As countries around the world race to shore up their supply of a range of currently in-demand minerals, it’s worth asking the question – how critical is supply?
Is the planet in danger of running out of the elements we need – copper, nickel, lithium, graphite and tin spring to mind – to build the technologies needed to transition to a renewable and low-emissions future?
Some estimates say China’s supply of metals such as dysprosium, neodymium and lanthanum, used in missile guidance systems, laptops and many other products, could be exhausted within 20 years.
In this article:
- Single source poses sovereign risk
- A roadmap for critical minerals
- Processing capability will ease supply issues
- Recycling a part of the solution
- Technological work-arounds
- Don’t panic about supply
Single source poses sovereign risk
It isn’t just the extinction of critical minerals that concerns governments – it’s the sovereign risk of having to source them from and then process them in a vanishingly small number of countries around the world.
China owns 85% of the Earth's known rare earth element supply and is home to more than 90% of production.
With the breakdown of global supply chains, caused by war and geopolitical unrest, but also by pandemic(s) and natural disasters, it’s important to have secure domestic supply.
The scarcity of a critical mineral is determined by a range of factors, including domestic processing, import dependence, geological endowment and demand.
In 2022, critical minerals are inputs to a range of automotive, communications, electronics, defence, aerospace, power generation and medical technologies.
Low-emission technologies are greedy for the minerals that make components for batteries, electric motors and renewable energy generators.
Then there is the grid – the wires that supply all that renewable energy. Copper is an inalienable part of that, and this is why the price of copper is skyrocketing.
A roadmap for critical minerals
The CSIRO's Critical Energy Minerals Roadmap assesses the mineral demand of many of the technologies relevant to a lower-carbon economy.
Australia, the US and the EU are keeping track of supply of the minerals currently regarded as critical, and have each performed assessments to inform national critical mineral lists.
Here in Australia, Geoscience Australia and the Office of the Chief Economist are the leading domestic sources of information on the supply of critical minerals.
It is clear that Australian state and federal governments recognise the need to enhance the security of global critical minerals supply chains and to this end, the Critical Minerals Strategy is a step in the right direction.
Put together this year, the strategy sets out the policy framework for growing the critical minerals sector.
The stated aim of the strategy is to turn Australia into a critical minerals powerhouse, which can capitalise on the strength of a mature resources sector, and bring processing and downstream capability into the mix.
It will pursue this objective by assisting proponents to identify and secure project finance and deepening international collaboration to grow critical minerals supply chains through working with key partners like US etc – for example, the recently announced Indian Partnership.
“It aims to leverage growing global demand and develop a thriving and durable Australian critical minerals sector – one that contributes to the national security and economic prosperity of Australia and the Indo-Pacific region by supporting innovation, attracting new investment and promoting marketing opportunities, while delivering the infrastructure needed to bring new critical minerals projects into production,” said a departmental spokesperson.
The strategy sits alongside a range of other policy measures, including:
- Global Resources Strategy – which looks to diversify markets and facilitate new trade opportunities for traditional and emerging commodities;
- $1.5 billion Modern Manufacturing Strategy – which aims to fund critical minerals processing as one of the National Manufacturing Priorities; and
- Technology Investment Roadmap – which sets out several low emissions technologies in the roadmap that rely on critical minerals.
Processing capability will ease supply issues
“The issue isn’t about running out of commodities like alumina and silica, but about processing them to that very high purity required for electronics, and that’s a technology challenge rather than a minerals challenge,” said Dr Chris Vernon, senior principal research scientist at the CSIRO.
“There has been a long discussion with government over the last decade about both moving Australian minerals industry further along the value chain simply from a creating value at home point of view and more recently about sovereign capability and feeding into supply chains and being part of supply chains that don’t go through a single country.
“Things will come into short supply, supply will get tight, but it’s hard to tell if it’s a forever thing. It depends on a range of factors, not least of which is demand, and evolving technology.”
Recycling part of the solution
Enhanced recycling technologies will remain an important piece of the puzzle and progress on this front will alleviate the pressure on supply.
“We should be recycling all of our modern electronics to recover these materials,” said Vernon.
To this end, ASX-lister Reach Resources Ltd (ASX:RR1) recently announced it is considering acquiring REEcycle Inc, a US-based rare earth element (REE) separation and technology company, citing an interest in the need to create a renewable and secure source of rare earth elements, to reduce uncertainty for companies reliant on these materials.
REEcycle has strategically concentrated on the recovery of neodymium and dysprosium, two REEs that are ranked highest in both supply risk and for their importance to clean energy.
In a recent presser, Reach Resources cited the Shanghai Metals Market, which forecasts that recycling of neodymium-based NdFeB magnets is likely to become the largest growth of neodymium and dysprosium supply from 2021 to 2025.
Technological work-arounds
Some ASX-listed companies are taking steps to reduce their exposure to supply shortages by simply finding ways to work around the need for the minerals in question.
Imperium3 New York Inc (iM3NY), which is 60% owned by Australian listed company Magnis Energy Technologies Ltd (ASX:MNS, OTCQX:MNSEF), is set to begin production of lithium-ion battery cells in June this year.
These batteries will not contain cobalt or nickel, two battery metals that have experienced extraordinary price increases in recent weeks because of the provenance of the raw materials.
Russia is the world’s largest producer of nickel, and prices have risen from $20,000 per tonne to over $100,000 per tonne in the last month. With cobalt – which is often sourced from jurisdictions where ESG is not a primary concern – prices are now approaching $85,000 per tonne.
Recognising that these price hikes would result in an increase of more than $1,000 per electric vehicle, Magnis has eliminated the need for these materials in its batteries.
By producing its own batteries, the company is also reducing its exposure to China, removing this step from its supply chain.
“We are constantly having groups reaching out to us for supply of our batteries - these groups include some of the biggest EV manufacturers globally,” iM3NY chairman Dr Shailesh Upreti said in an announcement to the market.
“They are realising the importance of a non-China supply chain along with a nickel and cobalt free battery.”
Don’t panic about supply
Though it is fair to say we have dug plenty of material out of the ground, the issue isn’t about how much is left on the planet but who wants it – and who has the will and ingenuity to provide it.
Commodities deemed critical in previous epochs may no longer be fashionable today – flint in the Stone Age, for example, or salt in the Roman Age – and are more likely to be left, in peace and abundance, in the ground.
Chris Vernon relates the salutary tale of gallium, an often-overlooked alumina processing by-product, in the 1980s, when it was tipped to be the new silicon.
“An enterprising French company came to Australia to build a side-stream gallium extraction plant at Pinjarra, next to one of the bauxite processing plants, and produced the world’s supply of gallium in a few months,” said Vernon.
“And then they had to turn it off, because gallium hadn’t taken off the way they thought it would, and if they kept it going it would kill the price of gallium.
“Gallium is on the critical list today – but you can still get your hands on some if you want it.”