods. However one proviso is that in fast growing areas such as rare earths for high strength magnets, the growth of the market and longevity of the products is such that even high levels of recycling of discarded materials will only provide a modest proportion of current supply.

2.6 As regards ethical supply, this is difficult when metal producing countries are increasingly separated from the consuming countries and often have poor environmental and social governance. We propose that an increased use of standards, ecolabels and sustainable public procurement will help to communicate the message that metals sold in the UK need to be "clean". Thus a business case can be made to producer organisations as well as appealing to ethical and environmental motivations. We declare an interest as a contractor helping to deliver the EU Ecolabel within the UK.

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?

3.1  Speciality metals typically have high embodied energy, and where manufactured in countries with carbon-intensive energy systems, high embodied carbon. They also have large volumes of resources associated with their extraction and refining. Hence techniques to increase their resource efficient use are recommended.

3.2  Resource efficiency solutions should not be thought of solely in terms of recycling, although this is the first approach that tends to be suggested by metal-orientated companies because of their familiarity with the secondary metals sector. Since many speciality metals are only used in small quantities and their applications can be dissipative, recycling is often very difficult, as evidenced by their often low recycling rates despite high prices. Hence alternative strategies such as extension of the product lifetime through remanufacturing, refurbishment or reuse may be a good strategy before materials recycling. When recycling must take place, strategies such as product take-back, design for disassembly will be increasingly required to obtain these relatively small amounts of speciality metals.

3.3  Policy changes may be required to make recovery cost-effective eg changes to the WEEE Directive and ELV Directive to target specific metals rather than an overall percentage mass recycling target.

3.4  Given the relatively low tonnages of many of these metals, recycling may only make economic sense with one or two plants within the whole of Europe. If exported outside of Europe, recycling may or may not be carried out in an environmentally and socially responsible way. If the materials are defined as hazardous waste, then controls should be possible under the Basel Convention.

3.5  Oakdene Hollins is currently undertaking a project funded by the European Pathway to Zero Waste Project that is assessing the potential for recovery and recycling of the fourteen metals identified by the EU Raw Materials Initiative as "critical". This will include infrastructure and collection requirements (particularly in the SE of England), carbon impacts of recycling, the demand/supply balance and international best practice.

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

4.1  In the case of rare earth elements magnets (a major application for rare earths), some substitution is possible in some applications. However the rare earth magnets based on neodymium iron boron have been optimised over a period of around 25 years and no substitutes of equivalent performance exist. Generally, substitution across the strategic metals is often difficult, since they are often expensive and economic factors have encouraged their substitution with cheaper elements if possible. An extreme case is the Platinum Group metals, where there has been substantial effort to reduce its use in catalytic applications.

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

5.1 A number of criticality studies have been or are currently being undertaken and are likely to identify a research agenda with a great deal of commonality between the US, Japan and Europe

5.2 Some work on substitution of critical metals is already being encouraged in the Framework 7 European research programme.

5.3 A number of networking events have been undertaken on this issue, for example the recent EU-US workshop on rare earth elements and other critical materials for a clean energy future held at MIT on 3 December. The outputs from this meeting of researchers should be available shortly.

5.4 Given the likely minimum economic scale of recycling operations, the links to European legislation, and the visibility of the security issues at a European level, the best level of collaboration for the UK would appear to be at an EU level.

6.  BACKGROUND

Oakdene Hollins researches and consults on sustainable products and services. We also run the Centre for Remanufacturing and Reuse, the only European centre of its kind, which promotes those activities with products when they can be shown to environmentally beneficial. We are part of UK Ecolabel Delivery, which is concerned with the EU Ecolabel scheme.

We have carried out the following projects on the issues of strategic metals and materials security:

  • In 2008 our report "Material Security: ensuring resource availability for the UK economy" was published by the Resource Efficiency Knowledge Transfer Network (now the Environmental Sustainability KTN). This concluded that there were not absolute scarcities of metals, but that the increasing environmental impact of mining, extraction and purification were likely to lead to limits in production before absolute scarcity became significant.
  • In early 2010 we completed a study on the likely availability of the rare earth elements for the low carbon economy, including the possibilities of substitution and recycling, for the Department for Transport and for the Department for Business, Innovation and Skills. We concluded that there were likely to be short to medium term shortages of certain key rare earth elements for high strength magnets, particularly if China continued its reduction of export quotas. Since that time, the announcement of a greater than expected reduction in Chinese quotas, with consequent price increases, and the use of rare earths supply in geopolitical disputes with Japan, has been widely reported in the press.
  • For the Institute for Energy, a Joint Research Centre of the European Commission we are currently researching critical metals in the materials supply chains of six of the energy generation sectors that form part of the European SET Plan for achieving low carbon energy generation targets. These sectors are nuclear, wind, photovoltaics, smart grid, carbon capture and storage (CCS), and biofuels. This report will be completed in early 2011.

This response is submitted by Nicholas Morley, Director of Sustainable Innovation, and does not represent company policy.

Nicholas Morley

14 December 2010



 
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Prepared 17 May 2011