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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