Feature Report: Energy and Natural Resources

4 items of content in this feature report

Going in depth

Close-up

Rare Metals: A Threatened Supply?

Poorly managed use of rare metals could lead to shortages and have serious repercussions on the global economy. But a number of factors, including conservation, recycling and new mines, have the potential to ensure the sustainable development of these strategic natural resources.

Image of a plant for the processing of cobalt, a rare metal, in Lubumbashi, Democratic Republic of the Congo.
Cobalt is a strategically important mineral. The photo shows a plant in Lubumbashi (Democratic Republic of the Congo) processing blocks of cobalt before they are exported to China. ©SAMIR TOUNSI / AFP

Rare metal resources are spread across the entire planet. Large quantities of beryllium, niobium, cobalt, platinum and tantalum are respectively produced in the United States, Brazil, the Democratic Republic of the Congo, South Africa and Australia. However, one country is particularly abundant in “rare earths”, the most sought-after family of rare metals. That country is China, the world’s new superpower.

17: The total number of “rare earth” metals, which are increasingly essential to the energy and electronics industries.

 

According to the French Geological and Mining Research Bureau (BRGM)1, China is home to almost 47% of the world’s naturally occurring rare earth reserves, ahead of Russia (17%) and Greenland (8%). When considering production alone, however, China’s dominance is much stronger, with an estimated share of around 90%. The country’s pre-eminent position in production was achieved thanks to its very low operating costs, especially at its large mines in Mongolia, known for their cheap labor and loose environmental regulations. A number of industrialized countries have even moved their rare earth processing plants offshoreRefers to sea-based oil exploration and production operations, as in "offshore license" or "offshore drilling". to China to take advantage of the lower costs2.

 

The sharp rise in demand owing to emerging needs in the energy transition and digital sectors (see Close-Up: “Rare Metals: Increasingly Strategic”) has given rise to three risks, which must be addressed if sustainable developmentThis term was first defined in the Brundtland Report, published in 1987, as “development that meets the needs of the present without... is to be pursued.

Risk of Shortage: Conserving and Recycling

Production shortages of some highly in-demand metals could force industry players to postpone the arrival of new technologies. This risk can be dealt with by reducing non-essential uses, recyclingAny waste treatment process that uses materials from identical or similar end-of-life products or manufacturing waste to produce new products. products and developing alternative solutions.

China produces around 90% of the world’s rare earths, but many other countries have untapped deposits.

In February 2018, Japanese carmaker Toyota unveiled a magnet that eliminates the need to use neodymium in its electric vehicles. Other models, such as the Renault Zoé and the Tesla line-up, use ten times less of the metal or none at all. Medium-sized onshoreRefers to land-based oil exploration and production operations, as in "onshore seismic data acquisition" or "onshore drilling". wind turbines could also go without. Another example is cerium oxide, a substance that was widely used for polishing windshield glass and that, being non-polluting, was often released into the environment. By recycling it, industry players have reduced its use tenfold. 

Recycling involves recovering rare metals from end-of-life equipment through the appropriate management of the bona fide “urban mine” that is e-waste (computer hard drives, cell phones, televisions, etc.). Today’s recycling methods are highly sophisticated. However, the cost of recycling channels needs to be low enough not to discourage investment in this sector, as is currently the case (See Gaétan Lefebvre’s op-ed article).

Financial risk 

Rare metal prices are highly volatile, meaning they fluctuate wildly. For example, lithium and cobalt prices tripled between 2013 and 2016. Conversely, when China eased its rare earth export quotas, prices declined. 

Prices, though, have a direct impact on mining project investment. If prices go up, it encourages investors to undertake new rare metal mining operations. If they go down, it benefits user industries, but it does not encourage investors to open new mines.

In April 2018, Japan announced that it had found substantial rare earth deposits in the seabed of the Ogasawara archipelago, 2,000 kilometers off the coast of Tokyo. However, mining operations – especially those located offshore – require billions of dollars in investment. 

Geopolitical risk

Given its abundant rare metal reserves, China is likely to influence prices and, consequently, supply. Rare earth selling prices vary widely and investment becomes more or less risky depending on whether China tightens or eases its export quotas (John Seaman’s op-ed article).

A number of other “hot spots” exist in the world. For example, the Democratic Republic of the Congo produces 66% of the world’s cobalt (widely used in batteries), but it struggles with recurring ethnic conflict. Global superpowers, particularly China and the United States, are very active in these sensitive regions to secure their access to such strategic raw materials.

 

 

Sources:

(1) Read the BRGM feature report (in French only).

(2) Read about trends on the French mineral resources portal (in French only).