Material riskAccess to technology mineralsSeptember 2010
In June 2010, the European Commission (EC) published a report1which identified 14 raw mineral materials as critical to Eur...
Material riskAccess to technology mineralsCritical raw materials for the European Union (EU)The world’s population growth ...
Why worry now about technology minerals?                                                                             Explo...
Exploration or extraction of technology mineralsby EU companiesWe have identified 36 companies listed or headquartered in ...
How geographically concentrated are the globalreserves of technology minerals?Our findings suggest that, for the majority ...
Where are these concentrated mineralreserves located?Sixty percent of the technology mineral reserves are concentrated    ...
How stable is the mining environment in whichthese technology mineral reserves are located?We have cross-referenced the to...
Russia                                                                                              Magnesium             ...
What sources of funding are available to developtechnology minerals?Our research on our universe of EU listed or headquart...
What is the potential market size and demand fortechnology minerals and are these influenced bymineral substitutions or pr...
Is the EU mining and metals sector ready toanswer the technology minerals supply chainissue highlighted by the EC?The numb...
How can the EU mining and metals sectorbetter position itself to fulfil the demand fortechnology minerals?Successfully ful...
Appendix 1: Illustrative technology mineralsmarket size, use, production and reserves                                     ...
Appendix 2: Global demand fortechnology minerals                                                                    Demand...
Ernst & Young’s Global Mining & Metals CenterErnst & Young’s Global Mining & Metals Center brings together a worldwide tea...
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Ernest & Young 2010 material risk

  1. 1. Material riskAccess to technology mineralsSeptember 2010
  2. 2. In June 2010, the European Commission (EC) published a report1which identified 14 raw mineral materials as critical to Europeanindustry. In this paper we explore the supply risks facing producersand consumers of these technology minerals, and assess theEuropean mining and metals sector’s ability to respond to thesupply chain challenge. Michel Nestour Director Mining & Metals London T: +44 (0)20 7951 4936 E: 5 Rare Earths 4.5 4 PGM 3.5 3Supply risk Germanium Niobium Antimony Magnesium 2.5 Gallium 2 Indium Tungsten Barytes Fluorspar 1.5 Beryllium Graphite Cobalt Tantalum 1 Lithium Magnesite Chromium Rhenium Limestone Vanadium Borates Tellurium Molybdenum 0.5 Diatomite Bentonite Zinc Perlite Gypsum Manganese Clays Silver Iron Talc Silica Aluminium Bauxite Nickel Feldspar Copper 0 Titanium 3 4 5 6 7 8 9 10 Economic importanceSource: Critical raw materials for the EU: report of the Ad-Hoc Working Group on defining critical raw materials, European Commission, June 2010.1 Critical raw materials for the EU: report of the Ad-Hoc Working Group on defining critical raw materials, European Commission, June 2010. Material risk Access to technology minerals
  3. 3. Material riskAccess to technology mineralsCritical raw materials for the European Union (EU)The world’s population growth and rapid industrialization have EC experts have identified a selection of 14 raw materials asled to a swift increase in demand for metal intensive technology critical, out of 41 minerals and metals analyzed. These materialssuch as LCD screens, hybrid cars and wind turbine magnets. The are referred to in this paper as “technology minerals”.emergence of China as a metal superpower and its insatiable thirst The EC study, Critical raw materials for the EU, used a methodologyfor minerals to support its economic development, coupled with based on criticality, designed to account for the supply risk and theworldwide increased dependence on these technologies, prompted economic importance of each mineral and metal considered.the EC to design an integrated strategy for raw materials inNovember 2008. The goal is to ensure that future EU technology The minerals considered as critical are circled in yellow in theindustries can adequately prepare themselves to face increasing diagram competition for key mineral inputs.The response from the rest of the worldGlobally, other law makers, federal agencies and companies are heavily backed by the government, has taken it to Vietnam andbeginning to see increasing supply risks dependence and are Kazakhstan. US policy makers are pursuing a rare earths plan withnow looking at what needs to be done to secure resources. In the Rare Earths Supply Technology and Resources Transformationthe case of rare earths, Korean companies aim to obtain rare- (RESTART) Act, which aims to establish a working group to assessearth resources from China by equity participation in Chinese and monitor strategic need for rare earths, create a nationalcompanies, while Japan has begun an unprecedented number of stockpile, facilitate financing for domestic production and supportexploration projects and acquisitions outside China in an effort innovation and workforce development to support the secure supply. Japan’s search for rare earth investments, Material risk Access to technology minerals 1
  4. 4. Why worry now about technology minerals? Exploitation of the identified technology minerals is dependent The availability of technological minerals appears to be on the sector’s ability to: identify and commercially extract the increasingly under pressure. minerals from either an accessible and large enough mineral This is due to: deposit, or from smaller mineral deposits of high grade minerals; ► New demand from emerging markets or to commercially recycle the mineral harvested from existing metal fabrication. In the case of rare earths, an additional ► The impact of the recent economic crisis on the complexity arises from the fact that the mineral composition availability of funding, and, in turn, on exploration and of rare earths deposits usually includes all of the 17 rare earth production spend elements1 in varying proportions. The demand pattern is different ► Continued advances in technology application for each of the 17 elements according to their various applications. ► Investors’ limited knowledge and understanding of the A number of challenges arise for EU (listed or headquartered) technology minerals companies in making the decision to explore or extract such However, the main perceived threat is a change in geopolitical- technology minerals. These include: economic frameworks, which could disrupt supply and demand ► The availability of an accessible mineral deposit capable of patterns and ultimately lead to protectionism. economic extraction We believe that, assuming demand continues to rise, this ► Legislative regimes, mining regulations, political systems and scenario is unlikely to occur over the long term as market social and environmental risks solutions will prevail — for example, price increases will lead to new exploration, long term supply agreements and ► Availability of funding to develop the mines joint ventures. ► Level of customer demand for the ores Nevertheless, if the EU mining and metals industry is to remain In the following pages we address the above mentioned challenges competitive in the future supply of these critical technological in the context of technology minerals by looking specifically at: minerals, and if customers are to limit their supply chain risks, now is the time to take notice. A strategy needs to be developed ► How many EU companies are involved in the exploration/ for technology minerals supply, potentially with the support of a extraction of technology minerals? broader incentivized investment framework. ► How geographically concentrated are the global reserves of technology minerals? ► Where these technology minerals are located ► The stability of the mining environment in which these technology mineral reserves are located ► The sources of funding available to develop technology minerals ► The potential market size and demand for these technology minerals and the influence of mineral substitutions or price 1 Rare earth elements include: yttrium, scandium, lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium and lutetium.2 Material risk Access to technology minerals
  5. 5. Exploration or extraction of technology mineralsby EU companiesWe have identified 36 companies listed or headquartered in the EU About half of those identified EU companies are UK listed orinvolved in the exploration or extraction of technology minerals, headquartered. However, the majority of their ore deposits arebased on information in the public domain. The primary focus of located outside the EU. Certain companies are in fact subsidiariesthese companies is on platinum group metals (PGMs), magnesium, of larger groups such as CAMEC (now part of ENRC) or Glebefluorspar and tungsten. Often the same company will have several Mining Limited (part of Ineos Group).projects covering several technology minerals. Conversely, thereare currently no EU listed or headquartered companies which areinvolved in extraction or exploration of beryllium. 10 9 8 Number of European companies 7 6 5 4 3 2 1 0 Fluorspar Magnesium Graphite Antimony Rare Earths Cobalt Niobium Tungsten Tantalum Indium1 PGMs Beryllium Germanium1 Gallium1 compounds 2 Source: Global OneSource, London Stock Exchange, Raw Materials Group and EY research. It excludes diversified miners such as BHP Billiton, Rio Tinto, Anglo American and Xstrata. 1 Includes refiners as by-product. 2 Based on magnesite. Material risk Access to technology minerals 3
  6. 6. How geographically concentrated are the globalreserves of technology minerals?Our findings suggest that, for the majority of the technology view, a high level of geographical reserve concentration poses anminerals, the three largest reserves account for over 60% of total additional risk to the supply chain for such technology minerals. Itglobal reserves1, by volume. This means that, with the exception increases the economic influence of a sector in a local economy. Itof gallium, indium and fluorspar, over 60% of each mineral’s total also increases the risk that such economies may decide to processreserves are concentrated in three or fewer geographic regions. the minerals locally to create higher value-add products instead ofThis concentration level is higher than we see for bauxite and simply exporting the minerals overseas for further processing.iron ore, indicated in the chart for comparative purposes. In our Mineral global reserve concentration % 100% 80% Concentration % 60% 40% 20% 0% Germanium PGMs Niobium Tantalum Graphite Cobalt Tungsten Antimony Rare Magnesium Beryllium Bauxite Gallium Indium Iron ore Fluorspar Earths compounds Source: Mineral commodity summaries, USGS, January 2010; Mikolajczak, Clair , “Availability of indium and gallium”, September 2009, via The level of global reserve concentration ratio is estimated as the proportion of the top three largest identified estimated mineral reserves by volume divided by total estimated reserves (as compiled by the US Geological Survey (USGS) as at 2009 from a variety of sources such as mineral commodity national reserves information, and in their absence, other sources such as academic articles, company reports, trade journals and articles), except for niobium, germanium, tantalum and indium, where only the top one or two countries publicly report data. For beryllium, we have used the world resources approximation from the USGS as reserves are not sufficiently well delineated to report consistent figures by geography. For gallium, we have used as a concentration proxy, the bauxite concentration, as gallium is primarily a by-product of bauxite and there is no gallium reserve publicly disclosed.4 Material risk Access to technology minerals
  7. 7. Where are these concentrated mineralreserves located?Sixty percent of the technology mineral reserves are concentrated the two largest reserves in volume, the concentration percentagein three geographic areas: Russia, North Korea (predominantly increases to 68% and China accounts for more than 50% of themagnesium) and China. Discounting magnesium and fluorspar, global reserves. Geographic concentration of Geographic concentration of 12 critical global resources 14 critical global resources (excluding magnesium and fluorspar) Russia 24% Others Others 40% 32% China 51% China 19% US 7% North Korea CIS 17% 10%Source: Mineral commodity summaries, USGS, January 2010; Mikolajczak, Clair, “Availability of indium and gallium”, September 2009, via Material risk Access to technology minerals 5
  8. 8. How stable is the mining environment in whichthese technology mineral reserves are located?We have cross-referenced the top three technology mineralreserves’ geographic location (where available) with widelyavailable qualitative studies. The map opposite shows in visualform our analysis of these countries in terms of perceived risks.Our observations suggest that a significant proportion of theseminerals are located in countries considered by these studies torepresent a higher risk of instability.Source: 2010 Ranking of countries for mining investment, Behre DolbearGroup inc., via; IHS Global Insight Country RiskRatings Analysis (as at 22/9/2010) via and USATransparency International Corruption Perception Index 2009, via http://www. Rare; Reserves location sourced from Mineral commodity survey,USGS, January 2010; Mikolajczak, Clair (Director of Metals and Chemicals) Tungsten“Availability of Indium and Gallium”, September 2009 via PGMs1 Gallium reserve location was not available publicly so bauxite location was used Beryllium Cuba as a proxy. Germanium Cobalt Mexico Fluorspar Graphite Key: Negligible risk Brazil Niobium Low risk Tantalum Medium risk High risk Very high risk6 Material risk Access to technology minerals
  9. 9. Russia Magnesium Antimony Tungsten Indium PGMs Rare earths (CIS) North Korea Magnesium China Fluorspar Magnesium Graphite Antimony Rare earths Tungsten India IndiumGuineaGallium1 Graphite DRC Thailand Cobalt Antimony Vietnam Gallium1 South Africa Fluorspar PGMs Australia Cobalt Tantalum Gallium1 Material risk Access to technology minerals 7
  10. 10. What sources of funding are available to developtechnology minerals?Our research on our universe of EU listed or headquarteredcompanies suggests that, since 2005, they have raised US$2.2b Equity issues by EU technology minerals companiesthrough the stock market. In 2009 and 2010 YTD, more than 50% 1,038 14 1100of the capital raised was by a single company, Lonmin plc. The 1000 12companies that have raised these funds are primarily focused on 900the PGMs and cobalt. 800 10 Proceeds US$mThe majority of our sample has limited access to the debt market 700 8due to the early stage or perceived high risk profile of technology 600 Number 500mineral operations. This is compounded by the fact that the 6 400 367demand for such minerals is a relatively new phenomenon, arising 299 300 274from increasing technology applications and the desire to bring 200 223 4these to global mass markets. A case in point is the ubiquitous 100 2iPhone, which did not exist until June 2007.Other alternative sources of funding may include joint ventures. 0 2005 2006 2007 2008 2009 2010The rationale for entering a joint venture varies from transactionto transaction and may include: Proceeds Number of issuers► Spreading the risk Source: Thomson Reuters, Ernst & Young research► Matching of capital to assets ► State-backed Japan Oil, Gas and Metals National Corp► Securing supply in the face of a possible minerals (JOGMEC) has agreed to explore and develop mineral supply-demand imbalance resources, with a particular focus on rare earths and rare metals, in Namibia (July 2010). JOGMEC’s role will be to► Securing price in exchange for off-take agreement and provide advanced technology for the analysis of geological provision of funding from customers data and to help Japanese companies join exploration projects.Recently announced joint ventures in technology minerals include: JOGMEC aims to stockpile two months’ worth of the special► Graphit Kropfmuhl, a subsidiary of Dutch group AMG metals required in electronics, steel, and car manufacturing to Advanced Metallurgical Group N.V., entered into a joint venture guard against price and supply volatility. with Extrativa Grafite do Brasil and REP Minerals to secure ► In August 2010 JOGMEC also announced a partnership with graphite (announced in February 2010). Midland Exploration Inc., (a Canadian exploration company) on► Planet Resource Recovery Inc., a developer, manufacturer the Ytterby rare earths project. and marketer of “green” technologies for the remediation and ► Advanced Metallurgical Group (AMG) signed an agreement recovery of the planet’s resources, entered a joint venture with to buy antimony mining rights in Turkey to secure future raw Franklin Mining inc., to develop and operate the San Antonia de material supply in September 2010. Turiri Antimony mine in Bolivia (announced in April 2010). Outside of the technology minerals, Bolloré, a developer of lithium-► Toshiba Corp has signed a definitive agreement with metal-polymer batteries, and Eramet, a mining group, signed an Kazakhstan’s state-operated nuclear firm Kazatomprom to exploration contract in February 2010 with a call option for lithium form a joint venture in September 2010 to focus on the global deposits with Argentinean company Minera Santa Rita. Similarly, distribution of niobium-based products to the superconductor in June 2010, JOGMEC agreed to invest US$4m in the Borate industry, tantalum and rare earths such as dysprosium. Hills Project to be a joint venture partner with American Lithium Minerals, Inc. (a US based mineral exploration company). Most of these examples represent early indications of mining companies and industrial groups jointly collaborating to find solutions to the supply chain challenge.8 Material risk Access to technology minerals
  11. 11. What is the potential market size and demand fortechnology minerals and are these influenced bymineral substitutions or price?With the exception of fluorspar, magnesium compounds and In addition, one of the factors driving the potential demand forgraphite, the global production of technology minerals is well technology minerals will be the degree of possible substitutionbelow a million tons each per annum, and significantly below the and future technology applications. Possible substitutionsproduction levels of iron ore (2.3b tons) and bauxite (201m tons), concerning technology minerals can be summarized into threeillustrated for comparative purposes in Appendix 1. This highlights broad categories (see table below).both the limited availability and rate of production or recycling of The degrees of substitution appear to be limited. However, thisthese minerals. is a dynamic process which is subject to constant change dueOne reason for such limited production rates to date is that these to evolving technology research and development, discoveryminerals currently represent relatively small markets (with the and application.exception of magnesium compounds, PGMs, cobalt and niobium Should there not be an appropriate substitute for a particularwhich have an indicative annual global market size of over US$2b). technology mineral, or where production of technology mineralsThis has historically reduced the incentive of the mining sector to could not be increased, then the price of that mineral will increaseinvest in these markets. accordingly, assuming demand increases. This could impactIn its report, the EC presented an analysis of future demand the end consumer by contributing to either the scarcity of thebased on technology change. From this analysis, it identified product itself or increasing its overall price. However, technologygallium, indium and germanium as the three minerals that should minerals comprise only a small proportion of the end product andexperience the largest demand growth. The table in Appendix 2, as contribute only a modest amount to the total price paid by thepresented in the EC report, shows that demand for these products consumer (e.g., it is estimated that the cost of indium in a 42”will more than double by 2030. TV is less than 1% of the TV price). It is important therefore that the industry producing the end product ensures that it maintainsThe supply and demand for gallium, indium and germanium a fluid supply-chain through involvement in upstream mineralminerals, which are by-products of bauxite, zinc, lead and copper procurement (i.e., exploration or extraction) through joint ventureproduction, is not only dependent on emerging technology or long term supply agreements.demand, but also (and more significantly) on the supply anddemand for bauxite, zinc, lead and copper. Each of these in turnresponds to its own supply and demand cycle in line with expectedfuture economic growth and future metal price trends. Technology minerals Main industrial use Substitution Antimony Flame retardant No effective substitute for its major application Beryllium, germanium, niobium, rare earths, Electronic, steel, construction, automotive, IT, Difficult to substitute or where there are tantalum and tungsten telecommunication and mining possibilities there may be a loss of performance or higher costs Cobalt, fluorspar, gallium, graphite, indium, Alloys, battery, chemicals, construction, steel, Limited substitute or only for certain application magnesium and PGMs semi-conductors, telecommunication, renewable technology, electronic and automotiveSource: Ernst & Young research Material risk Access to technology minerals 9
  12. 12. Is the EU mining and metals sector ready toanswer the technology minerals supply chainissue highlighted by the EC?The number of EU companies involved in technology mineralsexploration or extraction is small and in our view currentlyinsufficient to respond to the technology minerals supply chainissue. The main reasons for this timid response are:► The mineral ore deposits tend to be small when compared with iron ore or bauxite. The minerals are themselves often extracted as by-products of other more plentiful minerals, which affects their extraction rate. For example, the primary extraction of gallium does not depend solely on the demand for, and price of, gallium. The additional revenues from gallium’s production are small compared with the overall income generated by bauxite extraction and this can adversely affect a miner’s readiness to expand its gallium extraction. In addition, it often takes between seven to ten years before a new discovery can start to produce minerals.► The mineral deposits tend to be located in regions where mining laws and political regimes are complex or challenging.► The availability of debt to finance mine development was significantly impacted by the global financial crisis and risk aversion, and economic uncertainty will continue to impact investors’ appetite for investment in exploration1. However, mineral technology companies have been able to raise funding through the equity market since 2005 with a particular focus on cobalt and PGMs. Alternative sources of funding are still available and many early stage projects in other mineral groups have successfully attracted investment from strategic partners acquiring minority equity stakes.► Investors have limited experience and knowledge of the technology minerals fundamentals to date as this is a complex new area.► The demand for technology minerals is increasing but these markets still remain small in comparison to those of other minerals such as bauxite or iron ore. As a result, they are yet to attract the full attention of the mining community.Failure to address the above challenges promptly could causethe EU technology industry to dwindle over time. We are alreadyexperiencing a marked decrease in the amount of these mineralsexported from emerging economies, as a result of increasinginternal demand from their technology industry, with theannounced decreasing export quota from China rare earthsindustry on 7 July 20102.Other regions of the world are beginning to take both public and 1 See previous Ernst & Young papers, The wall of debt (October 2009) and Life after debt (May 2009). sector action to address this risk – Europe cannot afford to 2 “China reduces rare earths export quota by 72%” from China Daily viabe left behind. Material risk Access to technology minerals
  13. 13. How can the EU mining and metals sectorbetter position itself to fulfil the demand fortechnology minerals?Successfully fulfilling the demand for technology minerals must Ernst & Young’s experience with mining and metals companiesbe dependent on whether the EU consumers of these technology around the world suggests that EU companies that wish to developminerals have the requisite appetite for active participation in in this sector will require support and innovative thinking, giventhe technology mineral supply-chain. In the current environment, the challenges is doubtful that the response could solely come from the EU There are steps that can be taken to address these challenges:exploration/extraction sector. ► Development of growth strategies (e.g., greenfield projects orEarly indications concerning other minerals (e.g., lithium) suggest company acquisitions) to compete with foreign state ownedthat joint responses between mining companies and industry enterprises in geographies where local knowledge is key.consumers to find creative and individualized solutions are possible,such as the proposed lithium joint venture between Eramet, Bolloré ► Lobbying of government and tax authorities to ensure that theand Minera Santa Rita. This will take industrial companies into the authorities understand the risks associated with inaction in theunfamiliar territory of M&A or joint venture with junior miners. technology minerals sector.Unfamiliarity should not prevent the necessary actions. ► Development of new relationships and cultural understandingInterestingly, opportunities are emerging with one of the major between miners and technology companies to facilitate futuretechnology mineral rich countries, China, which has allowed joint supply strategies.foreign companies to enter processing joint ventures with Chineserare earths businesses for example. China has also recently For further information on how Ernst & Young can helpstepped up its efforts on research and development of high-end with your material risk, please contact Michel Nestourtechnology for the rare earths downstream industry by setting upa special research fund of between 300m Yuan and 450m Yuan on +44 (0)20 7951 4936, or your(US$44.1m and US$66.1m). Such cross-border joint ventures can local Ernst & Young complex but strategically rewarding.The EC needs to decide what the next steps will be to ensure thatthe EU mining and metals industry takes a greater interest intechnology minerals and remains competitive in this area. Thiscould take various forms including:► Tax policy changes including tax breaks (such as flow-through financing) for EU based exploration and extraction activities in the specified metals.► Setting up a state-owned enterprise, to take responsibility for exploration or provide centralized funding support for private exploration or extraction companies.► State-owned geological surveys for early exploration.► Creation of national stockpiles.► Promotion of technology minerials recycling in the EU.► Creating more innovative supply chains for key metals that incentivise the secure supply of key scarce materials. Such supply chain features will often attach suitable premiums on the necessary materials that will enable the creation of capital or the acceptance of greater sourcing and production risk. Such premiums may provide incentives for arbitrage opportunities from otherwise apparently closed markets. Material risk Access to technology minerals 11
  14. 14. Appendix 1: Illustrative technology mineralsmarket size, use, production and reserves Indicative Leader Reserves annual Mine Prod. 08 Mine Prod. 09E share of 09E estimates Indicative market size Minerals Source Industrial use (metric ton) (metric ton) production (metric ton) price ($/kg) ($m)c Iron ore Mined Steel 2,220,000,000 2,300,000,000 39% China 77 billion tons 0.15 345,000 Bauxite Mined Aluminium 205,000,000 201,000,000 31% Australia 27 billion tons 0.028 (d) 5,628 Magnesium Mined Casting alloys, 5,430,000 4,990,000 56% China 2.3 billion tons 2.85 14,221 compounds packaging (excludes US) (excludes US) PGMsa Mined Automotive and 393 373 58% 71,000 Pt – 48,900 11,746 electronics South Africa Pd -15,600 Cobalt Nickel or copper Alloys and 75,900 62,000 40% DRC 6,600,000 41.9 2,597 by-product rechargeable or mined batteries Niobium Mined Steel or 62,900 62,000 91% Brazil 2,946,000 41d 2,542 construction Antimony Mined Flame retardant 197,000 187,000 90% China 2,100,000 9.6 1,795 Tungsten Mined Mining and 55,900 58,000 81% China 2,800,000 30 1,740 construction Graphite Mined Steel 1,120,000 1,130,000 70% China 71,000,000 1.2d 1,400 Rare earths Mined Automotive, 124,000 124,000 96% China 99,000,000 5.7b 710 renewables technology Fluorspar Mined Chemical and steel 6,040,000 5,100,000 58% China 230 million 0.11c 561 tons Indium Zinc, lead, Electronic 570 600 50% China 49,000 575 345 copper and tin by-product Tantalum Mined IT and 1,170 1,160 48% USA 110,000 87.1 101 telecommunication Germanium Copper, lead or Telecommunication 140 140 71% China 450f 638 89 zinc by-product and solar Gallium Bauxite and zinc Semi-conductor 111 78 Not available Not available 600 47 by-product and renewables technology Beryllium Mined Electronic 200 140 85% USA Not available 264d 37Source: Mineral commodity summaries, USGS, January 2010; MetalBulletin (23 August 2010); (27 August 2010); and Mikolajczak, Clair (Director ofMetals and Chemicals) - “Availability of indium and gallium”, September 2009, via Based on platinum and palladium only, production in kilograms. b Based on rare earths oxides year end 2009. c Based on year end 2009 price for metallurgical grade.d Based on 2009 year end price. e estimated. f USA only; other countries not available.12 Material risk Access to technology minerals
  15. 15. Appendix 2: Global demand fortechnology minerals Demand in 2006 Estimated demand in Production in 2006 from emerging 2030 from emerging Minerals Source (ton) technology (ton) technology (ton) Indicator 20061 Indicator 20301 Gallium Bauxite and zinc 152 28 603 0.18 3.97 by-product Indium Zinc, lead, copper 581 234 1,911 0.4 3.29 and tin by–product Germanium Copper, lead or zinc 100 28 220 0.28 2.20 by-product Neodynium Mined 16,800 4,000 27,900 0.23 1.66 (rare earth) PGM (Platinum) Mined 255 Very small 345 0 1.35 PGM (Palladium) Mined 267 23 77 0.09 0.29 Tantalum Mined 1,384 551 1,410 0.4 1.02 Cobalt Nickel or copper 62,279 12,820 26,860 0.21 0.43 by-product or mined Ruthenium Mined 29 0 1 0 0.03 Niobium Mined 44,531 288 1,410 0.01 0.03 Antimony Mined 172,223 28 71 <0.01 <0.01Source: Critical raw materials for the EU: report of the Ad-Hoc Working Group on defining critical raw materials”, European Commission, June 2010, and Annexe V to theReport; Ernst & Young research1 The indicator measures the share of the demand resulting from driving emerging technologies in total today’s demand of each raw material in 2006 and 2030 Material risk Access to technology minerals 13
  16. 16. Ernst & Young’s Global Mining & Metals CenterErnst & Young’s Global Mining & Metals Center brings together a worldwide team of professionals Ernst & Youngto help you achieve your potential — a team with deep technical experience in providing assurance, Assurance | Tax | Transactions | Advisorytax, transaction and advisory services. The Center works to anticipate market trends, identify theimplications and develop points of view on relevant industry issues. Ultimately, it enables us tohelp you meet your goals and compete more effectively. It’s how Ernst & Young makes a difference. About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisoryGlobal Mining & Metals Leader, Europe, Middle East, Austria, Germany, Switzerland services. Worldwide, our 144,000 peopleand Oceania India and Africa Reto HoferMike Elliott Michael Lynch-Bell are united by our shared values and an +41 58 286 7503+61 29 248 4588 +44 (0)20 7951 3064 unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieveSouth America United Kingdom Belgium and the Netherlands their potential.Carlos Assis Lee Downham Jeff Sluijter Ernst & Young refers to the global+55 21 2109 1606 +44 (0)20 7951 2178 +31 10 406 organization of member firms of Ernst & Young Global Limited, each of whichChina Africa CES* is a separate legal entity. Ernst & YoungPeter Markey Adrian Macartney Jacek Hryniuk Global Limited, a UK company limited by+86 21 2228 2616 +27 11 772 3052 +48 22 5577514 guarantee, does not provide services clients. For more information about our organization, please visit www.ey.comCanada France and Luxembourg Italy, Spain, PortugalTom Whelan Christian Mion Basilio Gomez Salinas © 2010 EYGM Limited.+1 604 891 8381 +22 430 41 21 82 +34 915 727285 All Rights EYG no. ER0019United States Commonwealth ofAndy Miller Independent States+1 314 290 1205 Evgeni +7 495 648 9624 Alexei Ivanov +7 495 228 3661 India Anjani Agrawal +91 22 4035 6380* Albania, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Macedonia, Malta, Moldova, Poland, Romania, Serbia, Slovakia, Slovenia, Turkey.For further information on our global capabilities, visit Our views and opinions We regularly produce papers that address some of the relevant and timely issues facing the sector. Our most recent publications include: ► Fraud and corruption in mining and metals. To meet rising demand, mining and In line with Ernst & Young’s commitment to minimize its impact on the environment, this metals companies are operating in territories that provide increased exposure document has been printed on paper with a high to corruption. Today’s slimmed down control environments by virtue of cost recycled content. reductions from the financial crisis only puts companies at greater risk. See which This publication contains information in summary form indicators will help you detect and prevent fraudulent and corrupt practices and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research ► 2010 business risks facing the mining and metals sector. The 2010 Ernst & Young or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young business risk report identifies the top 10 global strategic risks in the mining and organization can accept any responsibility for loss metals sector. We also identify specific measures we believe company leadership occasioned to any person acting or refraining from action as a result of any material in this publication. On should adopt to manage these risks in today’s more challenging economic climate. any specific matter, reference should be made to the appropriate advisor. Publications can be viewed and downloaded at 1017424.indd (UK) 09/10. Creative Services Group.