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A reassessment of the strategic materials question
A reassessment of the strategic materials question
D.M. Jacobson, R.K. Turner and A.A.L. Challis
Strategic materials, it is conventionally argued, should be subjected to conservation and stockpiling measures; the aim being to optimize supplies of these ‘speci& materials for essential applications. This paper contains a critique of this conventional approach to strategic materials planning and a reevaluation of the supply vulnerability and usage criticality criteria. It is argued that a more systematic, multipronged, approach to resource contingency planning is required. Stockpiling could play a role in mitigating the effects of short-term supply shortages, but to be effective it would have to be operated in a dynamic manner. Stockpiling policy should be buttressed by, among other measures, government support for R and D programmes aimed at stimulating substitution processes and greater recycling activity. In order to achieve rational contingency planning of materials resources in Europe an appropriate administrative framework is required. One such framework might be that provided by the National Critical Materials Council in the USA. D.M. Jacobson is with GEC Research Ltd, Hirst Research Centre, East Lane, Wembley, Middlesex HA9 7PP; R.K. Turner is with the School of Environmental Sciences, University of East Anglia, Norwich, Norfolk NR4 7TJ, A.A.L. Challis is with the Plastics and Rubber Institute, Hobart Place, London SW1 W OHL. This paper is based upon a submission to the House of Commons Select Committee. It forms part of the general programme of the Materials Forum Technical Committee and the authors would like to thank members of the Technical Committee, particularly Professor A.C. Dunham, for their advice and comment.
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While concern over the adequacy of natural resources is certainly not new, there is still no consensus on what in fact has turned out to be a far from straightforward issue. The appraisal of natural resource availability involves both physical science and economic considerations. In simplistic economic terms, scarcity will be reflected in relative prices. However, scarcity is not the only influence on prices and prices often do not fully reflect scarcity (especially if ‘natural resource scarcity’ is defined as encompassing the waste assimilation and life support services of the biosphere). In the real world of natural resource demand and supply, the processes at work are dynamic and complex.’ Therefore finding and correctly interpreting data which include increasing scarcity over time is no easy task. From the Malthusian perspective, it is the absolute physical limit to non-renewable resources which is important and which is predicted to become binding in the near/-medium-term future. Such forecasts are based on static stock index calculations. They utilize suppIy data covering only proved reserves and assume an exponential trend rate of growth in demand. This approach is epitomized by the influential Meadows Report.2 A related position emphasizes the importance of environmental limits (eg mineralogical thresholds in terms of required energy inputs for extraction, thermal and other pollution costs) to growth. According to the opposite Ricardian perspective, the ‘depletion effect’ of exploitation is felt in terms of rising costs and materials prices over time, as the ‘quality’ of available resources declines. Forecasts in this tradition are much more optimistic. Assuming non-homogeneous resources, an expansion of the recoverable resource stock via increased exploration effort and success, and rapid technological progress (in particular, the establishment of a ‘backstop energy technology’), the Ricardian analysis indicates no scarcity dilemma within the next hundred years or SO.~ The ‘depletion effect’ is further mitigated by compensatory processes stimulated by the market. Such processes include material and function substitutions, industrial process changes and scrap recycling. 4 Advances in processing technologies, for example direct leaching techniques such as in situ solution mining and biotechnology, which
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bypass costly mineral benefication processes, are enabling the recovery of precious metals and copper from relatively low grade ores.5 In the present century, fears about long-term shortages of resources have been compounded by anxieties in times of war or international political tension about short-term scarcity of raw materials (transitional Malthusian scarcity). Influenced by these considerations, both governments and mineral markets have come to recognize the existence of a category of ‘strategic materials’ which may be described by the following representative definition. A strategic material is one for which the quantity required for essential civilian
and military uses exceeds the reasonably secure domestic and foreign supplies, and for which acceptable substitutes are not available within a reasonable period of time.6 This definition of a ‘strategic material’ also encompasses the notion of the term ‘critical material’ which is often used iointly or interchangeably. Implicit in this definition is the justification of special measures, such as conservation and stockpiling, in order to optimize supplies of these ‘special’ materials for essential applications.
A critique of the conventional approach ‘D.R Bohi and M.A. Toman, ‘Understanding nonrenewable resource supply behaviour’, Science, Vol 219, 1983, pp 927932. ‘D.H. Meadows et al, The Limits to Growth, Universe Books, New York, 1972. 3H.E. Goeller and A. Zucker. ‘Infinite resources: the ultimate strategy’, Science, Vo1223, 1984, pp 456-462. 4D.W. Pearce and R.K. Turner, ‘The economic evaluation of low and non-waste technologies’, Resources and Conservation, Vol 11, 1984, pp 27-43. %.L. Harris, ‘Precious metals recovery from low-grade resources’, Journal of Meta/s, Vol 38, No 6, 1986, pp 29-30. 60ffice of Technology Assessment (OTA), Strategic Materials: Technologies to Reduce US Import Vulnerability, United States Congress, Office of Technology Assessment, Washington, DC, 1983.
The above definition encompasses the two criteria according to which a material is conventionally judged to be ‘strategic’: the critical nature of its use and the vulnerability of its supply, as represented in Figure 1. At first sight, these criteria may appear simple and straightforward to apply; but this appearance is deceptive because a multitude of factors are relevant to the assessment of materials for their strategic sensitivity on this basis. Moreover, as will be shown below, many of these factors are interdependent and also difficult to evaluate quantitatively. It is perhaps not surprising, therefore, that pronouncements on the subject tend to be based on facile judgements. To make matters worse, the ‘criticality’ and ‘vulnerability’ have been terms ‘strategic material’, adopted as emotionally charged catchphrases by analysts serving commodity dealers and financial institutions.
The vulnerability criterion To illustrate the weaknesses in the conventional materials’, we shall first consider the concept
treatment of ‘strategic of vulnerability as it is
Strategic material sensitivity
i Figure 1. Schematic the conventional materials
view
representation
of
of the strategic
issue.
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Strategic materials question
used in this context. The term ‘vulnerability’ refers to the risks of both short-term shortages and longer-term scarcity for whatever reason. The question of possible short-term shortages of raw materials has received considerable attention because it lies at the heart of the stockpiling strategy. One possible cause of sporadic shortages of a material is an interruption of supplies by a foreign producer. The risk to supplies is clearly higher if a large proportion of a material is imported from just a few countries, and the Institute of Geological Sciences (IGS, now the Britsh Geological Survey) has suggested a basis on which to quantify the degree of concentration of sources of suppl~.~ The proposed index of concentration is expressed in terms of the number of supplying countries and the proportion of the total supplies contributed by each. While this index of concentration is useful in its own right, it only takes into account one parameter of supply vulnerability, namely country of origin. It is not concerned with the number of mines, production enterprises, whether these are nationalized or private, in the supplying countries. How, for example, can the relative supply vulnerability of two different materials be gauged, if for one there is a larger number of supplying countries but a smaller number of production units than for the other? An important factor governing supply vulnerability is the reliability of countries as suppliers of materials. However, it is simply not possible to properly quantify this factor, despite some keen attempts to do so.* Questions of political stability, national ideology, economic nationalism and industrial and communication infrastructure are all relevant, but how are these to be measured? As the IGS reminded the House of Lords Select Committee on Strategic Materials in 1982, the industrialized Western democracies are not necessarily more reliable as suppliers than other countries; witness the strike by Canadian nickel miners in 1969, which precipitated the most serious metal crisis in the UK since the Second World War. ‘House of Lords Select Committee on Availability of raw materials has often been assessed in terms of the Strategic Materials, 20th Report on the static resource life, defined as the ratio of economic resources divided European Communities, HMSO, London, by annual production.’ This index cannot, however, give a reliable 1982. *D. Hargreaves and S. Fromson, World estimate of the resource life. As Humphreys points out, published index of Strategic Materials, Gower, Alderfigures of reserves are those furnished by mining companies for the shot, 1983; and K.W. Stalker et a/, ‘An purpose of demonstrating that their mineral stocks are sufficient for index to identify strategic metal vulnerability’, Metal Progress, No 11, 1984, pp 55several years of future production: exploration costs dictate that they do 65. not prove more reserves than are commercially necessary at the time. ‘F.-W. Wellmer, ‘Reserve/consumption Stated more bluntly, ‘mining companies are in the business to make ratios - how can they be interpreted?‘, C/M money . . . and not to provide intellectual comfort to analysts of Bulletin, Vol 74, No 831, pp E&62; and D.S.C. Humphreys, ‘A mineral commodity resource availability’. lo Seen in this light, it is perhaps not surprising life-cycle?‘, Resources Policy, Vol9, 1982, that the static resource lives of many metals have actually been pp 215-229. low. Robertson. Tin: Its Production and increasing in recent years. l1 For copper, at least, the cause of this Marketing, Croom Helm, London, 1982, increase seems to be purely technical ie it reflects the trend towards pp 164-165. mining operations with a steadily increasing output capacity.” ‘IN. Roxburah, ‘The resource base and Others have argued that a scarcity measure ought to reflect the sum of mercury - a Gesh perspective’, Resources Pokv. Vol 6. 1979. oo 260-272: and OD the social sacrifices, both direct and indirect, made to obtain a unit of tit, tiif 9, W&lmer. le, this measure would reflect the sum of the resource.13 In princip ‘*Op tit, Ref 9, Wellmer. marginal costs of production, the rent (defined as in situ rent, net price 13A.C. Fisher, ‘Measures of natural resource scarcity’, in V.K. Smith, ed, Scarcity or user cost) and all externalities such as environmental damage costs. and Growth Reconsidered, Johns Hopkins Three scarcity measures have so far been suggested and empirically University Press, Baltimore, MD, 1979, tested: unit cost of production of the resource; real price of resourcepp 249-275.
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intensive goods; and the rental rate (user cost) of the resource, estimated via a proxy measure, marginal exploration (discovery) costs. However, the results of these studies are ambiguous, and it is now recognized that no one measure of resource scarcity is adequate. Uncertahty over the true nature of global physical resource scarcity is compounded when the definition of natural resources is expanded to encompass the services provided by open access environmental resources (waste assimilation, amenity provision, life support services). Exploration, extraction and increasing levels of production carry with them the risk of increased stock pollution, as residuals are discharged into the biosphere. The loss of such services may be irreversible in many cases. Sources of vulnerability tend to be interdependent. Thus, there is an obvious relationship between price and the extent to which supply and demand are out of balance, implying that materials produced in small quantities will be most susceptible to large fluctuations in price. Such a characteristic is indeed observed, with the platinum group metals being prime examples. Materials which have a market of only a few tonnes or less are also more vulnerable to supply interruption because they are likely to be produced by a small number of enterprises and also because production capacity can be outstripped by a growth in demand at the mere kilogram level. However, as the strength of linkage between the various vulnerability factors will differ from one specific usage of a material to another, they justify being considered separately. Yet, the fact that these factors are not independent of each other complicates the analysis and further frustrates attempts to construct a satisfactory aggregate index of vulnerability. The criticality criterion
In the conventional approach, the criticality of use represents the second criterion for assessing the strategic sensitivity of materials, as indicated in Figure 1. However, excessive emphasis has been placed on the questions of availability and supply of mineral ores, to the detriment of user considerations. For any given raw material, its criticality will depend directly on the ability to substitute for it in its various key applications and on the prospects for recycling the material from scrapped products. Here, recycling is to be seen as a means of converting ‘hidden’ resources of the material that exist in the user country into economically viable reserves. It seems reasonable to describe a material as potentially critical if one ‘important application’ of the material would suffer significantly increased cost if the price of the former were to escalate. However, the identification of the ‘important applications’ and appraisal of substitution and recycling possibilities are very difficult tasks. Yet it would be necessary to reliably assess these factors and evaluate the aggregate changes in economic welfare that would be likely to result from supply problems in order to obtain a global measure of criticality for particular materials. The problem is compounded by the fact that every product would be affected differently. The role of materials technologies
“Q.M. Jacobson and D.S. Evans, Critical Th e crucial role played by processing technologies and associated Materialsin the Electricaland Electronics has tended to be overlooked in the ‘strategic Industry, The Institutionof Metallurgists, industrial infrastructure London,1984. materials’ debate.14 For example, the ores of many of the essential RESOURCES
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used in the electrical and electronics industry, such as silicon and germanium, are commonplace and virtually worthless as commodities; extensive processing is required to make them suitable for the manufacture of devices and components. It is perhaps not surprising, therefore, to learn that in the ‘strategic materials’ debate in the USA, there has been a shift from concern over the dependence on imported raw materials to concern over the dependence on competitive materials technology.i5 Many of the features observed when analysing the usage of materials in the electrical and electronics industry would seem to carry over into other sectors of consumption. A phenomenon that has attracted much comment from economists and others is the progressive decline in the consumption of materials generally, and of metals in particular, as compared with GDP, in the UK and in other countries.16 In the USA consumption of material resources in proportion to GDP has in fact declined by two-thirds over the past century.17 Among the principal causes for this decline is, to use the term proposed by Humphreys, the growing efficiency of the use of materials, brought about by technological advances. l8 Well known examp les are the development of tinplate with thinner coatings of tin, of thinner walled copper pipes for plumbing applications, of optical fibres to replace copper cables and wiring in telecommunications and of steels with improved strength-to-weight ratios, which have brought about large savings in the use of steel for construction. In connection with the last point, Humphreys has noted that the Eiffel Tower, built in 1889, used 7 000 tonnes of wrought iron, whereas it has been estimated that an equivalent structure erected today would require only 430 tonnes of steel. These examples highlight the shift that is taking place from industries dependent on tonnages of raw materials to manufacturing enterprises with a much enhanced value-added content, exploiting ‘high-tech’ materials which require sophisticated processing. Manufacturers are being presented with a growing choice of materials - some would say a ‘hyper-choice”’ - with each material having properties that are tailored to meet increasingly precise application requirements. In consequence, mineral and energy resources are diminishing in importance, while at the same time, the enabling technologies are becoming an ever more critical factor in determining the industrial strength and security of a country. An extreme case is provided by the microelectronic industry based on device grade silicon and gallium arsenide. In 1984, the total world market for gallium arsenide wafers, based on less than 20 tonnes of gallium metal, was worth f200 million. This compares with a value of f10 000 million for the 1.8 million tonnes output of stainless steel.*’ It is predicted that, with an unusually high annual compound growth rate of 20%, the value of electronic device manufacture alone will soon equal and then exceed that of the entire steel industry.‘l On the debit side for importing nations, there is a growing tendency for supplying countries to vertically integrate mining and extraction with secondary processing. Thus, in the case of chromium, South African and Finnish producers are currently extending their operations downstream from ore recovery and ferrochrome production to manufacturing stainless steel semifinished products2* At the same time, ferrochrome producers in the EEC, Japan and the USA have severely cut back production in recent years because of fierce competition from new smelters in countries with indigenous supplies of chromium, in
materials
‘5Cl News, Vol 4, No 4, p 13. 16W.S. Etheridge, ‘Demand for metals’, Materials in Engineering, Vol 2, 1981, pp 131-140; and J.W.- Evans and J. Szekely, ‘Newer vs traditional industries: a materials perspective’, Journal of Metals, Vol37, No 12, 1985, pp 40-44. “N. Rosenberg, ‘Innovative responses to materials shortages’, in Perspectives on Technology, Cambridge University Press, Cambridge, 1976, pp 249-259. ‘8D.S.C. Humphreys, ‘Consumption of non-fuel minerals: trends and economic appraisal’, in Indigenous Raw Materials for Industry, The Metals Society, London, 1984. “CPE, L’hyperchoix des materiaux, Centre de Prospective et d’Evaluation, Sciences et Techniques, Special Number, 1985, pp 48-61. 200p tit, Ref 14. 2’S Jones et al, ‘Future demand for gallkrm arsenide semiconductor devices’, Metals and Materials, Vol2, 1986, pp 353356. 2ZM Rogers ‘Chrome and ferrochrome firmiy in the hands of the few’, Metal Bulletin Monthly, No 175, 1985, pp 15-l 9.
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South Africa.23 In consequence, the major alloy steel consuming countries have become heavily dependent on South Africa not only for chromium but for ferrochrome and high quality steels and, above all, for the processing facilities and technology involved. The loss of the value-added steel processing and manufacturing activities by the major Western industrial countries to South Africa would appear to be irreversible as that country is now building up a world lead in ferrochrome and steel smelting technology.‘4 To sum up, the classic concern over the availability and supply of raw materials has tended to obscure other issues, including those relating to materials technologies, which are no less vital to the critical and strategic materials question. particular
Quantification
23J.F. Papp, ‘Chromium’, in Mineral Commodity Profiles, US Dept of the interior, Bureau of Mines, Washington, DC, 1983; and M. Rogers, ‘The chromium industry in South Africa and Zimbabwe, 1984’, unpublished report, University of Oxford, 1984. %p tit, Ref 22. 250p tit, Fief 8, Hargreaves and Fromson; A.V. Bridgwater and M.V. Nott, ‘A methodological asessment of raw materials in the UK’, Resources Policy, Vol 7, No 4, 1981, pp 251-264; for recent attempts see J.P. Clark and B. Reddy, ‘Critical and strategic materials’, in M.B. Bever et al, eds, Encyclopaedia of Materials Science and Engineering, Pergamon, Oxford and New York, 1986.
of strategic sensitivity
In the light of the above analysis, which has highlighted the enormous complexity of the ‘strategic materials’ question, it is reasonable to suspect the various indices of strategic sensitivity that analysts have constructed in an endeavour to quantify this term.25 The complexity of the problem can be gauged from the sources of strategic sensitivity identified in case studies carried out in the electrical and electronics industry and listed in Table 1. It is little wonder, therefore, that the use of necessarily simplistic indices of strategic sensitivity all to often leads to misleading generalizations. This further underlines the need to abandon the conventional treatment of the issue.
Formulation of a more systematic approach to resource contingency planning Because it is preoccupied with the availability and supply of mineral ores, the conventional treatment of the strategic materials question naturally enough stresses stockpiling as the principal policy response (as indicated in Figure 1). However, in view of the multiplicity of issues that are involved, any really effective strategy aimed at reducing the vulnerability of the civil and defence industries in the UK to problems
Table 1. Sources of vulnerability to industrial users of materials in the UK. Vulnerability
Reason
1.
The material represents a significant fraction of manufacturing and is subject to large price swings
2.
Supplies of the material potentially at risk
3.
Recycling is unable to significantly
4.
Demand for the material is susceptible to relatively large increases in demand
in the form required for manufacture
are
augment supplies of the material
5. Substitutes for the material are not readily available
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Imports make up a significant proportion of supplies Countries which are unstable or which do not have good political relations with the UK furnish a significant proportion of the supplies There are a small number of producing countries There are a small number of production units Supply links are vulnerable Demand is in danger of outstripping production capacity Users have poor leverage over producers, as when the material represents a low value byproduct of the mineral ore There is a long processing chain and the supply industry lacks vertical integration Collection and/or separation of scrap is difficult Processing using existing technology is uneconomical World production of the material is small Speculative interest in the material is strong There is a lack of substitute materials There is a lack of readily available functional substitutes The ability to apply material conserving substitution is limited
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Strategic materials question
associated pronged.26
with
their
materials
supplies
must
necessarily
be multi-
Stockpiling Stockpiling could have a role in mitigating the effects of short-term supply shortages. However, to be effective, a stockpile would have to be operated in a dynamic manner, following changes in patterns of usage within the country, including methods of production. There is otherwise the danger, as experienced in the USA, that large quantities of material will be accumulated which, in the course of time, become technically obsolete. A prime example is provided by the stocks of cobalt in the US strategic stockpile which were acquired in the early 1950s. This material has a nominal purity of 99.5%) which is today of inadequate quality for many superalloy applications. 27 Furthermore, material held in a stockpile must be immediately usable by domestic manufacturing industry. It would, for example, be pointless holding chromite for the purpose of producing stainless steel if facilities were lacking in the country to convert the chromite to ferrochrome. On the other hand, changes in methods of steel production could reduce the utility of a ferrochrome stockpile. A stockpiling policy therefore calls for highly discriminating judgements based on detailed specialized knowledge of the needs of user industries: the possibility of a scheme jointly administered by government and industry is worth considering in the circumstances. If stockpiling were to be extended, certain other possible negative spin offs would need to be considered. Inventory adjustments, both actual and notified, could have an adverse effect on the subsequent pricing and supply of the materials in question, especially if the quantities involved are significant in comparison with annual world production. Recent sales of silver and mercury from the US government stockpile provide strong evidence for this view. The net result could well be an increased volatility in prices and an unsettled climate for producers and users. Substitution Material or functional substitution would be the appropriate responses to sustained supply interruptions. The commercial motivation for developing substitutes in normal times is the expectation of a price or performance advantage. Where no such direct economic incentive exists, the case has been made justifying government support for research and development programmes aimed at substituting for critical materials, in the same way that government might be expected to take a lead in instituting a stockpile.2s It should be remembered that, because no material is identical in its set of properties to any other, the introduction of a substitute material in a particular application will almost certainly require some degree of induced innovation and redesign to complementary parts of the systems in which they are employed. This wide aspect would have to be continually addressed in a substitution programme. 26J.B. Wachtman, ‘The nature of the critical and strategic materials problem’, AGARD (NATO). CP-356.1984.1.1-l .I 1. “Metal &t//etin;.27 March 1981.. “Op tit, Ref 26; J.P Clark and F.R. Field, ‘How critical are critical materials’, Technology Review, No 4, 1985, pp 38-47.
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Recycling Recycling strategic
converting
can have materia1s.
‘hidden’
a positive role to play in mitigating shortages of Recycling in a sense represents a means of resources close at hand into immediately usable
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stocks. For this option to be available in practice, however, it is necessary to have the appropriate processing facilities on tap, because the plant needed to recover most materials can take considerable time and effort to install. The implementation of a meaningful recycling strategy also requires detailed data on the generation and flow of scrap containing significant amounts of strategic materials. Such data is currently lacking in all industrialized economies. Of immediate concern is the fact that certain technological developments are encouraging increased mixing and dispersal of materials in products, which is likely to make recycling more difficult to achieve. Thus, for example, the trend towards miniaturization is reducing the quantity of material that can be recovered per unit of scrap and is necessitating more elaborate processing methods. This may eventually make resource recovery from a significant proportion of scrap prohibitively expensive. The manner in which materials are being mixed together in order to optimize technological performance and/or aesthetic appeal is producing potentially incompatible combinations as far as recycling is concerned. The Materials Forum is addressing this issue, and in 1985 sponsored a project which was funded by DTI to explore opportunities for modifying the design of products and their utilization of materials so as to facilitate recycling.29 Domestic
“M. Henstock, Design for Recyclability, Dept of Metallurgy and Materials Science, University of Nottingham, 1987. “‘Sir Kingsley Dunham, ‘Metallic resources’, pp l-6 in indigenous Raw Materials for industry, Metals Society, London, 1984; and D.E Highly, ‘Non-metallic mineral resources’, pp 7-21 in indigenous Raw Materials for industry, Metals Society, London, 1984. 3’Mineral Resources Consultative Committee, 26 Dossiers on Selected Raw Materials, HMSO, 1971-84.
supplies
The UK has had a long history of supplying its own natural resources: at one time it was the world’s leading producer of copper and tin ores. However, reserves of many raw materials are now for all practical purposes nil, though many raw materials are still produced (these are listed in Table 2). Note not only the absence of significant quantities of virtually all metals, but also a lack of a number of other important materials. The raw materials in which the UK is dependent on imports are listed in Table 3, a much longer list. Quite a number of materials occur in both Tables 2 and 3, meaning that, although the material is produced in the UK, the bulk needs to be imported. Outlines of the current position of known resources of metals and non-metallic minerals have been reviewed by Dunham.30 Overviews for certain minerals are contained in the 26 mineral Dossiers published by the Mineral Resources Consultative Committee.31 In spite of the best efforts of the British Geological Survey (BGS), other government departments and public and private industries, it is still not possible to say that a reasonably comprehensive or reliable Table 2. Minerals produced in the UK. Fuels Coal
Oil
Gas
(Tin) Copper
(Tungsten) Zinc
Potter’s clay Common clay Limestone Chert and flint Special sands Gypsum Fluorspar Diatomite Honestone
Fireclay Slate Dolomite Silica stone - ganister Sand and gravel Anhydrite Barytes Talc China stone
Metals
Iron ore Lead Non-metallic minerals China clay Fuller’s earth Calcspar Chalk Sandstone Igneous rock Rocks salt Celestite Mica Potash minerals
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Strategic materials question Table 3. Metals and minerals Abrasive raw materials Antimony Attapulgite Beryllium Cadmium Cobalt Diatomite Gold llmenite Lead Mercury Nepheline syenite Tantalum Platinum Quartz Sepiolite Silver Thorium Tungsten Zeolites
Clifford Butler, Report of the Study Group info Geologicat Surveying, ABRC-
%ir
NERC, 1987. 33D.S.C. Humphreys,
82
op tit, Ref 18.
mainly
imported
into the UK. Aluminium Asbestos Bentonite Boron Chromium Crvolite Germanium Graphite Iron ore Marble Molybdenum Niobium Phosphorus Pvrites Sklenium Sillimanite Talc Titanium Vermiculite Zirconium
Activated minerals Arsenic Bauxite Bismuth Cerium Copper Feldspar Granite Iodine Manganese Mica Nickel Perlite Pumice Rare earths Silicon Sulphur Tin Vanadium Zinc
inventory of the raw materials present in workable quantities and grades is known. However, the recent Butkr Report?* on geological surveying in the UK recommends that the BGS concentrates on developing such a database. This would require the revision of many of the basic geological maps, on a scale of 1:lO 000, with the production of accompanying descriptive memoirs detailing the latest information on each map area. This basic work is not, however, adequate for the compilation of the mineral database: it provides only the groundwork for more detailed studies of a quite different kind, which examine the distribution and properties of potential raw materials. An excellent start to this more detailed programme has been made in the assessment of the available resources of sands and gravels (more than 143 reports on specific areas). More limited information is available on other minerals such as limestone, dolomite and conglomerate. In addition the BGS has produced a significant number of reports on possible metal occurrences. Unfortunately, even this effort barely begins to attack the problems of a nationwide appraisal of the potential mineral wealth of the UK. Undoubtedly there are a number of materials for which the chances of discovering new deposits are slim; but until such a database exists the formulation of any minerals strategy is seriously hampered. It may seem surprising that in the country where most of the early developments of geology were pioneered, the status of most geological natural resources is still poorly known. The reason lies in the complexity and time required for the necessary geological surveying and mineral assessment. In the UK most of the obvious metallic resources have probably already been found: the search must now be for the hidden deposits. For the non-metallic minerals the problem does not lie in finding deposits of limestone, for example, but in assessing whether the properties of a particular limestone are suitable for a particular end-use (for example, for making seawater magnesite). This will require more resources for the BGS, and an enlargement of the current exploration and planning projects sponsored by the Department of the Environment and the Department of Trade and Industry. It is unfortunate how often in the past our own indigenous stockpile beneath our feet has been ignored. professor J. Nutting remarked, in the introduction to the on ‘Indigenous Raw Materials for proceedings of a conference Industry’33 that: RESOURCES
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We do believe that better use could be made of our indigenous resources, and that, from an awareness of their extent, future materials development work could be focussed upon making use of what we have got rather than what we have to import with the attendant risks of shortage, price instability and political blackmail.
Other considerations
Stockpiling and to some extent substitution and recycling could be the appropriate safeguards against temporary interruptions of supplies.34 Less dramatic problems such as escalating costs of raw materials can be at least as damaging to the economy in the longer term and thus equally justify contingency plans. A case in point was the oil crisis in 1973, which caught the leading industrial countries virtually unprepared and had a serious impact on their economies. Maintaining and upgrading existing processing facilities may be easy to achieve; but to establish capacity for entirely new domestic production may not often make immediate economic sense. However, the positive knock on effects in other areas might be considerable. For example, initiating domestic production of device quality silicon from silica would not only secure strategic supplies and help to reduce the commercial vulnerablility of domestic users but could have a stimulating effect on operations as diverse as silicone production and the manufacturing of engineering equipment.35 At the very least, a case can be made for establishing small strategic processing facilities and keeping these in a ‘mothballed’ state until such time as they are required
A framework for resource contingency
340p tit, Ref 6. 35D.S. Evans and D.M. Jacobson, ‘Special materials in the electrical and electronics industry’, in Indigenous Raw Materials for Industry, The Metals Society, London, 1904. 36W.A. Vogley, ‘Materials policy: Europe’, in M.B. Bever et a/, eds. Encvclcmaedia of Materials Science -and .Enghee&g, Pergamon, Oxford and New York, 1966. 370p tit, Ref 7.
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planning
Having recognized the need for a multipronged approach to contingency planning of materials resources, we must then consider how to achieve it in practice. At present, the sort of administrative framework called for, one that is broadly based and at the same time fully integrated, is lacking in Europe. France alone of the EEC countries has formulated a detailed non-fuel minerals policy, while it shares with two other Western countries, Sweden and Switzerland, the distinction of maintaining stockpiles of strategic materials.36 The EEC does not have any collective policy on contingency planning of raw materials. In the early 1980s the Commission presented a report to the Council of Ministers indicating why a policy to safeguard materials supplies is desirable, but this was not taken any further.37 However, the European Commission is active in planning and coordinating a range of activities that together constitute an embryonic resource planning policy. These concern such diverse areas as foreign trade, aiding exploration for new resources, and the sponsorship of scientific and technological research. A significant proportion of the research programmes supported by the Community are devoted to improving knowledge of natural resources, developing new processes and to achieving economies in the use of raw materials by various means, including recycling. Each programme is of a relatively short duration, normally a maximum of four years; however, this restriction is partly overcome by it being replaced on expiry by another programme in the same general field. These activities could be easily integrated into a more comprehensive scheme of resource planning within the EEC.
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Strategic materials question
A framework that might be considered as an appropriate model for Europe is provided by the National Critical Materials Council in the USA, which was established by the National Critical Materials Act of 1984.38 Operating within the Executive Office of the President, this body has been assigned the role of coordinating government materialsrelated policies and research and development programmes on advanced materials. It has the authority to oversee the whole area of materials research and the duty to assess the future needs of both government and industry. Among its specific functions are: to assess the adequacy of the materials content of educational curricula; to draw up an inventory of critical materials and to project the needs of government and industry for them and, with the collaboration of the Office of Science and Technology Policy and others, to predict possible major problems that may emerge in the future; to provide Congress with recommendations on changes in policy, regulation and on legislation that may be required.
38H Leamy ‘The national critical materials Act’, MRS bulletin, No 1, 1985, pp 21-22. 39Meta/Bulletin, 27 June 1986. 40T.W . Stanley, ‘Stockpiling’, in MB. Bever et al, eds, Encyclopaedia of Materials Science and Engineering, Pergamon, Oxford and New York, 1986.
84
The National Critical Materials Council has been empowered to establish advisory panels and to convene Federal interagency committees to assist it in its work. While the Council is supported by some government funding, it largely relies on the private sector to implement the agreed materials policies. In Japan, by comparison, the responsibility for initiatives in research and development on new materials and related technologies, and also for securing supplies of raw materials, has been delegated almost completely to private industry. This position extends to the official strategic stockpile that is currently being built up by the Japanese government in partnership with private industry.39 Sweden and Switzerland also rely on incentives offered to their private sector for the stockpiling programmes.40 For the UK it makes sense for materials policies and, in particular, resource contingency planning to be developed as part of a joint EEC undertaking, building on existing national and Community programmes, as outlined above. A wider Atlantic dimension taking in the USA and Canada could offer considerable mutual benefit. This would enjoy the obvious advantages of a greatly expanded and more diversified resource base and range of materials technologies, and also possibly the benefit of the better developed US administrative structures, including the National Critical Materials Council. The grouping might be further broadened to take in Japan and the rest of the NATO alliance. While this extended participation could well represent the ultimate objective, it is probably desirable to set as an initial goal the achievement of a coherent resource planning policy within the EEC.
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D.M. Jacobson, R.K. Turner and A.A.L. Challis
Strategic materials, it is conventionally argued, should be subjected to conservation and stockpiling measures; the aim being to optimize supplies of these ‘speci& materials for essential applications. This paper contains a critique of this conventional approach to strategic materials planning and a reevaluation of the supply vulnerability and usage criticality criteria. It is argued that a more systematic, multipronged, approach to resource contingency planning is required. Stockpiling could play a role in mitigating the effects of short-term supply shortages, but to be effective it would have to be operated in a dynamic manner. Stockpiling policy should be buttressed by, among other measures, government support for R and D programmes aimed at stimulating substitution processes and greater recycling activity. In order to achieve rational contingency planning of materials resources in Europe an appropriate administrative framework is required. One such framework might be that provided by the National Critical Materials Council in the USA. D.M. Jacobson is with GEC Research Ltd, Hirst Research Centre, East Lane, Wembley, Middlesex HA9 7PP; R.K. Turner is with the School of Environmental Sciences, University of East Anglia, Norwich, Norfolk NR4 7TJ, A.A.L. Challis is with the Plastics and Rubber Institute, Hobart Place, London SW1 W OHL. This paper is based upon a submission to the House of Commons Select Committee. It forms part of the general programme of the Materials Forum Technical Committee and the authors would like to thank members of the Technical Committee, particularly Professor A.C. Dunham, for their advice and comment.
74
While concern over the adequacy of natural resources is certainly not new, there is still no consensus on what in fact has turned out to be a far from straightforward issue. The appraisal of natural resource availability involves both physical science and economic considerations. In simplistic economic terms, scarcity will be reflected in relative prices. However, scarcity is not the only influence on prices and prices often do not fully reflect scarcity (especially if ‘natural resource scarcity’ is defined as encompassing the waste assimilation and life support services of the biosphere). In the real world of natural resource demand and supply, the processes at work are dynamic and complex.’ Therefore finding and correctly interpreting data which include increasing scarcity over time is no easy task. From the Malthusian perspective, it is the absolute physical limit to non-renewable resources which is important and which is predicted to become binding in the near/-medium-term future. Such forecasts are based on static stock index calculations. They utilize suppIy data covering only proved reserves and assume an exponential trend rate of growth in demand. This approach is epitomized by the influential Meadows Report.2 A related position emphasizes the importance of environmental limits (eg mineralogical thresholds in terms of required energy inputs for extraction, thermal and other pollution costs) to growth. According to the opposite Ricardian perspective, the ‘depletion effect’ of exploitation is felt in terms of rising costs and materials prices over time, as the ‘quality’ of available resources declines. Forecasts in this tradition are much more optimistic. Assuming non-homogeneous resources, an expansion of the recoverable resource stock via increased exploration effort and success, and rapid technological progress (in particular, the establishment of a ‘backstop energy technology’), the Ricardian analysis indicates no scarcity dilemma within the next hundred years or SO.~ The ‘depletion effect’ is further mitigated by compensatory processes stimulated by the market. Such processes include material and function substitutions, industrial process changes and scrap recycling. 4 Advances in processing technologies, for example direct leaching techniques such as in situ solution mining and biotechnology, which
0301-4207/88/020074-11$03.00
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1988 Butterworth
& Co (Publishers)
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Strategic materials
question
bypass costly mineral benefication processes, are enabling the recovery of precious metals and copper from relatively low grade ores.5 In the present century, fears about long-term shortages of resources have been compounded by anxieties in times of war or international political tension about short-term scarcity of raw materials (transitional Malthusian scarcity). Influenced by these considerations, both governments and mineral markets have come to recognize the existence of a category of ‘strategic materials’ which may be described by the following representative definition. A strategic material is one for which the quantity required for essential civilian
and military uses exceeds the reasonably secure domestic and foreign supplies, and for which acceptable substitutes are not available within a reasonable period of time.6 This definition of a ‘strategic material’ also encompasses the notion of the term ‘critical material’ which is often used iointly or interchangeably. Implicit in this definition is the justification of special measures, such as conservation and stockpiling, in order to optimize supplies of these ‘special’ materials for essential applications.
A critique of the conventional approach ‘D.R Bohi and M.A. Toman, ‘Understanding nonrenewable resource supply behaviour’, Science, Vol 219, 1983, pp 927932. ‘D.H. Meadows et al, The Limits to Growth, Universe Books, New York, 1972. 3H.E. Goeller and A. Zucker. ‘Infinite resources: the ultimate strategy’, Science, Vo1223, 1984, pp 456-462. 4D.W. Pearce and R.K. Turner, ‘The economic evaluation of low and non-waste technologies’, Resources and Conservation, Vol 11, 1984, pp 27-43. %.L. Harris, ‘Precious metals recovery from low-grade resources’, Journal of Meta/s, Vol 38, No 6, 1986, pp 29-30. 60ffice of Technology Assessment (OTA), Strategic Materials: Technologies to Reduce US Import Vulnerability, United States Congress, Office of Technology Assessment, Washington, DC, 1983.
The above definition encompasses the two criteria according to which a material is conventionally judged to be ‘strategic’: the critical nature of its use and the vulnerability of its supply, as represented in Figure 1. At first sight, these criteria may appear simple and straightforward to apply; but this appearance is deceptive because a multitude of factors are relevant to the assessment of materials for their strategic sensitivity on this basis. Moreover, as will be shown below, many of these factors are interdependent and also difficult to evaluate quantitatively. It is perhaps not surprising, therefore, that pronouncements on the subject tend to be based on facile judgements. To make matters worse, the ‘criticality’ and ‘vulnerability’ have been terms ‘strategic material’, adopted as emotionally charged catchphrases by analysts serving commodity dealers and financial institutions.
The vulnerability criterion To illustrate the weaknesses in the conventional materials’, we shall first consider the concept
treatment of ‘strategic of vulnerability as it is
Strategic material sensitivity
i Figure 1. Schematic the conventional materials
view
representation
of
of the strategic
issue.
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Strategic materials question
used in this context. The term ‘vulnerability’ refers to the risks of both short-term shortages and longer-term scarcity for whatever reason. The question of possible short-term shortages of raw materials has received considerable attention because it lies at the heart of the stockpiling strategy. One possible cause of sporadic shortages of a material is an interruption of supplies by a foreign producer. The risk to supplies is clearly higher if a large proportion of a material is imported from just a few countries, and the Institute of Geological Sciences (IGS, now the Britsh Geological Survey) has suggested a basis on which to quantify the degree of concentration of sources of suppl~.~ The proposed index of concentration is expressed in terms of the number of supplying countries and the proportion of the total supplies contributed by each. While this index of concentration is useful in its own right, it only takes into account one parameter of supply vulnerability, namely country of origin. It is not concerned with the number of mines, production enterprises, whether these are nationalized or private, in the supplying countries. How, for example, can the relative supply vulnerability of two different materials be gauged, if for one there is a larger number of supplying countries but a smaller number of production units than for the other? An important factor governing supply vulnerability is the reliability of countries as suppliers of materials. However, it is simply not possible to properly quantify this factor, despite some keen attempts to do so.* Questions of political stability, national ideology, economic nationalism and industrial and communication infrastructure are all relevant, but how are these to be measured? As the IGS reminded the House of Lords Select Committee on Strategic Materials in 1982, the industrialized Western democracies are not necessarily more reliable as suppliers than other countries; witness the strike by Canadian nickel miners in 1969, which precipitated the most serious metal crisis in the UK since the Second World War. ‘House of Lords Select Committee on Availability of raw materials has often been assessed in terms of the Strategic Materials, 20th Report on the static resource life, defined as the ratio of economic resources divided European Communities, HMSO, London, by annual production.’ This index cannot, however, give a reliable 1982. *D. Hargreaves and S. Fromson, World estimate of the resource life. As Humphreys points out, published index of Strategic Materials, Gower, Alderfigures of reserves are those furnished by mining companies for the shot, 1983; and K.W. Stalker et a/, ‘An purpose of demonstrating that their mineral stocks are sufficient for index to identify strategic metal vulnerability’, Metal Progress, No 11, 1984, pp 55several years of future production: exploration costs dictate that they do 65. not prove more reserves than are commercially necessary at the time. ‘F.-W. Wellmer, ‘Reserve/consumption Stated more bluntly, ‘mining companies are in the business to make ratios - how can they be interpreted?‘, C/M money . . . and not to provide intellectual comfort to analysts of Bulletin, Vol 74, No 831, pp E&62; and D.S.C. Humphreys, ‘A mineral commodity resource availability’. lo Seen in this light, it is perhaps not surprising life-cycle?‘, Resources Policy, Vol9, 1982, that the static resource lives of many metals have actually been pp 215-229. low. Robertson. Tin: Its Production and increasing in recent years. l1 For copper, at least, the cause of this Marketing, Croom Helm, London, 1982, increase seems to be purely technical ie it reflects the trend towards pp 164-165. mining operations with a steadily increasing output capacity.” ‘IN. Roxburah, ‘The resource base and Others have argued that a scarcity measure ought to reflect the sum of mercury - a Gesh perspective’, Resources Pokv. Vol 6. 1979. oo 260-272: and OD the social sacrifices, both direct and indirect, made to obtain a unit of tit, tiif 9, W&lmer. le, this measure would reflect the sum of the resource.13 In princip ‘*Op tit, Ref 9, Wellmer. marginal costs of production, the rent (defined as in situ rent, net price 13A.C. Fisher, ‘Measures of natural resource scarcity’, in V.K. Smith, ed, Scarcity or user cost) and all externalities such as environmental damage costs. and Growth Reconsidered, Johns Hopkins Three scarcity measures have so far been suggested and empirically University Press, Baltimore, MD, 1979, tested: unit cost of production of the resource; real price of resourcepp 249-275.
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intensive goods; and the rental rate (user cost) of the resource, estimated via a proxy measure, marginal exploration (discovery) costs. However, the results of these studies are ambiguous, and it is now recognized that no one measure of resource scarcity is adequate. Uncertahty over the true nature of global physical resource scarcity is compounded when the definition of natural resources is expanded to encompass the services provided by open access environmental resources (waste assimilation, amenity provision, life support services). Exploration, extraction and increasing levels of production carry with them the risk of increased stock pollution, as residuals are discharged into the biosphere. The loss of such services may be irreversible in many cases. Sources of vulnerability tend to be interdependent. Thus, there is an obvious relationship between price and the extent to which supply and demand are out of balance, implying that materials produced in small quantities will be most susceptible to large fluctuations in price. Such a characteristic is indeed observed, with the platinum group metals being prime examples. Materials which have a market of only a few tonnes or less are also more vulnerable to supply interruption because they are likely to be produced by a small number of enterprises and also because production capacity can be outstripped by a growth in demand at the mere kilogram level. However, as the strength of linkage between the various vulnerability factors will differ from one specific usage of a material to another, they justify being considered separately. Yet, the fact that these factors are not independent of each other complicates the analysis and further frustrates attempts to construct a satisfactory aggregate index of vulnerability. The criticality criterion
In the conventional approach, the criticality of use represents the second criterion for assessing the strategic sensitivity of materials, as indicated in Figure 1. However, excessive emphasis has been placed on the questions of availability and supply of mineral ores, to the detriment of user considerations. For any given raw material, its criticality will depend directly on the ability to substitute for it in its various key applications and on the prospects for recycling the material from scrapped products. Here, recycling is to be seen as a means of converting ‘hidden’ resources of the material that exist in the user country into economically viable reserves. It seems reasonable to describe a material as potentially critical if one ‘important application’ of the material would suffer significantly increased cost if the price of the former were to escalate. However, the identification of the ‘important applications’ and appraisal of substitution and recycling possibilities are very difficult tasks. Yet it would be necessary to reliably assess these factors and evaluate the aggregate changes in economic welfare that would be likely to result from supply problems in order to obtain a global measure of criticality for particular materials. The problem is compounded by the fact that every product would be affected differently. The role of materials technologies
“Q.M. Jacobson and D.S. Evans, Critical Th e crucial role played by processing technologies and associated Materialsin the Electricaland Electronics has tended to be overlooked in the ‘strategic Industry, The Institutionof Metallurgists, industrial infrastructure London,1984. materials’ debate.14 For example, the ores of many of the essential RESOURCES
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Strategic materials question
used in the electrical and electronics industry, such as silicon and germanium, are commonplace and virtually worthless as commodities; extensive processing is required to make them suitable for the manufacture of devices and components. It is perhaps not surprising, therefore, to learn that in the ‘strategic materials’ debate in the USA, there has been a shift from concern over the dependence on imported raw materials to concern over the dependence on competitive materials technology.i5 Many of the features observed when analysing the usage of materials in the electrical and electronics industry would seem to carry over into other sectors of consumption. A phenomenon that has attracted much comment from economists and others is the progressive decline in the consumption of materials generally, and of metals in particular, as compared with GDP, in the UK and in other countries.16 In the USA consumption of material resources in proportion to GDP has in fact declined by two-thirds over the past century.17 Among the principal causes for this decline is, to use the term proposed by Humphreys, the growing efficiency of the use of materials, brought about by technological advances. l8 Well known examp les are the development of tinplate with thinner coatings of tin, of thinner walled copper pipes for plumbing applications, of optical fibres to replace copper cables and wiring in telecommunications and of steels with improved strength-to-weight ratios, which have brought about large savings in the use of steel for construction. In connection with the last point, Humphreys has noted that the Eiffel Tower, built in 1889, used 7 000 tonnes of wrought iron, whereas it has been estimated that an equivalent structure erected today would require only 430 tonnes of steel. These examples highlight the shift that is taking place from industries dependent on tonnages of raw materials to manufacturing enterprises with a much enhanced value-added content, exploiting ‘high-tech’ materials which require sophisticated processing. Manufacturers are being presented with a growing choice of materials - some would say a ‘hyper-choice”’ - with each material having properties that are tailored to meet increasingly precise application requirements. In consequence, mineral and energy resources are diminishing in importance, while at the same time, the enabling technologies are becoming an ever more critical factor in determining the industrial strength and security of a country. An extreme case is provided by the microelectronic industry based on device grade silicon and gallium arsenide. In 1984, the total world market for gallium arsenide wafers, based on less than 20 tonnes of gallium metal, was worth f200 million. This compares with a value of f10 000 million for the 1.8 million tonnes output of stainless steel.*’ It is predicted that, with an unusually high annual compound growth rate of 20%, the value of electronic device manufacture alone will soon equal and then exceed that of the entire steel industry.‘l On the debit side for importing nations, there is a growing tendency for supplying countries to vertically integrate mining and extraction with secondary processing. Thus, in the case of chromium, South African and Finnish producers are currently extending their operations downstream from ore recovery and ferrochrome production to manufacturing stainless steel semifinished products2* At the same time, ferrochrome producers in the EEC, Japan and the USA have severely cut back production in recent years because of fierce competition from new smelters in countries with indigenous supplies of chromium, in
materials
‘5Cl News, Vol 4, No 4, p 13. 16W.S. Etheridge, ‘Demand for metals’, Materials in Engineering, Vol 2, 1981, pp 131-140; and J.W.- Evans and J. Szekely, ‘Newer vs traditional industries: a materials perspective’, Journal of Metals, Vol37, No 12, 1985, pp 40-44. “N. Rosenberg, ‘Innovative responses to materials shortages’, in Perspectives on Technology, Cambridge University Press, Cambridge, 1976, pp 249-259. ‘8D.S.C. Humphreys, ‘Consumption of non-fuel minerals: trends and economic appraisal’, in Indigenous Raw Materials for Industry, The Metals Society, London, 1984. “CPE, L’hyperchoix des materiaux, Centre de Prospective et d’Evaluation, Sciences et Techniques, Special Number, 1985, pp 48-61. 200p tit, Ref 14. 2’S Jones et al, ‘Future demand for gallkrm arsenide semiconductor devices’, Metals and Materials, Vol2, 1986, pp 353356. 2ZM Rogers ‘Chrome and ferrochrome firmiy in the hands of the few’, Metal Bulletin Monthly, No 175, 1985, pp 15-l 9.
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South Africa.23 In consequence, the major alloy steel consuming countries have become heavily dependent on South Africa not only for chromium but for ferrochrome and high quality steels and, above all, for the processing facilities and technology involved. The loss of the value-added steel processing and manufacturing activities by the major Western industrial countries to South Africa would appear to be irreversible as that country is now building up a world lead in ferrochrome and steel smelting technology.‘4 To sum up, the classic concern over the availability and supply of raw materials has tended to obscure other issues, including those relating to materials technologies, which are no less vital to the critical and strategic materials question. particular
Quantification
23J.F. Papp, ‘Chromium’, in Mineral Commodity Profiles, US Dept of the interior, Bureau of Mines, Washington, DC, 1983; and M. Rogers, ‘The chromium industry in South Africa and Zimbabwe, 1984’, unpublished report, University of Oxford, 1984. %p tit, Ref 22. 250p tit, Fief 8, Hargreaves and Fromson; A.V. Bridgwater and M.V. Nott, ‘A methodological asessment of raw materials in the UK’, Resources Policy, Vol 7, No 4, 1981, pp 251-264; for recent attempts see J.P. Clark and B. Reddy, ‘Critical and strategic materials’, in M.B. Bever et al, eds, Encyclopaedia of Materials Science and Engineering, Pergamon, Oxford and New York, 1986.
of strategic sensitivity
In the light of the above analysis, which has highlighted the enormous complexity of the ‘strategic materials’ question, it is reasonable to suspect the various indices of strategic sensitivity that analysts have constructed in an endeavour to quantify this term.25 The complexity of the problem can be gauged from the sources of strategic sensitivity identified in case studies carried out in the electrical and electronics industry and listed in Table 1. It is little wonder, therefore, that the use of necessarily simplistic indices of strategic sensitivity all to often leads to misleading generalizations. This further underlines the need to abandon the conventional treatment of the issue.
Formulation of a more systematic approach to resource contingency planning Because it is preoccupied with the availability and supply of mineral ores, the conventional treatment of the strategic materials question naturally enough stresses stockpiling as the principal policy response (as indicated in Figure 1). However, in view of the multiplicity of issues that are involved, any really effective strategy aimed at reducing the vulnerability of the civil and defence industries in the UK to problems
Table 1. Sources of vulnerability to industrial users of materials in the UK. Vulnerability
Reason
1.
The material represents a significant fraction of manufacturing and is subject to large price swings
2.
Supplies of the material potentially at risk
3.
Recycling is unable to significantly
4.
Demand for the material is susceptible to relatively large increases in demand
in the form required for manufacture
are
augment supplies of the material
5. Substitutes for the material are not readily available
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Imports make up a significant proportion of supplies Countries which are unstable or which do not have good political relations with the UK furnish a significant proportion of the supplies There are a small number of producing countries There are a small number of production units Supply links are vulnerable Demand is in danger of outstripping production capacity Users have poor leverage over producers, as when the material represents a low value byproduct of the mineral ore There is a long processing chain and the supply industry lacks vertical integration Collection and/or separation of scrap is difficult Processing using existing technology is uneconomical World production of the material is small Speculative interest in the material is strong There is a lack of substitute materials There is a lack of readily available functional substitutes The ability to apply material conserving substitution is limited
79
Strategic materials question
associated pronged.26
with
their
materials
supplies
must
necessarily
be multi-
Stockpiling Stockpiling could have a role in mitigating the effects of short-term supply shortages. However, to be effective, a stockpile would have to be operated in a dynamic manner, following changes in patterns of usage within the country, including methods of production. There is otherwise the danger, as experienced in the USA, that large quantities of material will be accumulated which, in the course of time, become technically obsolete. A prime example is provided by the stocks of cobalt in the US strategic stockpile which were acquired in the early 1950s. This material has a nominal purity of 99.5%) which is today of inadequate quality for many superalloy applications. 27 Furthermore, material held in a stockpile must be immediately usable by domestic manufacturing industry. It would, for example, be pointless holding chromite for the purpose of producing stainless steel if facilities were lacking in the country to convert the chromite to ferrochrome. On the other hand, changes in methods of steel production could reduce the utility of a ferrochrome stockpile. A stockpiling policy therefore calls for highly discriminating judgements based on detailed specialized knowledge of the needs of user industries: the possibility of a scheme jointly administered by government and industry is worth considering in the circumstances. If stockpiling were to be extended, certain other possible negative spin offs would need to be considered. Inventory adjustments, both actual and notified, could have an adverse effect on the subsequent pricing and supply of the materials in question, especially if the quantities involved are significant in comparison with annual world production. Recent sales of silver and mercury from the US government stockpile provide strong evidence for this view. The net result could well be an increased volatility in prices and an unsettled climate for producers and users. Substitution Material or functional substitution would be the appropriate responses to sustained supply interruptions. The commercial motivation for developing substitutes in normal times is the expectation of a price or performance advantage. Where no such direct economic incentive exists, the case has been made justifying government support for research and development programmes aimed at substituting for critical materials, in the same way that government might be expected to take a lead in instituting a stockpile.2s It should be remembered that, because no material is identical in its set of properties to any other, the introduction of a substitute material in a particular application will almost certainly require some degree of induced innovation and redesign to complementary parts of the systems in which they are employed. This wide aspect would have to be continually addressed in a substitution programme. 26J.B. Wachtman, ‘The nature of the critical and strategic materials problem’, AGARD (NATO). CP-356.1984.1.1-l .I 1. “Metal &t//etin;.27 March 1981.. “Op tit, Ref 26; J.P Clark and F.R. Field, ‘How critical are critical materials’, Technology Review, No 4, 1985, pp 38-47.
80
Recycling Recycling strategic
converting
can have materia1s.
‘hidden’
a positive role to play in mitigating shortages of Recycling in a sense represents a means of resources close at hand into immediately usable
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Strategic materials question
stocks. For this option to be available in practice, however, it is necessary to have the appropriate processing facilities on tap, because the plant needed to recover most materials can take considerable time and effort to install. The implementation of a meaningful recycling strategy also requires detailed data on the generation and flow of scrap containing significant amounts of strategic materials. Such data is currently lacking in all industrialized economies. Of immediate concern is the fact that certain technological developments are encouraging increased mixing and dispersal of materials in products, which is likely to make recycling more difficult to achieve. Thus, for example, the trend towards miniaturization is reducing the quantity of material that can be recovered per unit of scrap and is necessitating more elaborate processing methods. This may eventually make resource recovery from a significant proportion of scrap prohibitively expensive. The manner in which materials are being mixed together in order to optimize technological performance and/or aesthetic appeal is producing potentially incompatible combinations as far as recycling is concerned. The Materials Forum is addressing this issue, and in 1985 sponsored a project which was funded by DTI to explore opportunities for modifying the design of products and their utilization of materials so as to facilitate recycling.29 Domestic
“M. Henstock, Design for Recyclability, Dept of Metallurgy and Materials Science, University of Nottingham, 1987. “‘Sir Kingsley Dunham, ‘Metallic resources’, pp l-6 in indigenous Raw Materials for industry, Metals Society, London, 1984; and D.E Highly, ‘Non-metallic mineral resources’, pp 7-21 in indigenous Raw Materials for industry, Metals Society, London, 1984. 3’Mineral Resources Consultative Committee, 26 Dossiers on Selected Raw Materials, HMSO, 1971-84.
supplies
The UK has had a long history of supplying its own natural resources: at one time it was the world’s leading producer of copper and tin ores. However, reserves of many raw materials are now for all practical purposes nil, though many raw materials are still produced (these are listed in Table 2). Note not only the absence of significant quantities of virtually all metals, but also a lack of a number of other important materials. The raw materials in which the UK is dependent on imports are listed in Table 3, a much longer list. Quite a number of materials occur in both Tables 2 and 3, meaning that, although the material is produced in the UK, the bulk needs to be imported. Outlines of the current position of known resources of metals and non-metallic minerals have been reviewed by Dunham.30 Overviews for certain minerals are contained in the 26 mineral Dossiers published by the Mineral Resources Consultative Committee.31 In spite of the best efforts of the British Geological Survey (BGS), other government departments and public and private industries, it is still not possible to say that a reasonably comprehensive or reliable Table 2. Minerals produced in the UK. Fuels Coal
Oil
Gas
(Tin) Copper
(Tungsten) Zinc
Potter’s clay Common clay Limestone Chert and flint Special sands Gypsum Fluorspar Diatomite Honestone
Fireclay Slate Dolomite Silica stone - ganister Sand and gravel Anhydrite Barytes Talc China stone
Metals
Iron ore Lead Non-metallic minerals China clay Fuller’s earth Calcspar Chalk Sandstone Igneous rock Rocks salt Celestite Mica Potash minerals
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Strategic materials question Table 3. Metals and minerals Abrasive raw materials Antimony Attapulgite Beryllium Cadmium Cobalt Diatomite Gold llmenite Lead Mercury Nepheline syenite Tantalum Platinum Quartz Sepiolite Silver Thorium Tungsten Zeolites
Clifford Butler, Report of the Study Group info Geologicat Surveying, ABRC-
%ir
NERC, 1987. 33D.S.C. Humphreys,
82
op tit, Ref 18.
mainly
imported
into the UK. Aluminium Asbestos Bentonite Boron Chromium Crvolite Germanium Graphite Iron ore Marble Molybdenum Niobium Phosphorus Pvrites Sklenium Sillimanite Talc Titanium Vermiculite Zirconium
Activated minerals Arsenic Bauxite Bismuth Cerium Copper Feldspar Granite Iodine Manganese Mica Nickel Perlite Pumice Rare earths Silicon Sulphur Tin Vanadium Zinc
inventory of the raw materials present in workable quantities and grades is known. However, the recent Butkr Report?* on geological surveying in the UK recommends that the BGS concentrates on developing such a database. This would require the revision of many of the basic geological maps, on a scale of 1:lO 000, with the production of accompanying descriptive memoirs detailing the latest information on each map area. This basic work is not, however, adequate for the compilation of the mineral database: it provides only the groundwork for more detailed studies of a quite different kind, which examine the distribution and properties of potential raw materials. An excellent start to this more detailed programme has been made in the assessment of the available resources of sands and gravels (more than 143 reports on specific areas). More limited information is available on other minerals such as limestone, dolomite and conglomerate. In addition the BGS has produced a significant number of reports on possible metal occurrences. Unfortunately, even this effort barely begins to attack the problems of a nationwide appraisal of the potential mineral wealth of the UK. Undoubtedly there are a number of materials for which the chances of discovering new deposits are slim; but until such a database exists the formulation of any minerals strategy is seriously hampered. It may seem surprising that in the country where most of the early developments of geology were pioneered, the status of most geological natural resources is still poorly known. The reason lies in the complexity and time required for the necessary geological surveying and mineral assessment. In the UK most of the obvious metallic resources have probably already been found: the search must now be for the hidden deposits. For the non-metallic minerals the problem does not lie in finding deposits of limestone, for example, but in assessing whether the properties of a particular limestone are suitable for a particular end-use (for example, for making seawater magnesite). This will require more resources for the BGS, and an enlargement of the current exploration and planning projects sponsored by the Department of the Environment and the Department of Trade and Industry. It is unfortunate how often in the past our own indigenous stockpile beneath our feet has been ignored. professor J. Nutting remarked, in the introduction to the on ‘Indigenous Raw Materials for proceedings of a conference Industry’33 that: RESOURCES
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We do believe that better use could be made of our indigenous resources, and that, from an awareness of their extent, future materials development work could be focussed upon making use of what we have got rather than what we have to import with the attendant risks of shortage, price instability and political blackmail.
Other considerations
Stockpiling and to some extent substitution and recycling could be the appropriate safeguards against temporary interruptions of supplies.34 Less dramatic problems such as escalating costs of raw materials can be at least as damaging to the economy in the longer term and thus equally justify contingency plans. A case in point was the oil crisis in 1973, which caught the leading industrial countries virtually unprepared and had a serious impact on their economies. Maintaining and upgrading existing processing facilities may be easy to achieve; but to establish capacity for entirely new domestic production may not often make immediate economic sense. However, the positive knock on effects in other areas might be considerable. For example, initiating domestic production of device quality silicon from silica would not only secure strategic supplies and help to reduce the commercial vulnerablility of domestic users but could have a stimulating effect on operations as diverse as silicone production and the manufacturing of engineering equipment.35 At the very least, a case can be made for establishing small strategic processing facilities and keeping these in a ‘mothballed’ state until such time as they are required
A framework for resource contingency
340p tit, Ref 6. 35D.S. Evans and D.M. Jacobson, ‘Special materials in the electrical and electronics industry’, in Indigenous Raw Materials for Industry, The Metals Society, London, 1904. 36W.A. Vogley, ‘Materials policy: Europe’, in M.B. Bever et a/, eds. Encvclcmaedia of Materials Science -and .Enghee&g, Pergamon, Oxford and New York, 1966. 370p tit, Ref 7.
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planning
Having recognized the need for a multipronged approach to contingency planning of materials resources, we must then consider how to achieve it in practice. At present, the sort of administrative framework called for, one that is broadly based and at the same time fully integrated, is lacking in Europe. France alone of the EEC countries has formulated a detailed non-fuel minerals policy, while it shares with two other Western countries, Sweden and Switzerland, the distinction of maintaining stockpiles of strategic materials.36 The EEC does not have any collective policy on contingency planning of raw materials. In the early 1980s the Commission presented a report to the Council of Ministers indicating why a policy to safeguard materials supplies is desirable, but this was not taken any further.37 However, the European Commission is active in planning and coordinating a range of activities that together constitute an embryonic resource planning policy. These concern such diverse areas as foreign trade, aiding exploration for new resources, and the sponsorship of scientific and technological research. A significant proportion of the research programmes supported by the Community are devoted to improving knowledge of natural resources, developing new processes and to achieving economies in the use of raw materials by various means, including recycling. Each programme is of a relatively short duration, normally a maximum of four years; however, this restriction is partly overcome by it being replaced on expiry by another programme in the same general field. These activities could be easily integrated into a more comprehensive scheme of resource planning within the EEC.
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Strategic materials question
A framework that might be considered as an appropriate model for Europe is provided by the National Critical Materials Council in the USA, which was established by the National Critical Materials Act of 1984.38 Operating within the Executive Office of the President, this body has been assigned the role of coordinating government materialsrelated policies and research and development programmes on advanced materials. It has the authority to oversee the whole area of materials research and the duty to assess the future needs of both government and industry. Among its specific functions are: to assess the adequacy of the materials content of educational curricula; to draw up an inventory of critical materials and to project the needs of government and industry for them and, with the collaboration of the Office of Science and Technology Policy and others, to predict possible major problems that may emerge in the future; to provide Congress with recommendations on changes in policy, regulation and on legislation that may be required.
38H Leamy ‘The national critical materials Act’, MRS bulletin, No 1, 1985, pp 21-22. 39Meta/Bulletin, 27 June 1986. 40T.W . Stanley, ‘Stockpiling’, in MB. Bever et al, eds, Encyclopaedia of Materials Science and Engineering, Pergamon, Oxford and New York, 1986.
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The National Critical Materials Council has been empowered to establish advisory panels and to convene Federal interagency committees to assist it in its work. While the Council is supported by some government funding, it largely relies on the private sector to implement the agreed materials policies. In Japan, by comparison, the responsibility for initiatives in research and development on new materials and related technologies, and also for securing supplies of raw materials, has been delegated almost completely to private industry. This position extends to the official strategic stockpile that is currently being built up by the Japanese government in partnership with private industry.39 Sweden and Switzerland also rely on incentives offered to their private sector for the stockpiling programmes.40 For the UK it makes sense for materials policies and, in particular, resource contingency planning to be developed as part of a joint EEC undertaking, building on existing national and Community programmes, as outlined above. A wider Atlantic dimension taking in the USA and Canada could offer considerable mutual benefit. This would enjoy the obvious advantages of a greatly expanded and more diversified resource base and range of materials technologies, and also possibly the benefit of the better developed US administrative structures, including the National Critical Materials Council. The grouping might be further broadened to take in Japan and the rest of the NATO alliance. While this extended participation could well represent the ultimate objective, it is probably desirable to set as an initial goal the achievement of a coherent resource planning policy within the EEC.
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POLICY June 1988