European Policies on Critical Raw Materials, including Rare Earth Elements

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European Policies on Critical Raw Materials,
including Rare Earth Elements
Natural Resources GP

• Vasili Nicoletopoulos
• Natural Resources GP
• ERES 2014 1st conference
• 4 - 7 September 2014, Milos, Greece Aug 30

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Contents
Natural Resources GP

• History of CRM in the EU
• Other national CRM initiatives
• On recycling
• Foreign trade policies on CRM
• Chinese CRM policies
• WTO
• What next?
• Open questions

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History of CRM in the EU
Natural Resources GP

• Raw Materials Initiative RMI
• Nov 08 Communication for Improving Access to Raw
  Materials in Europe
• June 13, ECs Report on RMI implementation
  overview of the ongoing initiative, interest for
  the EU 3d countries rich in raw materials to
  collaborate
• European Innovation Partnership on Raw Materials
  EIP
• launched by the EC Nov 12
• EC Definition of CRM 2010
• CRM analysis 2010 14 CRM
• May 2014, CRM list 20 CRM, 13 previous
  tantalum 6 new borates, Cr, coking coal,
  magnesite, phosphate rock, Si

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..History of CRM in the EU
Natural Resources GP

• 2010 EU 14 CRM

• 2014 Criticality Chart

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Other national CRM initiatives
Natural Resources GP

• Countries focus f ( needs, expertise,
  geopolitics)
• Japan substitution
• China processing metallurgy, environment,
  tightened export quotas ostensibly to secure
  internal supply
• Australia sustainable mining
• Canada exploration
• S. Korea investing 300m over 10 yrs for RD
  into 40 technologies -- refining, smelting,
  processing, recycling and substitution
• Russia active program on materials stockpiles
  export restrictions

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Other national CRM initiatives
Natural Resources GP

• REE Resource Efficiency Recycling
• End-of-life recycling rates for all of REE lt1
  UNEP. In Japan 1/3 of REE for permanent
  magnets went into new scraps and then recycled.
  EUs CRM, including REE OHF identified recovery
  opportunities for permanent magnets, NiMH
  batteries, phosphors eg. Rhodias process for
  recovery and separation of REE contained in used
  fluorescent powder.
• US Strategic Stockpiling of CRM
• Strategic Mineral Advisory Council encouraging
  DoD to move away fm stockpiling strategic/CRM
  from China to creating nurturing US-based REE
  supply chain. SMAC particularly concerned about
  DOD recommendation that 120.43 million of HREE,
  which are only produced in China, be added to US
  stockpiles.

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On recycling
Natural Resources GP

• Conflict between market forces and the existing
  regulatory framework
• EU could negotiate emergency terms with WTO,
  setting clear transparent conditions for export
  restrictions/duties on wastes of strategic
  importance
• Recycling support improving collecting
  infrastructure, creating legal certainty equal
  level playing field, removing unnecessary
  administrative burdens
• All individual elements of EU Climate Change
  Policy should result from consistent energy, raw
  material and industrial policies
• J. Zboril, EESC, June 20, 14

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ERES 2014 1st conf 4-7 Sept, 14, Milos, Greece
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Foreign trade policies on CRM
Natural Resources GP

• Industrial Minerals Trading
• EC, Jul 13 EU - US Transatlantic Trade and
  Investment Partnership, Raw materials Energy,
  Initial position paper
• trans-Atlantic trade to be promoted by increasing
  transparency predictability of trade deals
• first most important step towards a better
  global governance of trade in raw materials
  boost investment, aid production
• negotiators to consider incorporating rules
  inspired by the global Extractive Industry
  Transparency Initiative EITI on declaring
  payments to governments

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Foreign trade policies on CRM
Natural Resources GP

• US DoD Urges Assessment of REE Supply Risk July
  11, '14
• in assessing REE supply risks for the US military
  industry, showing the strategic importance of
  these minerals and the will of the US to limit
  its reliance on China.

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Chinese CRM policies
Natural Resources GP

• Chinese Export License Systems REE etc
• trade-restrictive measures eg export
  duties/quotas on key raw materials incl. Sb,
  bauxite/alumina/aluminium, Co, coke, Cu,
  fluorspar, In, Pb, magnesite/magnesium carbonate,
  Mn, Mo, Ni, RE, Au, Sn, W, wood, yellow
  phosphorus and Zn
• unwritten pre-condition of any company to have
  their request for a permit evaluated, blocking
  new FDI in the sector
• since 2000, production caps to regulate REE
  supply instated an export quota system, Chinese
  companies (to obtain a licence to export any REE
• China's unfair REE export restrictions must be
  rectified - Chicago Tribune Aug 11 '14

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Chinese CRM policies
Natural Resources GP

• REE Recycling and Smuggling
• June 14 Preliminary stats illegal smuggling
  hidden among 67 REE recycling projects across the
  country. MIIT urged govt to regulate REE
  recycling
• July 14, China Mining Association CMA illegal
  or unlicensed REO production reached
  40,000-50,000 mt in the domestic market,
  determining a serious oversupply, lowering REE
  prices
• Aug 5, 14  REE purchase by govt result of the
  pressure from the WTO to lift REE export quotas
  attempt to push up prices to revive a market
  still weakened by illegal mining

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Chinese CRM policies
Natural Resources GP

• Aug 5, '14 Approval of formation of North Baotou
  Steel Rare Earth Group, formed by Inner Mongolia
  Baotou Steel Rare Earth Hi-Tech and 5 other major
  producers, major step towards implementing
  Beijings policy of building enterprise groups to
  regulate domestic market
• Aug 12, 14 Illegal mining in China is to blame
  for low REE prices, govt official said during 6th
  Baotou China Rare Earth Industry Forum
• Aug 26 '14 REE suffering from the not-so-rare
  capitalist disease of boom-and-bust

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Chinese CRM policies
Natural Resources GP

• Subsidising REE Environmental and Efficiency
  Upgrades
• July 10, 2014 govt decision to subsidise REE
  producers technological upgrades in
  energy-efficiency, environmental protection,
  promotion of value-added products
• Taxation
• May 14 MIIT, State Administration of Taxation
  Ministry of Finance considering adjusting again
  the REE resources tax China and the CRM Value
  Chain
• National Institute of Advanced Studies, India,
  Sept 13 Chinese enjoy global REE monopoly
  thanks to US policy oversights, including 1995
  permission to buy Magnequench that made China a
  global player in value chain for REM, alloys,
  magnets

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WTO
Natural Resources GP

• June 09 1st dispute settlement case on several
  industrial raw materials by EU, US, Mexico
• Dec 09 panel established finding a Chinas
  export restrictions on several industrial raw
  materials in breach of WTO rules, not justified
  for environmental protection or conservation
  policy reasons and b that China had committed
  not to levy export duties
• Mar 12 US, EU, Japan initiated 2nd complaint re
  Chinas restrictions export duties, export
  quotas, minimum export price requirements, export
  licensing requirements on export of various
  forms of REE, W, Mo used in electronic goods

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WTO
Natural Resources GP

• Apr 14 China notified decision to appeal
  certain issues. China Daily report Beijing
  should try get around the WTO ruling by
  offering to remove the export quotas on LREE but
  keep ones on medium and HREE, which have smaller
  production volumes.
• Ministry of Commerce protecting resources the
  environment for sustainable development...no
  intention of favoring domestic industry through
  distorted trade
• Aug 7 14 WTO Appellate Body rule in EUs favor
  Chinas export restrictions on REE, W, Mo in
  breach of WTO rules. Chinas export duties
  quotas not justified for reasons of environmental
  protection or conservation policy.

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WTO
Natural Resources GP

• Chinese Retaliation?
• Chinese authorities may deal with the WTO by
  imposing higher taxes on producers of REE on the
  basis of the value of minerals, rather than the
  volume as is the case now.
• This change will result in higher production and,
  of course, export prices.
• But Chinas revenge could be longer-term and
  designed to cause deeper damage.

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What next?
Natural Resources GP

• EC report on the Implementation of the Raw
  Materials Initiative of June 24, 13
• wide-ranging public consultation on the strategy
  going well
• by 2020 actions would include setting up
  innovative pilot projects, incl demonstration
  plants on exploration, mining processing
  finding substitutes for raw materials in short
  supply creating a network of research centers on
  sustainable raw materials management
• Roskills June 14 study
• Terms like risk and critical are emotive

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Open questions
Natural Resources GP

• Why did China become a monopoly?
• Where is the downstream REE market located?
• Why did prices rise and fall both times
  dramatically?...and can they rise again? LREE vs
  HREE
• Can Lynas and Molycorp survive? What about new
  projects?
• Will there be new uses or, on the contrary, will
  economizing/substitution/recycling diminish
  demand?
• Who gains from stockpiling?

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Relevant work by Natural Resources GP
Natural Resources GP

• Rare Earths Worldwide An Industry and Policy
  Analysis, Study, 2011
• REE Light to Heavy?, Study, 2013
• Articles in Industrial Minerals Magazine
• Presentations in international conferences
  Athens, Brussels, Bologna, Budapest, Milan,
  Osaka, Plovdiv etc

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• Thank you very much!
  Vasili Nicoletopoulos
• www.naturalresources.gr