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Objective Capital's Rare Earths, Speciality & Strategic Metals ...

Objective Capital's Rare Earths, Speciality & Strategic Metals
Investment Summit 2012
Ironmongers' Hall, City of London
13-14 March 2012
Speaker: Adrian Chapman, Oakdene Hollins

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    Critical metals in strategic energy technology Critical metals in strategic energy technology Presentation Transcript

    • RARE EARTHS, SPECIALITY& STRATEGIC METALSINVESTMENT SUMMIT Critical metals in strategic energy technology Adrian Chapman – Consultant, Oakdene Hollins IRONMONGERS’ HALL, CITY OF LONDON TUESDAY-WEDNESDAY, 13-14 MARCH 2012 www.ObjectiveCapitalConferences.com
    • Oakdene HollinsCritical Metals in StrategicEnergy TechnologiesAdrian ChapmanRare Earths, Specialty & Strategic Metals Investment SummitObjective Capital, 13th March 2012
    • Disclaimer • Oakdene Hollins Ltd believes the content of this presentation to be correct as at the date of writing. The opinions contained in this presentation, except where specifically attributed, are those of Oakdene Hollins Ltd. They are based upon the information that was available to us at the time of writing. We are always pleased to receive updated information and opposing opinions about any of the contents. • The listing or featuring of a particular product or company does not constitute an endorsement by Oakdene Hollins, and we cannot guarantee the performance of individual products or materials. This presentation must not be used to endorse, or suggest our endorsement of, a commercial product or service. • All statements in this presentation (other than statements of historical facts) that address future market developments, government actions and events, may be deemed "forward-looking statements". Although Oakdene Hollins believes the outcomes expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance: actual results or developments may differ materially. Factors that could cause such material differences include emergence of new technologies and applications, changes to regulations, and unforeseen general economic, market or business conditions. • We have prepared this presentation with all reasonable skill, care and diligence within the terms of the contract with the client. Although we have made every reasonable effort to ensure the accuracy of information presented in this presentation, Oakdene Hollins cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions herein. Factors such as prices and regulatory requirements are subject to change, and users of the presentation should check the current situation. In addition, care should be taken in using any of the cost information provided as it is based upon specific assumptions (such as scale, location, context, etc.). Clients should satisfy themselves beforehand as to the adequacy of the information in this presentation before making any decisions based on it.
    • Agenda • Background on materials security • Strategic Energy Technologies: ‐ SET Plan ‐ Metal screening ‐ Bottleneck metals ‐ Mitigation options • Summary
    • Oakdene Hollins Consulting to business on sustainable products, services and clean production: Sectors: Services: • Food & Drink • Market Appraisal • Textiles & Clothing • Supply Chain Risk Assessment • Technology Appraisal • Metals & Mining • Protocol & Standards • Wastes Management Development • Chemicals & Materials • Economic Modelling • Financial Impact Assessment • Management of Research Projects • Carbon Footprinting
    • Materials Security • Study on by-product metals (International Lead & Zinc, Copper and Nickel Study Groups, ongoing) • Assessing rare metals as supply chain bottlenecks in priority energy technologies (European Commission Institute of Energy, 2011) • Expert Review of Criticality Studies (Private Client, 2011) • Investing in Critical Metals (Report for Investors, 2011) • Study into the feasibility of protecting and recovering critical raw materials (European Pathway to Zero Waste, 2011) • Lanthanides resources and alternatives (Department for Transport, 2010) • Materials security: Ensuring resource availability for the UK economy (Resource Efficiency KTN, 2008) (Reports available from www.oakdenehollins.com)
    • EU’s ―Critical 14 Materials‖ Analysis based on Supply Risk vs Economic Importance Large Volumes Small Volumes Fluorspar – 6,010,000 Indium – 609 Graphite – 925,000 Tantalum – 681 Magnesium – 576,000 Platinum Group – 467 Antimony – 167,000 Beryllium – 205 Rare Earths – 133,000 Germanium – 118 Tungsten – 68,800 Gallium – 182 Niobium – 62,900 Cobalt – 89,500 2010 USGS Production Figures, (tonnes)
    • EU Critical Raw Materials Initiative Source: EU Raw Materials Initiative
    • Criticality Ranking – 12 Studies Most Moderately Near Not Critical Critical Critical Critical Beryllium Antimony Bismuth Aluminium Gallium Cobalt Chromium Boron / borates Indium Germanium Fluorspar Cadmium Magnesium Manganese Lead Copper PGMs Nickel Lithium Molybdenum REEs Niobium Silicon / silica Selenium Tin Rhenium Silver Vanadium Tungsten Tantalum Titanium Tellurium Zirconium Zinc Source: Oakdene Hollins
    • EU Strategic Energy Technology PlanThe SET-Plan is the first step to establishing a European energytechnology policy. The principle goals are; • Accelerating knowledge development, technology transfer and up-take; • Maintaining EU industrial leadership on low-carbon energy technologies; • Fostering science for transforming energy technologies to achieve the 2020 Energy and Climate Change goals; • Contributing to the worldwide transition to a low carbon economy by 2050. Large policy influence on energy technologies, and therefore raw material demand over the coming decades.
    • SET-Plan Technologies
    • EU SET-Plan Technologies • SET Plan Technology Map with development plans for 17 technologies • Six priority technologies: ‐ Nuclear Fission ‐ Solar Energy (PV and CSP) ‐ Wind Energy ‐ Bioenergy (power generation, biofuels) ‐ Carbon Capture and Storage ‐ Smart Grids
    • Metal Requirements • Widest selection of metallic elements quantified: • 60 metallic elements included • Iron, aluminium and radioactive elements are excluded from study • Assess demand from industry targets for uptake against current world supply: i.e. To compare most optimistic demand scenario to most pessimistic supply scenario
    • Significance Screening Results 50% 19% Metals Demand of SET-Plan in 2030 10% 9% 8% 7% % of 2010 World Supply 6% 5% 4% 3% 2% 1% 0% Te In Sn Hf Ag Dy Ga Nd Cd Ni Mo V Nb Cu Se Pb Mn Co Cr W Y Zr Ti
    • Significant Metals by Technology Metal Solar Wind Nuclear CCS Total Tellurium 50.4%    50.4% Indium 18.0%  1.4%  19.4% Tin 9.6%  0.02%  9.6% Hafnium   7.0%  7.0% Silver 4.8%  0.4%  5.2% Dysprosium  4.0%   4.0% Gallium 3.9%    3.9% Neodymium  3.8%   3.8% Cadmium 1.5%  0.03%  1.5% Nickel  0.7% 0.2% 0.5% 1.5% Molybdenum  1.0% 0.4% 0.02% 1.4% Vanadium   0.01% 1.3% 1.3% Niobium   0.04% 1.2% 1.2% Selenium 0.8%    0.8%
    • Bottleneck Analysis Market Factors Market Measures Likelihood of rapid global demand Analysis of demand forecasts growth Limitations to expanding Reserves, supply production capacity forecasts, evaluation of by- production dependencies Political Factors Political Measures Concentration of supply in few Production statistics countries Political risk indicators (FSI & Political risk related to major WGI) supplying countries
    • -70 -60 -50 -40 -30 -20 -10 10 20 30 0 Vanadium Niobium Hafnium Gallium Tin Silver Selenium Molybdenum Nickel Neodymium Indium Dysprosium Example: Forecasts for Key Metals Tellurium 2020 2015
    • Bottleneck analysis by metal Market Factors Political Factors Limits to Likelihood of Overall Metal expanding Concentration rapid demand Political risk risk production of supply growth capacity Dysprosium High High High High Neodymium High Medium High High Tellurium High High Low Medium High Gallium High Medium Medium Medium Indium Medium High Medium Medium Niobium High Low High Medium Vanadium High Low Medium High Medium Tin Low Medium Medium High Selenium Medium Medium Medium Low Silver Low Medium Low High Molybdenum Medium Low Medium Medium Hafnium Low Medium Medium Low Low Nickel Medium Low Low Medium Cadmium Low Low Low Medium
    • Role of Metals by Technology: Wind • Direct Drive Permanent Magnets : • Neodymium • Dysprosium • Steel Alloying Elements : • Nickel • Molybdenum
    • Metal Prices: REE 3000 2500 2000 $/kg 1500 1000 500 0 2007 2008 2009 2010 2012 2011 Dy Oxide Nd Oxide
    • Role of Metals by Technology: Solar • CdTe Thin Films: • Cadmium, Tellurium, (Indium, Tin) • CIGS Thin Films: • Indium, Gallium, Selenium, (Tin) • Crystalline Silicon: • Tin, Silver • Amorphous Silicon: • (Indium, Tin) • Concentrated Solar Power: • (Silver)
    • Metal Prices: Indium Indium min 99.99% (EU) 1200 1000 800 $/kg 600 400 200 0
    • Metal Prices: Tellurium Tellurium min 99.99% (EU) 500 400 300 $/kg 200 100 0 03/11/2009 03/11/2010 03/11/2011
    • Responses to Materials Criticality Data collection Trade and Procurement and and international stockpiling dissemination co-operation Resource Design and Primary efficiency innovation production strategies (e.g. substitution) (e.g. recycling) Source: Oakdene Hollins
    • Mitigation Strategies for solar Expanding Output • By-product metals extraction, opportunities for Cu/Al/Zn refineries Recycling • Recycling potential limited due to dispersive applications Substitution • Indium – Considerable research, but early stage • Gallium – Linked to germanium • Tellurium – Options for low value applications But technology choice available
    • Summary • Greatest risks for six primary SET-Plan technologies: ‐ Solar: tellurium, gallium, indium ‐ Wind: dysprosium, neodymium • No overall bottlenecks – technology mix matters • Mitigation required in long term • Opportunities for expansion of production/by- production to meet demand • Recycling, substitution will have a role • Further policy factors – e.g. REACH, revision of RMI, global trade rules
    • Adrian Chapmanadrian.chapman@oakdenehollins.co.uk www.oakdenehollins.com
    • EU Energy Generation Capacity European Generation Capacity to 2030 (GW) Source: EU energy trends to 2030 — Update 2009, DG Energy (2010)
    • Bottleneck Metals: Dysprosium & Neodymium • Primary product (55%), by-product of iron (45%) Geographical Location of Rare Earths, 2010 China Mine production 97% India Brazil Malaysia CIS Reserves 48% 17% 11% 19% United States Australia Other countries 0% 20% 40% 60% 80% 100% Source: USGS Applications for Nd Magnets, 2009 Others, 3% Acoustic, 5 MRI, 5% % Optical HDD, 31% Devices, 5% Automobile, 24% Motor, 26% Source: Shin Etsu
    • Bottleneck Metals: Tellurium • By-product of copper (90%) & lead (10%) Geographical Location of Tellurium, 2010 Refinery Japan productio 8% 7% 6% 10% 65% n Russia Peru Canada Reserves 10% 14% 73% United States Other countries Unknown 0% 20% 40% 60% 80% 100% Sources: USGS & BGS Applications for Tellurium, 2009 Electronics & Others, 11% Chemicals & Metallurgy, 4 Pharma- 2% ceuticals, 21 % Photo- voltaics, 26 % Source: EU RMI
    • Bottleneck Metals: Gallium • By-product of alumina Geographical Location of Gallium, 2008 China Germany Kazakhstan Production Capacity Japan Russia Ukraine Hungary Slovakia 0% 20% 40% 60% 80% 100% Source: USGS Applications for Gallium, 2009 Photo- detectors & solar, 2% R&D, 14% Lasers & LEDs, 18% Integrated circuits, 66% Source: EU RMI
    • Bottleneck Metals: Indium • By-product of zinc Geographical Location of Indium, 2010/2007 China South Korea Refinery production 52% 14% 12% 6%5% Japan Canada Belgium Peru Brazil Reserves 75% 17% Russia United States Other countries 0% 20% 40% 60% 80% 100% Source: USGS Applications of Indium, 2009 Others, 6% Low m.p. Alloys, 10% Other ITO, 10% Flat Panel Displays, 74 % Source: EU RMI