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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
Argus Media-Metal Pages China Metals Week
‘Critical metals’ have important uses but are exposed to supply risks
18th Nov 2015
Which markets are the future stars of the 'critical metals' industry?
Source: USDOE (2011)
Transportation
Communications
Electronics
Batteries
Military
Renewables
Slide 3 of 21
Argus Media-Metal Pages China Metals Week
Which are the ‘critical metals’?
18th Nov 2015 Slide 4 of 39
Which markets are the future stars of the 'critical metals' industry?
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
Argus Media-Metal Pages China Metals Week
The common solution to ‘criticality’ is to “Reduce, Reuse and Recycle”
18th Nov 2015
Which markets are the future stars of the 'critical metals' industry?
Source: USDOE (2011)
Geopolitics
Environment
Shortage
Sustainability
Slide 5 of 21
Argus Media-Metal Pages China Metals Week
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
Which markets are the future stars of the 'critical metals' industry?
Source: Sykes et al., (2016, in press); USGS (2014)
Slide 6 of 21
Most critical metals markets barely register in terms of scale
Argus Media-Metal Pages China Metals Week
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
Which markets are the future stars of the 'critical metals' industry?
0
100
200
300
400
500
600
700
Growth of metal market groups 2004-13 (US$ billions)
Industrial Non-Ferrous Precious Critical
Source: Sykes et al., (2016, in press); USGS (2014)
Slide 7 of 21
Argus Media-Metal Pages China Metals Week
So what causes transformational growth in
metals markets?
18th Nov 2015
Which markets are the future stars of the 'critical metals' industry?
Slide 8 of 39
Argus Media-Metal Pages China Metals Week
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
Which markets are the future stars of the 'critical metals' industry?
Slide 9 of 39
Argus Media-Metal Pages China Metals Week
Economic growth is partly defined by the search for better mineral resources
18th Nov 2015 Slide 10 of 39
Which markets are the future stars of the 'critical metals' industry?
Stone Age Bronze Age Iron Age
Age of Exploration (Gold Rushes)
Industrial Age (Plus more gold rushes)
Modern Age
Argus Media-Metal Pages China Metals Week
…but nonetheless limited to only a few ‘Metals of Antiquity’
18th Nov 2015
Which markets are the future stars of the 'critical metals' industry?
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
Source: Sykes et al., (2016, in press); USGS (2014)
Argus Media-Metal Pages China Metals Week
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)
18th Nov 2015 Slide 12 of 21
Which markets are the future stars of the 'critical metals' industry?
Source: Sykes et al., (2016, in press); USGS (2014)
Argus Media-Metal Pages China Metals Week
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
Which markets are the future stars of the 'critical metals' industry?
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
Source: Sykes et al., (2016, in press); USGS (2014)
Slide 13 of 21
Argus Media-Metal Pages China Metals Week
Aluminium benefitted from each of discovery, supply and demand factors
18th Nov 2015
Which markets are the future stars of the 'critical metals' industry?
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
Argus Media-Metal Pages China Metals Week
Nickel and uranium also saw key discovery, supply and demand changes
18th Nov 2015
Which markets are the future stars of the 'critical metals' industry?
Images: Canadian Mining Review (nickel smelting) & shutterstock Source: Sykes et al., (2016, in press)
Slide 15 of 21
Argus Media-Metal Pages China Metals Week
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
18th Nov 2015 Slide 16 of 39
Which markets are the future stars of the 'critical metals' industry?
• 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)
Argus Media-Metal Pages China Metals Week
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
Which markets are the future stars of the 'critical metals' industry?
Source: Sykes et al., (2016, in press)
Slide 17 of 21
Argus Media-Metal Pages China Metals Week
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
Which markets are the future stars of the 'critical metals' industry?
Source: Sykes et al., (2016, in press)
Slide 18 of 21
Argus Media-Metal Pages China Metals Week
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
Which markets are the future stars of the 'critical metals' industry?
Source: Sykes et al., (2016, in press)
Slide 19 of 21
Argus Media-Metal Pages China Metals Week
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
Which markets are the future stars of the 'critical metals' industry?
Source: Sykes et al., (2016, in press)
Slide 20 of 21
Argus Media-Metal Pages China Metals Week
But only a few critical metals can have a major impact on the wider economy
18th Nov 2015
Which markets are the future stars of the 'critical metals' industry?
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
Source: Sykes et al., (2016, in press)
Slide 21 of 21
Argus Media-Metal Pages China Metals Week
Which markets are the future stars of the ‘critical metals’ industry?
18th Nov 2015 Slide 22 of 39
Which markets are the future stars of the 'critical metals' industry?
Barium Boron Cerium
Chromium Cobalt Gallium
Lanthanum Lithium
Magnesium Scandium
Silicon Strontium
Vanadium
?
Argus Media-Metal Pages China Metals Week
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
Which markets are the future stars of the 'critical metals' industry?
Slide 23 of 21
Argus Media-Metal Pages China Metals Week
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
Which markets are the future stars of the 'critical metals' industry?
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
Argus Media-Metal Pages China Metals Week, Guangzhou, China: 18th November 2015
THANK YOU
Contact information:
John P. Sykes: [email protected]
Joshua Wright: [email protected]
Allan Trench: [email protected]
Paul Miller: [email protected]
Argus Media-Metal Pages China Metals Week, Guangzhou, China: 18th November 2015