Rare Earths and Shale Oil & Gas: Technology, Environment ... ppt Sept 24 2012.pdf · Rare Earths...

Rare Earths and Shale Oil & Gas: Technology, Environment and Politics

Vasili NicoletopoulosNatural Resources GP

‘Sustainable Mining Development in Europe’Plovdiv, Bulgaria, 24.9.12

Natural Resources GP

Sustainable Mining Development in Europe, Plovdiv, 24.9.12

2

Session III

The countries of Central and Eastern of Europe in the European Map of Mining and Processing of Mineral Raw Materials: Importance and Opportunities for Investment



3

Content

• Introduction, definitions, characteristics of RE and shale oil & gas

• Why RE and shale are internationally ‘hot subjects’• RE• Shale oil & gas• Differences and commonalities• Conclusions



4

1. RE – The Elements…



5

…RE – The Elements

‘Popular Atomics: Periodic Table Is New Touchstone of Geek Chic’, WSJ, Sept 21-23, 2012



6

RE - Applications

• 4-5 critical REEs, each w/ individual markets: neodymium [probably most important - used in permanent magnets] and Heavy RE elements [HREE], europium, terbium, dysprosium and yttrium.

• Among most important RE uses: magnets & high-efficiency lighting. Magnets for small electric motors to power everyday items [vacuum cleaners, lawnmowers, washing machines, disc drives], or high-end technology applications [windmills, electric & hybrid car engines].

• Other important RE uses: catalysts, cell phones, metal alloys/batteries. Many RE end uses ‘sensitive’: defense, aerospace, medical equipment, green technology.

• German wind turbine producers ‘not using magnets containing Ndin their turbines and…only 5% of wind turbines concerned’.

• Electronics industry untroubled by RE prices - 18 June, '12



7

RE – World Supply•Main player: *China*. Minor: Brazil, India•China 95% of world exports but only 40% of reserves•China mostly heavy RE•US, Europe: no RE production, only processing facilities…but projects in US [started Sept ’12, mostly La, Y], EU, Greenland, Australia/Malaysia, Russia, other…incl. the Brazilian Amazon?•Japan and Rep of Korea in Brazil, Kazakhstan, Uzbekistan, Vietnam; US in Afghanistan, etc. Taiwan chose to cooperate w/ China•Europe, esp. S.E.: Sweden [Tasman], Lithuania [Stilmet], other Bulgaria: RE elements and yttrium in lithotypesof Bulgarian coals, RE elements sampled coal Pirindeposit, RE element contents in lower and higher flora from Bulgarian region of Black Sea



8

RE – World Reserves



9

RE – Processing in Mountain Pass



10

RE – Recent Developments

• Lynas shares surge over 50% on operating license approval Sept 5-6, ’12

• Deep sea and central Asia may be alternative sources of RE -July 6, '12

• Greenland's great mineral potential includes heavy RE - Aug 29, '12

• IMC Receives EIA Exemption for Centralized REE Separation Plant in Quebec - Aug 22, '12

• Koreas held 2 secret talks on RE metals last year July '12• Orbite Successfully Produces 1st Separated Heavy RE

Oxides fm a N. American Shale Clay Deposit - June 26, '12 Links Our Two Topics



11

RE - EHS

• EHS factors [+ the then low Chinese prices] contributed to shutdown of Mountain Pass, CA,USA in the ’90s…

• …Also the new Chinese policies officially condemn emissions of ‘fluorine, dust, hydrofluoric acid, sulfur dioxide, sulfuric acid and radioactive waste residue’

• EHS cause public reactions to new processing projects outside China, incl. Lynas, Malaysia, world’s biggest RE processing plant, where some locals compared it w/ Japanese radiation poisoning, reminding problems w/ the last RE project in Malaysia, closed in 1992. However, in Sept 5, ’12 the project obtained a temporary operating licence.



12

RE – A Bubble?

• RE prices, in USD, rose dramatically in 2010-2011• Lifton June 19, ’12: ‘A 2011 bubble…REE prices to the

sky…just as junior miners coming into full bloom and most junior REE exploration companies overvaluing their projects.

• Now speculative bubble burst—and I think a lot of it had to do with China repositioning itself—we're back to earth.

• If both Molycorp and Lynas were in full production by 2015, that would bring approximately 60 ktpy new production to market. Of that, only about 8 ktpy would be Nd, and none HREEs’.

• ‘Rare earths prices share in global economic slowdown’ Sept 6, ’12…

• China's magnet factories @ 40% capacity Sept 21, ’12



13

RE - Policies

Completely Chinese-driven

What are the Chinese trying to do?– Concerns– Policies

Is the Rest-of-the-World reacting smartly?– Concerns– Policies



14

RE – Chinese Policies

• Cut [and categorized] export quotas, starting 11 Aug ’10…In Aug 23, '12 declared 1st RE export increase in 3 years

• No new mining licenses to 2015. Consolidated number of companies. Shut down illegal mines. Increased taxation for Chinese producers. Cut RE mining rights by half - July 17, '12. Cut RE mining permits further [?] 41% Sept 14, ’12

• Tougher EHS• Co-ordinated pricing • Withdrew VAT rebate on exports • Emphasize HRE• Assist R&D• Stockpile strategic reserves – 7/12: ~6bi RNB



15

RE – Geopolitics…“There is oil in the Middle East; there is rare earths in China”

Deng Xiaoping, 1992

• EU: RE 1st. ‘Criticality-risk categorization’, incl RE: Yttrium in 1st

category.Europium, lanthanum, neodymium, samarium in 2nd.

• Non-Chinese companies can secure RE by operating in China, benefiting fm cheaper RE prices, eg Rhodia runs processing plant near Baotou

• New RE projects coming on stream internationally might causeovercapacity, especially if/when they coincide w/ abrupt deceleration of Chinese economy & a negative effect on world commodity demand and prices

• Nevertheless, many countries officially opposing 2010-2012 Chinese RE policies: [1] pressure Chinese to relax export restrictions, [2] stimulate supply outside China by supporting discovery & devt of REE domestically or w/ international agreements.



16

…RE – Geopolitics…

• US: energy independence, promotion of alternative power generation, many REE applications highly specific, ‘substitutes are inferior or unavailable’. Oct ’10 House of Reps ‘RE & Critical Materials Revitalisation Act’ ‘to reestablish the US as leading REE producer, make it self-sufficient…. & to never be dependent on China for crucial components for national security’…but US Pentagon distancing themselves fm this ‘strategic danger’ rhetoric.

• Acquisition of a key EU RE processor [eg Stilmet] could have significant implications for future of EU critical mineral supplies. How would US govt react if a US company became takeover target for EU companies?

• Umicore, Belgium, largest scrap refiner of Terbium, so important to EU lighting makers, in jv w/ Rhodia, now reactivating plant at La Rochelle, France [built ~40 years ago, one of 1st solvent extraction plants worldwide purpose-built to separate RE [the other: original Molycorp’sMountain Pass, California]. Rhodia now division of Belgium's Solvay, which, as Rhodia, operates 2 jv RE refineries in China.



17

… RE – Geopolitics

• Economizing, substituting, recycling• US legislators proposed blocking World Bank funding for any

Chinese mining projects, & prohibiting Chinese-funded work in U.S.• Japan, world’s largest REE importer, stands to lose more fm

Chinese supply bottlenecks than perhaps any other nation and, like the Korean Republic, establishing jvs & supply agreements on RE with 3rd countries, discussing creation of strategic stockpiles outside China, economizing/ substituting/ recycling

• EU undertaking study to find economical RE deposits, examining raw materials stockpiling, working on R&D in reducing the need for RE, developing substitutes for them.

• WTO establishes dispute panel to investigate Chinese RE exports -July 23, '12

• Islands dispute 'Why China won't use RE against Japan‘, Sept ’12• The real game is the value chain



18

2. Shale & Other Unconventional Occurrences



19

Shale – Unconventional Gas, Fracking

• Coal--bed methane (CBM): Trapped in coal seams, adsorbed in the solid matrix of the coal

• Tight gas: Trapped in relatively impermeable hard rock, limestone or sandstone, sometimes w/ quantified permeability limits

• Shale gas: Trapped in fine grained sedimentary rock called shale, which has a characteristic ‘flaky’ quality

• Hydraulic fracturing [fracking], started in USA: Chemically treated water & sand pumped into ground @ extremely high pressure fracture [crack] rocks & release trapped oil or natural gas [NG]. Also for geothermal energy, water.

• Combination of fracking + horizontal drilling access to NG reserves previously considered uneconomical, particularly in shale formations



20

Shale – Engineering Developments

• Proppants, sand or ceramic: Ceramic Proppantshigher flow capacity than similar sizes of sand,

including resin-coated grades, greater strength and thermal stability

• Recycling of waste liquids• ‘Green fracking fluids’: partly biodegradable or

environmentally friendly, more polymer-based fracturing chemicals, more water-based, using components that are either biodegradable or environmentally friendly

• ‘Waterless fracking’: CO2 foam, LPG



21

Shale Gas Basins in Europe



22

Shale Gas Basins of E. Europe [EIA]Natural Resources GP


23

Shale – Projects in Europe…

• US: >25PCT. Russia: Largest NG supplier in Europe

• Austria: OMV withdrawing Sept 18, ’12• Bulgaria: SG, tight gas available, banned shale gas

drilling with 'fracking' this year• Czech Rep: plans temporary ban on shale exploration, to be

discussed in Oct• France: drilling suspended since Feb ’11..but Prime Minister

Ayrault [Aug ’12]: ‘govt may permit shale gas exploitation’ but Hollande blocks and turns down 7 applications [Sept 14, ’12]

• Germany: ‘Govt should ban fracking near drinking waterreservoirs & mineral springs and require developers toconduct EIA, German Environment Ministry report Sep 6, ’12

• Greece: May have SG structures in W. Thrace & elsewhere• Hungary: SG available



24

… Shale – Projects in Europe

• Lithuania: will essentially be driven by the economics of development [+ ‘avoiding’ Gazprom]

• Poland: most favorable market in C. & E. Europe for SG production

• Romania: Prime Minister Ponta moratorium since May• Serbia: SO basins• Slovenia: tight gas found• Turkey: Sept 4 ’12 Shell started SG exploration in SE Turkey

in Diyarbakir. • UK: govt go-ahead May ’11…but May 22, ’12, ‘shale gas

appeal in decline’• Ukraine: US Energy Information Administration estimates ~

42tn cf shale gas reserves



25

Shale – Environmental, Health IssuesEnvironmental • Water contamination - depletion [in arid countries]• Seismic risks• Impacts on land use, landscape • GHG emissions [methane etc]• Air pollutant emissions and soil contamination• Radioactivity• Drive up cost of dairy• Risks to various species

Health • ‘Bleeding, Oozing legions covering people’s faces, wounds,

severe inflammation, phenol & hippuric acid in urine?’



26

Shale – Policies…

Public Policies

• Environmental [+ pressure to disclose composition] and licencing

• Protection of public health and safety in general• Enhancing & protecting natural resources• Price volatility• Investment uncertainty• Tax policy

Natural Resources GPNatural Resources GP


27

Shale - Policies

EU policies

• Issues related to land access• Higher production costs than in N. American market• Heightened environmental concerns• Difference between EU and US is in property rights• America’s shale gas fields occur far fm houses and schools-

Europe’s shale gas operations near people• ‘Commission’s role: neither open nor close door to SG operations• ‘Draft Report On Industrial, Energy And Other Aspects Of Shale Gas

And Oil’, Committee on Industry, Research & Energy, European Parliament, Rapporteur: Niki Tzavela, 30.3.2012

• ‘Unconventional Gas: Potential Energy Market Impacts in the European Union’, JRC Scientific and Policy Reports, European Commission, 2012



28

Shale – Geopolitics…

• Fracking caused US NG price to fall < 3 &/mmBtu…while in Europe > 10!!

• European fracking bans / opposition slowed devt of NG in Europe

• Bans and moratoria could delay by at least a decade the replacement of much of the high-priced Russian and N. African gas w/ cheaper domestic production

• Russia, Qatar et al losing competitive advantage as suppliers of [non-conventional] oil and gas…but Gazprom Sept 6, ’12: ‘It remains to be seen whether the shale gas boom will revolutionise the European gas market’.

• SG devt can reduce a country’s dependency on imported gas, increasing domestic energy security



29

Shale-caused: Gas groups’ large writedownsAug. 31, '12



30

…Shale – Geopolitics

• Oil & gas affects current account deficits and prices/inflation in importing countries

• As shale-derived US NG became cheaper in past few years, power companies opting to use it, rather than thermal coal, togenerate electricity

• International nuclear energy industry expected to be heavily affected by lower-priced non-conventional oil and gas

• FT: ‘How much blood will the US expend when its oil exportsrival those of Saudi Arabia?’

• …Unless shale reserves are being overestimated!



31

3. Shale/RE: Comparisons - Conclusions

In both cases, ‘market imperfections’ easily observed - the failure of Adam Smith’s ‘invisible hand’:

• Resource preservation• Monopolistic situation• Security of supply. RE ‘critical’.• Negative externalities: environmental protection and

restoration…but RE in green uses – ‘Silent Spring’ to land prices

• Positive externalities: technology diffusion• National security• Technological supremacy



32

Shale/RE: Characteristics – Conclusions…Differences

• Driving force for shale: population growth energy needs,for RE: growth in technological uses

• China is the leader in RE - but the US was before, and could become again?...

• …US is the leader in SG/SO - through fracking - but China has the largest deposits

• RE a niche market. Foreign trade extremely important. RE are tradable: WTO complaint, while…

• …Oil and gas a commodity market. Cartels not covered by WTO. Note: US arguments re. RE contrary to those for its NG exports!

• Gas: National developments have int’l implications: technology and low gas price are assets for the US



33

…Shale/RE: Characteristics – Conclusions…

Commonalities…

• Energy, a common theme: shale w/ energy production, RE w/ energy uses but also w/ production [renewables eg.wind, solar]

• Both RE and shale are extracted…and are not rare in occurrence• Russia, China, US, Australia, Sweden have both• Technology at its best: in RE uses, in shale production • Price effects: RE prices rose and now falling, sharing in global

economic slowdown? Only Baotou profitable. Shale revolutionizes oil/gas but gas-producing companies suffer in profits & asset value!

• Both RE and shale have substitutes: shale ’s is conventional oil/gas. RE’s substitutes only partially.

• Environmental concerns due to ‘processing’. Improved technologies coming up: RE processing, waterless fracking, recycling.



34

… Shale/RE: Characteristics – Conclusions…

…Commonalities

Public reactions: national or supranational. Is ‘development vs environment’ a dilemma?

Resource efficiency, eg. waste management - recycling [started] in both cases: fracking water/liquids, RE electronic & other waste

Strong connection w/ other energy sources: RE essential for renewables, shale a competitor to nuclear and renewables?

RE and shale have strategic importance: RE due to criticality of uses, shale as [a] allows energy independence [hope for E. Europe, threat for Russia/Arabs] and [b] low energy cost improves competitiveness - boon to the US.Very active public policies, re. environmental, economic & strategic aspects



35

… Shale/RE: Characteristics – Conclusions

Final comment

• The common thread: energy, technology, the environment and public attitudes

• Man is capable of great technological discoveries…• …that can improve living standards…• …and also affect the relative power of nations…• …but can also harm nature, mostly locally• Textbook market economics not applicable• It is up to policy and society to keep a balance, by paying

utmost attention to implementation standards…throughout the entire life cycle…to secure sustainable development



36

ReferencesWork by Vasili Nicoletopoulos, Natural Resources GP

Comprehensive studies:1. ‘Rare Earths Worldwide: An Industry and Policy Analysis’, A Report by Natural Resources GP2. ‘Hydraulic Fracturing and the Growth of Shale Gas and Shale Oil Internationally’, A Study by Natural

Resources GP

Presentations and articles:3. Forthcoming: ‘Hydraulic fracturing’, a working paper submitted to IENE, Sept ’124. Forthcoming: ‘Waste Management Is Good Business - The Need For Reclamation Of Critical Materials’, to be presented in the

UNEP/IETC Global Partnership on Waste Management Biennium Conference, Osaka, Japan, November 5-6, 20125.’ Fracking for Shale Gas & Shale Oil Worldwide’, 2nd Tunisia Oil & Gas Summit, Hammamet, Tunisia, Sept 22, '126. ‘Rare Earths: the Politics and Policy’, Industrial Minerals, July 20127. ‘Rare Earths: International Public Policies’, Industrial Minerals International Congress & Exhibition, Budapest, March 20129. ‘Critical and Essential Materials’, Euromines Critical Materials Conference, Brussels, March 20129. ‘Raw Materials for Tomorrow’s Ceranics: Emphasis on Rare Earths and Magnesite’, Confidustria Ceramica, Bologna, Italy,

September 201110. ‘Public Policies Regarding Rare Earths’, Federchimica Workshop, Milan, Italy, June 2011

Other

11. Reports by EP, EC, EIA, IEA12. EU Criticality analysis 13. American Resources report14. Lifton, J., ‘The Only Five Rare Earth Elements that Matter’, The Critical Metals Report, June 19, ’12



37

Thank you very much!Vasili Nicoletopoulos

www.naturalresources.gr


Date post:	11-Mar-2018
Category:	Documents
Upload:	lamthu
View:	215 times
Download:	1 times

Rare Earths and Shale Oil & Gas: Technology, Environment ... ppt Sept 24 2012.pdf · Rare Earths...

Documents