DG GROWTH’s recent by-product metal recovery conference in Brussels was host to widely diverse views on the technology and policy challenges of increasing the availability of a range of materials essential to the EU’s supply chain security, which are summarised here.
Firstly, the current pricing structure for metals does not incentivise producers to recover their by-products. There is hope that prices and/or demand will increase to incentivise greater recovery than is currently being undertaken. The longer-term question is whether the EU has sustainable access to these currently unrecovered metals, as they are undervalued in the market.
So how is it possible to persuade a plant manager to recover by-products?
There are 4 key factors to be considered:
There is a growing need to treat huge stacks of ‘waste’ material and also to try not to increase them further;
Currently, by-product recovery processes are not very efficient; More cooperation with potential users of by-products is needed, to address environmental issues and thereby avoid further burdening our environment.
At the same time, there is increasing environmental regulation and greater focus on the environmental impact of the metals and mining sector.
There is only minimal interest from major producers in developing new technological processes to recover by-products. Hydro-metallurgy is currently the dominant way of extracting by-product metals, although some recovery is through pyro-metallurgy. A more efficient and selective means of extraction, for example using solvents or ion exchange, needs to be found. Modern Chinese smelters are producing 15-17 by-products, but older less technologically advanced smelters can only recover 2 -3. These all need modernising.
However, the process to recover by-products should not affect the production of the main metal, as that is where the economic value is derived. The reality is that the by-product does not exceed 2-5% of the value of the main metal. There is a significant capital investment required to recover by-product metal, so focussing on this activity is not currently attractive to primary metal producers. Despite the fact that from a Critical Raw Material perspective there is high value in by-product metals, this value is not reflected in the price.
This is the most challenging aspect, as the metals’ markets are currently not functioning; The inability of the market to resolve these issues came out as a key point over the course of the conference. Minor metals are more important for users than for producers. They are important for smelters and refiners, but for most are not the key focus of their production. Will mines/smelters focus more on by-products in future? Yes, but their main focus will understandably continue to be on core business. Some will want to diversify income streams, so will be more receptive. However, this is all against the short-term picture of troubled markets with low prices. Platinum, for example, is described as an example of market failure, where the industry cannot function in a context where 70% of producers are operating at below the cost of production.
There is a balance to be struck. Prices need to incentivise production, but if they rise too much it’s a disincentive for consumers.
Producers won’t invest in by-product recovery unless they think they can make money, so how can the market be convinced to invest and to take a risk? There is not one straightforward answer to this question, the reason being that it is not a straightforward question. Namely, the market is one thing, and security of supply is something completely different – we need to be clear which we want.
If what we want is for this to be left to the market, prices won’t move just because we say we need to incentivise producers. It is also important to point out that not all are following the same set of rules, for example, the Chinese government has a high ability to influence the market, so in this context, the market cannot compete.
Security of Supply
Security of supply cannot be achieved by following market rules, so if we want security of supply, we have to operate to a different set of rules than traditional market rules.
If the aim is for increased by-product metal recovery to be a core element of European security of supply, something needs to be developed, and some have suggested policy instruments along the lines of the Common Agricultural Policy. It was set up to allow a big influence to be exercised on a particular industry, on a market that has to be supported, but the CAP consumes a large part of the EU budget, and it would be an understatement to say that it is not universally popular; however, it does support agriculture. The problem is that the raw materials’ market is global, not European, so it can’t be controlled by Europe.
The primary goal of such a policy would be to maintain prices at a high enough level to ensure the viability of by-product metal recovery.
Alternatively, is there a place for a stockpile? They exist, for example in China and the USA, and have the role of stabilising prices for minor metals that don’t reflect supply and demand. There has been an EU project to explore the possibility of stockpiling in Europe, but the study found it was not needed by the big companies, although it might have been useful for SMEs.
Whatever the success of any intervention, prices will still face fluctuations due to regulations and export restrictions, for example.
But the EU is trying to level the playing field.
It applies trade measures such as anti-dumping controls, in an attempt to help protect the EU market. There are other mechanisms that the EU and other markets can apply where disputes occur, for example through the WTO.
The introduction of conflict minerals regulation in the US and currently being discussed within the EU, requires industry to do due diligence.
The argument was made that there needs to be a balance between free trade and measures offering some degree of protection to a particular market. In this modern era of globalisation, we are all interdependent – no one country is self-sufficient in all its resource needs, so an approach needs to be found where all can co-exist and do business.
Finally, to return to the environment – there is a moral obligation to use the planet’s resources as efficiently as possible, for the benefit of us all. Can such an obligation be left to the market? It does not respect the environment (that is not its role), so if we want to protect the environment, we cannot just leave the future to the market.
Round Table Participants:
Peter Craven, Mintek, South Africa
Rein Nieland, of the EU Commission’s DG TRADE
Ioannis Paspaliaris, National Technical University of Athens, Greece
Christophe Petit, Eramet, France
Don Smale, International Metals Study Groups, Portugal
Chair: Mattia Pellegrini, Head of Unit C2, Resource Efficiency & Raw Materials, DG GROWTH
Maria Cox, MMTA