european policies on critical raw materials, including rare earth elements vasili nicoletopoulos...

European Policies on Critical Raw Materials, including Rare Earth Elements

Vasili NicoletopoulosNatural Resources GP

ERES 2014 1st conference: 4 - 7 September 2014, Milos, Greece Aug 30

Natural Resources GP

Contents

• 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

ERES 2014 1st conf: 4-7 Sept, 14, Milos, Greece


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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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..History of CRM in the EU

2010 EU 14 CRM


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2014 Criticality Chart

Other national CRM initiatives …


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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

…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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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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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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…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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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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…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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…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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…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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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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…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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…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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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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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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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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Thank you very much! Vasili Nicoletopoulos

www.naturalresources.gr

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european policies on critical raw materials, including rare earth elements vasili nicoletopoulos...

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