Global Trends in Mineral Commodities for Advanced Technologies
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The U.S. Geological Survey National Minerals Information Center (NMIC) is the U.S. Government agency tasked with the collection, analysis, and dissemination of information on the production, consumption, import, export, and other measures of the flows of non-fuel mineral commodities of importance to the U.S. economy and national security. The NMIC and its agency predecessors have maintained a database of this information, collected and published annually, dating back to the beginning of the twentieth century. Time series analysis of annual information from the NMIC provides the opportunity to identify trends in the supply chains of the minerals and metals which are increasingly in demand for advanced technologies. The identification of trends in data for net import reliance, country concentration of production, global demand, price volatility, and other measures, when combined with world governance indicators, can be used to focus attention on individual mineral commodities where supply chain restrictions may develop. Specific examples for U.S. net import reliance, global tantalum primary mining, and mineral criticality screening are presented to illustrate the utility of time series analysis of trends in mineral commodity supply and demand, the types of data required, and the limitations of currently available information.
KeywordsSupply risk Import reliance Conflict minerals Mineral criticality
Over the past 25 years, growth in global population and rapid economic development, particularly in China, has resulted in higher living standards for hundreds of millions of people globally. Projections of recent growth and development trends suggest that, globally, as many as 3 billion more people could achieve middle-class living standards (as measured by purchasing power parity) in the period between 2009 and 2030 (Kharas and Gertz 2010). These global scale socioeconomic trends have been accompanied by rapid technological advancements which have resulted in dramatic increases in the types and quantities of mineral commodities used in complex new technologies and applications (Marscheider-Weidemann et al. 2016). One consequence of these demand growth and technological developments is that the standard of living of millions of people now requires the use of nearly every common, and many not so common, element in the periodic table. All of these materials ultimately derive from the extractive industries, underlining the central importance of mining and mineral processing to support our modern world. If current trends continue, it seems likely that the current global competition for dozens of mineral raw materials which are deemed essential, critical, or strategic, will only intensify (Abraham 2015).
The National Minerals Information Center (NMIC), within the U.S. Geological Survey, is tasked with the collection, analysis, and dissemination of information on the production, consumption, stocks, and trade flows of non-fuel mineral commodities important to the U.S. economy and national security. Collected data are aggregated and analyzed by the NMIC for developments in mineral supply chains over time. Changes in supply sources, demand, prices, and other factors affecting the availability of raw materials can provide important insights into domestic supply security and emerging supply risks. The NMIC and its U.S. Government predecessors have compiled a continuous record of mineral mining and consumption dating back to the beginning of the twentieth century (Kelly and Matos 2014). Although supply risks can be measured and conceptualized in many forms, this paper will discuss three key aspects in particular that the NMIC uses, among others, to evaluate risks: net import reliance (NIR); production concentration at the country level; and mineral criticality methodology. The net import reliance example illustrates multi-decade trends in the supply and demand of a broad spectrum of mineral commodities for a single country. The production concentration example shows the evolution for supply of a single, critical metal from a range of countries and how this has changed over a timescale on the order of a decade. The mineral criticality example demonstrates how multi-year, multi-mineral commodity trend data can be used to resolve changes on an annual basis, and is country-agnostic. The analysis of global trends in mineral supply data is a central theme for all three examples.
Example 1: Trends in U.S. Net Import Reliance
Import reliance alone is not necessarily an indication of supply risk. Factors such as low governance risk and well-established trade relationships, among other factors, can lessen the inherent supply risk associated with net import reliance. Trade partners such as Canada and Mexico, with whom there are codified trade agreements, are inherently less risky than China in this respect. Figure 2 shows the contributions of Canada and Mexico (green) and China (red) as a portion of the overall U.S. net import reliance. The U.S. net import reliance data show that, for the majority of mineral commodities monitored by the NMIC, supply is sourced from a limited number of countries and that, for some of these, the majority of imported production is sourced from a single country. While this analysis is specific for the U.S., similar trends would no doubt be observed for the European Union and Japan, as well as other countries where mining is markedly reduced compared with historical levels. Strategies for mitigating supply risk associated with net import reliance include increased domestic production, diversification of sources, and recycling. It should be noted, however, that recycling alone, if increasing global demand continues, will not be adequate and that mining new quantities of minerals will still be necessary (Meinert et al. 2016). The long-term, secular trend in the U.S. net import reliance data reflects the decline in mining activity in the U.S. over the past several decades. While the underlying factors which have resulted in this trend can be debated, it is likely that such pronounced, long-term changes will not be easily reversed.
Example 2: Production Concentration at the Country Level: Tantalum
The global supply of tantalum has become a highly visible issue in recent years with the increase in its production in areas categorized as conflicts zones by the international community (Papp 2014). These concerns resulted in legislation in the U.S. as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Public law 111–203, 124 Stat. 2213–2218), which requires companies that source tantalum, tungsten, tin, and gold (3TG minerals) to perform due diligence on their supply chains to determine whether any of those materials were sourced from the Democratic Republic of the Congo (DRC) or adjoining countries (as defined by the sharing of an internationally recognized border) (U.S. Securities and Exchange Commission 2012; U.S. Department of State 2015; Chasan 2015). Tantalum compounds have found widespread use in electronic circuitry because of its unique properties which facilitate its use as a capacitor. This ability to efficiently store and release an electrical charge has resulted in tantalum becoming a ubiquitous component of virtually every smart phone, tablet, computer or any other electronic device.
Production of tantalum from Rwanda and the DRC has continued to increase from 2009 onward as tantalum consumption rebounded after the economic crisis. Low-cost artisanal mining techniques employed in central African countries, which extract resources from sedimentary placer deposits, provide a competitive advantage over conventional mining of hard rock pegmatite deposits in countries such as Australia. However, social issues around conflict minerals, high governance risk, and the lack of transparent trade flows contribute to a rising supply risk profile for countries in central Africa. Over the course of the 15-year period examined here, global tantalum supply has undergone a clear evolution from originating in countries using modern, industrial mining techniques, and characterized by transparency and low governance risk, to being sourced from countries using artisanal mining techniques, and characterized by low transparency and high governance risk. In 2000, Australia, Brazil, and Canada produced more than two-thirds of the global supply of tantalum. By 2015, nearly 80% of global supply was being sourced from Rwanda, the DRC, and other adjoining (Dodd–Frank) or nearby African countries.
A variety of metrics for evaluating governance risk are available. The World Governance Indicators published by the World Bank, for example, capture six key dimensions of governance risk, are available from 1996 forward, and are updated annually. Just as examples, Australia consistently ranks in the mid to upper nineties out of one hundred for most measures tracked by the World Bank. The DRC, in contrast, consistently ranks in single digits for the same measures, on a scale of 0–100, with higher numbers representing lower governance risk (The World Bank Group 2017). By any objective measure, the supply of primary tantalum is significantly less secure than it was at the beginning of the twenty-first century.
Tantalum is only one example of this type of global trend over time. Similar global trends can be observed for cobalt, which is another mineral where global production is becoming more concentrated in the Democratic Republic of Congo. Year-on-year changes in mineral supply and demand, country sources, and changes in governance risks can evolve over time to compound potential supply chain risks. The availability of a long-term, continuous record for the supply and demand of a broad range of mineral commodities is essential for time series analysis of trends on multi-decade, multi-year time scales to identify such risks. The analysis of time series data for country concentration and governance risk can be combined with other supply chain metrics to develop mineral criticality screening methodologies. An example of how such analysis is currently being utilized by the NMIC to develop such methodologies is described below.
Example 3: Mineral Criticality Screening
Mineral criticality is a topic of recurring interest in the public and private sectors of many mineral-consuming countries and has historically been conceptualized in numerous ways. Renewed interest in this topic in recent years is exemplified by an important, fundamental study of mineral criticality (National Research Council 2008). The working definition for a critical mineral emerging from the NRC report is a mineral which “performs an essential function for which few or no satisfactory substitutes exist” and for which “an assessment also indicates a high probability that its supply may become restricted…”. These basic concepts of importance in use and risk to supply disruption underlie much of the work done in this field over the past 10 years (for useful reviews, see Erdmann and Graedel 2011; Graedel and Reck 2015). While the focus of many studies has been to define a “list” of critical minerals, it is increasingly clear that mineral criticality depends on who is asking the question. An oil and gas exploration and production company is likely to have a much different “list” than, for example, a defense contractor, or a wind turbine manufacturer. Most studies are also static in the sense that they evaluate criticality for a particular year rather than using trends to identify emerging risks to supply.
The Assessment of Critical Minerals: Screening Methodology and Initial Application is a report summarizing a U.S. federal government interagency collaboration, facilitated by the National Science and Technology Council (NSTC) and tasked with evaluating mineral criticality in a novel, analytically informed way (Subcommittee of Critical and Strategic Mineral Supply Chains 2016). This report represents a different way of evaluating mineral criticality than previous work. The intent of the model is to screen broadly, in terms of commodities covered and geographic scope, to identify trends, not lists, and to rely on data that are updated on an annual basis. The NMIC produces or collects all of the data used in the model with the exception of governance risk.
The screening methodology is comprised of three equally weighted indicators: Supply Risk “R”; Production Growth “G”; and Market Dynamics “M” each of which measures a different, though not necessarily independent aspect of global supply chains. The “R” metric evaluates supply risk associated with production concentration and the quality of governance for producing countries via the World Bank’s World Governance Indicators (The World Bank Group 2017). The “G” metric captures trends in the global market, assuming that growth is indicative of increased demand. The “M” metric measures price volatility for each mineral over a 5-year time interval. These three indicators draw upon annual price and production data of 78 non-fuel mineral commodities, covering the bulk of the periodic table, from 1996 to 2014, as published by the NMIC. The equally weighted, geometric mean of the indicators, normalized on a scale from 0 to 1, makes up the overall criticality metric, “C.” A detailed description of the screening methodology and model can be found in the NSTC report (Subcommittee of Critical and Strategic Mineral Supply Chains 2016).
Some observations from the data presented in Figure 4 serve to illustrate the utility of this approach and tie the results to the examples cited earlier. The histogram for mined copper (Cu) shows a uniformly low value for the criticality indicator “C.” Copper is a widely produced metal commodity with sources in dozens of countries, (Brininstool 2014) including the U.S., which produced 66% of its domestic requirements in 2016 (Brininstool 2017). Copper is also a commodity for which more granular data are available, allowing a more detailed evaluation of the criticality metrics along the supply chain. This is shown in the panel below the main periodic table in Figure 4 for copper, for which data for mine, smelter, and refinery production are available. This illustrates that the focus on potential supply risks, in the case of copper, should be on smelting and refining capacities rather than mining as the former are increasing, particularly over the past 10–15 years.
Gallium is another interesting example, despite the fact that complete data are not available for the entire time series. The criticality indicator has risen sharply over the past several years. Gallium is produced almost entirely as a by-product of processing bauxite, in which it is present at about 50 parts per million on average, to produce alumina and aluminum metal. Production is concentrated in only a few countries and the U.S. was 100% net import reliant for its supply in 2016 (Jaskula 2017). Gallium is found in important advanced technology applications such as integrated circuits, laser diodes, photodetectors, and solar cells, among others.
Figure 4 also highlights where gaps in data limit our visibility on potential supply risks. The rare earth elements, represented by the La-Lu histogram, which shows historically high and increasing values for the criticality indicator, do not differentiate between the 13 elements in the series (Gambogi 2017a). Data for a more specific analysis are simply not available at sufficient granularity. Scandium, an element often included with rare earth elements and which has potential applications in fuel cells and in aluminum alloys, is similarly opaque in terms of available information on global supply, and therefore, no analysis is possible (Gambogi 2017b).
Rather than identifying a particular mineral or material as critical, the screening methodology is intended to highlight changes in supply and demand which should prompt further analysis to identify emerging supply risks. The identification and prioritization of materials for which detailed analyses are needed is the primary output of the model.
Discussion and Conclusions
The examples cited in this work have two things in common which enable time series analysis of mineral commodity supply and demand to identify potential emerging supply risks. These are (1) reliable, fact-based data on mineral production and consumption for a broad spectrum of mineral commodities, and (2) a continuous record of such information over periods of interest for analysis. The U.S. Geological Survey, National Minerals Information Center performs this function for the U.S. Government in a role that dates back to the origin of the Survey. Several important attributes of the data which are collected, analyzed, and published by the NMIC are important to recognize.
The data need to be broad in scope, both in terms of the types of mineral commodities covered, and in geographic coverage. The former is illustrated by the observation that advanced technologies now require the use of nearly the entire periodic table of the elements to achieve the performance required for their application, and the latter by the trend, over the past several decades, in mineral mining and processing moving from developed countries to an increasingly global supply situation. These factors, in very simple terms, mean knowing which materials we need to support our economic and national security interests, and where we need to go to find them, in order to inform our evaluation of risks to supply. The data also need to be country-specific and authoritative. Evaluation of supply risk in the absence of country-specific information on mineral commodity production and consumption is nearly impossible. Authoritative, reliable data collected, analyzed, and published in a continuous, systematic manner are essential for this type of evaluation. The USGS-NMIC, as a government agency guided by sound, statistical procedures and USGS Fundamental Science Practices, is ideally suited to produce such information.
Since mineral supply and demand are dynamic quantities, the analysis of these should also be dynamic. The time series analysis of data results in the identification in trends which can readily be observed on a variety of time scales, as demonstrated by the examples given in this paper. The USGS-NMIC approach to analysis of mineral criticality emphasizes the dynamic nature of mineral supply and demand by focusing on trends, not lists. Lists have their place, for specific applications, for example, but are inadequate to address the broader requirements of economies and national security needs at a country level.
Mineral information on net import reliance, country concentration of production, growth in world production, price volatility, and world governance risk are all important inputs for evaluating risks to supply of essential, critical, and strategic minerals and materials. Increased granularity of mineral information, for example, for individual rare earth elements, on trade flows of various minerals, and on a broader portion of the mineral product supply chain (concentrates, metals, oxides and other important precursor forms) is also needed to provide a more complete picture of emerging risks.
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