1. Critical versus deficit mineral commodities? International Conference on EU 2020 Strategy in mineral commodities management 19-20 September 2011 – Polish Geological Insitute, Warsaw Dr. Tadeusz Smakowski, PGI and Dr. Patrice Christmann, BRGM

2. European work on minerals criticality assessment The EU assessment of criticalities related to minerals and metals is part of the work supporting the European Commission’s Raw Materials Initiative [COM(2008)699 and COM(2011)025] It resulted in the publication, in June 2010 of the « Minerals Critical for the EU » report

3. European work on minerals criticality assessment 41 raw materials (metals, industrial minerals, construction materials) were assessed, 14 were selected as critical. The assessment will be revised, possibly every 3 years

4. SUPPLY RISK ECONOMIC IMPORTANCE POLITICAL ECONOMIC STABILITY OF PRODUCING COUNTRIES Data source: World Governance Indicator LEVEL OF CONCENTRATION OF THE PRODUCTION Data source: HHI SUBSTITUTION POTENTIAL Data source: Expert opinion by Fraunhofer ISI (based on cost, not on functionality) RECYCLING RATE ratio of recycling from old scrap to European APPARENT consumption - Data source: UNEP International Resource Panel report « Recycling of metals: a status report » 25% 25% 25% 25%

5. Copper

6. European work on minerals criticality assessment Several important factors are not yet integrated in the EU criticality assessment, such as: – Analysis of criticalities at different time horizons – New projects pipeline analysis (what, where, and when?) – Supply risks analysis along the supply chains – Disappearance of know-how all along the supply chain – Integration of environme ntal and social externalities – Raw materials price volatility

7. Limits to any criticality assessment Data availability and quality: several countries publish little and/or unreliable data on their minerals projects pipeline, production and trade. Even the best commercial databases document only a limlted part of the global mineral industry, and a decreasing one! Customs statistics are of limited use to measure real consumption. Only apparent consumptions can – and not for every metal - be evaluated!

8. Limits to any criticality assessment The trade of minor (= rare) metals and projects financed out of private equity are very poorly documented There is a strong incidence of undocumented, but growing, stockpiles on criticality issues. The development of Exchange Traded Commodities/ Exchange Traded Funds is adding to the problem.

9. Critical when? It is absolutely necessary when assessing criticality issues to work at different, complementary time horizons: now, 5 years, 15 years, 30 years supply and demand analysis are needed. The exemple of copper is quite typical Due to the nature of the minerals industry and the 10 to 20 years lead-time from exploration to production, informed foresight is a basis for any strategy. This still is in its infancy at EU and national levels, after decades of benign neglect and short-term policies.

10. Copper criticality analysis: any supply risk?

13. The need for supply-chain analysis

14. Supply chain analysis Modern industry relies on sometimes very complex and potentially fragile supply chains linking all end-users goods to geology. Western industries are heavily relying on concepts such as « just in time », « zero stock », lean organisations. End-of-supply chain industries have mostly no or very limited knowledge on the risks they are exposed to and have no mitigation strategies

15. The need for Supply chain analysis Few companies at the end of supply-chains know what raw materials are in the goods they produce, and what risks they face (rapid cost escalation, disruptions) The situation is particularly worrying in the case of SMEs who have little resources to spare to involve themselves in the intricacies of mineral raw materials and their related issues. Criticality can occur at various stage of a supply chain. This should be publicly documented up to the purification stage (where applicable)

16. Geological endowment ExplorationDevelopmentMiningProcessing MetallurgyPurificationSemi-productComponent System (e.g: car) Key risk factors are the dominance of China over mining, processing and metallugy of antimony. The possibility to substitute antimony in its main use reduces the risk. Information on exploration activities for antimony were not available at the time of peparing this presentation. Antimony (Sb)

17. <Geological endowment ExplorationDevelopmentMiningProcessing MetallurgyPurificationSemi-productComponent System (e.g: car) Key risk factors are possible regulatory changes in the occupational exposure limits applicable to beryllium metallurgical plants or workplaces where harmful beryllium dust may occur. In Europe, some high-tech SMEs and their know-how are critical to beryllium / beryllium alloy metallurgy and manufacturing of derived products. Beryllium (Be)

18. <Geological endowment ExplorationDevelopmentMiningProcessing MetallurgyPurificationSemi-productComponent System (e.g: car) There is limited data available on cobalt related exploration activities. While mining is geographically relatively well distributed (HHI : 0,25), this is not the case for cobalt refining, with China controlling a growing share of global cobalt refining (42% in 2010, estimate, Darton Commodities (2011) Cobalt (Co)

19. Conclusions Minerals and metals are essential to the EU While this is now politically recognised, the actions identifiable at EU level appear very strongly tilted towards innovation and technology. This is only one side of the coin. Data, information and knowledge development is as vital. When and how will this develop? There is a danger of further loss of know-how and capacities. Due to rapid shifts in technologies, recycling, substitutions, regulations and geopolitics continuous publicly funded minerals intelligence is required, not an 3-yearly update of criticality assessments. This should be made available to enterprises

20. Conclusions EU Research is needeed to improve the current EU criticality indicators Pooling of efforts in indicators developement, data collection at EU level needs to be organised soon. Capacities are subcritical and dwindling. Polling with other countries should be considered (USA: USGS and Yale Criticality Project 2009-2012, involving over 10 researchers and international stakeholders!, Japan: JOGMEC; S. Korea …) Development of information supportive of enterprises, particularly SMEs, as well as of public authorities, is of essence.

21. Conclusions Many minerals and metals could not be critical to the EU economy, as they are geologically available, in the EU but there is: – A DEFICIT IN PRODUCTION DUE TO A DEFICIT IN PUBLIC POLICIES. THESE WERE IGNORING FOR TOO LONG TIME THE STRATEGIC IMPORTANCE OF MINERALS AND METALS AS THE BASIS OF MOST ECONOMIC ACTIVITIES – A CONFUSION BETWEEN (non existent) DEMATERIALISATION AND VALUE-ADDING DEVELOPED AT EU LEVEL

22. Conclusions 3 R (recycle, reduce, re-use) based economic development is needed at EU level, but it will be insufficient to meet our needs. Decoupling growth from resources use is not the key issue, it is decopling from negative environmental and social impacts that is the probleme Beware of EU policies that would result in further burden shifting to developing countries, losses of jobs and skills in the EU!

23. Conclusions Critical versus deficit mineral commodities? The deficit is in knowledge, vital to design and implement the industrial and public strategies required to address Europe’s loss of competitiveness. This deficit leads to the current criticalities, and to worser ones possibly to come.

24. A final word, from 2500 years ago « It is not winning 100 victories in 100 battles that is clever, it is being victorious without having fought a single battle that is clever. » Sun Tzu, Chinese military strategist