Scarce, and getting scarcer

Could the looming scarcity of so-called rare metals put the brakes on the clean energy revolution – or generate new opportunities for recyclers?

“You want to go on the path to a green future? That path starts at a mine,” says rare metals expert Jack Lifton, who undertakes due diligence for investors looking into opportunities in the metals sector.

Wind turbines, solar panels, the transport and storage of green energy: they all depend upon a range of metals – and some of those may not be available in the quantities that many manufacturers and investors assume.

A worldwide transition to renewable energy will rely on substantial amounts of metals such as neodymium, tellurium, indium, silver, copper, tin and zinc. 

No economic driver

René Kleijn, assistant professor of industrial ecology at Leiden University in the Netherlands, has investigated reserves of indium, a key raw material in thin-film solar panels. Were the world to pursue an aggressive build-out of solar energy capacity, the reserves would meet just 1% of demand.

Although demand for indium is growing fast, supply is not keeping pace, because the metal is a byproduct of zinc and lead production. Because only tiny amounts of indium are extracted from zinc and lead production – around 28 grams of indium can be recovered from 1 tonne of zinc ore – dramatic increases in indium prices have little impact on the economics of zinc and lead production. Between 2003 and 2006, the price of indium rose from $100 to $980 per kg, but mining companies hardly stepped up their production.

“There is no economic driver for increasing the production of byproducts since these companies earn so much more money mining the base metal,” says Lifton, whose consultancy, Technology Metals Research, is based in Carpentersville, Illinois.

Expected shortage

This goes for many of the metals needed for renewable energy, such as gallium, tellurium, cadmium, germanium and cobalt, which are used in thin film solar cells, fibre optics (the basis of a smart grid), fuel cells, the permanent magnets used in wind turbines, and lithium-ion batteries.

Shortages of tellurium, indium and gallium are all expected within the next five years, according to the UN Environment Programme. First Solar, a US based producer of cadmium telluride photovoltaic modules, is the market leader in this sector. By 2012, the company will have expanded its production capacity to about 2GW, according to a spokeswoman, which would consume 182 tonnes of tellurium.

Although there are no official data on the production of tellurium, estimates range from 200 to 640 tonnes a year. At the lower end of the range, First Solar could potentially hoover up almost the entire global production of tellurium, leaving manufacturers of memory chips, flash memory cards and thermoelectric cooling devices fighting over the remnants.

Heavily debated

Moreover, some experts warn that the base metals of most byproducts are also becoming scarce. Analysis of the United States Geological Survey data on reserves by André Diederen, senior researcher at the Dutch technological institute TNO, shows that 2% economic growth a year will see metals such as copper, nickel, zinc and lead depleted in about 30 years. 

Research into the reserve base – that subset of resources that is proven but not yet economically viable to extract – is showing an equally grim picture, according to Harald Sverdrup, a professor in chemical engineering at the University of Lund, Sweden, based upon his comparison of several reserves databases.

“Zinc will become scarce within 30 years,” Sverdrup claims. For copper, lead and nickel, that timescale is within 100 years, he says. But this is a heavily debated topic. Some experts say reserves data is inadequate; it is expensive to prove reserves because it requires the drilling and testing of ore for extraction rates. (...)

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