Critical Raw Materials (CRMs) are increasingly being referred to in political policy. The MMTA and the IMA (International Magnesium Association) organised a seminar in September kindly hosted by the German Aerospace Center’s (DLR) Institute of Vehicle Concepts, Stuttgart aiming to inform and educate Members and Associates on what the European CRM list means for their businesses.
Maria Cox, MMTA General Manager, introduced the seminar and placed it within the context of the role of the MMTA to inform and educate on the topical issues affecting the minor metals sector, as well as to participate in the debate around future CRM policy developments. Christian Payn from IMA then gave an introduction to magnesium, its uses and supply issues. During 2014, for example, there was around 900,000 tonnes of primary production with 84% produced in China.
From the DLR, Simone Ehrenberger introduced this German national research institute which is engaged in projects relating to transport and aerospace, including new materials and concepts for road vehicles and railway. Areas of research interest include new technical solutions such as economic and environmental assessments, as well as sources of the raw materials employed in developing vehicle solutions.
The German political approach to the importance of CRMs
Dr. Christian Kühne of the Ministry for Environment, Climate and Energy, Baden-Württemberg stressed the importance of critical raw materials for Germany, and for the region in particular. Manufacturing is a significant contributor to Germany’s GDP, at around 22%, a much higher percentage than for most European countries, with the figure for Baden-Württemberg being even higher, at 35%.
Within that figure, material costs make up 43% of the manufacturing cost, therefore there is a keen interest in maintaining the supply of those critical raw materials essential to the German and Baden-Württemberg manufacturing sector.
There has been a massive increase in the number of elements used over the past century and by 2030, there will be a need for in excess of current world supply in many elements, for example gallium and indium, in order for technology to develop and meet its potential in the way they would like. There is high raw material demand for emerging technologies, for example photovoltaics and permanent magnets. If there is a shortage of raw materials for these applications then technological innovation will be impeded. Therefore government policy needs to consider this.
The German government currently has several programmes on raw materials including the government’s Raw Materials Strategy, using policy instruments, encouraging material efficiency and establishing a specific mineral resource agency, the 2012 Resource Efficiency Programme, which helps German companies secure supply of raw materials.
The Baden-Württemberg region itself has done a strategic study on material flows for companies based in the region, categorising their relevancy for the local economy. The region has identified 29 economically relevant raw materials. The resource strategy for the region is to decouple economic growth from resource consumption and to establish secure and sustainable materials supply. Strengthening the Circular Economy is also a focus; Baden-Württemberg has already engaged in stakeholder dialogue and workshop on the subject.
EU Policy and CRMs
Alexis Van Maercke from DG Grow talked about the EU policy towards CRMs, highlighting that the German approach outlined by Dr Kühne holds many similarities.
The third CRM list will begin preparation next year with a methodology review scheduled. It seems likely, however, that in order to compare with the previous lists there will not be any major changes. Alexis explained how the CRM list is used as a policy tool and has been the inspiration for similar lists in other European countries, as well as Japan and the U.S.A. The audience was informed that funding from Horizon 2020 has a category on new technologies for the enhanced recovery of by-products for 2016.
The audience posed some questions to Alexis: Martin Tauber, President of the CRM Alliance, asked for clarification on whether ‘Associate’ countries would be treated like EU Members in terms of funding. It was confirmed that Associate countries, such as Norway, Turkey and Serbia can apply for funding equal to EU-member states. Another participant asked about the EU’s approach to the Circular Economy. Alexis was able to confirm that the EU Commission is developing a proposal towards the Circular Economy by the end of the year, with legislation expected within one to two years.
Supply risks and economic importance
Looking more deeply at the CRM methodology was Dr. Frank Marscheider-Weidemann from the Fraunhofer-Gesellschaft in Germany. The Institute worked on the previous CRM list methodology and has studied dynamic materials flow modelling, including how technical changes influence demand for raw materials.
Dr. Marscheider-Weidemann explained why materials move on and off the CRM list. Reasons include:
- Changes in the end-use structure (or end-use data)
- Changes in the “value added” assigned to the mega sectors. Ie whether a particular sector has more or less economic importance
- Changes in Supply risk: closing, re-opening and establishing of primary production
- Changes in the concentration of production
- Changes in governance / environmental performance rating of producing countries
- Changes in recycling rates
- Changes in assessment of substitutability
He was also able to give conclusive advice on what the list does and does not do in terms of how it should be viewed and used. The list provides transparent estimates for the relative ranking both in supply risk and economic importance, but only gives a relative ranking at one point in time. Raw materials are considered on the basis of their economic benefit to society and it considers all the uses of the raw material. Secondary raw materials are explicitly acknowledged for their contribution to society. A controversial point for the audience was the emphasis on the importance of substitution.
The list does not provide a view into the future, consider the effect of market size (e.g. scale of problem and rate of change of indicators) or explicitly consider the interdependence between different metal markets (either on the supply or the demand side).
Christian Payn asked Dr. Marscheider-Weidemann about the substitution of magnesium in some aluminium alloys and the effect of this on the industry. The response acknowledged the difficulties of taking into account the quality of a material and the possibility of looking deeper into this.
The final speaker in the morning session was Heleen Vollers, the Coordinator of the CRM Alliance. Heleen explained the role of the stakeholder group in promoting and protecting the interests of those involved in CRMs. The group works together to provide relevant information to the EU policy makers on CRMs, such as the European Commission, Members of the European Parliament, important mining country representations to the EU and downstream users of CRMs. The Alliance has organised events on how CRMs should be considered in terms of industrial and trade policy and REACH. The group now covers 15 of the 20 CRM materials and has been granted observer status at various EU raw material groups. The EU needs input from industry to make the right decisions, and the Alliance is working hard to provide this.
During the afternoon, companies had the chance to explain what it meant to them to produce or use materials that are classified as critical. Martin Tauber called for consideration of the end usages of these materials and how they contribute to peoples’ lifestyles. He also encouraged the audience to reflect on how innovation might have developed if primary production and a secure supply of these often extraordinary materials had been supported and established in Europe.
The case studies looked at different elements of supply risk and economic importance for Europe. European primary production of Mg in Turkey was looked at first with Eczacibasi ESAN, a new Turkish Magnesium producer that has recently started production, talking about having a supply of this critical material from Europe, reducing the reliance on China and other regions. Turkey is associate EU member, with shorter transport distance meaning lower emissions and material from an ISO certified site. Ilhan Goknel mentioned that the first CRM report in 2010 was the trigger for their magnesium project in Turkey.
Mark Saxon from Tasman Metal, the Swedish rare earths project, talked about the difficulty of developing primary production in Europe. He said that the rare earth industry has had far too much attention in comparison to its size in recent years, with the rare earth crisis being a political issue and not to do with the supply in the ground. The aim of Tasman is to establish a secure and stable REE supply in Europe away from the dominance of China, where the quality of the product may be low and the environmental impact high. Traditional mining investors have moved on to tech and pharmaceutical start-ups. In Europe land access is a huge issue, as well as poor shareholder returns. In order for Europe to stay competitive it needs to be active in small high value markets.
Armin Buschhausen, MD, Cellmark Metals Germany gave the attendees a unique perspective of criticality from a trader’s point of view. He talked about supply risks including the pricing of materials in USD and the volatile small markets of many of the CRMs. Most metals, and indeed commodities in general, have low prices at the moment, but Armin also believes that there are more opportunities than risks working with China. He also highlighted some specific examples of trade issues and restrictions such as EU anti-dumping policies on silicon being very beneficial for some local producers.
Claire Mikolajczak from Indium Corporation looked at the state of the indium market. Indium Corporation has a factory in Asia as 90% of the ITO (indium tin oxide) market is in Asia. Claire talked about free trade and fair trade in terms of indium. She also discussed the opaqueness of the industry and the scarcity of information available to policy makers, meaning that they have to make decisions on limited and incomplete data that is sometimes out-of-date. Claire was clear that consultation with industry is essential.
A closing question from the audience focused on whether the Earth can provide the resources we need into the future? The panel agreed that generally higher prices lead to more sources, as they become economically viable and that shortage of supply is generally due to prices rather than lack of resources in the ground.
The MMTA and IMA would like to thank all the speakers and attendees at this seminar; we look forward to welcoming you again to another insightful and informative event on prominent issues affecting your businesses.
Tamara Alliot, MMTA