ENERGY MINERALS

Europe, US urged to move on rare earth supply

EUROPEAN high-technology companies are being encouraged to enter into partnerships with exploration companies, to ensure they’re not left behind in the race to ensure access to critical raw materials in the future.

Nick Evans
Europe, US urged to move on rare earth supply

A new report from Ernst &Young, released overnight, says that European companies did not appear to have paid enough attention to the emerging constraints in the supply of metals critical for high-technology industries, a risk that could cause the “[European Union] technology industry to dwindle over time”

The report, “Material Risk: Access to technology minerals”, looks at emerging supply constraints in rare and minor metals – the rare earth elements, platinum group metals, antimony, magnesium, germanium, gallium, fluorspar, tungsten, niobium and other metals critical to high-tech industries.

Report author Michel Nestour said the number of EU companies involved in technology minerals exploration or extraction was “currently insufficient to respond to the technology minerals supply chain issue”

“There is already a marked decrease in the amount of these minerals exported from emerging economies, as a result of increasing internal demand from their technology industry, such as the announced decreasing export quota from China rare earths industry to 72 per cent on 7 July 2010,” he said.

“Successfully fulfilling the demand for technology minerals must be dependent on whether the EU consumers of these technology minerals have the requisite appetite for active participation in the technology mineral supply chain.

“Other regions of the world are beginning to take both public and private sector action to address this risk – Europe cannot afford to be left behind.”

Nestour said Ernst & Young research has only been able to identify 36 companies across the EU that are involved in technology metals extraction or exploration.

The report said it was doubtful that European mining companies alone could successfully gear up to ease supply constraints for European industry, and urged high-tech companies to begin looking at the kind of joint venture funding partnerships that are emerging across the rest of the world.

“Successfully filling the demand for technology minerals must be dependent on whether the EU consumers ... have the requisite appetite for active participation in the technology mineral supply-chain,” the report said.

“In the current environment it is doubtful that the response could come solely from the EU exploration/extraction sector.”

The report also urged EU governments to consider giving technology minerals companies tax breaks to encourage an expansion of exploration and mining, and suggested the creation of national stockpiles to solve short-term supply issues.

The report even suggested it might be necessary to create state-owned enterprises to manage exploration for rare metals, or alternatively to provide venture capital backing for junior explorers.

The E&Y report comes as the US considers how it will handle its problems in securing technology metals, particularly for its defence and other high-tech industries.

The US Congress last week passed the Rare Earths and Critical Materials Revitalization Act, which is aimed at supporting the US Energy Department efforts to find and develop rare earth sources.

In a rare show of bipartisan support, the act passed the US Lower House by a margin of 325 to 98.

The bill establishes a research, development and commercial application program within the Department of Energy aimed at ensuring a long-term domestic supply of rare earth materials in the US to “satisfy the national security, economic well-being, and industrial production needs of the United States”

The legislation also authorises the department to establish a loan guarantee scheme to companies involved in improving extraction and separation technologies – the most expensive part of a rare earth project – and aims to completely revitalise the US rare earth industry within five years.

US Republican Senator Lisa Murkowski, who introduced a similar bill to the nation’s Upper House, said in a statement last week the rare earth industry was critical to the future of the Us’position as a super power.

"Just as we've seen with our reliance on foreign oil, the United States' total reliance on foreign sources of rare earths puts us in a perilous situation," she said.

The Senate bill also allows for the establishment of a US strategic stockpile of rare earth minerals and would provide federal loan guarantees to assist the domestic mining industry.

"Some have compared China to a one-nation OPEC for rare earths— and China’s recent actions signal that they are well aware of their immense power over the supply of this sought-after commodity.”

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