Supply chain sustainability driving zirconium prices higher

Leading companies are placing increasing importance and accountability for sustainable sourcing of raw materials, and traceability throughout the supply chain. This includes auditing of suppliers to ensure that all elements or compounds can be traced back to where they have been originally mined, and then processed at various stages across the supply chain. This often involves multiple countries, companies, and responsibilities to ensure that materials are produced to the correct specifications at every step of the way, while also upholding strict social and environmental standards. This also addresses commitments to meet international health and safety standards and conditions for workers, and ensuring there is no exploitation of children or minority groups, such as in the production of cobalt or tantalum in Africa.

“Sustainability” has different meanings to different stakeholder across the value chain, and includes the effect of mining and processing on the environment, downstream manufacturing, and the degree of recycling of end of life products to recover critical elements. Minimising the impact of mining and processing on the environment is a common goal, with efforts to minimise the carbon footprint and use of water and chemicals during processing. This includes minimising the amount of waste and residues produced and how they are safely neutralised, stored, and managed over time. The mineral sands industry in Australia is a good example of how mines can be developed to extract the zirconium and titanium ores, which in many cases are exported for further processing. Once a mine reaches the end of its life, the mine and surrounding areas are remediated so that the original landscape is in many cases left in a better condition than before mining commenced. This includes returning the environment to its natural condition, and meeting obligations undertaken when environmental agreements and licences were first granted.

With China responsible for supplying over 75% of global zirconium materials in the form of fused zirconia and zirconium oxychloride (ZOC) derived chemicals and powders, the importance of secure and sustainable supply chains for these critical elements is becoming increasing important. In the case of ZOC, China now produces over 90% of global supply as traditional producers in Japan, Europe, and North America cut back or ceased production 20-30 years ago when they could no longer compete. Interestingly, the Chinese zirconium industry relies on the importation of zirconium ores and concentrates (zirconium silicate), which are mainly supplied by Australia and South Africa. It has faced many challenges in recent years as it modernises production facilities to minimise air, water, and soil pollution. This has required significant ongoing investment to upgrade facilities to meet tougher environmental laws and policies, and is a continuing trend to address responsible production. Restricted supply and prices increases this year being can be attributed to tougher environmental compliance costs, plus higher chemical and raw material costs. Next in line is expected to be greater scrutiny of zirconium chemicals waste streams and how they are handled, stored and managed, as there is increased emphasis on all types of soil and water pollution. As widely reported, almost all of the uranium and thorium found in ZOC waste streams comes from the zirconium silicate raw material, which adds up to ~65 tonnes per year.

Chinese Premier Li Keqiang announced at the National People’s Congress in March that “we will make our skies blue again…and build a green Great Wall of sustainable development”. This strongly supports the government’s commitment to reduce all forms of pollution, and the widespread efforts by authorities to carry out environmental inspections on its chemicals industry. This includes the zirconium chemicals industry, with Shandong Province temporarily suspending ZOC production in April and May. These are all important steps towards more sustainable production, and is expected to be followed by more environmental inspections and policies to control pollutants, including taxes on waste products, which is expected to further increase production costs.

The increased sense of urgency by western customers over zirconium prices and sustainable supply makes Alkane’s Dubbo Project (DP) an important alternative source of zirconium supply which is independent of China and zircon, as well as other critical rare earths, hafnium, and niobium.