Today’s global economy is being driven by several disruptive ‘megatrend’ industries that will change the world as we know it. This is part of the quest for technologies and solutions that are faster, stronger, cleaner, smaller, lighter and safer. For example:
- Clean energy – power generation with low emissions and enhanced energy storage
- Transportation – electric vehicles and aerospace developments using new materials
- Ageing population – new detection and treatment methods in healthcare
- Internet of Things – data networking of smart devices, vehicles and buildings
- Automation and robotics – the road to artificial intelligence
Growth of these megatrend industries is escalating; moreover, several are converging, creating growth rates much higher than historical levels. They all rely on myriad new and emerging technologies that in turn rely on materials containing specific elements and minerals that are essential to their production. These ‘critical elements’ become even more so when they are subject to restricted supply – whether due to general scarcity or the economic constraints of a dominant producer.
Zirconium, hafnium, niobium and rare earths have each been identified by many countries as critical elements that are essential to many future technologies. They are also playing a key role in the above megatrend industries. For example:
- Zirconium – Zirconium-based ceramics are used in solid oxide fuel cells, special alloys, dental replacements and jet turbine coatings; zirconium is also used in kidney dialysis and smartphones.
- Rare earth elements – Praseodymium/neodymium alloys are used in permanent magnets for wind power turbines, electric vehicles and industrial robots; rare earth elements are also used in medical imaging techniques, smartphones, fibre optics, special alloys, ceramics and electronics.
- Hafnium – Hafnium is used in several aerospace alloys and ceramics, while hafnium oxide is emerging as a material of choice in semiconductors and data storage devices.
- Niobium – Niobium’s main use is in high strength low alloy steels (HSLA); niobium alloys are being used in aerospace rocket engine nozzles (with hafnium); niobium is also used widely in engineering steels (including turbines), MRIs, capacitors for electric motors and mobile electronics.
The global markets for most of these critical elements are controlled by China’s vast manufacturing industry. China currently produces more than 75% of the world’s zirconium products and over 90% of high-value rare earths used in permanent magnet production. Hafnium, which is currently produced as a by-product of nuclear-grade zirconium, is also controlled by China. On the other hand, 85% of niobium is produced and manufactured in Brazil.
Single country domination of these elements, which are essential for clean energy and advanced tech (including defence) applications, could negatively impact the economy and security of all nations. The global economy needs the introduction of reliable, independent, long-term suppliers outside the dominant markets.
Eye on China
In reinforcement of the global market’s sensitivity to China’s manufacturing sector, recent domestic developments are expected to have far-reaching effect. The Made in China 2025 policy aims to move Chinese industry away from low-value, polluting industries to manufacturing for higher-value, downstream markets. This is likely to have the unintended consequence of restricting rest-of-world supply of certain critical elements (including zirconium and rare earth elements) due to consumption by downstream Chinese manufacturers. Moreover, supply of technology components containing these elements (such as rare earth permanent magnets and electric motors) would potentially cease as China focuses on selling finished products (such as electric vehicles or total wind turbine systems).
Compounding this, the Chinese government’s ‘war on pollution’ is leading to stricter enforcement of environmental laws across the sector. The imposition of additional regulations, along with environmental inspections and audits, are causing temporary plant closures and are also likely to curb some illegal mining. In the case of rare earths, illegal mining accounts for more than 50% of supply. China will also be looking to recoup a US$30-40B industry clean-up cost.
This all means the period of low prices and oversupply is probably now over for rare earths and zirconium materials. Moreover, demand is predicted to escalate – demand for rare earth magnets alone looks set to grow at 9% or more. Insatiable demand for these critical elements from both China and the rest of the world means global manufacturers will need to seek alternatives and develop complete mine to market supply chains in order to continue and guarantee production.
This makes the Dubbo Project a highly significant long-term, reliable and independent supply option outside China.