Table 28 summarises the risks for supplyͲchain bottlenecks for each of the 14 metals that are used in significant quantities in the SETͲPlan technologies. The results have been colourͲcoded to aid viewing. Table28showsthatforfiveofthesefourteenmetals(cadmium,hafnium,molybdenum,nickelandsilver) thelikelihoodofsupplyͲchainbottlenecksoccurringoverthenextdecadeisfoundtobelow.Thisisthe case either because demand growth is expected to be relatively slow (e.g. in the case of cadmium, hafnium or silver) or because there are few serious obstacles on expanding output through bringing additionalcapacityintoproduction(e.g.inthecaseofnickelormolybdenum).Politicalrisksfailtochange this assessment, with only molybdenum being associated with moderate political risks. For the others, political risks are low because production is either relatively diversified (e.g. in the case of cadmium, nickelandsilver)ordominantproducersareassociatedwithlowrisks(e.g.hafnium).
ThebottleneckscreeningfindsmoderaterisksforsupplyͲchainbottlenecksoverthecomingdecadefor fourothermetals:niobium,selenium,tinandvanadium.Demandforniobium,seleniumandvanadiumis expected to increase rapidly. However, only moderate growth is expected for tin and there are few limitations to expand niobium and vanadium output. Therefore, the bottleneck screening finds only limitedmarketrisksforthesethreemetals.Theyarenonethelessassignedamediumriskscorebecause of the presence of significant political risks. In the case of niobium, it is the very high supplier concentration (more than 90% of niobium production currently takes place in Brazil) that leads to concerns. For vanadium and tin, moderate supplier concentrations are compounded with high political risk scores for all major producers (China and Indonesia for tin, and China, South Africa and Russia for vanadium).Inthecaseofselenium,therearenomajorpoliticalrisks,butduetostrongdemandandits byͲproductcharacter,marketrisksareassessedtobemoderate,resultinginamediumoverallbottleneck score. For these four metals, there is no immediate concern over supplyͲchain bottlenecks. However, supplyanddemanddevelopmentscoulddeterioraterelativelyeasilyinthefutureandcouldescalaterisks for the formation of supplyͲchain bottlenecks. The markets for these metals should therefore be monitoredregularlyforsignsofsuchdeterioration. Table28:SummaryofBottleneckAnalysis Metal MarketFactors PoliticalFactors Overallrisk Likelihoodof rapiddemand growth Limitationsto expanding production capacity Concentration ofsupply Politicalrisk
Dysprosium High High High High
High
Neodymium High Medium High High
Tellurium High High Low Medium
Gallium High Medium Medium Medium
Indium Medium High Medium Medium
Niobium High Low High Medium
Medium
Vanadium High Low Medium High
Tin Low Medium Medium High
Selenium Medium Medium Medium Low
Silver Low Medium Low High
Low
Molybdenum Medium Low Medium Medium
Hafnium Low Medium Medium Low
Nickel Medium Low Low Medium
Finally,therearefivemetalsforwhichthescreeningfindshighrisksforsupplyͲchainbottlenecks.These metalsare: 1. dysprosium 2. neodymium 3. tellurium 4. gallium 5. indium Forallthesemetals,industrysourcesexpectoverthecomingdecadeacontinuationoftherapiddemand growththeyhaveexperiencedoverthepastyears,whichputsthesupplysideunderpressure.Inmost cases, these high growth rates are driven by strong growth in greenͲtech applications such as the SETͲ Plantechnologies.However,ineachofthesecases,therearesignificantobstaclestoexpandingoutputin theshorttomediumterm,resultinginhighoverallmarketrisk.Inthecaseoftherareearthsneodymium anddysprosium,thesedifficultiesarerelatedtothecommercialandtechnicalchallengesinbringingnew rare earths mines to the market, including the need for considerable longͲterm investments and longͲ leadtimes.Inthecaseofdysprosium(andtoalesserextentforneodymium),thismarketriskisfurther exacerbatedbecausethemetalis‘underrepresented’inmostrareearthoresrelativetomarketdemand.
Inthecaseofindium,telluriumandgallium,itisaboveallthebyͲproductcharacterthatposesobstacles to the expansion of supply. These metals are mainly recovered during zinc, copper and aluminium refining,butthemarketsaretinyincomparisontothemarketsforthehostmetals.Primaryproduction of roughly 600, 500 and 100 metric tonnes of indium, tellurium and gallium respectively per annum compareswithmorethan11,15and36millionmetrictonnesofprimaryproductionforzinc,copperand aluminium. This is a factor of 1:18,000, 1:30,000, and 1:360,000 in terms of quantity between the byͲ productandthehostmetal.EvenwithveryhighpricesforthebyͲproducts,thesmallsizeofthemarkets creates only very limited commercial incentives for zinc, copper and aluminium refiners to pay strong attention to optimal byͲproduct recovery. Supply expansion is therefore intermittent, with significant amountsofthebyͲproductnotbeingrecoveredduetolackoftreatmentorsubͲoptimalextractionrates.
Thesehighmarketrisksarecompoundedintherareearthscasebyhighpoliticalrisksduetoanextreme concentrationofsupplyinChina.Politicalrisksarelessprominentforindium,telluriumandgallium,as supply is less concentrated and in each case there is significant production in countries which are associated with low political risks. It is further interesting to note that for these five metals, geological availability is not a central issue as they are all relatively abundant in the earth’s crust, except for tellurium which is also quite scarce in the physical sense. Given these high market and political risks identified in this study, it is not surprising that most of these metals have been associated with high supply risks in several previous studies (see Table 12). How real the risks for future supplyͲchain bottlenecksareisalsodemonstratedbythefactthatoverthepastdecade,themarketsforeachofthese fivemetalshavebeenrockedbycrisestriggeredbysupplyͲchainbottlenecks,whichhavebeenmarkedby price spikes and supply disruptions. Gallium prices spiked sharply in 2001 to over $2000 per kg before fallingbacktolessthan$300perkgayearlaterandindiumpricesincreasedby800%between2002and 2005.Telluriumpriceshavealsoincreasedroughly10Ͳfoldoverthepastfiveyearsandthecurrentrare earthcrisis(whichwasalreadydiscussedatthebeginningofthisChapter)sentneodymiumpricessoaring fromabout$30inmidͲ2010tomorethan$300perkgatthetimeofwriting.Inmanycases,downstream processorshavealsofacedsupplydisruptionsduringsuchsupplycrises.
The analysis in this Chapter shows that a high risk for similar future bottlenecks persists for these five metals.SuchsupplydisruptionsandpricerisescouldadverselyaffectthesmoothdeploymentofSETͲPlan technologies and the realisation of the SETͲPlan targets. In Chapter 6, the reliance of SETͲPlan technologies on these five bottleneck metals is examined in greater detail. Chapter 7 then examines possible mitigation strategies for each metal from a European policyͲmaking perspective, including substitution,increasingEuropeanoutput,moreefficientuseandintensifiedrecycling.