Raw material worries
June 25, 2010
The European Commission has pushed the alarm button on raw materials after an expert group listed 14 materials facing a "critical" risk of shortage, some within a few years. In a report published this week, the Commission warned that demand for the materials could more than triple within 20 years.
A key factor behind the shortages, according to the report, is the concentration of production in just a handful of countries, such as China, Brazil, Russia and the Democratic Republic of Congo, compounded by low substitutability and recycling rates.
Tigthtening control of materials
The report also attributes the shortages to the way some of these countries use trade and taxation policies to reserve their resource bases for exclusive use. China, for instance, plans to tighten control over its rare-earth minerals by allowing only a select number of state-owned companies to oversee the mining of its materials. The country accounts for 95 percent of global rare-earth mineral production.
Ahead of the report's publication, European Union Commissioner for Enterprise, Antonio Tajani, spoke of a need for "fair play" on raw material markets to ensure access to scarce elements by European industry.
The 14 materials identified by the Commission's working group out of 41 minerals and metals are antimony, beryllium, cobalt, fluorspar, gallium, indium, germanium, graphite, magnesium, niobium, platinum group metals, rare earths, tantalum and tungsten.
Furthermore, the study warns that materials markets could become highly volatile due to the rapid proliferation of new technologies that "can drastically change the demand for critical raw materials."
Recommendations to overcome shortages
Demand for gallium, which is mainly produced in China, could increase from its total current production of 152 tons to 603 by 2030, according to the report. And demand for neodymium, a rare earth also found predominately in China, could grow from 16,800 tons today to 27,900 tons over the same period.
The European Union expert group has made several recommendations to overcome the shortage problem, including proposals designed to boost mineral recycling, identify alternative materials and promote greater exploration. The group also recommends that the EU "consider the merits of pursuing dispute settlement initiatives" at the World Trade Organization (WTO) level to ensure the supply of important raw materials to European industry.
'Raw Materials Dialog'
German Economics Minister Rainer Bruederle has responded to the material shortage by initiating a "Raw Materials Dialog" initiative and inviting industry to participate in discussions on how to secure a steady supply.
Government officials and industry representatives met for the second time earlier this week to discuss, among other topics, the launch of a raw materials agency. The agency, organized within the German Federal Institute for Geology and Raw Materials, would be responsible for monitoring global raw materials markets.
"Raw material security is paramount to the sustainability of German industry," Ullrich Grillo, chairman of Grillo-Werke, a chemicals and minerals company and of the raw material working committee of the Federation of German Industries (BDI), told Deutsche Welle. "Without high-tech metals and also basic materials such as aluminum, copper and zinc, German industry is in danger."
Grillo added that it's not enough for raw material policy to be discussed at G8 and G20 summits; it needs to become a topic in bilateral negotiations.
Author: John Blau
Editor: Ranjitha Balasubramanyam