Resources for the world
Ore, mica, sand and gravelThe manufacture of many high-tech applications and modern mass-produced electronic products such as photovoltaic installations, hybrid cars and smartphones requires abundant mineral resources. These resources include mineral ores from which metals such as copper, nickel, indium and gold are extracted, as well as nonmetallic industrial minerals such as fluorite, graphite and mica. Mica is utilized among other things as an insulator in tiny components for the microelectronics industry, and graphite is required for electrodes. Fluorite is used in the production of hydrofluoric acid to cauterize steel and photovoltaic components. Sand, gravel and stone for the building industry are also considered to be mineral resources.
Nearly all the mineral resources used today are derived from onshore deposits. Depending on the deposit concerned, these are extracted from underground mines or open-cast mines using enormous excavators and wheel loaders. Sand and gravel are the exception, as these have for some time now been exploited not only onshore but also from shallow marine areas.
For several decades we have also been aware of the presence of major occurrences on the sea floor which consist of many millions of tonnes of valuable metals. These have so far remained unutilized because onshore production has been capable of satisfying demand. In addition, deep ocean mining is still uneconomic because of the expense involved in harvesting the ores using ships and underwater robots. Unlike traditional onshore mining, the extraction technology has not yet been developed.
Fear of supply shortagesExperts assume that, despite steadily increasing demand, the onshore deposits will in most cases continue to satisfy our growing appetite for metals and minerals. They do predict future shortages of some resources, however. For instance, those resources which are available or mined in only small amounts – such as antimony, germanium and rhenium – could become scarce, partially as a result of the growing needs of the BRIC countries (Brazil, Russia, India and China). To compare, about 20 million tonnes of refined copper were produced worldwide in 2012, but only 128 tonnes of germanium.
- 2.1 > Mineral ores for metal production are extracted from huge open-cast mines such as the Dexing copper mine near the eastern Chinese city of Shangrao. The excavators are working their way deep into the earth.
- Germanium is used for the radio technology in smartphones, in semi-conductor technology and in thin-film solar cells. There are concerns, particularly among the leading industrialized nations, that the supply of such significant industrial resources could become more precarious in coming decades. The following are some of the factors on which supply depends:
- Rising demand due to new developments: Some innovation researchers predict that the need for certain metals will increase significantly in the years to come as a result of new technological developments. Rare earth metals, for example, are elements which could be required in rapidly increasing quantities in future for the construction of engines for electric cars and generators in wind turbines.
- Rising demand and competition as a result of economic growth in the BRIC countries and emerging markets, as well as strong growth in the global population.
- Limited availability: Many resources are by-products of the extraction of other metals. For instance, both germanium and indium – which is vital for the manufacture of LCD displays – are by-products of lead and zinc mining. They occur in only small quantities in the lead and zinc deposits. In order to extract more germanium and indium, lead and zinc production would have to increase substantially. This would be uneconomic, however, because the demand for lead and zinc is not high.
- State monopolies: Many important industrial resources are found in only a few countries or are currently produced by only a few. These nations have an effective monopoly. For instance, China accounts for 97 per cent of the worldwide production of rare earth metals. Currently it is also the most important producer of other resources. Importing nations are concerned that China, or other nations, could restrict the availability of these resources by imposing high tariffs or other economic measures. The situation is aggravated by the fact that modern high-tech industries require resources of extra high quality or high purity. In many cases these, too, occur in only a few regions of the world.
- Oligopolies as a result of industry concentration: In some cases resources are mined by only a handful of companies. Competition for some resources has intensified even more in recent years due to major resource companies having bought out smaller ones.
- Political situation: Supplies from politically fragile states are also fraught with problems. One example is the Democratic Republic of the Congo which generates 40 per cent of worldwide cobalt production, but which has been destabilized by many years of civil war.
- The availability of a resource to a country or company does not depend alone on the size of worldwide deposits, therefore, but on a combination of factors which determines the price. Of course, the price is also affected by the situation on the resource markets. For instance as demand for a resource grows, so does its price. In other cases resources may increase in price as a result of speculation alone, because markets overreact. One example here was the huge price hike of copper and other resources after 2006 when China snapped up major quantities of resources. At that time there could be no question of scarcity, however.
- 2.2 > Many metals today are mined in only a few countries, with China leading. The data originate from a comprehensive analysis of resources carried out in 2010, since when the situation has not changed significantly. No reliable figures are available for gallium or tellurium.
Measuring uncertaintyExperts are trying to assess the certainty of future resource supplies. They take state and corporate monopolies into account on the one hand, and the political situation in the prospective mining areas on the other, to produce a “weighted country risk”. This weighted country risk is ascertained on the basis of 6 criteria (indicators) against which the governance and prevailing political situation of individual states are measured. These indicators have been defined by the World Bank as follows:
- Voice and accountability: measures perceptions of the extent to which a country’s citizens are able to participate in selecting their government, as well as freedom of expression, freedom of assembly and a free media;
- Political stability and absence of violence: measures perceptions of the likelihood of a government being destabilized by violence, political violence or terrorism;
- Government effectiveness: measures the quality of public services, the civil service and the degree of its independence from political pressures;
- Regulatory quality: measures perceptions of the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development;
- Rule of law: measures perceptions of confidence in and adherence to the rules of society, and in particular the quality of contract enforcement and property rights. It also measures the quality of the police and the courts, as well as the likelihood of crime and violence;
- Control of corruption: measures perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as the influence of elites and private interests.
- Numeric values are assigned to the 6 indicators, and these are totalled to reveal country risk values between +1.5 and –1.5. Values above 0.5 indicate a low risk, between –0.5 and +0.5 a moderate risk, and those below –0.5 are considered critical.
Economists are using the Herfindahl-Hirschman Index (HHI), a measure of market concentration, as they attempt to assess the extent to which resource supply is influenced by state or corporate monopolies. This mathematically determined index considers the number of companies competing in the market and their market shares, from which they can calculate the degree of concentration of that market. In terms of figures, the Herfindahl-Hirschman Index ranges between the highest value 1 where there is only one market participant (indicating a monopoly), and the lowest value 0, which is achieved when (theoretically) an infinite number of participants have the same market share. For practical reasons the values are multiplied by 10,000 to effectively remove the decimal point.
- Accordingly, a resource market with an HHI below 1500 is considered “unconcentrated”. Above 2500 it is seen as “highly concentrated” or monopolized, and values in between indicate that a market is “moderately concentrated”.
If the resources are assessed according to both the weighted country risk and the HHI at the same time, they can be classified into 3 different risk groups: low risk, moderate risk and high risk resources. Copper is considered a low risk resource. It has a low country risk value and at the same time low corporate and country concentration ratios. This is because copper is produced in politically stable countries, by a range of different companies.
- 2.3 > The security of individual resource supply is ascertained by looking at the reliability of exporting nations (weighted country risk) and the monopolization of individual resource markets. This diagram considers state monopolies in particular (country concentration). Resources which are considered safe (low risk) are highlighted in green, those at moderate risk in yellow, while those with an insecure supply situation (high risk) are highlighted in red.
- Rare earth elements and the metalloid antimony are considered extremely high risk resources. Deposits with a high content of antimony are found mainly in China, which supplies about 84 per cent of global production. The Herfindahl-Hirschman Index value is correspondingly high. Antimony is used for touchscreens and micro-electronic components; it is also very much in demand as a flame retardant for fire-resistant clothing and plastics.
How long will resources last?Calculating the supply risk can naturally provide only a snapshot of the current situation. It does not tell us just how long we can expect the resources to be available in future.
Geoscientists are trying to answer this question by gauging the reserves and resources of the various substances. Essentially we know where certain ores can be anticipated, because resources usually occur in characteristic geological formations, the worldwide distribution of which is relatively well known. Platinum for example occurs mainly in the Bushveld Complex of South Africa in a layered igneous intrusion. This is a layer of rock caused by magmatic activity which has penetrated the adjacent rock strata. Platinum in such intrusions is also found in some other regions of the world. However, the platinum content of the ores is in many cases so minimal that extraction is not profitable.
Ground surveys, geological and geophysical analyses and test drilling must be undertaken before it is possible to ascertain whether metals occurring in a geological formation are concentrated enough to be considered a deposit.
- 2.4 > Mineral resource deposits are classified in different categories, depending on how well-known or sampled they are. Whether the resources can be extracted is another factor considered.
- No such testing has as yet been carried out in many regions of the world because the exploration of new deposits in unknown terrains is extremely expensive and complicated. For this reason interest has mainly been focused on areas in the vicinity of known occurrences. Major tracts of Australia, Canada, South America and West Africa remain largely unexplored. Assessing worldwide occurrences is therefore a very unreliable undertaking. Occurrences are classed into different categories, depending on the extent to which an area of land has been sampled or developed:
- RESERVES: Reserves are occurrences of resources which have already been proven and their extraction is economically feasible using current technology.
- RESOURCES: An occurrence is described as a resource when its metal content and volume have not yet been proven by sampling, or when its extraction and processing are economically unfeasible. One example is nickel laterite ore, a special type of nickel ore found in the residual soils of tropical and sub-tropical areas. Until the 1950s there was no economically-feasible industrial process to separate the nickel from the ore. The occurrences, although well-known, could not be utilized. The laterites were therefore ranked as resources. Once an appropriate metallurgical process was developed, they became an exploitable reserve. Today about 50 per cent of the nickel produced worldwide comes from such lateritic deposits.
- 2.5 > Bauxite is extracted mainly in open-cast mines. A specialized machine like this one removes 800 tonnes per hour. Bauxite is primarily used to manufacture aluminium.
- Unlike natural gas and oil, metal reserves and resources are further sub-classified according to the extent to which they have been sampled. The economic feasibility of their extraction is also taken into account.
In view of the major areas of land worldwide which have not yet been properly sampled, geoscientists assume that many as-yet-undiscovered deposits exist and that these will theoretically be capable of meeting the growing need for mineral resources in the future. But it is debatable whether major underground or open-cast mines will be developed onshore, because of their drastic intervention in landscapes.
Many stretches of land have been completely transformed over past decades as a result of mining. People have lost their homes and important ecosystems have been destroyed. Copper mining was responsible for the enormous craters in the ground in South America. In Brazil large tracts of rainforest were destroyed by the open-cast mining of bauxite, another residual soil from which aluminium is extracted. Any expansion of onshore mining is therefore viewed with a great deal of scepticism.
Recycling rather than discarding?An alternative to intensified ore mining could in future be the recycling of valuable resources. Just as aluminium and steel are already being melted down and reprocessed on a grand scale, other resources too could be recovered from waste and electronic scrap.
However, electronic waste is processed by only a few companies worldwide, which mainly recover copper, silver, gold and platinum.
From a process engineering point of view it would also be feasible, for instance, to recycle indium tin oxide film from smartphone screens. As yet, however, no industrial facility has yet been designed for routine processing.
Not only are discarded smartphones and computers of interest for recycling: waste also accumulates during production. Yet because processes for treating the waste and extracting the substances are lacking, the electronics industry can return only a portion of its waste into the production process. A process for gallium from LEDs would be highly desirable, for example.
- Collection systems for end-of-life products and production waste are also lacking. Recycling is further complicated by the fact that a product may contain only tiny amounts of certain metals, making it scarcely worthwhile to reprocess. Experts are trying to create new methods to improve the identification and separation of the various processed substances.
Microchips and other microelectronic components in which a range of different substances are effectively fused together present a particular challenge. Because most electronic scrap cannot be recycled, many industrialized nations export it into developing and newly industrializing countries as waste. In some cases it is still being transported illegally overseas. Companies involved in such activity claim to recycle the scrap and are paid accordingly. But instead of recycling it in a technically complex manner, they save money by exporting it. For this reason specialists are discussing the following measures and suggestions for the future recycling of metals:
- The development of new systems to recover industrial production waste;
- The introduction of recycling bins for private households;
- The priority development of recycling processes for metals at a high risk of shortages (country risk, country concentration);
- The creation of economic incentives to spur a functioning recycling market which specializes in resources from consumer goods, end-of-life vehicles and electronic scrap.
Could sea-floor mining be the answer?To make future resource supplies more secure, sea-floor mining could offer many states and companies a potential alternative, for both economic and geopolitical reasons. It would avoid the land-use conflicts which underground and surface mining bring in their wake, and could also help many nations without resource reserves to become a little less dependent on the exporting nations.
In principle there are two scenarios where sea-floor mining is concerned: mining within the territorial waters of a nation, and mining in the deep sea which is considered a common heritage of mankind and a resource to be shared among all nations.
Nation states are responsible for regulating the mining activity in their own sovereign territory. In the case of the deep sea, however, the central authority is the International Seabed Authority (ISA), which grants licences for specific areas. The ISA is based in Kingston, Jamaica. In particular the ISA ensures that the future profits gained from deep-sea mining activities are shared equitably. The objective is to prevent a situation occurring whereby only rich nations have access to promising resources.
The International Seabed Authority has already assigned numerous licensed areas to several states for exploration purposes; as yet they may only explore – not exploit. To date no actual mining has been carried out anywhere because the final set of rules governing the activity is still being debated. The ISA plans to establish the legal conditions for such seabed mining by 2016.
- 2.6 > A worker in a recycling factory in San José, Costa Rica, sorts tin cans from which aluminium is recovered.
- 2.7 > Electronic components such as chips with electronic circuits contain very small amounts of various metals. Recycling is extremely difficult as the metals are virtually fused together.
- As far as sea-floor mining is concerned, interest is focused on 3 main types of resource deposit which contain different valuable metals:
- MANGANESE NODULES: Manganese nodulesManganese nodulesare lumps of minerals ranging in size between that of a potato and a head of lettuce. They cover enormous areas of the seabed of the Pacific and Indian Oceans. They are composed mainly of the chemical elements manganese, iron, copper, nickel and cobalt along with other substances such as molybdenum, zinc and lithium. Manganese nodules are mostly found at depths below 3500 metres.Further information on this topic is available here:
- COBALT CRUSTS: Cobalt crustsCobalt crustsare incrustations of minerals which form on the sides of submarine mountain ranges and seamounts. They develop as a result of the accumulation of minerals dissolved in the water and contain mainly manganese, iron, cobalt, nickel, platinum and rare earth elements. Cobalt crusts are found in the western Pacific at depths of 1000 to 3000 metres.Further information on this topic is available here:
- MASSIVE SULPHIDES: Massive sulphidesMassive sulphidesaccumulate mainly at the openings of hot vents on the ocean floor. In these regions cold seawater penetrates through cracks in the sea floor at depths of up to several kilometres. The water near magma chambers then heats up to temperatures exceeding 400 degrees Celsius. As it does so, metalliferous minerals are released from the rock. Upon warming the solution rises rapidly and is extruded back into the sea. As soon as this solution mixes with the cold seawater, the minerals form a precipitate which accumulates around the hydrothermal vents in the form of massive ore deposits. Massive sulphides are found in many places on the sea floor which are or used to be volcanic. Depending on the region, they contain widely different amounts of copper, zinc, lead, gold and silver, as well as numerous important trace metals such as indium, germanium, tellurium or selenium.Further information on this topic is available here:
- MANGANESE NODULES: Manganese nodules
- If and when marine resources are mined depends mainly upon how resource prices actually develop worldwide. It is impossible to predict whether, as is the case with oil, world market prices will continue to rise. New onshore mining projects could lead to price reductions for certain resources, for example. In the past we have often seen that when mining of a major new onshore deposit begins, there is a surplus of the resource concerned. Cost savings also contribute to falling prices. There are many reasons behind such savings such as new mining technologies, automation or improved metallurgic processes.
On the other hand, prices rise as the demand for a resource increases. This could in future prove to be the case with resources which are highly sought after due to technological and social developments. One example here is the metal neodymium which is increasingly used in the construction of electric motors and wind turbine generators. Experts are in fact concerned that supplies of this metal could run short in the coming years. If the prices of metals that are also found offshore increase in the coming years as a result of such short-
ages, sea-floor mining could become economic. However, at this stage nobody can foresee whether such a situation will occur.
An exception could possibly be the massive sulphides found in the territorial waters of Papua New Guinea, which have been found to contain substantial amounts of gold and silver. Their retrieval has been planned for several years now, but for economic and contractual reasons production has been postponed repeatedly.