Written evidence submitted by Aerospace
and Defence Knowledge Transfer Network, Materials and Structures
National Technical Committee (NTC) (SIM 05)
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 2007-08, 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 eg 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 six 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 two 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 (eg 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, eg 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 three 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 % 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 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% per annum 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 - eg 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, eg 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
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