GrondstoffenGrondstoffen

EUMEDION, 12 okt 2011

Lange Voorhout 162514 EE The Hague

The NetherlandsEmail: info@hcss.nl

Website: www.hcss.nl

Population exponential growth

• Population by 2050 – 9 billion• GDP from US$35 to 72 trillion by 2030• Water demand to increase 30% by 2030• Energy demand doubled by 2030• GHG emissions decrease 50-80% by 2050• Cereal demand: + 67% by 2050• Cereal demand: + 67% by 2050• Land deficit by 2050 – 200 million ha

Interdependencies

Global Trends 2025: A Transformed World (NIC 2008)

Global Governance 2025: At A Critical Juncture (NIC 2010)

• US less dominant

• Rise BRICS etc

• Emerging informal Groupings (G-20)

• Collaboration world community

• Development regional hegomons

and regional stability

Certain Uncertain

• Emerging informal Groupings (G-20)

• Powershift towards non-state

actors

• Population growth (+1.2 billion

2025)

• Youth bulges become dangerous

and regional stability

• Speed of transition toward

sustainable energy

• Speed & impact climate change

Systemic changes

The emergence of non-Western countries can lead to:

• Instability, because multipolarity not stable per definition

• Declining ‘shaping power’ of the West, weaker legal framework and

effectiveness of institutions

• More black holes in (regions of) failed states

• Growing instability as consequence of struggle over minerals, energy and • Growing instability as consequence of struggle over minerals, energy and

effects of climate change.

• Soft power of China: autocratic, resource rich countries and against resource

poor democracies

Question: How will emerging powers handle geopolitical aspects

of scarce resources, how will the West react and what is the

relation between scarcity and local/regional stability?

Why commodities matter again…

Commodities are key part of the story, with:

• high price levels and strong volatility• tight markets and supply-side constraints• states and their proxies (SWFs, SOEs, regulatory bodies) as key actors in marketsin markets• added factor climate change debate

Intense politicization and securitization of commodity markets

Commodities as key strategic issue in a multipolar world

Emerging nexus of environmental, economic & security policy

Scarcity: source of conflicts

– Angola (1975-2002): oil, diamond

– DRC (1996-?): copper, coltan, diamond, cobalt, wood, tin,

oil

– Ivory Coast (2002-2007): diamond, cacao, cotton

– Liberia (1989-2003): wood, diamond, iron, palm oil, cacao, – Liberia (1989-2003): wood, diamond, iron, palm oil, cacao,

coffee, rubber, gold

– Senegal: wood, cashew nuts

– Sierra Leone (1991-2000), diamond, cacao, coffee

– Sudan (1983-2005): oil

Examples: Africa according to UNEP

Fact Sheet UN Environment Programme

• Since 1990, at least 18 violent conflicts have been fuelled by

the exploitation of natural resources.

• 40% of all intrastate conflicts since 1960 have a link to

natural resources.

• Intrastate conflicts linked to natural resources are twice as • Intrastate conflicts linked to natural resources are twice as

likely to relapse to conflict in five years.

• Less than a quarter of peace negotiations aiming to resolve

conflicts with links to natural resources have addressed

resource management mechanisms.

Examples: recent Chinese investments in Africa

• Sudan: 40% of its oil goes to China

• Guinea: negotiations over 7 billion investments in infrastructure-for-

minerals (oil, bauxite, iron ore)

• Liberia: treaty of 2.6 billion iron ore exploitation

• Nigeria: negotiations for 15% of oil reserves exploitation ($30-50 billion)

• Niger: loan of $95 million for uranium mine

• DRC: $9 billion deal for infrastructure-for-minerals

• Angola: 40% van oil goes to China

• Rwanda: loan of $250 million for infrastructure-for-minerals

• South Africa: biggest trade partner. Part: 20% in Standard Bank.

• Zimbabwe: loans ($950million), weapon deals and MOU for nickel, copper

and cobalt

Element Main Applications

DYSPROSIUM (DY) PERMANENT MAGNETS: ELECTRICAL VEHICLES; WIND TURBINES

LANTHANUM (LA) NICKEL-METAL HYBRID BATTERIES: ELECTRICAL VEHICLES

NEODYMIUM (ND) PERMANENT MAGNETS: ELECTRICAL VEHICLES; WIND TURBINES

GALLIUM (GA) SEMICONDUCTORS; SOLAR ENERGY CELLS; LEDS; DEFENSE APPLICATIONS

GERMANIUM (GE) SEMICONDUCTORS; SOLAR ENERGY CELLS; LEDS; FIBER-OPTICS; INFRA-RED

Rare Earth Elements: example for the rest?

GERMANIUM (GE) SEMICONDUCTORS; SOLAR ENERGY CELLS; LEDS; FIBER-OPTICS; INFRA-RED

INDIUM (IN) LIQUID CRYSTAL DISPLAYS (LCD); SEMICONDUCTOR; SOLAR ENERGY CELLS; LEDS

ANTIMONY (SB) SOLDER, SEMICONDUCTORS

TUNGSTEN (W) HIGH-PERFORMANCE STEEL (STRENGTH, HEAT RESISTANCE); E.G. INDUSTRIAL CUTTING TOOLS

MAGNESIUM (MG) HIGH-PERFORMANCE STEEL ( LIGHT-WEIGHT, MALLEABILITY ); E.G. CAR-BODIES, AIRPLANES

VANADIUM (V) HIGH-PERFORMANCE STEEL (ANTICORROSION, HEAT/SHOCK/VIBRATION RESISTANCE); E.G. JET ENGINES

MOLYBDENUM (MO) HIGH-PERFORMANCE STEEL (ANTICORROSION, HEAT/WEAR RESISTANCE); E.G. ROCKET ENGINES

Global production Rare Earth oxides

Source: Öko Institute: Rare Earth study; (Angerer et al 2009)

Economie en veiligheid

Government Intervention in Rare Metal Markets

Rare metals are especially prominent in the resource debate due

to:

• Western import dependence & crucial role of China

• indispensability for high- & green-tech applications

• inelasticity & concentration of supply• inelasticity & concentration of supply

• fast-growing & highly volatile demand

This creates supply security concerns and makes (some) metals into

“strategic” resources!

The strategic value & political economy of each metal is unique, evolving

rapidly, and …

European Policy Response to Rare Metals debate

• Raw Materials Initiative (RMI) led by DG Enterprise & Industry

resulted in the 2008 Communication with focus on non-energy

mineral resources:

• Ensure equal access for European industry globally

• Promote supply expansion from European sources• Promote supply expansion from European sources

• Boost resource efficiency and recycling

• Follow-up EU criticality study released June 2010:

• Examines 41 minerals and metals with 14 labeled as “critical”

• Recommends to tailor policy responses for each critical material

• Extensive consultation process has just been wrapped up

EU Raw Materials Strategy

The Communication adopted on 2 February 2011 reinforces

the EU’s raw materials strategy built on the 3 pillars of the

Raw Materials Initiative:

1) Ensure a level playing field in access to resource in third countries1) Ensure a level playing field in access to resource in third countries

2) Foster sustainable supply of raw materials from EU sources

3) Boost resource efficiency and promote recycling

An integrated strategy which outlines new actions in the area

of non-energy, non-agricultural raw materials

Critical Raw Materials for the EU

Source: EC, DG Enterprise and Industry “Critical Raw Materials for the EU” Brussels, 2010.

Topsectoren en grondstoffen• High Tech materialen en systemen: Germanium in optische kabels en

optische infrarood technologieën; cerium in computers; antimoon,

niobium en tantaal inmicrocondensatoren; ijzererts, cokes, injectiekolen,

tin en zinkertsen voor staal; bauxiet/aluinaarde voor aluminium; zilver,

goud en koper voor elektronische apparatuur; wolfraam, niobium,

vanadium, nikkel, mangaan en chroom voor speciale staalsoorten.

• Energie: Neodymium, dysprosium en samarium in permanent-• Energie: Neodymium, dysprosium en samarium in permanent-

magneten; indium, gallium, seleen en telluur in zonnecellen; platina in

brandstofcellen; europium, yttrium, gallium en indium in LED-verlichting;

lithium, kobalt en zeldzame aardmetalen in batterij-technologie;

biomassa voor energieopwekking

• Logistiek: Lithium en neodymium in elektrische auto’s; kobalt en

samarium in hoge snelheidstreinen; scandium-legeringen in lichtgewicht

vliegtuigframes; magnesium voormetaallegeringen in auto’s; platina,

palladium en rhodium in auto-uitlaatgaskatalysatoren;

Topsectoren en grondstoffen

• Agro-Food: Fosfaat voor kunstmest, soja voor veevoeder, palmolie, cacao,

koffie, specerijen, vis(meel)

• Tuinbouw en uitgangsmaterialen: Veen als substraat t.b.v. plantveredeling

en kweek

• Creatieve industrie: Niobium, antimoon en tantaal in computerchips;

zeldzame aardmetalen zoals yttrium- europium, terbium en indium in zeldzame aardmetalen zoals yttrium- europium, terbium en indium in

LCD-technologie

• Life-sciences : Tantaal in medische technologie

• Chemie: Platina en palladium in katalysatoren; kobalt in synthetische

brandstof; zeldzame aardmetalen als katalysatoren

• Water: Palladium voor ontzilting; hout voor damwanden, steigers en

meerpalen

Risico management Bedrijfsleven

• Aanpassing risicomanagement:

– geen extrapolatie van historische data

– Data geven niet meer dan klein deel van de werkelijkheid

weer

– Nieuwe risico’s liggen veeluit buiten gezichtsveld– Nieuwe risico’s liggen veeluit buiten gezichtsveld

• Verwevenheid van economie en veiligheid.

• Risk management modellen niet baseren op extrapolatie,

maar op ervaringen uit het verleden, historische analogieën,

analyse van internationale betrekkingen en het onderkennen

van known unknowns en unknown unknowns.

Conclusies

• Toenemend staatskapitalisme, protectionisme en (grondstoffen)nationalisme leidt tot toenemende overheidsrelaties. Overheden worden meer faciliterend voor bedrijfsleven.

• Noodzakelijk is een betere strategische integratie van • Noodzakelijk is een betere strategische integratie van overheid en bedrijfsleven. Innovatie alleen is niet voldoende.

• Het is onvoldoende voor bedrijven om investeringen alleen op zuiver economische elementen te beoordelen. (Veiligheids) politiek-economische risicoanalyse is cruciaal.

The Hague Centre for Strategic Studies

J.G.M. (Michel) Rademaker MTLDeputy Director, Market and Operations

T: +31 (0)70 3184842E: michelrademaker@hcss.nlM: +31 (0)6 24686023

hcssnlLinkedinFacebook

Visiting and Postal Address: Lange Voorhout 16, 2514 EE Den Haag, The Netherlands

HCSS office

Lange Voorhout 162514 EE The HagueThe NetherlandsThe Netherlands

Tel: +31 703184840Mail: info@hcss.nlWebsite: www.hcss.nl

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Reports

� http://www.hcss.nl/reports/rare-earth-elements-and-strategic-mineral-policy/5/

� http://www.hcss.nl/reports/resource-scarcity-in-the-21st-century-conflict-or-cooperation/7/

� http://www.hcss.nl/reports/scarcity-of-minerals/14/

� http://www.hcss.nl/reports/schaarste-en-noodzaak-van-regie-en-handelingsperspectief/12/

� http://www.hcss.nl/events/conference-rare-earths-europe-and-australia-trade-security-and-sustainability/10/

� http://www.hcss.nl/reports/op-weg-naar-een-grondstoffen-strategie-nl/71/

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