Natural Resources GP
European Policies on Critical Raw
Materials, including Rare Earth Elements
Vasili Nicoletopoulos
Natural Resources GP
ERES 2014 1st conference:
4 - 7 September 2014, Milos, Greece
Aug 30
Natural Resources GP
Contents
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History of CRM in the EU
Other national CRM initiatives
On recycling
Foreign trade policies on CRM
Chinese CRM policies
WTO
What next?
Open questions
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
History of CRM in the EU …
Raw Materials Initiative [RMI]
•Nov ‘08 Communication for Improving Access to Raw Materials
in Europe
•June ‘13, EC’s Report on RMI implementation: overview of the
ongoing initiative, interest for the EU & 3d countries rich in raw
materials to collaborate
European Innovation Partnership on Raw Materials [EIP]
•launched by the EC Nov ‘12
EC Definition of CRM 2010
•CRM analysis 2010: 14 CRM
•May 2014, CRM list: 20 CRM, 13 previous – tantalum + 6 new:
borates, Cr, coking coal, magnesite, phosphate rock, Si
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
..History of CRM in the EU
2010 EU 14 CRM
2014 Criticality Chart
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
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Other national CRM initiatives …
Countries’ focus = f ( needs, expertise, geopolitics)
Japan: substitution
China: processing & metallurgy, environment, tightened export
quotas ostensibly to secure internal supply
Australia: sustainable mining
Canada: exploration
S. Korea: investing $300m over 10 yrs for R&D into 40
technologies -- refining, smelting, processing, recycling and
substitution
Russia: active program on materials stockpiles & export
restrictions
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…Other national CRM initiatives
REE Resource Efficiency & Recycling
End-of-life recycling rates for all of REE <1% [UNEP]. In Japan ~ 1/3 of
REE for permanent magnets went into new scraps and then recycled.
EU’s CRM, including REE: OHF identified recovery opportunities for
permanent magnets, NiMH batteries, phosphors [eg. Rhodia’s process for
recovery and separation of REE contained in used fluorescent powder].
US: Strategic Stockpiling of CRM
Strategic Mineral Advisory Council encouraging DoD to move away fm
stockpiling strategic/CRM from China to creating & nurturing US-based
REE supply chain. SMAC particularly concerned about DOD
recommendation that $120.43 million of HREE, which are only
produced in China, be added to US stockpiles.
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
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On recycling
•Conflict between market forces and the existing regulatory
framework
•EU could negotiate emergency terms with WTO, setting clear &
transparent conditions for export restrictions/duties on wastes of
strategic importance
•Recycling support: improving collecting infrastructure, creating
legal certainty & equal level playing field, removing unnecessary
administrative burdens
• All individual elements of EU Climate Change Policy should
result from consistent energy, raw material and industrial policies
J. Zboril, EESC, June 20, ’14
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
Foreign trade policies on CRM…
Industrial Minerals Trading
EC, Jul ’13 ‘EU - US Transatlantic Trade and Investment
Partnership, Raw materials & Energy, Initial position paper’
•trans-Atlantic trade to be promoted by increasing transparency
& predictability of trade deals
•first & most important step towards a better [global] governance
of trade in raw materials: boost investment, aid production
•negotiators to consider incorporating rules inspired by the global
Extractive Industry Transparency Initiative [EITI] on declaring
payments to governments
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
…Foreign trade policies on CRM
US DoD Urges Assessment of REE Supply Risk July 11, '14
in assessing REE supply risks for the US military industry,
showing the strategic importance of these minerals and the will
of the US to limit its reliance on China.
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
Chinese CRM policies…
Chinese Export License Systems: REE etc
•trade-restrictive measures eg export duties/quotas on key raw
materials incl. Sb, bauxite/alumina/aluminium, Co, coke, Cu,
fluorspar, In, Pb, magnesite/magnesium carbonate, Mn, Mo, Ni,
RE, Au, Sn, W, wood, yellow phosphorus and Zn
•unwritten pre-condition of any company: to have their request
for a permit evaluated, blocking new FDI in the sector
•since 2000, production caps to regulate REE supply & instated
an export quota system, Chinese companies (to obtain a licence
to export any REE
•China's unfair REE export restrictions must be rectified Chicago Tribune Aug 11 '14
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
…Chinese CRM policies…
REE Recycling – and Smuggling
•June ’14 Preliminary stats: illegal smuggling hidden among 67
REE recycling projects across the country. MIIT urged govt to
regulate REE recycling
•July ’14, China Mining Association CMA: illegal or unlicensed
REO production reached 40,000-50,000 mt in the domestic
market, determining a serious oversupply, lowering REE prices
•Aug 5, ‘14: REE purchase by govt result of the pressure from
the WTO to lift REE export quotas & attempt to push up prices to
revive a market still weakened by illegal mining
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
…Chinese CRM policies…
Aug 5, '14: Approval of formation of North Baotou Steel Rare
Earth Group, formed by Inner Mongolia Baotou Steel Rare Earth
Hi-Tech and 5 other major producers, major step towards
implementing Beijing’s policy of building enterprise groups to
regulate domestic market
Aug 12, ‘14: Illegal mining in China is to blame for low REE
prices, govt official said during 6th Baotou China Rare Earth
Industry Forum
Aug 26 '14: REE suffering from the not-so-rare capitalist
disease of boom-and-bust
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
…Chinese CRM policies
Subsidising REE Environmental and Efficiency Upgrades
July 10, 2014: govt decision to subsidise REE producers’
technological upgrades in energy-efficiency, environmental
protection, promotion of value-added products
Taxation
May ‘14: MIIT, State Administration of Taxation & Ministry of
Finance considering adjusting again the REE resources tax
China and the CRM Value Chain
National Institute of Advanced Studies, India, Sept ’13 : Chinese
enjoy global REE monopoly thanks to US policy oversights,
including 1995 permission to buy Magnequench that made
China a global player in value chain for REM, alloys, magnets
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
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WTO…
June ’09: 1st dispute settlement case on several industrial raw
materials by EU, US, Mexico
Dec ’09: panel established finding [a] China’s export restrictions
on several industrial raw materials in breach of WTO rules, not
justified for environmental protection or conservation policy
reasons and [b] that China had committed not to levy export
duties
Mar ’12: US, EU, Japan initiated 2nd complaint re China’s
restrictions [export duties, export quotas, minimum export price
requirements, export licensing requirements] on export of
various forms of REE, W, Mo used in electronic goods
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
…WTO…
Apr ’14: China notified decision to appeal certain issues. China
Daily report: ‘Beijing should try & get around the WTO ruling by
offering to remove the export quotas on LREE but keep ones on
medium and HREE, which have smaller production volumes’.
Ministry of Commerce: ‘protecting resources & the environment
for sustainable development...no intention of favoring domestic
industry through distorted trade’
Aug 7 ‘14: WTO Appellate Body rule in EU’s favor: China’s
export restrictions on REE, W, Mo in breach of WTO rules.
China’s export duties & quotas not justified for reasons of
environmental protection or conservation policy.
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
…WTO
Chinese Retaliation?
Chinese authorities may deal with the WTO by imposing higher
taxes on producers of REE on the basis of the value of minerals,
rather than the volume as is the case now.
This change will result in higher production and, of course,
export prices.
But China’s revenge could be longer-term and designed to
cause deeper damage.
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
What next?
EC report on the Implementation of the Raw Materials
Initiative’ of June 24, ’13:
•‘wide-ranging public consultation on the strategy going well’
•‘by 2020 actions would include: setting up innovative pilot
projects, incl demonstration plants on exploration, mining &
processing; finding substitutes for raw materials in short supply;
creating a network of research centers on sustainable raw
materials management…’
Roskill’s June ‘14 study:
•“Terms like ‘risk’ and ‘critical’ are emotive
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
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Open questions
• Why did China become a monopoly?
• Where is the downstream REE market located?
• Why did prices rise and fall – both times dramatically?...and
can they rise again? LREE vs HREE
• Can Lynas and Molycorp survive? What about new projects?
• Will there be new uses or, on the contrary, will
economizing/substitution/recycling diminish demand?
• Who gains from stockpiling?
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Natural Resources GP
Relevant work by Natural Resources GP
• ‘Rare Earths Worldwide: An Industry and Policy Analysis’,
Study, 2011
• ‘REE: Light to Heavy?’, Study, 2013
• Articles in Industrial Minerals Magazine
• Presentations in international conferences: Athens, Brussels,
Bologna, Budapest, Milan, Osaka, Plovdiv etc
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece
Thank you very much!
Vasili Nicoletopoulos
www.naturalresources.gr
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ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece