which markets are the future stars of the critical metals industry - sykes et al - nov 2015 -...

WHICH MARKETS ARE THE

FUTURE STARS OF THE ‘CRITICAL

METALS’ INDUSTRY?

John P. Sykes123*, Joshua P. Wright4, Allan Trench125 and Paul Miller6

1. Centre for Exploration Targeting, Department of Mineral and Energy Economics, Curtin Graduate School of Business, Perth, Australia

2. Centre for Exploration Targeting, School of Earth and Environment, The University of Western Australia, Perth, Australia.

3. Greenfields Research, Harrogate, UK. Email: [email protected]

4. Rowton Consolidated, Chester, UK. Email: [email protected]

5. CRU Group, London, UK. Email: [email protected]

6. Sulphide Resource Processing, Perth, Australia. Email: [email protected]

* Today’s speaker

Argus Media-Metal Pages China Metals Week, Guangzhou, China: 18th November 2015

Argus Media-Metal Pages China Metals Week

Key questions

• What is a critical metal and what are the common solutions for resolving ‘criticality’?

• Is transformational growth the market instead a plausible way to reduce ‘criticality’?

• Has such transformational metal market growth occurred before?

• What causes this transformational metals market growth?

• Do any ‘critical metals’ have the potential for such growth?

• What are the implications for governments, consumers and suppliers involved in the critical metals markets?

18th Nov 2015

Which markets are the future stars of the 'critical metals' industry?

Slide 2 of 21


‘Critical metals’ have important uses but are exposed to supply risks

18th Nov 2015


Source: USDOE (2011)

Transportation

Communications

Electronics

Batteries

Military

Renewables

Slide 3 of 21


Which are the ‘critical metals’?

18th Nov 2015 Slide 4 of 39


Antimony Arsenic Barium Beryllium Bismuth Boron Cadmium Cerium Chromium

Cobalt Dysprosium Erbium Europium Gadolinium Gallium Germanium Holmium Indium Iridium

Lanthanum Lithium Lutetium Magnesium Manganese Mercury

Molybdenum Neodymium Niobium Osmium Palladium Platinum Group Metals Platinum Praseodymium

Rare Earth Metals Rhenium Rhodium Ruthenium

Samarium Scandium Silicon Silver Strontium Tantalum Terbium Tellurium Thorium Thulium Tungsten Vanadium Ytterbium Yttrium


The common solution to ‘criticality’ is to “Reduce, Reuse and Recycle”

18th Nov 2015


Source: USDOE (2011)

Geopolitics

Environment

Shortage

Sustainability

Slide 5 of 21


But their markets are often small and thus they may outgrow their ‘criticality’

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Co

pp

er

Go

ld

Alu

mn

ium

Zin

c

Man

gan

ese

Nic

ke

l

Ch

rom

ium

Sil

ico

n (

me

tal)

Sil

ver

Lead

PG

Ms

Tin

Mo

lyb

de

nu

m

Ura

niu

m

Mag

ne

siu

m

Tu

ng

ste

n

Co

bal

t

Lith

ium

Bo

ron

(B

ora

te)

RE

Ms

Van

adiu

m

Tit

aniu

m (

MS

)

An

tim

on

y

Bar

ium

(B

arit

e)

Nio

biu

m

Ind

ium

Ge

rman

ium

Tan

talu

m

Th

ori

um

Gal

liu

m

Str

on

tiu

m

Bis

mu

th

Rh

en

ium

Be

ryll

ium

Me

rcu

ry

Cad

miu

m

Ars

en

ic

Te

llu

riu

m

Metals market by size (US$ 2013 millions)

18th Nov 2015


Source: Sykes et al., (2016, in press); USGS (2014)

Slide 6 of 21

Most critical metals markets barely register in terms of scale


However critical metals market growth has been limited in the last decade

Critical Metal

2004-13 Market Growth

Lithium 388%

Antimony 211%

Chromium 144%

Rare earths 93%

Vanadium 24%

Cobalt -5%

Strontium -57%

18th Nov 2015


0

100

200

300

400

500

600

700

Growth of metal market groups 2004-13 (US$ billions)

Industrial Non-Ferrous Precious Critical


Slide 7 of 21


So what causes transformational growth in

metals markets?

18th Nov 2015


Slide 8 of 39


The origins of mining are in the search for ‘better’ not ‘more’ resources

• Origins of mining 400,000 – 200,000 years ago;

• Cosmogenic beryllium levels indicate flint sourced at 2m+ depth;

• Although flint is abundant at surface, it is weathered and low quality;

• Unweathered flint at depth was higher quality making better tools;

• Unweathered flint deposits therefore had to be ‘discovered’ and ‘mined’ before the flint could be ‘used’

• Verri et al., 2005, Flint procurement strategies in the Late Lower Palaeolithic recorded by in situ produced cosmogenic 10Be in Tabun and Qesem Caves (Israel), Journal of Archaeological Science, 32, 207-213

• Also: Sykes et al., (2016), in press.

18th Nov 2015


Slide 9 of 39


Economic growth is partly defined by the search for better mineral resources



Stone Age Bronze Age Iron Age

Age of Exploration (Gold Rushes)

Industrial Age (Plus more gold rushes)

Modern Age


…but nonetheless limited to only a few ‘Metals of Antiquity’

18th Nov 2015


Cu Pre-Bronze Age (Pre-3,500 BCE)

Sn Bronze & Iron Ages (3,500-1 CE)

C

Fe Cu

Ag

Au Pb

Cr As

S

Zn

Hg

Sn Sb

Al Renaissance & Industrial Age (1669-1913 CE)

H

Li

Na

K

Rb

Cs

La

Ac

Be

Mg

Ca

Sr

Ba

Sc

Y

Ra

Ti

Zr

Hf

V

Nb

Ta

Mo

W

Mn

Ru

Os

Co

Rh

Ir

Ni

Pd

Pt

Cd

B

Al

Ga

In

Tl

Si

Ge

N

P

Bi

O

Se

Te

Po

F

Cl

Br

I

He

Ne

Ar

Kr

Xe

Rn

Ce

Th

Pr Nd

U

Sm Eu Gd Tb Dy Ho Er Tm Yb Lu

Pa

Pu Modern Age (1937 CE-present)

Fr Rf Db Sg

Tc

Re

Bh Hs Mt Ds Rg Cn Uut Fl Uup Lv

At

Uus Uuo

Pm

Np Pu Am Cm Bk Cf Es Fm Md No Lr

Slide 11 of 39



Aluminium was the first post-Antiquity metal to become a major metal market

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0

50

100

150

200

250

300

190

0

190

6

1912

1918

1924

1930

1936

194

2

194

8

1954

196

0

196

6

1972

1978

198

4

199

0

199

6

200

2

200

8

Growth in aluminium and copper markets and prices in 2013 US$

Cu Market Size ($B) Al Market Size ($B) Cu Price ($/t) Al Price ($/t)





Nickel & uranium are other examples of post-Antiquity metal market growth

0

50

100

150

200

250

300

190

0

190

9

1918

1927

1936

194

5

1954

196

3

1972

198

1

199

0

199

9

200

8

Growth in market size indices of copper and nickel (1900 = 1)

Cu Index Ni Index

18th Nov 2015


0

5

10

15

20

25

1950

1955

196

019

65

1970

1975

198

019

85

199

019

95

20…

200

520

10

Growth in market size indices of copper and uranium (1950 = 1)

Cu Index U Index


Slide 13 of 21


Aluminium benefitted from each of discovery, supply and demand factors

18th Nov 2015


Images: sandatlas.org; earlham.edu; tempraturedetectors.com & shutterstock

ABUNDANCE

CONCENTRATION

8.2%

Factors in place prior to 20th century

MIN

ING

PROCESSING

DEMAND

Solved in late 19th & early 20th century

Source: Sykes et al., 2016, in press

Slide 14 of 21


Nickel and uranium also saw key discovery, supply and demand changes

18th Nov 2015


Images: Canadian Mining Review (nickel smelting) & shutterstock Source: Sykes et al., (2016, in press)

Slide 15 of 21


Transformational market growth is reliant on discovery, supply & demand

For transformational market growth to occur amongst a critical metal it likely will be:

• Discoverable

• Extractable

• Useable



• Abundant in the crust; • Concentrate into discrete deposits;

• Simple to mine; • Simple to process;

• Important economic uses; • Broad economic use

Source: Sykes et al., (2016, in press)


Some ‘critical metals’ are too rare and some too difficult to find

Ab

un

dan

ce in

th

e c

rust

>

Hig

h

(>10

0p

pm

)

Al, Ba, Cr, Mg, Mn, Si, Sr, Ti, V

n/a

n/a

(theoretically the most amenable to discovery)

Me

diu

m (

1-10

0p

pm

)

Be, B, Ce, Dy, Er, Eu, Gd, La, Li, Nd, Nb, Pr, Sm, Sc, Th, W, Yb, Y

Co, Cu, Ga, Ge, Ni, Sn, Zn

As, Pb

Low

(<1

pp

m)

Ho, Lu, Ta, Tb, Tm

(theoretically the least amenable to discovery)

n/a

Ag, Au, Bi, Cd, In, Ir, Hg, Mo, Os, Pd, Pt,

Re, Rh, Ru, Sb, Te

Lithophile Chalcophile / siderophile and lithophile Chalcophile / siderophile

Ability to concentrate in the crust >

18th Nov 2015



Slide 17 of 21


Some ‘critical metals’ are too difficult to mine and/or process

Min

ing c

onstr

ain

ts >

(Mining constrained) n/a

Extraction (mining and processing) constrained:

Dy, Er, Ho, Lu, Ta, Tb, Th, Tm, Sn, Yb, Y

B Au, Li, Mg,

Hg, Ni, Si, W

Be, Bi, Ce, Co, Eu, Gd, Ir, La, Pb,

Mn, Nd, Os, Pd, Pr, Pt, Rh, Ru, Sb, Sm, Ti, Zn

Not extraction constrained:

Ba, Cu, Nb, Sb n/a

Processing constrained:

Ag, Cd, Ga, Ge, In, Re, Sc, Te, V

Processing constraints >

18th Nov 2015



Slide 18 of 21


Some ‘critical metals’ lack important or sufficiently varied uses

Criticalit

y o

f use >

Critically demanded metal:

Dy, Er, Eu, Ga, Gd,

Ho, Lu, Nd, Pd, Pr, Rd,

Sm, Tb, Tm, Yb

Co, Ge, In, Ir,

La, Li, Os,

Pt, Ru, Sc, Te, Y

Metal with critical and diverse

demand:

Ce

Ba, Cr, Mo,

Nb, Re, Sr

As, Bi, B, Mg, Hg,

Sb, Si, Ta, Th, W Ag, Be

Metal with limited demand:

Cd, Pb

Au, Ni, Sn,

Ti, V, Zn

Broadly demanded metal:

Al, Cu

Breadth of use >

18th Nov 2015



Slide 19 of 21


Some ‘critical metals’ have the potential for transformational market growth

Rank Metal Score

1 Antimony 4

n/a Copper 4

n/a Aluminium 3.5

2 Barium (Barite) 3.5

- Germanium 3.5

- Indium 3.5

n/a Silver 3.5

- Tellurium 3.5

- - -

6 Dysprosium (REM) 1.5

- Erbium (REM) 1.5

- Ytterbium (REM) 1.5

- Thorium 1.5

n/a Tin 1

7 Holmium (REM) 1

- Lutetium (REM) 1

- Terbium (REM) 1

- Thulium (REM) 1

- Tantalum 1

18th Nov 2015



Slide 20 of 21


But only a few critical metals can have a major impact on the wider economy

18th Nov 2015


Ba

B

Cr Co

Ga Li

Mg

Ce

Sc

Si

Sr

La

V

Sb

Ge In

Te

As Hg

Mo

Nb

Ir

Os

Pt

Ru

Be Bi

Pd

Rh

Re

W

Mn

Nd Y

Cd Eu

Gd Pr

Sm

Dy

Er

Yb Th

Ho Lu

Tb Tm Ta

1

10

100

0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

Po

ten

tial

eco

no

mic

imp

act

of

tran

sfo

rmat

ion

al m

ark

et

gro

wth

>

Potential for transformational market growth >

Potential for transformational market growth versus the potential economic impact of transformational market growth

High Potential High Impact

Low Potential Limited Impact

Low Potential High Impact

High Potential Low Impact


Slide 21 of 21


Which markets are the future stars of the ‘critical metals’ industry?



Barium Boron Cerium

Chromium Cobalt Gallium

Lanthanum Lithium

Magnesium Scandium

Silicon Strontium

Vanadium

?


In Summary • ‘Critical metals’ have important uses but are exposed to

supply risks, for which the common solution is to “Reduce, Reuse and Recycle”;

• But their markets are often small and thus they may be able to outgrow their ‘criticality’;

• Despite this ‘critical metals’ market growth has been limited in the last decade;

• However, the history of mining and metals, in particular aluminium, nickel and uranium shows transformational metal market growth has occurred in the past;

• Each of these market transformations was facilitated by key mineral discoveries, and supply and demand breakthroughs.

18th Nov 2015


Slide 23 of 21


The Implications • For transformational market growth of a critical metal to occur

it likely will have to be discoverable, extractable and useable;

• All these factors need to be in place for growth to occur;

• Most ‘critical metals’ are currently discovery and/or supply and/or demand constrained;

• But some critical metals may be nearer economically significant transformational market growth, than others;

• Consumers should focus on critical metals markets with the potential to outgrow their ‘criticality’, as should producers;

• For these ‘critical metals’ efforts to reduce ‘criticality’ may be better focused on growing the supply and market size, rather than trying to reduce demand exposure.

18th Nov 2015


Slide 24 of 21

UPCOMING PUBLICATIONS

18th

Nov

2015

Slide 25

of 21

Sykes, J.P., Wright, J.P., & Trench, A., 2016, Discovery, Supply and Demand: From Metals of Antiquity to Critical Metals, Applied Earth Science (TIMM B), in press

Sykes, J.P., Wright, J.P., Trench, A., & Miller, P., 2016, An assessment of the potential for transformational market growth amongst the critical metals, Applied Earth Science (TIMM B), in press


THANK YOU

Contact information:

John P. Sykes: [email protected]

Joshua Wright: [email protected]

Allan Trench: [email protected]

Paul Miller: [email protected]


which markets are the future stars of the critical metals industry - sykes et al - nov 2015 -...

Economy & Finance