The problem of strategic metals and rare earths

This text and the questions that follow resume my conference of 6 February 2012 at the Institut de France in response to the invitation of the Académie des Sciences Morales et Politiques.

Natural resources are a source of industrial dynamism for producing countries, while consuming countries have entered into competitive consumption.

That is why I propose, without delay, to review what I believe a national doctrine on mineral raw materials should be before discussing a scenario related to German energy policy.

Three elements form the basis of a national commodity doctrine: energy independence, food self-sufficiency and mineral independence. The absence of one of them prevents sustainable economic development.

1 National Commodities Doctrine


For metals, this doctrine is based on a thesis that will be active (Asia) or passive (Europe):

Japan and Korea are seeking a stable supply for the country’s economy.
China seeks to maintain a stable domestic supply through centralization of needs, industrial consolidation and less smuggling.
The United States is seeking to diversify supplies, substitute and recycle to industrialize.
Europe is seeking to avoid a shortage.
Naturally, a producing country, Australia or Canada, will encourage investment to maximize income.

Countries importing natural resources will implement a doctrine using several tools: a precise definition of materials, dynamic mining companies, privileged partnerships with producer states, strategic stocks, public or private trading companies in charge of national supply.

a) What is a critical raw material? It is a resource for which the industrial risks associated with a supply shortage are high and for which there is no possible substitution. A subject will be critical in one industry but not in another, in one country but not in another and this evolves over time.

b) What is a strategic raw material? It is an indispensable resource for state policy or national defense. Here again, a subject will be strategic in one country, but not in another, and this evolves over time.

In France, there is no strategic material except uranium, which benefits from a law, a decree and classified directives.

At European level I cannot find a common policy or common defence that would justify this list. China, the USA, Korea and Japan have a list of strategic metals.

In the wrong order, these materials are: copper, nickel, iron, coal, platinum, palladium, rhodium, rhenium, antimony, beryllium, cobalt (solo, nickel, copper), gallium (bauxite and zinc), germanium, graphite, indium (zinc), magnesium, niobium, rare earths (cerium, lanthanum, neodymium, terbium, europium, yttrium, terbium, lutetium…) tantalum, tungsten, lithium, tellurium, etc.

c) Which industries consume these materials?

We were all familiar with the slow contagion model for steel consumption, from the construction of the Eiffel Tower to the towers of Chinese cities. Here, for these materials, we are witnessing a galloping epidemic. It’s unique. Everyone wants it for everything and at the same time: in electric cars, new aircraft models, light-emitting diodes, electronic chips, smart phones, OLED screens, solar panels, wind turbines, electricity storage, fuel cells, national defence, steel, optics, lasers, petrochemicals, nuclear, etc.

The example of rare earth-based permanent magnets illustrates this growing consumption. Composed mainly of neodymium, dysprosium and praseodymium, their demands were a few grams in computers, but now they are 200 grams for an electric bicycle, 1-2 kg for an electric car and nearly 200 kg/MW for direct drive wind turbines.

We will understand this immediately, these consumptions will be in competition with each other and it is the producer of raw materials who will direct the flows according to price criteria – the different criticalities will be in competition – or strategic notions of the producing states.

These choices will be safe if you have to choose between a phone or a computer that also makes a phone. But what to do when it comes to choosing between energy production dependent on rare metals, or if there is a national security dimension?

(d) Why does the supply of critical metals not immediately meet demand?

In production forecasts, simplistic reasoning accounts for the resources available in the earth’s crust without regard to the economic reserves to be discovered or extraction models. Although sometimes these metals are not rare, they are co-products of other major metals and some of these production chains are opaque. Thus, there is no indium mine but zinc, tellurium but copper, molybdenum but copper, gallium but bauxite, rhodium but nickel or platinum. Of course, these metals are dependent on the dynamics of the major metal, they are not profitable in themselves and, if they are not produced for technical reasons, it may be for economic reasons.

Sometimes the mines of major metals are insufficient, or at the end of their life, and mining renewal has not been prepared: future new deposits have not been sought, so not yet discovered, a mine is 10-20 years of work before production, but some countries refuse to open mines.

Recycling these metals in the industrial cycle is the simplest step. Then, a wait of sometimes 20 years will precede the recycling of the carrier products. Moreover, on the latter, the deposits of materials are sometimes so thin, the alloys so complex or the contents so low, or even all at once, that we will not be able to recover them well. Recycling alone will therefore not satisfy consumer needs.

2) Tools to address deficits

(a) The mining industry

The dynamism of energy and mining companies is measured through their investments in the exploration and/or acquisition of new deposits. The French mining industry is a disappointment. For lack of vision, she remained prostrate, small and frozen while mining giants were being born elsewhere. This week two companies that did not exist twenty years ago, Glencore and Xstrata, announced a $90 billion merger while our older mining companies are thirty times smaller. In addition, our mining projects are less dynamic.

A new starting point on our territory would still be possible. The opening of small mines by innovative exploration SMEs in the Pyrenees, the Massif Central and Brittany for copper, zinc and tin from tungsten would allow the modern production of “strategic metals” co-products while respecting the environment.

Moreover, with the exception of coalfields, the French geological horizon is not known below 100 metres. The KGHM copper mine in Poland is 1000-1200 metres away, the Las Cruces copper mine in Spain is under a 150 m waste rock, the Neves-Corvo copper and zinc mine in Portugal is 700 metres away. In the rest of the world, mines commonly reach 1000-2000 metres, or even 4000 metres in South Africa. In France, the geological context of Brittany, the Massif Central and the Vosges is favourable, a deep exploration of the subsoil has the potential to lead us to discover more important deposits.

For small mines, a first step can represent 5,000 direct jobs, while the second step can represent large deposits, twice as many for each discovery. There is a factor 5 between direct and indirect employment.

But it takes courage because the question of prospecting arises: the abandonment of exploration for oil and shale gas in France, and its potential of hundreds of thousands of jobs with indirect jobs, questions us.

The first obstacle to prospecting in France is that today we no longer listen to the engineer’s word. The second is administrative: the new Mining Code will adopt the principle of public inquiries from the Environment Code, but these innovations have not yet been formalised. In addition, mining activity is isolated in the Ministry of the Environment and not integrated into the Ministry of Industry. Finally, the Regional Directorates of Environment, Development and Housing, which receive mining applications, are no longer trained in this activity. This loss of technical skills complicates the processing of cases. Indeed, the generation of geologists, miners and energy experts of the 1950s and 1960s who had the knowledge because they had exploited what could be exploited in France, before gaining territories abroad, is no longer in activity; the next generation leaving the formations is not yet in function. This is why French geology students are looking for a professional dynamic in foreign mining companies, or even in large metal-consuming industrialists who wish to complete their skills.

Need we to remind you that the industrial cycle is: exploration, exploitation and transformation of natural resources, then industrial manufacturing, marketing, then service and finally recycling. Are we prepared for mining jobs in France for products made in France? It should be recalled that the industrial model of the consumer products of global nomadic electronics was largely built on the extraction, disrespectful of the environment, of Chinese rare earths (97% of production, 49% of known reserves). In this context, it is difficult to blame the Chinese authorities for putting their house in order despite the spread of ridiculous hysteria.
anti-Chinese “conspirator”. We should be able to do things differently with local products that are immediately environmentally friendly.

Let’s summarize this first idea in one question: Why does Mongolia know a mining El Dorado and not France?

(b) Privileged partnerships between producer and consumer States

Producers are sovereign over a soil or subsoil and exercise power strategies.
Consumers are sovereign over industrial sectors and the associated influence strategies. In the future, producers of metals, agricultural products and energy will export less and consume more locally. The latter idea, resource nationalism, is illustrated in a short article with the provocative title: “When the African consumer wakes up China will tremble” (See and International and Strategic Review N°84 winter 2011)

And, if producers consume more, we must find a strategic geological depth. We will come back to this in conclusion.
(c) Strategic stocks

They are a fragile offer for several reasons. This is a temporary proposal, which cannot be shared, requiring a significant investment and permanent dialogue between administrations and companies. They are set up for the long term, but their managers have a duty to navigate on sight, anticipating a market environment where speculation reigns because of their raison d’être. Experienced professionals are needed to ensure this management.

Who has stocks? China, Japan, South Korea, the United States, but also States in the Middle East or Asia for food….

France had built up a strategic stock of metals, but it was sold off in the last decade of the twentieth century. It is said that rules of engagement were forgotten and market-based procurement was one of the peace dividends after the fall of the Berlin Wall. The economic war had not been anticipated.
(d) Public or private trading companies

The trading companies in charge of national supply offer the benefits of an invasion without military war, it is economic war. In this field of metallurgy and trading, France has suffered a recent and serious handicap since the astonishing, mysterious and sudden disappearance of the factories, jobs and metals of its leader, the Comptoir Lyon-Alemand-Louyot after 200 years of existence.

When these few simple concepts are ignored, misused or misinterpreted, industrial sectors complain of mineral shortages when they are forced to rush together towards the same solutions without worrying about mining supply.

3.German energy policy

In my presentation, we come to the scenario that I would like to explore quickly: German energy policy. I am well aware that simplification has its imperfections, but this is the way to illustrate some ideas in such a short time.

In 2011, Germany has about 102 GW of installed capacity and an electricity mix of 58% carbon (lignite, coal, gas), 20% renewable energy and 21% nuclear. By 2022, it plans to close its 21 nuclear power plants, while reducing consumption and increasing the share of coal, gas and also renewable energies (35%), in particular wind power.

The film of the last few weeks is instructive in this respect.

This winter, the world leader in the manufacture of wind turbines is in financial difficulty, laying off 10% of its global employees: bad weather at sea prevented it from installing as many wind turbines as it wanted, government subsidies have sometimes disappeared, the situation is difficult.

In the future, overpowered wind turbines will be in the majority: in 2009, 60% of wind turbines were less than 2 MW; in 2012, 70% are above 2MW. Large offshore wind turbines are in full development and each one uses rare earths that allow compact nacelles and reduced maintenance.

Germany is becoming aware of its dependence on critical metals and, last year, a junior mining explorer was formed by major German groups to discover and reserve future deposits of three elements (rare earths, tungsten, coal coke). The German government will finance mining exploration, but the companies will be responsible for the exploitation.

Two questions are necessary:

How to manage offshore wind turbine troubleshooting in winter storms? What will it cost? At 35% renewable energy, we are in the electrical tape and no longer in lace.
Will the German junior face the nationalism of the natural resources of the countries it will prospect?

Two ideas open two discussions.

In the minds of some, electric cars, wind turbines or solar panels mean partial or total independence from uranium, coal, oil or gas. But they do not realize that they are becoming dependent on lithium, indium, gallium, rare earths, etc. These are indeed new dependencies that are still poorly understood, or even for some unknown people.

Secondly, I would like to ask a question – and I will be told if it makes sense – to be said slowly and to meditate at length: is it a riskier energy policy than nuclear energy to base its economic development on renewable energies that are still immature, particularly wind power, with meteorological models that are becoming obsolete as the climate changes?

One answer is obviously the rejection of the bipolar – with or without nuclear power, with or without renewable energy – and the acceptance of the multipolar: renewable energy must progress, especially solar energy, and the atom retains a future that is in the atom itself.

If there were only two elements to remember from my speech, they would be independence and access to resources.

If French consumption of critical metals increases, France will have to gain independence, take charge and open mines on its territory.
The mining sector of tomorrow will be new exploration campaigns, lower grades, rising costs due to increased energy and water consumption, and stricter environmental regulations. In France, we have energy, water, infrastructure and ecology. In our country, mines will be mainly jobs, they will be deep, non-polluting and they will propose a solution to the renewal of the industry.

If French mines are insufficient, resources will have to be accessed at a new geological depth. In other words, a territory without demographic tension, depopulated, with raw materials and whose access conditions we would accept. I see only one of them: Russia. This is the subject of a short article “Russia and critical issues” (Revue Géoéconomie N°59 autumn 2011) where I cross my knowledge of natural resources and my political understanding of Russia.

Finally, the concept of nation is embodied if statesmen decide on mineral, agricultural and energy dependencies or independence that are fair in price and availability for populations, whether urban or rural.

Let us not be afraid to choose our independence and our dependence on natural resources, freely and rightly.