Market Drivers for Commercial Recovery of Products from Geothermal Fluids

Hill Technology

Management Limited

Client: GNS Science May 2015

Author: Alistair Hill

Also available as GNS Science Miscellaneous Series 81; ISBN 978-0-478-19996-3 (print), 978-0-478-19997-0 (online). www.gns.cri.nz

196 Stagecoach Road I Mahana RD1 I Upper Moutere I Nelson 7173 I New Zealand T: +64 (0) 3 540 3739 I M: +64 (0)275 346 778 I Skype: alistairhill I Email: [email protected]

TABLE OF CONTENTS

Executive summary ...... 7 Introduction ...... 9 Applications and costs ...... 10 Silica ...... 12 Colloidal silica ...... 12 Precipitated silica ...... 14 Supply chain considerations ...... 16 Lithium ...... 18 Introduction ...... 18 Lithium product grades and compounds ...... 18 Non-battery chemical Applications ...... 21 Glass and Ceramics ...... 21 Other Technical Applications ...... 21 Speciality lithium products and metallic lithium ...... 22 Batteries ...... 22 Market sector demand development...... 23 Lithium supply ...... 28 Lithium price development ...... 32 Influence of recycling ...... 33 Boron ...... 36 Borate demand ...... 37 Insulation and textile fibreglass ...... 37 Borosilicate Glass ...... 39 Fertilizer ...... 41 Ceramics and frits ...... 43 Detergents ...... 44 Wood preservation ...... 44 Borate supply ...... 44 Caesium ...... 47 Caesium uses ...... 47 Caesium extraction ...... 49 Caesium market ...... 50

Rubidium ...... 51 Uses of rubidium ...... 51 Rubidium extraction ...... 53 Rubidium market ...... 53 Magnesium ...... 54 Magnesium uses ...... 54 Magnesium as a strategic metal and price volatility ...... 56 Sodium ...... 60 Uses of sodium ...... 60 Sodium extraction and production ...... 60 Sodium market ...... 60 Potassium ...... 61 Uses of potassium ...... 61 Extraction and production ...... 61 Potassium market ...... 62 Calcium ...... 63 Uses of calcium ...... 63 Calcium market ...... 64 Gold ...... 65 Conclusions ...... 67

TABLES Table 1: Lithium product groupings around market and product type ...... 19 Table 2: Lithium products for technical markets and their key end uses ...... 19 Table 3: Lithium products for speciality and metals markets and their key end uses ...... 22 Table 4: Lithium products for battery markets ...... 23 Table 5: Lithium (LCE) content of non-automotive battery applications ...... 24 Table 6: Automotive battery applications and types ...... 24 Table 7: Global industry CAGR selected industries (Borates) 2009 – 2013 ...... 41 Table 8: Regional frits & ceramics market and growth 2010 – 2015 ...... 43 Table 9: Gold use 2013, 2014 ...... 65

TABLE OF FIGURES Figure 1: Speciality silica market 2001 – 2026 ...... 13 Figure 2: Speciality silica market value 2001 – 2026 ...... 13 Figure 3: Colloidal silica market 2001 – 2026 ...... 15 Figure 4: Precipitated silica market 2001 – 2026 ...... 15 Figure 5: The effect of HD Silica on tire performance ...... 17 Figure 6: Tire market growth ...... 17 Figure 7: Lithium process routes illustrating products used for technical grade markets ...... 20 Figure 8: Summary of key lithium products and uses ...... 20 Figure 9: The effects of battery demand on overall lithium demand...... 25 Figure 10: Overall lithium demand with different battery scenarios ...... 25 Figure 11: Light vehicle volumes featuring 48V systems ...... 27 Figure 12: Global passenger car and light vehicles emission legislation progress 2005 – 2025 ...... 27 Figure 13: A ragone plot illustrating relative power and energy densities for various battery chemistries ...... 29 Figure 14: Forecast EV range and price evolution for different chemistries ...... 29 Figure 15: Global lithium sources...... 30 Figure 16: Lithium supply forecast to 2020 ...... 31 Figure 17: Lithium supply and demand forecast to 2020 ...... 32 Figure 18: Lithium supply and demand forecast to 2020 ...... 33 Figure 19: Lithium (LCE) cost from different sources and long term price (red bar).. 34

Figure 20: A schematic representation of lithium products complexity, price and size 2011 ...... 34 Figure 21: A schematic representation of lithium products relative profitability at Rockwood Lithium (bubble size indicates profit) 2012 ...... 35 Figure 22: Potential influence of battery recycling on lithium supply ...... 35

Figure 23: Borate demand 2008 – 2016 (million tonnes B2O3) ...... 38 Figure 24: Borate demand by end use 2014 ...... 38 Figure 25: Fertilizer demand by region 2006/7 to 2013/14 ...... 42 Figure 26: Global fertilizer use by crop 2007 ...... 42 Figure 27: Principal global borate production ...... 45 Figure 28: Global supply and demand for sodium borate products (5 mol, 10 mol, anhydrous borax) ...... 45 Figure 29: Global supply and demand for non-sodium borate products...... 46 Figure 30: Caesium metal crystals ...... 47 Figure 31: The effect of mud on rate of penetration (ROP) ...... 48 Figure 32: Example of caesium formate brine rental...... 48 Figure 33: Rubidium atoms in a Bose-Einstein Condensate ...... 52 Figure 34: Magnesium use by application ...... 55 Figure 35: Increasing magnesium use per vehicle 2007 – 2020 ...... 55 Figure 36: Potential for weight saving replacing aluminium with magnesium in the powertrain ...... 56 Figure 37: Magnesium pricing history ...... 58 Figure 38: Global magnesium production 1998 and 2011 by region ...... 59 Figure 39: Gold price in US$ ...... 65

From Waste to Wealth: Commercial Recovery of Products from Geothermal Fluids The following statement from the contract awarded to Hill Technology & Management Limited describes the work to be undertaken: Market drivers A market analysis will be undertaken for products identified from the study of New Zealand’s geothermal fluid composition. This is likely to include (where available) market segments, market size and development (current and future), market growth rate, supply and demand, profitability, industry cost structures, pricing dynamics, competitive products, and key success factors. A summary report will indicate the markets, and thus products, with the most potential from geothermal fluids. Hill Technology & Management will undertake an analysis of these questions in order to determine the implications for commercial operations, with particular regard to opportunities for development. Conventional methods of market analysis will be used. 1. Undertake market analysis and prepare publically available summary report [1 March 2014 – 31 May 2015] 2. Present results to a stakeholder working group. [July 2015] Products identified as recoverable Research has identified the following products as available for recovery from geothermal fluids: 1. Main extracts a. Silica b. Lithium 2. Other potential extracts a. Boron b. Caesium c. Rubidium d. Sodium e. Potassium f. Magnesium g. Gold

Executive summary Geothermal extraction of minerals and compounds, from a market opportunity perspective is highly dependent on the detailed nature of the downstream product. However, the reverse side of the commercialization dichotomy is also very apparent. What product is desirable or viable depends on the nature of market opportunity. Therefore, to fully understand the underlying potential opportunity requires a multi-stage process carried out in close cooperation with those researchers responsible for identifying and then refining possible compounds. The geothermal brines in question hold relatively large concentrations of silica together with significant amounts of lithium, boron, caesium, potassium and sodium along with some rubidium, magnesium and traces of gold. In principal each of these compounds or elements hold opportunity for high value product. In some cases relatively niche product, such as colloidal silica, commands a very significant premium over other potential extract forms of silica. Similarly some forms of organolithium command a significantly higher price than battery grade lithium salts. However, in this case the amount of processing required to manufacture a suitable quality product needs careful consideration with respect to relative margin. The lithium market itself is subject to both intense speculation and considerable investment influence. However, basic supply and demand considerations that take into consideration a conservative demand forecast and foreseeable extraction projects lead to the conclusion that in the time scale envisaged for commercial lithium extraction any oversupply situation will have dissipated, an effect that will be enhanced by any reduction in investment around the world. Battery grade lithium salts are likely to be in a situation of significant supply constraint by the early 2020s, and therefore worthy of further investigation as geothermal brine based product. Boron, or the borate and boric acid market is dominated by two significant player, Eti Maden and U S Borax, a subsidiary of Rio Tinto. This means that despite the growing market globally and healthy price situation access to the supply chain is controlled. Therefore it is likely that to operate in this market the only strategies open to a New Zealand based smaller scale supplier are to by-pass the existing supply chain into local markets or to deal with one of the dominant companies; most likely Rio Tinto. The latter holds significant risk as any Boron compound supply from New Zealand would be subject to significant downward pressure on price, because of the large size of the customer, and probably only used as infill for the company’s own production. On the other hand a significant amount of borate is used as fertilizer in New Zealand and selling directly to local fertilizer manufacturers might be viable. The opportunities for both caesium and rubidium will require more detailed analysis once output compounds, scale and aspect such as purity are better understood. While caesium has some interesting uses, many high value requirements require careful specification. Therefore for both caesium and rubidium while it is possible at this stage to highlight that opportunities of significant value exist, the methodology for their utilisation requires detailed discussion with a downstream value chain based on actual available specification detail.

Magnesium, sodium and potassium are markets that are both varied and diverse. They have all been subject to a degree of commoditisation and magnesium in particular has become of strategic importance in vehicle lightweighting. Whether any extraction of compounds or elemental metals is an opportunity worth detailed investigation for exploitation depends on both the available final product specification and the cost base, and therefore margin available. All the products that might be derived from the processing of geothermal brines are naturally subject to the ‘tyranny of distance’ in common with any product produced in New Zealand aimed at a geographically global market. However, in the case of many of the potential higher value potential products, this ‘tyranny’ dissipates as product scarcity influences the economics of supply and demand. For a higher value scarce or niche product, although typically more resource in development is needed initially, distance and high cost factors are nowhere near as significant as continuity of supply and control of specification. In conclusion, there are significant opportunities available for the extracts from geothermal brines. However, the novelty of being able to access products is only at an early stage in the road to commercial exploitation. Market suitability needs detailed assessment based on a matrix of considerations centred around three areas: 1. The physical nature of the product including compounds, purity and in many cases particle morphology, consistency of supply and any necessary product support; 2. The price and value chain; in that for each compound a point in the supply chain(s) where it may be desirable to insert product. This will naturally have a significant influence on the profitability of individual minerals. By identifying the correct customer/ price level within the supply chain for the finished product a much more robust idea of margin; 3. Geographic market considerations such that supply to a New Zealand based supply chain will necessarily be less costly than a US based supply chain for a given quantity of compound. However, in some cases further processing might only take place in a few locations globally. As discussed above, while it is possible to identify potential market opportunity and to take a robust overview of global potential, real opportunity can only be assessed once real detailed information is available for detailed discussion with respect to actual downstream marketing.

Introduction Looking historically at projects that either have or at least tried to derive minerals from geothermal fluids, it is relatively obvious that the vast majority of projects never went much beyond the experimental or feasibility phase. There have also been only a limited number of pilot plants. Worldwide, only four projects ever reached a commercial production stage. The only on-going project now is the Salton Sea project by Simbol Mining. The United States was one of the first countries to start investigating by-products from geothermal operations, mostly in the 1960s, but only two plants ever reached commercial operation. One of these two plants was developed and operated by Morton International in the Imperial Valley, California. It produced small amounts of calcium chloride, potassium chloride and other salts, but due to a drop in salt prices in the late 1960s, production was stopped. In the 1970s, two water desalination projects were developed, but never reached a commercial stage. A study established geothermal desalination to be a feasible but uneconomical concept due to the specific conditions in New Mexico. One of the companies that has been very active in mineral extraction is CalEnergy. In 1998, the company built a small demonstration plant at its Elmore geothermal plant. For a ten-month period, it successfully produced 41,000 lbs. of high-grade zinc. In 2002, CalEnergy set up another plant at the Salton Sea with the goal of producing 30,000 metric tons of 99.99 – percent pure zinc, but due to technical problems, the company shut down the project in 2004. Co-funded by the California Energy Commission and the US Department of Energy, the Lawrence Livermore National Laboratory conducted a pilot-scale demonstration of silica extraction at Mammoth Lakes in 2000. The project aimed to demonstrate the technical and economic feasibility of metal and mineral co-production of silica from geothermal fluids. The economic analysis from the results of the demonstration showed the feasibility and favourable rates of returns. Simbol Mining Corporation is now thought to be utilizing the technology at its Salton Sea project. Around the same time, the US Department of Energy’s Geothermal Technology Program carried out a study at Coso in California, and Dixie Valley and Steamboat Springs in Nevada. The goal was to obtain more information about the extraction of silica, but there is no information available about the current state of this study. In Mexico, government-owned Fertilizantes Mexicanos (Fertimex) established a pilot project at the Cerro Prieto geothermal power facilities in the 1970s. The plan was to process potassium chloride with a target of 80,000 tons per year for the production of fertilizers. During the final construction phase, the international prices for potash collapsed and the project was abandoned. The possibility of silica extraction was explored in a pilot plant at the Wairakei geothermal power plant in New Zealand in the mid-1990s. A study carried out on the project concluded that the production of silica would be possible but there were issues with the amount of aluminium and calcium and their impact on the final product. Environmetals Limited (EVM) has recently been examining the extraction of speciality silica and other minerals as part of its descaling service. It has operated a pilot plant at

Wairakei able to process 150 tonnes per day of geothermal fluid and intends to license its IP in New Zealand to interested parties. In 1990 Tasman Pulp and Paper Company built a pilot plant at Kawerau to produce silica from separated geothermal water for paper machine trials. The plant processed over 30 million litres of separated geothermal water, producing 30 tonnes of geothermal silica. The technology was able to integrate the extraction process with upstream power generation, direct use of heat and the subsequent reinjection of geothermal brine In Italy, the extraction of chemical products goes back to the 11th century, but there was no geothermal association until the early 1800s when a chemical factory was set up in Larderello that extracted boric acid from geothermal fluids. The time between 1850 and 1975 was the most productive and commercial phase for boric acid production. In the 1920s other products, such as sodium perborate, ammonium carbonate and carbonic acid, were extracted from geothermal fluids. In 1970, Japan set up an experimental project to recover lithium from geothermal brine with initial successful results. The Department of Environmental Science, Department of Metallurgy and the Kyushu Institute of Technology in the Hatchobaru and Otake areas in Kyushu carried out the project. Other projects, such as in the Cheleken area of western Kazakhstan in Russia, never reached large-scale production. In Kenya, a project extracted CO2 from shallow geothermal wells for making dry ice, and a demonstration project on Kimolos Island in Greece showed the technical feasibility of seawater desalination 1. In 1979, a pilot plant in Iceland was built and operated for several years, producing sodium chloride as a fishery salt (production of salted cod). On the basis of this experimental plant, a bigger one was erected in 1983 under the name of Reykjanes Geo-chemicals with the purpose of producing sodium chloride, potassium and calcium chloride. The plant increased its production through the 1990s, but after five years of operation, the plant was closed due to technical problems and other factors. A new company, Arctic Sea Salt, plans to start production of health salt at Reykjanes in 2014, with a newly patented method and an estimated future capacity of 30 – 50,000 tonnes per annum. Other projects have been mentioned for Ethiopia and Chile, but no further details are currently available. Applications and costs In a paper by Leon Lehr, “Potential for by-product recovery in geothermal energy options” (1982), it is described that “economics of mineral extraction [from geothermal fluids] are driven by geothermal fluid characteristics, specific by-product(s) to be recovered, quantity, quality, value, marketability, type of geothermal energy conversion system used, size of energy facility, regulatory waste treatment and disposal requirements.”

1 European Geothermal Energy Council a.s.b.l. Geothermal Desalination. http://egec.info/wp- content/uploads/2011/03/Brochure-DESALINATION1.pdf 10

The economic feasibility of mineral extraction is highly dependent on international mineral prices. Both declining prices and sudden fluctuations have been challenging for extraction projects. As an example, potassium extraction projects in Mexico and the United States in the 1960s and 1970s were abandoned due to sharp reductions in price. Lithium is probably the most interesting mineral currently and a number of commentators have said that it would not be surprising if it now saw a resurgence in geothermal fluid extraction. Lithium is a key element in the production of electric batteries, as discussed below, and thereby a crucial ingredient in more advanced car electrification, as well as in other applications. It has therefore been the object of great commercial and government interest, resulting in some sharp price increases. However, because of its perceived future utility and scarcity lithium has become subject not only to considerable speculation, but also of considerable investment in future capacity. This is discussed further below, but demonstrates the potential wide ranging effects of market dynamics. Only a few plants have so far entered into commercial operation, and there are two main obstacles that have been holding back further development globally. The price volatility for minerals and metals has been one of the key reasons behind both under investment in processing plant development and the failure of plants; in many ways this directly results in a second contributing factor in the lack of maturity in technology used in mineral extractions from geothermal fluids. With the increasing demand for specific minerals and increasing prices for those, mineral extraction from geothermal fluids is now an attractive field again. New technology development and the recent pilot projects have attracted new investors and could mean a revival of some of efforts by the industry to derive value from geothermal fluids beyond electricity generation. In short, there might be a second chance to create a valuable side business for geothermal operations.

Silica Demand for speciality silica, and precipitated silica can be split from overall demand for mineral silica. The global demand for speciality silica is currently running at 2.7 million tonnes and this is forecast to increase to around 4.6 million tonnes by 2026 (Figure 1). This market is currently worth some US$6.9 billion and includes precipitated silica, silica gel, silica sol and fumed silica (Figure 2). Two types of speciality silica are of primary importance in examining the opportunities for geothermal brine products silica sol, or colloidal silica, and precipitated silica. In New Zealand Environmetals Ltd is currently running a pilot plant scale experiment to prove silica removal from geothermal brines and hopes to offer both precipitated and colloidal silica as output products. Colloidal silica Colloidal silica, or silica sol, is used in a wide range of applications including: • In papermaking colloidal silica is used as a drainage aid. It increases the amount of cationic starch that can be retained in the paper. Cationic starch is added as sizing agent to increase the dry strength of the paper; • High temperature binders; • Investment casting as part of making moulds; • As an abrasive for polishing silicon wafers; • Carbonless paper • Catalysts • Moisture Absorbent; • Increasing bulk density of powders and granules; • As a flowing agent to assist the free flow of powders; • In refractory ceramic fibre blankets; • In abrasion-resistant coatings; • For increasing friction as a coating on waxed floors, textile fibres and railway tracks to promote traction; As an antisoiling agent it works by filling micropores to prevent take up of dirt and other particles into textiles; • As a surfactant it is used for flocculating, coagulating, dispersing, stabilizing etc.; • In solution as a wine and juice fining agent; • Colloidal silica is used in concrete densifiers and polished concrete; and • In the manufacture of Quantum dots, small semi-conductors used in various scientific research settings. Colloidal silica is sold under a wide range of brand names, often orientated to particular end markets. Of all colloidal materials, amorphous colloidal silica is one of the most commonly produced man-made inorganic material due to its high performance and it is mainly available as aqueous dispersions.

Figure 1: Speciality silica market 2001 – 2026 Source: Various

Figure 2: Speciality silica market value 2001 – 2026 Source: Various

Colloidal silica is most commonly graded by the specific surface area (defined in m2/g). This surface area defines the average particle size. Colloidal silica with small particle sizes have in general lower solids content compared to colloidal silica with larger particle sizes. Anionic colloidal silica dispersions are available; stabilized with sodium, potassium, or ammonia. Cationic dispersions are available, stabilized with chloride or by removal of ions. Typical anionic colloidal silica is stable between a pH of 8 and 11.5, while cationic silica is stable between a pH of 2 and 4.5. Colloidal silica's stability and reactivity can be enhanced through various surface treatments including aluminium and silanes. Colloidal silica has many different functions from an active charge carrier or reacting surface to a physical abrasive or high temperature binder. The global demand for colloidal silica is projected to rise to over 400,000 tonnes by 2026, up from 300, 000 today with the value of the global market set to increase to over US$1.2 billion (Figure 3) There is a range of established suppliers for colloidal silica, perhaps the AkzoNobel claims to be the largest, although other large producers include Evonik, Bayer, Cabot, PPG and nanoparticle specialist Nalco. As an estimate there are some 30 manufacturers spread geographically around the world, reflecting the global nature of the market and the increasing number of uses for colloidal silica. Precipitated silica It is significant that the largest growth segment in the market is precipitated silica, and this is being driven by the increasing demand for ‘green’ tires within the automotive sector (Figure 4). The precipitated silica market currently runs at around 1.4 million tonnes and is forecast to grow to around 2.4 million tonnes by 2026. The value of this is also likely to appreciate from around US$1.1 billion to just over US$3 billion in 2026 with an average bulk price rising from around US$1,000 per tonne in 2011 to US$1,200 in 2026. Highly dispersible grades for the tyre and rubber industry are the most expensive, costing 20 – 25% more than easily dispersible grades. Among conventional silica, dental and food grades are among the most expensive because of high purity needs. Footwear grades are among the lowest cost, with grades for technical rubber goods slightly higher. In terms of demand the rapid increase in the market for precipitated silica reflects the discovery that highly dispersed silica used as filler significantly enhances automotive tire performance. However, as well as dispersion (to avoid clumping), both particle size and morphology are also important.

Figure 3: Colloidal silica market 2001 – 2026 Source: Various

Figure 4: Precipitated silica market 2001 – 2026 Source: Various

A small proportion of precipitated silica has been used in large and off-road tires since the 1970s to enhance tear resistance and adhesion properties, and to reduce cut growth, however, silica is overall less easy to disperse within the mix and a more difficult filler to use than the carbon black it is replacing. This means both processing cost increases and significant capital expenditure within tire manufacturing because the mixing equipment developed to utilise carbon black as filler has been subject to wholesale change to accommodate HD silica. In the 1990s the modification of the PC Tire Tread with highly dispersible silica, a coupling agent, a specific elastomer (organosilane) and changed process technology enabled the development of ‘green’ tires with approximately10 g CO2 per km saving (5% fuel consumption reduction). Used as reinforcing filler for rubber compounds precipitated silica with different specific surface areas allow the fine-tuning of mechanical and dynamic tire properties (Figure 5). For this reason HD silica is replacing carbon black. The use of HD silicon has initially been most pronounced in higher performance cars and within Europe, where there has historically been the greatest concentration on both fuel economy (due to high prices) and improved vehicle dynamics. However, overall the global tire market is showing a 5% compound annual growth rate (CAGR) with China progressing with a CAGR over 10% (Figure 6). It should also be noted that tire manufacturing, because of the relatively high cost of transport, is predominantly performed close to the use market. Therefore HD silica increasing demand driven by tires will show its largest demand growth in China. Although demand is forecast to increase substantially for precipitated silica there has naturally been a significant amount of investment in new capacity. However, pricing increases reflect the fact that supply is unlikely to outstrip demand for the foreseeable future. Major players in this market such as PPG, Evonik and Solvey have all been increasing capacity for precipitated silica, however the issues of excess demand have prompted one tire manufacturer, Goodyear, to investigate the use of rice husk ash as a silica source. Supply chain considerations Both colloidal silica and precipitated silica have well established markets which are growing prompting the investment in new capacity by the established supply chain. In New Zealand there are a range of industry orientated stockists (Adhesive Technologies, IMCD, PureNature, Consolidated Chemical, Redox and Mortech) supplying speciality chemicals for a wide range of uses including pharmaceutical. Precipitated silica is available through Omya New Zealand for the local market. Once the cost base and product characteristics of the silica products extracted from geothermal brine are established, together with the controllability of surface area and particle morphology, further work on the value chains associated with these products and the most effective point at which to inject them can be undertaken. This may prove to be selling to stockists in New Zealand and Australia directly for use or selling into the mainstream international market for further processing or refinement and access to its global customer base. 16

Figure 5: The effect of HD Silica on tire performance Source: Continental

Figure 6: Tire market growth Source: Continental

Lithium Introduction Lithium is a soft metal, the lightest in the periodic table, with a silvery white appearance that reacts immediately with water and air. Lithium also has the highest electrochemical potential of all metals. These properties provide very high energy and power densities for long useful life in small and comparatively lightweight battery packages and this is the primary engine for growth in demand. Lithium does not occur as a pure element in nature but is contained within mineral deposits or salts including brine lakes and seawater. The contained concentration of lithium is generally low and there are only a limited number of resources where lithium can be economically extracted. Lithium and its chemical compounds exhibit a broad range of beneficial properties including: • The highest electrochemical potential of all metals; • An extremely high co-efficient of thermal expansion; • Fluxing and catalytic characteristics; • Acting as a viscosity modifier in glass melts As a result, lithium is used in numerous applications, which can be divided into two broad categories: chemical applications and technical applications. Lithium product grades and compounds Lithium is marketed in a variety of product forms and grades. Table 1 illustrates the different product group categories or markets and products that are sold into these markets. Essentially there are four main product groups characterised by the terms technical, battery, Organolithium and speciality/ metal. Figure 7 illustrates the grades of lithium product and their process routes with technical products indicted by dotted outlines while Figure 8 shows the main lithium products and uses. As can be seen from Table 2, technical products include a wide range of disparate markets, principally across Europe, the US and East Asia but in reality across a wide spread of countries. Product form, particle size and morphology can vary considerably across end-uses and typically pricing is very competitive in these sectors where consistency and reliability of supply can be more important than grade or purity.

Table 1: Lithium product groupings around market and product type

Source: Roskill

Table 2: Lithium products for technical markets and their key end uses

Source: Roskill

Figure 7: Lithium process routes illustrating products used for technical grade markets Source: Roskill

Figure 8: Summary of key lithium products and uses Source: Roskill

Non-battery chemical Applications Lithium chemicals are used in a variety of applications including: • Lubricants: lithium is used as a thickener in grease ensuring lubrication properties are maintained over a broad range of temperatures; • Aluminium Smelting: the addition of lithium during aluminium smelting reduces power consumption, increases the bath electrical conductivity and reduces fluorine emissions; • Air Treatment: lithium may be used as an absorption medium for industrial refrigeration systems and for humidity control and drying systems; • Pharmaceuticals: lithium is used in the treatment for bi-polar disorder as well as in other pharmaceutical products. Lithium products are used directly in technical applications, particularly where lithium products with low iron concentration are necessary to meet the highly specialised requirements of end users. Currently, the largest global market for lithium is for use in glass and ceramics. Glass and Ceramics • Glass: including container glass, flat glass, pharmaceutical glass, specialty glass and fiberglass. These glass products may be designed for durability or corrosion resistance or for use at high temperatures where thermal shock resistance is important. The addition of lithium increases the glass melt rate, lowers the viscosity and the melt temperature providing higher output, energy savings and moulding benefits; • Ceramics: including ceramic bodies, frits, glazes and heatproof ceramic cookware. Lithium lowers firing temperatures and thermal expansion and increases the strength of ceramic bodies. The addition of lithium to glazes improves viscosity for coating, as well as improving the glaze’s colour, strength and lustre; • Specialty Applications: including induction cook tops and cookware. Lithium’s extremely high co- efficient of thermal expansion makes these products resistant to thermal shock and imparts mechanical strength. Other Technical Applications Lithium is also used in a variety of metallurgical applications including: • Steel Castings: the addition of lithium to continuous casting mould fluxes assists in providing thermal insulation and lubricates the surface of the steel in the continuous casting process; • Iron Castings: in the production of iron castings, such as engine blocks, lithium reduces the effect of veining, thereby reducing the number of defective casts. Lithium can be processed to form a variety of chemicals, including lithium carbonate, lithium bromide, lithium chloride, butyl lithium and lithium hydroxide. The fastest growing (and second-largest) market for lithium globally is for use in batteries. 21

Speciality lithium products and metallic lithium Lithium products falling into this category (Table 3) are generally high in price terms but produced to very tight customer specifications. Operation in these markets requires high levels of research and development resource and involves considerable amounts of intellectual property; customers expect very high levels of support. And, although prices are typically at the very upper end of those paid within the overall lithium market customers rarely see price as a primary factor in use and quantities used are more than justified by the final product pricing.

Table 3: Lithium products for speciality and metals markets and their key end uses

Source: Roskill

Batteries Despite the concentration on lithium-ion there are primarily two main battery categories involving the use of lithium: • Primary (non-rechargeable): including coin or cylindrical batteries used in calculators and digital cameras. Lithium batteries have a higher energy density compared to alkaline batteries, as well as low weight and a long shelf and operating life; • Secondary (rechargeable): key current applications for lithium batteries are in powering cell phones, laptops, other hand held electronic devices, power tools and large format batteries for electricity grid stabilisation. The advantages of the lithium secondary battery are higher energy density and lighter weight compared to nickel-cadmium and nickel-metal hydride batteries. A growing application for lithium batteries is as the power source for a wide range of electric vehicles including electric bikes/scooters, buses, taxis, trucks as well as

passenger electric vehicles. There are four main categories of electric passenger vehicles: Hybrid Electric Vehicles, Plug-in Hybrid Electric Vehicles and Electric Vehicles, and fuel cell vehicles. Table 4 illustrates the usage of the various salts and lithium metal in battery development, and in many ways this is the use sector that has been driving ideas about future demand and investment in new production capacity around the world. Across this sector product quality and consistency is critical and competition has been growing in intensity for low value high volume salts such as battery grade lithium carbonate. Clearly the variety of uses for lithium salts and metals is varied and the products themselves vary from close to commodity (e.g., smelting and glass use) to high value quality critical product (e.g., pharmaceutical such as Lithium hexamethyldisilazide). The perceived largest growth sector, the salts associated with lithium-ion battery technology lies between the two extremes of the market and both demand and supply are expected to be subject to considerable change over the next decade.

Table 4: Lithium products for battery markets

Source: Roskill Market sector demand development Lithium has around a dozen main end uses of which batteries have become the most critical to any demand forecast, and where automotive batteries become the largest segment. This means that lithium demand is linked closely to the growth of its use in automotive batteries. Automotive use is also no longer confined to hybrid and electric vehicles as

this industry is developing a situation where degrees of electrification ranging from systems based on existing 12V architectures and their optimization through a growing 48V segment to also include plug-in hybrid electric vehicles (PHEV), hybrid electric vehicles (HEV), electric vehicles (EV) and fuel cell powered vehicles (FCV) (Figure 10). As illustrated in Figure 9 the demand for lithium (often referred to in terms of lithium carbonate equivalent (LCE), but some commentators use lithium metal content) is fundamentally dependent on the demand for lithium-ion cells, particularly in automotive. In fact the demand for non-automotive use is considerable and growing (Table 5) with compound annual growth rates forecast at over 15% for power tool use and more than 20% for tablets.

Table 5: Lithium (LCE) content of non-automotive battery applications

Battery lithium Total lithium Total lithium CAGR content consumption 2011 consumption 2025

Mobile phones 1 – 3 g 4,300 tonnes 9,800 tonnes 6.1% Smartphones 2 – 3 g 1,700 tonnes 9,600 tonnes 13.2% Laptops 30 – 40 g 14,000 tonnes 44,000 tonnes 8.5% Tablets 20 – 30 g 17,000 tonnes 17,000 tonnes 20.8% Power tools 40 – 60 g 1,100 tonnes 8,000 tonnes 15.2% Source: SignumBOX 2012

Table 6: Automotive battery applications and types

Application Typical Typical power Typical energy, Common battery Critical voltage(s), levels, kWh type 2015 requirement V (kW)

SLI 14 3 0.7 Lead-acid Cold cranking Stop-start 14 3 0.7 Advanced lead- Cold cranking high at idle acid number of restarts Mild hybrid 48 – 200 10 – 30 0.5 NiMH/ Li-ion Long cycle life Full hybrid 300 – 600 60 1 – 2.5 NiMH/ Li-ion Long cycle life PHEV 300 – 600 60 4 – 10 Li-ion Long cycle life EV 300 – 600 60 15+ Li-ion Low cost Hill Technology & Management

Figure 9: The effects of battery demand on overall lithium demand Source: Fox-Davies

Figure 10: Overall lithium demand with different battery scenarios Source: Chemetall

The market for automotive batteries (Table 6) has become considerably more complex within the last few years with the heavy research and development concentration of reducing CO2 output by OEMs and suppliers in order to meet coming CAFE (Corporate Average Fuel Economy) regulation. This focus has lead to a situation where electrification is progressive depending on OEM, market and use rather then simply a consideration of hybrid cars, electric cars and plug-in hybrid cars. Within the product mix of automotive batteries older technologies are also maintaining volumes through a combination of development aimed at extending utility and performance and the safety and cost benefits associated with a mature technology and scale economies. For this reason there remains a significant demand in the automotive sector for lead acid, advanced lead acid and NiMH batteries at the moment, although this is likely to steadily decline as the cost of lithium-ion batteries reduce with scale economies and production process improvements.

In Figure 9 the demand shows an upper and lower forecast referred to as high and low scenarios, and there have been a very wide range of such forecasts produced over the past decade or longer. Demand has fluctuated for many reasons including the influence of the global oil price, the fuel economy of modern diesel engines in Europe, the high costs of lithium ion and concerns over safety and battery over run. Early optimism and available grants prompted the creation of large cell manufacturing capacity, particularly in the US in anticipation of a market that is only now emerging. This resulted in a number of bankruptcies and some early industry consolidation. Future demand continues to be driven primarily by progress in vehicle electrification with lithium quantities per vehicle estimated as follows: • Mild hybrid - 0.5 to 1 Kg LCE • Full hybrid - 0.8 to 2 Kg LCE • Plug-in hybrid - 1 to 10 Kg LCE • Battery electric vehicle - 8 to 40 Kg LCE However, today there are a number of important initiatives that improve confidence in a higher demand scenario rather than lower. The most importance of these is the imminent widespread introduction of 48V systems. As illustrated in Figure 11, by 2023 there are forecast to be over 13 million 48V systems being engineered into light vehicles per annum. Building a 48V architecture into vehicles is in fact an enabling technology for many important technologies that will help OEMs meet the increasingly stringent CO2 emissions regulation (Figure 12). These range from deriving supplementary power from electric motors within the drivetrain, for instance, to improve the transient response performance with large turbochargers and small internal combustion engines (downsizing and turbocharging is a CO2 reduction strategy for most OEMs), and allowing both stop-start functionality and engine-off coasting (often referred to as gliding).

Figure 11: Light vehicle volumes featuring 48V systems Source: Navigant

Figure 12: Global passenger car and light vehicles emission legislation progress 2005 – 2025 Source: ICCT

The efficiency of energy recovery during braking, deceleration and through exhaust heat conversion (Thermoelectric Systems) and suspension travel is greatly enhanced through 48V such that where 2.5% to 5% might have been recoverable with a 12V systems 5% to 10% will be recoverable with 48V. This more efficient energy recovery brings a wealth of powertrain opportunities and progress towards the illusive goal of a beltless engine. Forecasts from systems supplier Continental have stated that by 2025 one in three vehicles will include a 48V network, while Bosch CEO Volkmar Denner has forecast that almost every vehicle in Europe will be electrified by that date. Critical to the benefits enabled by 48V is lithium ion technology, and beyond that a number of other lithium based chemistries. Not only is lithium ion superior in terms of specific energy performance (Figure 13) it has the ability to rapidly take up charge in small bursts. Lead acid chemistry is particularly poor in this respect. A further aspect affecting lithium ion battery volume is that there may finally be a mechanism to progress the business beyond the ‘catch 22’ situation it has suffered from in the past. Lithium ion has often failed to achieve the necessary scale economies because effectively battery price was prohibitive. Until the cost per kWh significantly reduced mainstream hybrid and EV market penetration remained very niche limited by price. Much of the price issue was associated with the battery performance and cost. However, electric sports car manufacturer Tesla has now confirmed its plans for a ‘gigafactory’ that will produce more lithium ion batteries in 2020 than the global production in 2013, accompanied by a >30% reduction in cost per kWh (Figure 14). These two demand factors, as well as growth in full hybrid and electric vehicle demand mean that a tipping point will be reached within the next few years and by 2025 lithium demand for batteries will be over 320,000 tonnes, dwarfing many of the other usues for lithium. Lithium supply Current estimates of worldwide Lithium resources total ~ 30,000,000 tons (160,000,000 tons LCE) and reserves currently in active or proposed extraction operations total ~14,000,000 tones (74,000,000 tones LCE) these are geographically spread as illustrated in Figure 15. Lithium occurs naturally as a salt and is relatively easily mined but a number of commentators have theorised that it is possible that the Bolivian government will have a significant influence over pricing through its development of the world's largest lithium deposits. The massive salt flats at Salar de Uyuni, are estimated to contain a large proportion of the world's lithium reserves. The US Geological Survey (USGS) has estimated that the Bolivian deposits can produce about 5.4 million tons of lithium, relative to a total US reserve base of 410,000 tons.

Figure 13: A ragone plot illustrating relative power and energy densities for various battery chemistries Source: Bosch

Figure 14: Forecast EV range and price evolution for different chemistries

Figure 15: Global lithium sources Source: Global X

Other South American countries are watching developments with interest and the Brazilian and Chilean governments see future wealth and development arising through exploitation of their reserves. Chile provides 61% of lithium exports to the US, with Argentina providing 36%, according to the USGS, with Chile having estimated reserves of three million tonnes, and Argentina about 400,000 tonnes. Lithium production via the brine method is much less expensive than mining, says John McNulty, analyst at global bank Credit Suisse. Lithium from minerals or ores costs about US$4,200 to US$4,500 per tonne to produce, while brine-based lithium costs around US$1,500 to US$2,300 per tonne. Strategically this could be seen as a significant threat and the risks associated with global oil supply might merely be exchanged for risks associated with the global lithium supply. On the other hand, a 2011 study by Ford and Michigan University compiled data on 103 major lithium deposits worldwide with 32 having more than 100,000 tonnes each and the global total mounting to around 39 million tonnes. Annual production is currently around 30,000 tonnes, which would make very little impact on the known reserves of around 750,000 tonnes in North America alone. Estimates from Mitsubishi suggest that the world will need 500,000 tonnes per year at the maximum pace of expected growth in vehicle electrification. Reflecting the concentration of lithium-ion battery manufacturers and associated cathode material producers in China, Japan and South Korea, the East Asia region has become an increasingly important consumer of lithium products over the last decade. In

2012, East Asia accounted for 60% of total global consumption with Europe accounting for a further 24% and North America 9%. Lithium extraction, which totalled more than 168,000t LCE in 2012, is undertaken predominately in Australia, Chile, Argentina and China, with roughly half of lithium output from hard rock sources and half from brine. Talison Lithium in Australia, SQM and Rockwood Lithium in Chile, and FMC in Argentina dominate production. Just more than two-thirds of lithium minerals extracted in Australia is processed into downstream chemical products in China, where producers such as Tianqi Lithium (who recently acquired Talison to secure a captive supply of mineral feedstock) operate mineral conversion plants.

Figure 16: Lithium supply forecast to 2020 Source: TRU Group

Galaxy Resources commissioned a new 17,000 tonne per annum LCE mineral conversion plant in China in 2012. Canada Lithium is in the process of commissioning a 20,000 tonne per annum LCE plant in Quebec and several existing Chinese mineral conversion plants are also expanding capacity. FMC has increased brine-based processing capacity by a third in Argentina, while nearby Orocobre is also constructing a new brine-based operation due to be completed in 2014. In addition, Rockwood Lithium plans to complete a 20,000 tonne per annum LCE expansion in Chile in 2014. Combined, this additional capacity totals just less than 100,000 tonne per annum LCE, enough to meet forecast demand to 2017. As shown in Figure 16, supply development to 2020 there continues to be a wide variety of new capacity coming on-stream together with projects planned. The net effect if this development to 2020 is that, using TRU’s scenario, which is perhaps pessimistic in terms of automotive demand, the lithium market is destined for a sustained period of 31

oversupply (Figure 17). This would imply that many of the pipeline projects might fail to materialise or take substantially longer to become established. However, post 2020 there is a very significant demand increase and forecast production utilization (Figure 18) improves from 63% to over 90%. Bearing in mind such factors as market proximity and grade requirements by 2023 there might well be significant supply constraints and opportunity for additional lithium supply.

Figure 17: Lithium supply and demand forecast to 2020 Source: TRU Group

Lithium price development Pricing on lithium products is not very transparent compared to some other commodities with developed spot and exchange-traded futures markets. In general, the going price on battery-grade lithium carbonate is expected to be upwards of US$6,000 per tonne and the price for lithium hydroxide is expected to command a US$1,000–1,500 per tonne premium to lithium carbonate. However, with the current prevailing supply- demand situation many commentators assume flat long-term pricing of up to US$5,900 per tonne for battery-grade lithium carbonate. The 2011 analysis by Ford and Michigan University suggests that the price of technical- grade lithium carbonate, the main product produced and consumed in the lithium market, recovered some of its global economic downturn losses as the market tightened in 2012, averaging US$5,300 per tonne, up 15% from 2010. This is below the 2007 peak of US$6,500 per tonne, but well above the US$2,000 – 3,000 per tonne levels seen in the early 2000s.

As the opening of new and expanded capacity is concentrated over the next few years, the lithium market will witness increased competition and supply-side pressure on pricing, with prices for technical-grade lithium carbonate potentially falling back to around US$5,000 per tonne from 2015.

Figure 18: Lithium supply and demand forecast to 2020 Source: TRU Group

To put this in perspective Chilean brines have a production cost of around US$1,900 per tonne LCE while Australian ore sources are around US$4,400 per tonne LCE. In Figure 19 this relationship is illustrated with the right hand bar showing a price comparison at US$4,700 per tonne LCE. Analysis firm Roskill has produced a number of detailed studies of the lithium market and although battery and technical grades constitute the largest market volumes and the market is mainly considered in terms of LCE, Figure 20 and Figure 21 take more account of the complexity of the overall market and show the relative size, price levels and profitability across the wider market. Despite being at a close to commodity level within the global market, because of the relatively simplicity of processing battery and technical grade lithium carbonate are profitable if extracted at the right cost level, whereas some of the more specialist grades such as lithium aluminium hydride, while commanding a high price are relatively less profitable because of process complexity. Influence of recycling Recycling is a major consideration in many industries ranging from steel and aluminium to platinum group metals in catalysts. However, to date no commercially viable process exists for recycling lithium from batteries. Small batteries are currently shredded and then subjected to pyrotechnical reprocessing that liberates cobalt and nickel but larger automotive and grid load batteries to date are not suitable for this technique. Therefore if even today research is being undertaken in anticipation of a large available stock of larger lithium ion batteries, firstly the available stock of end of life batteries must develop, and with a life of ten years this will not be a viable resource until 2020, plus a financially and ecologically viable technique must be developed (Figure 22). 33

Figure 19: Lithium (LCE) cost from different sources and long term price (red bar) Source: Hill Technology & Management

Figure 20: A schematic representation of lithium products complexity, price and size 2011 Source: Roskill

Figure 21: A schematic representation of lithium products relative profitability at Rockwood Lithium (bubble size indicates profit) 2012 Source: Roskill

Figure 22: Potential influence of battery recycling on lithium supply Source: Roskill

Boron Boron does not exist in its elemental state in nature and combines with oxygen and other elements to form boric acid, or inorganic salts referred to as borates. The versatility of borates stems from their unique bonding and structural characteristics. In addition to being essential in living things, borates are important to many industrial applications and impart a wide range of performance, cost, and environmental health and safety advantages to both products and processes. Important functional effects of borates are utilized in industrial and consumer applications including: • Borates are essential to all higher plants. They are routinely applied in agriculture when soils are deficient to improve crop yields and quality. They are also of biological importance to animals and humans; • Sufficient concentrations of borates can inhibit the growth of bacteria and fungi and protect against damage by wood destroying insects. For this reason, borates are widely used to improve the durability of wood and wood based construction products. They are also used in the formulation of some insecticidal products; • Borates can serve to balance acidity and alkalinity. This property is made use of in both industrial processes and consumer products; • Borates modify the structure of glass to make it resistant to heat or chemical attack. They can also lower the melting temperature of glasses to facilitate the production of durable fibreglass, specialty glasses, and ceramic glazes. Borate glasses are important components in TV, computer, and mobile device display panels; • Borates react with suitable alcohols and carbohydrates to link them together. This effect is used to produce starch adhesives and fluids used in oil recovery. Related chemistry also provides the basis for the essential biological roles of boron; • Borates passivate ferrous and other metal surfaces to reduce their susceptibility to corrosion. This property is utilized in anticorrosive coatings, lubricants, industrial water systems, and automotive coolants; • Borates are used as fire retardants for polymers and cellulosic materials, such as cotton batting, wood, and cellulose insulation. Specialized borate compounds, such as zinc borates, are used as fire retardants and smoke suppressant additives in polymers; • Borates are excellent fluxes used to remove oxide impurities from metals. Boron is also added to steel and aluminium to produce hard and corrosion resistant alloys. Borates are also used in the production of super strong magnets and to stabilize metallurgical slags to enable secondary extraction and waste reprocessing; • Borates improve the performance of cleaning products by buffering and conditioning water. They inhibit the corrosion of washing machine parts, and perborates can provide a convenient source of active oxygen for non-chlorine bleaching and stain removal;

• Boron is unique among the light elements in its ability to capture neutrons, due to the natural presence of the 10B isotope of boron (~20% natural abundance). This radiation absorbing effect is utilized in the shielding, control, and safety of nuclear reactors and in medical therapeutics. Boron neutron capture therapy (BNCT) is an experimental treatment for cancers and other diseases in which neutron capture is harnessed to perform effective microsurgery; • Borates absorb infrared light. Incorporated into building products, such as insulation fibreglass, borates improve energy efficiency by preventing heat loss through infrared transmission. This effect can also be utilized in plastics, coatings, and other materials; and • In addition to the above physical and chemical uses, borates are used as starting materials in the manufacture of a wide range of advanced materials and specialty chemicals. These include super hard ceramics, boron halides, hydrides, and esters. Borate demand A number of the world’s mega trends are involved in driving demand growth for borates (Figure 23 and Figure 24). Firstly increasing urbanisation and building together with the need for improved energy efficiency drives the fibreglass insulation market. US housing starts are returning to more normal levels with a degree of pent-up housing demand pushing the market forward. In addition to this commercial properties are a major source of energy inefficiency and improved insulation promotes borate use. Insulation and textile fibreglass Borates are an important ingredient in insulation fibreglass, which represents the largest single use of borates worldwide. Insulation fibreglass is also known as glass wool or mineral wool, although the latter term also covers stone and slag wool that does not contain borates. Insulation fibreglass is used for thermal and acoustic insulation, with the largest use by far the thermal insulation of residential and commercial buildings, where it plays an important role in reducing energy use and CO2 emissions from the built environment. In buildings, insulation fibreglass may be used in the form of blankets (rolls) batts (pre-cut slabs) or loose fill (blowing wool). More minor uses of insulation fibreglass include duct and pipe wrap for refrigeration, heating, ventilation and air conditioning systems. The most important role of borates in the glass fibres is to increase absorbance of infrared radiation, which significantly increases the insulation performance of the roll, batt or wool. In insulation fibreglass manufacturing, borates act as a powerful flux and lower glass batch melting temperatures. They also control the relationship between temperature, melt viscosity and surface tension to create optimal glass fibrization. The end result is short, strong fibres that are biosoluble (dissolve in the lung if inhaled during installation), and resistant to water and chemical attack.

Figure 23: Borate demand 2008 – 2016 (million tonnes B2O3) Source: Ro Tinto Minerals

Figure 24: Borate demand by end use 2014 Source: Ro Tinto Minerals

Globally more stringent insulation codes are increasing demand for fibreglass and in China mass urbanization continues to drive building, albeit at a lower level in 2015 than previously. Continuous strand textile glass fibres are used for the reinforcement of various materials. Fibres have a diameter of a few microns and are coated with a silane in order to improve compatibility with the matrix material that they reinforce. Textile fibreglass (TFG) can be defined by several fibre types that come in a variety of forms: rovings, yarns, chopped strands, milled fibres and woven and mat textiles. 90 to 95% of TFG products are considered E-glass, which was originally aimed at electrical applications, but is now mostly used to reinforce thermoset and thermoplastic polymer composite structures. These are known as FRP – fibre reinforced plastic; or GFRP – glass fibre reinforced plastic. Important applications of these materials are boats, wind turbine blades, pipes, and lightweight composite structural components for cars, trucks, trains and aircraft. The textile industry has standardised E-glass into two general categories: printed circuit boards and aerospace applications; and general reinforcement applications. The primary difference between the categories is the use of boron. E-glass for PCB must contain between 5 and 10% B2O3, whereas E-glass for general reinforcement purposes can vary from 0 to 10% B2O3. More recently, low dielectric textile glass fibres have begun to appear. These fibres have a higher B2O3 content than E-glass for electronics, in order to have a reduced dielectric constant to make them suitable for high frequency electronics applications. In textile fibreglass manufacture, borates act as a powerful flux and lower glass batch melting temperatures. In fibres for electronics and aerospace applications, borates also enable control of dielectric properties. In fibres for general reinforcement applications, borates bring no benefits to the final product. Borosilicate Glass Borosilicate glass is the foundation for all heat-resistant glass applications and make a large number of products possible from halogen light bulbs to liquid crystal displays. Borosilicate refers to glass that contains from 5 % to 20% of boric oxide (B2O3). Borates allow many valuable properties to be designed into borosilicate glass, including thermal shock resistance, aqueous durability, chemical resistance, greater mechanical strength, electrical neutrality, higher resistance to devitrification during processing, lower glass melting temperature, an improved melt refining process, formability and other optical properties. Borosilicate glass applications include: • Heat resistant glass found in domestic ovenware and tableware, microwave dishes, and laboratory glasses. Glass that requires a high degree of thermal shock resistance depends on borates to control their coefficients of thermal expansion; • Display screens where the rapid development of thin film transistor liquid crystal displays (TFT LCD) which have effectively replaced cathode ray tube technology has been enhanced by the use of specialised borosilicate glasses. The forming technology for these flat glass screens needs to maintain parity with continued

demand for ever thinner and lighter screens, which puts very tight tolerances on the finished glass, and on the raw materials; • Lighting glass such as sealed headlights, lamp covers, halogen bulbs and fluorescent tubes are designed not only for high electrical resistance, but also for strength, chemical durability, and thermal shock resistance; • Tungsten filament lamps, metal vapour discharge lamps used in street lighting, radio valves and television cathode-ray tubes require some form of glass-to- metal connection, often being vacuum-tight. High electrical insulation is also typically required. Special glasses containing high levels of borates are used to make these glass-to -metal seals; • Neutral glasses used in ampoules and vials for medicine, as well as vacuum flasks rely on borates for increased chemical resistance and aqueous durability; • Cosmetic containers are made from borosilicate glass where chemical resistance and optimum brilliance is maintained; • Cover glass and substrate glass for flat photovoltaic cells have specific quality and performance requirements which can be met by specialised borosilicate glasses. These include high strength to weight ratio, impact resistance and surface compatibility with electronics materials. Evacuated solar collector tubes for solar water heating rely upon the tight control of thermal expansion, ease of formability, and the durability and impact resistance of borosilicate glass. Some concentrated solar power generation stations use large arrays of borosilicate collector tubes to gather reflected radiation from parabolic mirrors for the generation of electricity in steam driven turbines. These tubes require very careful matching of glass/metal thermal expansion, and durability in the demanding and remote conditions in which they are installed; • Solid glass microspheres are used for airport runway reflector systems. Some borate-containing glass beads are also used in plastics as reinforcement- extenders. Hollow microspheres are used to manufacture automotive parts and patching compounds. Their low-density, high compressive strength combined with good heat and sound insulation make them ideal as light-weight fillers for polymeric materials; and • Borates are also used in the production of optical glasses, prisms and lenses, glass-ceramics, art glass, decorative container ware, opal glassware, optical fibre cladding and couplers, Vycor glass, space protection glass and other specialty glasses for electronic packaging, optical communications, heat-resistant windows and telescope mirror blanks. • Borosilicate glass is an important constituent in a very wide variety of glasses and glass products, of particular importance are LCD-TFT screens and technology. consumer demand in this area is forecast to continue to drive demand, particularly as new production capacity is built in China. In addition new technologies in low energy lighting and illumination as well as solar panels serves to drive demand increases. Furthermore, an aging population in developed countries is leading to an increase in demand for pharmaceutical and thin tube glass, which contains borates.

Table 7: Global industry CAGR selected industries (Borates) 2009 – 2013

Applicati North South China Asia Europ Middle Global on Ameri Ameri Pacifi e East, ca ca c Africa, India

Insulatio 7.7% 4% 19% 10% 3% 6% 7% n fibreglas s Borosilic 7.5% 12% 21% 18% 4.5% 16% 17% ate glass Fertilizer 7.5% 7% 50% 20% 8% 21% 14.5%

Frits & 9% 6% 22% 23% 8% 12% 17% ceramics Source: Rio Tinto Minerals Fertilizer Boron is one of seven essential micronutrients vital to fertilization; fruit and seed production and boron deficiency is the most widespread of all crop deficiencies, affecting almost all major crops grown around the world. Boron is an essential element for all plants, and vital to maximizing crop quality and yield. Application methods, amounts and schedules vary for each crop. Boron should be present in all soils in trace amounts, but boron deficiency is very widespread. Agricultural demand for borates is driven by fertilizer demand. By 2050 the global population is likely to be around 9 billion people. This means that with less than 4% of the earth’s surface available for agriculture, as calculated by RTM each person will need to live off an available 25 m x 25 m of land. Being able to achieve this implies a substantial increase in the effectiveness and use of fertilizers (Figure 25). Fertilizers for almost all major crops require boron (Figure 26) and along with continued dramatic growth in both palm oil demand and soybean deliveries from South America, perhaps the world’s largest export crop after grain, demand for biodiesel continues to grow despite the inefficiencies of its production from land previously used for food crops in the US. Globally the fertilizer industry enjoyed a CAGR in borate terms of 14.5% between 2009 and 2013. This can be broken down by region as in Table 7.

Figure 25: Fertilizer demand by region 2006/7 to 2013/14 Source: International Fertilizer Industry Association

Figure 26: Global fertilizer use by crop 2007 Source: International Fertilizer Industry Association

Ceramics and frits Borates have been an essential ingredient in ceramic glazes and porcelain (vitreous) enamels for centuries. The market and growth of these products is given in Table 8. Glazes are the thin, glassy coatings fused onto the surfaces of ceramic substrates such as wall and floor tiles, tableware (e.g., bone china, porcelain), and ceramic sanitary ware. Porcelain enamels are similar in nature but are used on metals substrates such as pots and pans, household appliances, metal bathtubs, storage tanks and silos, architectural panels and signs.

Table 8: Regional frits & ceramics market and growth 2010 – 2015

Source: US Borax Before use in glazes and enamels, borates are incorporated into frits to render them insoluble. Frits are materials of a glassy nature rich in silica (SiO2), obtained by fusing different crystalline materials at high temperatures (up to 1550°C), and rapidly cooling the melt. The resulting material is then mixed with other materials including water, and finely ground to make a suspension that can be applied to the surface of the desired substrate. After application, the substrate is dried and fired to fuse the glaze or enamel onto the surface. In glazes and enamels, borates are used to initiate glass formation and reduce glass viscosity, helping to form a smooth surface and reduce thermal expansion. This facilitates a good fit between the glaze or enamel and the item it covers. Borates also increase the refractive index (or lustre), enhance mechanical durability and resistance to chemicals, and help to dissolve colouring agents. More recently, borates have gained acceptance as an important ingredient in ceramic tile bodies where they act as powerful binders, allow manufacturers to reduce tile thickness, use a wider range of clays, heighten productivity and decrease energy usage. 43

Detergents Many different forms of borates are used to produce laundry detergents, household or industrial cleaners and personal care products. In these applications, borates' unique properties serve to enhance stain removal and bleaching, stabilize enzymes, provide alkaline buffering, soften water and boost surfactant performance. Because borates act as a biostat, they also serve to control bacteria and fungi in personal care products. The vast majority of clothes worn in the world are still washed by hand. New trials on laundry soap bars demonstrate that borates significantly improve the cleaning action, and reduce levels of dirt redeposition, leading to brighter, cleaner clothes. Wood preservation Borate treated wood is in demand as a safe and long-lasting method to protect homes from wood destroying organisms. There are several types of borate wood preservatives used to treat solid wood, engineered wood composites and other interior building products like studs, plywood, joists and rafters. Borate treated wood has been used successfully for more than 50 years in New Zealand, for a decade in Hawaii, specifically to combat the voracious and highly destructive Formosan subterranean termite, and increasingly throughout the mainland United States. Borates prevent fungal decay and are deadly to termites, carpenter ants and roaches - but safe for people, pets and the environment. Borates interfere with termites' metabolic pathways when ingested through feeding or grooming, effectively killing them. Surviving termites avoid the protected wood products. Biocidal applications outside of wood protection include use as a fungicide and preservative in paints and coatings (in can and dry film), as a fungicide in polymers and rubber, and as a biocide for plastic and rubber. Borate supply Borate production (Figure 27) is concentrated in Turkey (Eti Maden, which is state owned) and the US at US Borax owned by Rio Tinto. The Turkish company claims to have around 73% of the global reserves. Other much smaller production is spread around the world. Eti Maden claim to have some 47% of the global market share for Borates and derivatives. About 70% of Turkish deposits are colemanite and US Borax extracts from borate ores via open cast mining and from brines extracted through solution mining techniques. Figure 28 shows the supply and demand situation for the sodium borate products (borax pentahydrate (5 mol), borax decahydrate (10 mol), anhydrous borax), which are feedstock for fibreglass, and agriculture products.

Figure 27: Principal global borate production Source: Bacanora Minerals

Figure 28: Global supply and demand for sodium borate products (5 mol, 10 mol, anhydrous borax) Source: Rio Tinto Minerals

Figure 29: Global supply and demand for non-sodium borate products Source: Rio Tinto Minerals Figure 29 shows the supply and demand situation for non-sodium borate products (boric acid, anhydrous boric acid) that are feedstock for speciality glass and ceramics As well as these considerations a number of other factors mean that supply is tightening despite competitive capacity expansion. Economical deposits are limited to three major regions and reserves are in relatively low abundance with complex extraction and processing. In addition demand is strengthening in both emerging and mature economies. The boric acid current market price ranges US$620 – 900 per tonne. This leads to an overall market value in 2015 of between US$465 million and US$675 million, probably ~ US$550 million. Market value is forecast to rise by 2020 to between US$620 million and US$900 million, probably ~ US$820 million.

Caesium Caesium is a soft gold-coloured metal that is quickly attacked by air and reacts explosively with water (Figure 30).

Figure 30: Caesium metal crystals Source: Rio Tinto Minerals Caesium uses Caesium products are used in a large variety of industries and applications like biocatalysis and industrial catalysis, glass manufacturing, and scintillation applications like medical imaging, brazing, and in organic synthesis. The most common use for caesium compounds is as a drilling fluid in oil gas drilling (caesium formate brine). The advantages of caesium formate over previous materials include faster drilling, better safety, improved well performance and better well maintenance, and this stems from the low solid and non-corrosive nature of the fluid. As illustrated in Figure 31, caesium formate used as a drilling mud offers distinct advantages over oil-based mud (OBM) using data taken from the DOE Deep Trek project, one of the US Dept. of Energy’s key projects in advanced drilling technology. Currently the dominant producer of caesium formate brine is Cabot, which processes pollucite ore mined at Bernic Lake, Manitoba, Canada and produces 700 bbl per month (~111,300 litres) and claims to hold brine stocks of more than 30,000 bbl. Interestingly, when caesium formate is used by the oil and gas industry it is not purchased outright but ‘rented’ such that a large proportion of the material is returned to Cabot for cleaning and re-use. The example in Figure 32 shows that for a 20 day ’workover’ 1,000 bbl of 118pcf caesium formate brine with a 10% loss has a cost of US$622,480. Within this data it can be seen that 118pcf brine is ‘worth’ US$2,126 per barrel or US$13.40 per litre. Caesium effectively promotes the performance of many metal-oxide catalysts used in heterogeneous processes. This effect is often enhanced by caesium’s ability to stabilise high-oxidation states of transition-metal anions. By forming and stabilizing complex salts with transition-metal-halide catalysts, caesium will also promote heterogeneous halogen transfer processes.

In homogenous catalysis, reaction rates are sometimes limited by the solubility of an anionic compound in an organic solvent, in which case the use of caesium as cation may solve the problem. Solubility in polar solvents is the reason why various caesium salts are efficient bases for organic reactions (e.g., caesium fluoride, caesium carbonate). Caesium alkoxides can be used as an alternative if sodium and potassium counterparts fail to give results due to strong influence of the cation on the reaction mechanism. Caesium fluoride is a highly active fluorination agent.

Figure 31: The effect of mud on rate of penetration (ROP) Source: Cabot

Figure 32: Example of caesium formate brine rental Source: Cabot

Caesium iodide and fluoride are capable of absorbing x-rays, gamma and particle radiation, and emitting visible light. This so-called scintillation effect is used in medical diagnostics, the exploration of natural resources, and in nuclear physics research.

Various forms of caesium, especially caesium nitrate, caesium carbonate, and caesium bicarbonate are used as glass components to achieve various objectives. The refractive index of optical glass, either in bulk or as a surface effect, can be modified by the addition of caesium salts. Through surface ion exchange with caesium-salt melts or solutions, the glass surface can be made resistant to corrosion or breakage. Caesium compounds such as caesium fluoride or caesium aluminium fluoride are increasingly used as flux components in the brazing of aluminium alloys. In response to growing requirements concerning weight, performance, costs, and quality, these aluminium alloys have recently replaced copper alloys in the automotive industry. This set of applications is likely to become much more significant as the automotive industry switches wholesale to lighter material and aluminium intensive vehicles in order to meet its CAFE targets (Figure 12). In preference such brazing compounds have high magnesium content, as this increases the mechanical strength of the alloy. Caesium containing fluxes such as caesium fluoroaluminates can counteract brazing problems arising from high magnesium content. Conventional fluxes fail in this respect and are therefore not suitable as brazing aids. High-purity caesium salts, e.g., caesium chloride, caesium sulphate, caesium trifluoroacetate and rubidium chloride are used in the recovery and purification of DNA by means of ultracentrifugation. This is done, for example, in the development of pest- resistant agricultural crops. Caesium extraction Caesium occurs in small quantities in a number of minerals. It is often found in lepidolite, a lithium ore. The mineral containing the largest fraction of caesium is pollucite (Cs4Al4Si9O26). This ore is mined in large quantities at Bernic Lake, in the Canadian province of Manitoba. Caesium is also found in small amounts in a mineral of boron called rhodizite. Caesium can be obtained in pure form by two methods. In one, calcium metal is combined with fused (melted) caesium chloride, in the other; an electric current passes through a molten (melted) caesium compound Caesium compounds can be produced using two methods. Acid digestion, which is more often used dissolves pollucite in the presence of strong acids (such as sulphuric acid, hydrochloric acid). When hydrochloric acid is used at high temperatures, caesium precipitates in the form of caesium hexachlorocerate (Cs2(CeCl6)), caesium iodine chloride (Cs2ICl) and caesium antimony chloride (Cs4SbCl3). Following evaporation, the precipitated double salts are decomposed and generate pure caesium chloride (CsCl). Pollucite can also be digested in the presence of hot sulphuric acid producing caesium aluminium (CsAl(SO4)2.12H2O), which can be converted to aluminium oxide by roasting

with carbon releasing a caesium sulphate (Cs2SO4) solution, which can subsequently be converted to caesium chloride (CsCl). The second method for producing caesium formate is through direct reduction, which involves heating the ore in the presence of potassium, calcium or sodium in vacuum, producing caesium metal. Because of impurities and technical difficulties, this method is not commercially viable. Alkaline decomposition, the third method, involves roasting pollucite in the presence of a Na2CO3/NaCl mixture or a CaCO3/CaCl2 mixture, followed by calcination with water and diluted ammonia (NH4OH) to release caesium chloride (CsCl), which can subsequently be converted to caesium aluminium (C2SO4:Al2(SO4)3:24H2O) or caesium carbonate (Cs2CO3). This process was developed in the mid 1990s specifically to be used as drilling fluid, particularly suitable in high-temperature high-pressure oil and gas wells, and to supply increasing market demand, in 1996 Cabot Corporation started extracting caesium from pollucite at the Tanco mine. Currently, this chemical is transferred to their manufacturing plant in Houston (Texas), which has the capacity to generate over 12,000 barrels per year of caesium formate solution. The company also produces caesium nitrate and chloride used for small-scale applications. Caesium market Current price for pure caesium metal is ~ US$1,100 per 100 g but compound prices are significantly cheaper and vary considerably by compound and purity. A small number of companies in Denmark, Germany, Japan, Russia and the UK also process caesium ores, and although Cabot itself estimates that it owns over 80% of the world’s pollucite reserves Chemetall (historically derived from Metallgeschellschaft AG) has been the largest producer of caesium chemicals. In addition, a larger number of specialty chemical companies produce various grades of the many caesium derivative compounds. Overall, however, the total industry and the market are very small compared with those in place for most metals. As the market is small and the number of producers worldwide is also relatively small, public trading in caesium metal or its compounds is not active, and therefore prices are not quoted. The metal is sold by the gramme with the price varying greatly with the amount and purity of the metal purchased. It is estimated that the current price for high purity metallic Caesium is ~ US$1,100 per 100 g, and because of the relatively small and specialised nature of the markets and large potential reserves held by a small group of producers it is unlikely there will either be supply-side constraints to increase the market price or stronger inter-producer competition that will depress prices. Furthermore, although rubidium and caesium are often considered as interchangeable, the supply of caesium is greater and therefore any substitution is more likely to flow in the other direction.

Rubidium Rubidium is a soft, ductile, silvery white metal that melts at 39.3ºC. One of the alkali metals, it is positioned in group 1 (or IA) of the periodic table between potassium and caesium. Naturally occurring rubidium is slightly radioactive and an extremely reactive metal it ignites spontaneously in the presence of air and decomposes in water explosively, igniting the liberated hydrogen. Because of its reactivity, the metal and several of its compounds are hazardous materials, and must be stored and transported in isolation from possible reactants. Although rubidium is more abundant in the earth’s crust than copper, lead, or zinc, it forms no minerals of its own, and is, or has been, produced in small quantities as a by- product of the processing of caesium and lithium ores taken from a few small deposits in Canada, Namibia, and Zambia. Uses of rubidium Rubidium is used interchangeably or together with caesium, and its principal application is in specialty glasses used in fibre optic telecommunication systems. Rubidium’s photoemissive properties have led to its use in night vision devices, photoelectric cells, and photomultiplier tubes. It has several uses in medical science, such as in positron emission tomographic (PET) imaging, the treatment of epilepsy and the ultracentrifugal separation of nucleic acids and viruses. Other uses include use as a co-catalyst for several organic reactions. Rubidium has also been considered for use in a thermoelectric generator using the magnetohydrodynamic principle, where rubidium ions are formed by heat at high temperature and passed through a magnetic field. These conduct electricity and act like an armature of a generator thereby generating an electric current. Rubidium, particularly vaporized rubidium-87, is one of the most commonly used atomic species employed for laser cooling and Bose–Einstein condensation (Figure 33). Its desirable features for this application include the ready availability of inexpensive diode laser light at the relevant wavelength, and the moderate temperatures required to obtain substantial vapour pressures. Rubidium has been used for polarizing 3He, producing volumes of magnetized 3He gas, with the nuclear spins aligned toward a particular direction in space, rather than randomly, rubidium vapour is optically pumped by a laser and the polarized Rb polarizes 3He through the hyperfine interaction. Such spin-polarized 3He cells are becoming popular for neutron polarization measurements and for producing polarized neutron beams for other purposes. The resonant element in atomic clocks utilises the hyperfine structure of rubidium's energy levels, making rubidium useful for high-precision timing, and is used as the main component of secondary frequency references (rubidium oscillators) to maintain frequency accuracy in cell site transmitters and other electronic transmitting, networking, and test equipment. These rubidium standards are often used with GPS to produce a "primary frequency standard" that has greater accuracy and is less expensive than caesium standards. Such rubidium standards are often mass-produced for the telecommunication industry.

Figure 33: Rubidium atoms in a Bose-Einstein Condensate An artists impression of rubidium atoms in a Bose-Einstein Condensate (BEC) being pushed by laser light. When the atoms, which all have the same magnetic spin orientation (represented by their blue and yellow "poles"), are pushed toward the viewer, they drift to the right due to their spin — a result of the spin Hall effect induced in Rubidium atoms at close to absolute zero

Other potential or current uses of rubidium include a working fluid in vapour turbines, as a getter in vacuum tubes, and as a photocell component. Rubidium is also used as an ingredient in special types of glass, in the production of superoxide by burning in oxygen, in the study of potassium ion channels in biology, and as the vapour to make atomic magnetometers. In particular, 87Rb is currently being used, with other alkali metals, in the development of spin-exchange relaxation-free (SERF) magnetometers. Rubidium-82 is used for positron emission tomography. Rubidium is very similar to potassium and therefore tissue with high potassium content will also accumulate the radioactive rubidium. One of the main uses is in myocardial perfusion imaging. The very short half-life of 76 seconds makes it necessary to produce the rubidium-82 from decay of strontium-82 close to the patient. As a result of changes in the blood brain barrier in brain tumours, rubidium collects more in brain tumours than normal brain tissue, allowing the use of radioisotope rubidium-82 in nuclear medicine to locate and image brain tumours. Rubidium was tested for the influence on manic depression and depression. Dialysis patients suffering from depression show depletion in rubidium and therefore a supplementation may help during depression. In some tests the rubidium was administered as rubidium chloride with up to 720 mg per day for 60 days. Rubidium chloride (RbCl) is probably the most used rubidium compound. Other common rubidium compounds are the corrosive rubidium hydroxide (RbOH), the starting material for most rubidium-based chemical processes, rubidium carbonate

(Rb2CO3) used in some optical glasses and rubidium copper sulphate Rb2SO4·CuSO4·6H2O Rubidium silver iodide (RbAg4I5) has the highest room temperature conductivity of any known ionic crystal, a property that is being exploited in thin film batteries and other applications. Rubidium extraction Although rubidium is more abundant in Earth's crust than caesium, the limited applications and the lack of a mineral rich in rubidium limits the production of rubidium compounds to 2 to 4 tonnes per year. Several methods are available for separating potassium, rubidium, and caesium. The fractional crystallization of a rubidium and caesium alum (Cs,Rb)Al(SO4)2·12H2O yields after 30 subsequent steps pure rubidium alum. Two other methods are reported, the chlorostannate process and the ferrocyanide process. For several years in the 1950s and 1960s, a by-product of potassium production called Alkarb was a main source for rubidium. Alkarb contained 21% rubidium, with the rest being potassium and a small fraction of caesium. Until recently Rubidium was considered to be relatively rare, however, it has now been discovered to be fairly abundant, the 16th most abundant element in the earth’s crust. Rubidium occurs in pollucite, leucite and zinnwaldite, which can contain traces up to 1% in the form of the oxide. Lepidolite can contain up to 1.5% rubidium, and the element can be recovered commercially from this source. Rubidium can also be recovered commercially from potassium minerals and potassium chloride. It is found, along with caesium, in the extensive pollucite deposits at Bernic Lake, Manitoba. Rubicline, a mineral with rubidium as an essential constituent, was discovered in Campo, Elba, Italy, in 1998. Rubidium market The current price for pure rubidium is ~ US$1,200 per 100 g and most commentary indicates that it is little used outside research. However, because of its potential as a component of photocells, external sensors and vision systems such as those used in Advanced Driver Aid Systems (ADAS) the precursor to many autonomous vehicle systems there is the potential that rubidium will become more industrially important, but, this is just conjecture at this stage and in-depth analysis of the vision systems sensor market would need to be undertaken to identify whether this constitutes a real opportunity. Supply is thought to be of the order of 6 to 10 metric tonnes per annum, and has historically served to limit demand and use as prohibitively high cost and scarcity discouraged innovation. However, application is often interchangeable with Caesium and from this perspective the two elements can be seen as similar and therefore in many applications the more abundant metal can be substituted.

Magnesium Magnesium is the lightest of all commonly used structural materials with a density of 1.7g/cm3, approximately one-third that of aluminium and titanium, and one-quarter that of steel. Despite this advantage, output of primary magnesium in 2012 at 905,000 tonnes was only 2.5% of primary aluminium output (45.2 million tonnes) and 0.06% of crude steel output (1,546 million tonnes). Magnesium output did, however, exceed that of titanium (211,000 tonnes). Magnesium uses Small additions of magnesium to aluminium impart heat treatability and strength. Magnesium’s affinity with sulphur makes it indispensable in the production of certain grades of crude steel. It also reduces titanium tetrachloride to titanium metal in the Kroll process, and nodularizes iron to produce very high cast iron grades. Together these four applications accounted for 61% of magnesium use in 2012. Thus despite its relative minnow status in structural materials output, magnesium plays a central part in the manufacture and use in metal products (Figure 34). Early structural uses of magnesium alloys were in aircraft fuselages, engine parts, and wheels. They are now also used in jet-engine parts, rockets and missiles, luggage frames, portable power tools, cameras and optical instruments. Today the metal is also widely used in the manufacturing of mobile phones, laptop computers, cameras, and other electronic components. Duralumin and magnalium are alloys of magnesium. The metal is also used in pyrotechnics, especially in signals, and flares, and as a fuse for thermite. It was used in photographic flashbulbs and is added to some rocket and missile fuels. It is used in the preparation of malleable cast iron. An important use is in preventing the corrosion of iron and steel, as in pipelines and ship hulls. For this purpose a magnesium plate is connected electrically to the iron. The rapid oxidation of the magnesium prevents the slower oxidation and corrosion of the iron. Organic magnesium compounds (Grignard reagents) are important in the synthesis of organic molecules and magnesium compounds such as the hydroxide (milk of magnesia, Mg(OH2)), sulphate (Epsom salts), chloride and citrate are used for medicinal purposes. Magnesium is the second most important intracellular cation and is involved in a variety of metabolic processes including glucose metabolism, ion channel translocation, stimulus-contraction coupling, stimulus secretion coupling, peptide hormone receptor signal transduction. However, automotive use, driven by the trend for vehicle lightweighting, is perhaps the most strategic use of magnesium alloy, and a number of new alloys suitable for die- cast, sheet and extrusion products have recently been produced (Figure 35 and Figure 36).

Figure 34: Magnesium use by application Source: International Magnesium Group

Figure 35: Increasing magnesium use per vehicle 2007 – 2020 Source: Hill Technology & Management

Figure 36: Potential for weight saving replacing aluminium with magnesium in the powertrain Source: GM/ Ford/ Chrysler

Magnesium as a strategic metal and price volatility Current demand for magnesium for alloying with aluminium and for steel desulphurisation is largely stable and any significant increases in demand are driven by automotive applications and substitution for steel and aluminium components. In the current supply chain for magnesium tier one suppliers and die casters look generally for long term contracts based on close cooperation with OEMs on design and integration. As a part of this supply chain the tier one suppliers obtain quotes from the magnesium alloy producers, which in turn base pricing on spot quotes from the pure magnesium producers. If pure magnesium prices begin to raise alloy producers and tier one suppliers inevitably find themselves squeezed between the OEMs requiring long- term price stability and the pure magnesium producers basing their pricing on spot quotes. This, according to the International Magnesium Group, is an unsustainable business model for the sector to seek to progress and gain the benefits of magnesium as a part of the material mix. Magnesium has always had great potential in manufacturing, particularly automotive. Historically it has been used in a number of applications; for many years the Volkswagen Beetle featured magnesium engine components where its use amounted to about 20 kg per car. When the Beetle ceased production in Europe, demand amounting to around 42,000 tonnes (at peak Beetle production) was removed from the market; VW did not continue this technology into its next generation of vehicles. The reason behind the decline in the popularity of magnesium through the 1980s and 1990s for automotive applications is related to a large degree to its price volatility.

With the dissolution of the former Soviet Union at the end of 1991, Russia and the Ukraine had significant stockpiles of magnesium available to exchange for hard currency. The price for magnesium moderated until in mid-1994 one producer in the United States requested an anti-dumping investigation of imports from these two countries as well as China. This resulted in the cessation of imports into the most advanced (in terms of magnesium use) automotive industry. Prior to this action, US demand overall was increasing. This growth was largely being driven by increased use in automotive manufacturing. However, the elimination of magnesium from Russia, China, Ukraine, and (in a separate anti-dumping action prior to 1991) Canada, resulted in increasing prices. Supplies were tight during 1995 and the price escalated to its highest level since magnesium was first produced in 1915. By 1996 the price began to moderate once again as east European magnesium returned to the US market, but as far as the world’s OEMs were concerned, at least in the short-term the damage was done. Magnesium had gained a reputation for high price volatility and therefore carried a risk in its use that manufacturers were not willing to take. It took many years and the legislative intervention of governments to mitigate CO2 emissions to establish the mechanisms within the market to alleviate the perceived risks before intellectual capital could once again be invested in realising the potential of magnesium in automotive manufacturing. The last decade of magnesium metal production has been characterised by a concentration of capacity in China, where the Pidgeon process, dating from the 1940s is very labour and energy intensive. Furthermore, each tonne of magnesium produced results in 43.3 kg of CO2 output, compared with an average for aluminium production globally of 12.7 kg per tonne. Prior to the construction of plant in China there were a variety of suppliers globally and competition, US dumping laws aside, however, the low price product offered through the Pidgeon process has served to allow China to strategically dominate the market. This concentration of capacity in China utilising what is essentially a very ‘dirty’ process has resulted in the magnesium production costs being influenced heavily by the following: • The price of ferrosilicon, which represents 50% of Chinese production costs and is in turn heavily influenced by demand for steel; • The price of Chinese electricity, which is subject to significant demand increase and is forecast to grow at 1.1 times GDP by the EU Policy Commission; • The price of Chinese coal, where demand is forecast to triple by 2025; The price of oil, which affects Chinese inflation and transportation costs; and • Chinese inflation, which is putting an upward pressure on labour costs. Currently margins within the magnesium component supply chain are thin and the base price of magnesium metal, because of the dominance of Chinese supply, is forecast to rise at the rate of Chinese inflation at least. These conditions bought about the price spike in 2008 seen in Figure 37, and continue to dominate strategic thinking today, the result of which is the significant underutilisation of magnesium in the automotive sector despite its highly desirable characteristics.

Furthermore, competition from aluminium, and thus the price ratio with aluminium and the differential amount of CO2 released in its production are also paramount in OEM decisions about the utilisation of magnesium. However, the situation today does hold some promise as new extraction process technology holds the prospect of alleviating the situation and allowing magnesium to be used for its undoubted attributes. For instance the Zuliani process currently being installed in Manitoba, Canada targets successfully many of the shortfalls of the Pidgeon process in China with much higher raw material and process reagent utilisation efficiencies and low, stable electricity costs ($0.035 per kWh versus $0.083 per kWh for China) together with low CO2 output (around 9.1 kg per tonne) holding the promise of stable magnesium prices at a ratio with aluminium prices that maintains long term interest in its use. Because of its utility and properties it is likely that magnesium will become increasingly important, particularly as die casting, sheet and extruded product takes advantage of new alloy development. Currently China dominates this important market and strategically it is likely to continue to focus on control for some years (Figure 38). However, should the economics of a geothermal brine based extraction technique allow, the global market continues to grow despite its tribulations. Currently the price for industrial grade magnesium is ~ US$4,400 per tonne and for medical grades US$35 per kg.

Figure 37: Magnesium pricing history Source: International Magnesium Group

North 39,000 America 5% 15,600 2% 31,200 4% 54,600 South 7% America 93,360 24%

171,160 Europe 44%

58,350 15% CIS 58,350 7,780 15% 2%

639,600 82% China

Thousand tonnes

Figure 38: Global magnesium production 1998 and 2011 by region Inner ring total 389,000 metric tonnes, outer ring total 780,000 thousand metric tonnes Source: Gossan

Sodium

Uses of sodium Sodium is used extensively in sodium vapour lighting, as a heat transfer agent (e.g., cooling nuclear reactors). Salt's ability to preserve food was a foundation of civilization. It helped to eliminate the dependence on the seasonal availability of food and it allowed travel over long distances. However, salt was difficult to obtain, and so it was a highly valued trade item to the point of being considered a form of currency by certain peoples. Sodium ions facilitate transmission of electrical signals in the central nervous system and regulate the water balance between body cells and body fluids. Metallic sodium is used in the manufacture of sodamide and esters, and in the preparation of organic compounds. It is also used to modify alloys such as aluminium- silicon by improving their mechanical properties and fluidity and to descale (smooth the surface of) metals and to purify molten metals. Sodium extraction and production Enjoying rather specialized applications, only about 100,000 tonnes of metallic sodium are produced annually. Metallic sodium was first produced commercially in 1855 by carbothermal reduction of sodium carbonate at 1100 °C in what is known as the Deville process:

Na2CO3 + 2 C → 2 Na + 3 CO A related process based on the reduction of sodium hydroxide was developed in 1886, however, sodium is now produced commercially through the electrolysis of molten sodium chloride, based on a process patented in 1924. This is done in a Downs cell in which the NaCl is mixed with calcium chloride to lower the melting point below 700 °C. As calcium is less electropositive than sodium, no calcium will be deposited at the cathode. This method is less expensive than the previous Castner process of electrolyzing sodium hydroxide. Sodium market Because of the large range of uses for sodium compounds and salts its markets are extremely diverse and complex ranging from such household items as sodium bicarbonate to medical compounds. Currently the price for metallic sodium is ~ $US250 per 100 g pure metal; lower purity metal sells for considerably less. The market for sodium is volatile due to the difficulty in its storage and shipping; it must be stored under a dry inert gas atmosphere or anhydrous mineral oil to prevent the formation of a surface layer of sodium oxide or sodium superoxide. These oxides can react violently in the presence of organic materials. Smaller quantities of sodium cost a proportionately greater amount due to the expense of shipping hazardous material.

Potassium

Uses of potassium As with sodium, the uses of potassium compounds are many and varied. Potassium is vital for plant growth and the greatest demand for potassium compounds is in fertilizers, particularly in the form of potash, which refers to a variety of potassium bearing minerals including potassium chloride [KCl, or muriate of potash (MOP)], potassium sulphate [K2SO4, or sulphate of potash (SOP)], potassium-magnesium sulphate (K2SO4•MgSO4, or sulphate of potash magnesia), potassium nitrate (KNO3, or saltpetre), and mixed sodium-potassium nitrate (NaNO3+ KNO3, or Chilean saltpetre). Potassium hydroxide is a strong alkali and an important industrial chemical. It is used in the manufacture of soft soaps and as an electrolyte in alkaline batteries. Potassium chloride is used as a healthier alternative to table salt. Toughened glass can be made by immersing glass in molten potassium nitrate, which is also the main explosive ingredient in gunpowder. Extraction and production Potassium salts such as carnallite, langbeinite, polyhalite, and sylvite form extensive deposits in ancient lake bottoms and seabeds, making extraction of potassium salts in these environments commercially viable. The principal source of potassium, potash, is mined in Canada, Russia, Belarus, Germany, Israel, United States, Jordan, and other places around the world. The first mined deposits were located near Staßfurt, Germany, but the deposits span from Great Britain over Germany into Poland. They are located in the Zechstein and were deposited in the Middle to Late Permian. The largest deposits ever found lie 1,000 meters (3,300 feet) below the surface of the Canadian province of Saskatchewan. The deposits are located in the Elk Point Group produced in the Middle Devonian. Saskatchewan, where several large mines have operated since the 1960s, pioneered the use of freezing of wet sands (the Blairmore formation) in order to drive mine shafts through them. The main potash mining company in Saskatchewan is the Potash Corporation of Saskatchewan. The water of the Dead Sea is used by Israel and Jordan as a source for potash, while the concentration in normal oceans is too low for commercial production at current prices. Several methods are applied to separate the potassium salts from the present sodium and magnesium compounds. The most common method is to precipitate some compounds relying on the solubility difference of the salts at different temperatures. Electrostatic separation of the ground salt mixture is also used in some mines. The resulting sodium and magnesium waste is either stored underground or piled up in slag heaps. Most of the mined potassium minerals end up as potassium chloride after processing. The mineral industry refers to potassium chloride either as potash, muriate of potash, or simply MOP. Pure potassium metal can be isolated by electrolysis of its hydroxide in a process that has changed little since Davy. Although the electrolysis process was developed and used in industrial scale in the 1920s the thermal method by reacting sodium with potassium chloride in a chemical equilibrium reaction became the dominant method in the 1950s. The production of sodium potassium alloys is possible by changing the 61

reaction time and the amount of sodium used in the reaction. The Griesheimer process employing the reaction of potassium fluoride with calcium carbide was also used to produce potassium. Na + KCl → NaCl + K (Thermal method)

2 KF + CaC2 → 2 K + CaF2 + 2 C (Griesheimer process) Potassium market Currently the price for metallic potassium is ~ $US200 per 100 g pure metal. Lower purity metal is considerably cheaper. The market for pure metal is volatile due to the difficulty of the long-term storage of the metal. It must be stored under a dry inert gas atmosphere or anhydrous mineral oil to prevent the formation of a surface layer of potassium superoxide. This superoxide is a pressure-sensitive explosive that will detonate when scratched. The resulting explosion will usually start a fire that is difficult to extinguish.

Calcium

Uses of calcium Calcium metal has relatively few uses. It is sometimes used in the removal of unwanted chemicals from a system. Calcium is used as a getter in the manufacture of evacuated glass bulbs. Calcium is added to the bulb while it is being made. It then combines with gases left in the glass in the final stages of manufacture. Calcium is also used as a getter in the production of certain metals, such as copper and steel. The calcium removes unwanted elements that would otherwise contaminate the metal.

Calcium carbonate (CaCO3) is used in manufacturing cement and mortar, lime, limestone (usually used in the steel industry) and aids in production in the glass industry. It also has chemical and optical uses as mineral specimens in toothpastes, for example. Calcium hydroxide solution (Ca(OH)2) (also known as limewater) is used to detect the presence of carbon dioxide by being bubbled through a solution. It turns cloudy where CO2 is present. Calcium propionate is used as a food additive, acts as a microbial agent, and therefore is very cost effective as a preservative in a wide variety of foods. It is one of the key tools in achieving long shelf life and its use is growing because of consumers’ increasing preferences for fresh foods.

Calcium arsenate (Ca3(AsO4)2) is used in insecticides. Calcium carbide (CaC2) is used to make acetylene gas (for use in acetylene torches for welding) and in the manufacturing of plastics.

Calcium chloride (CaCl2) is used in ice removal and dust control on dirt roads, in conditioner for concrete, as an additive in canned tomatoes, and to provide body for automotive tires.

Calcium citrate (Ca3(C6H5O7)2) is used as a food preservative, calcium cyclamate (Ca(C6H11NHSO3)2) is used as a sweetening agent in several countries but in many it is no longer permitted for use because of suspected cancer-causing properties. Calcium gluconate (Ca(C6H11O7)2) is used as a food additive and in vitamin pills.

Calcium hypochlorite (Ca(OCl)2) is used as a swimming pool disinfectant, as a bleaching agent, as an ingredient in deodorant, and in algaecide and fungicide. Calcium permanganate (Ca(MnO4)2) is used in liquid rocket propellant, textile production, as a water sterilizing agent and in dental procedures.

Calcium phosphate (Ca3(PO4)2) is used as a supplement for animal feed, fertilizer, in commercial production for dough and yeast products, in the manufacture of glass, and in dental products. Calcium phosphide (Ca3P2) is used in fireworks, rodenticide, torpedoes and flares.

Calcium stearate (Ca(C18H35O2)2) is used in the manufacture of wax crayons, cements, certain kinds of plastics and cosmetics, as a food additive, in the production of water resistant materials and in the production of paints. Calcium sulphate (CaSO4·2H2O) is used as common blackboard chalk, as well as, in its hemihydrate form better known as Plaster of Paris.

Calcium tungstate (CaWO4) is used in luminous paints, fluorescent lights and in X-ray studies. Hydroxylapatite (Ca5(PO4)3(OH), but is usually written Ca10(PO4)6(OH)2) makes up seventy percent of bone. Also carbonated-calcium deficient hydroxylapatite is the main mineral of which dental enamel and dentin are comprised. Calcium market The markets for calcium compounds are many and varied and naturally very diverse in terms of price. Current commentary about the calcium carbonate market indicates that it is likely to grow from US$15.6 billion in 2012 to more than US$25 billion by 2020 at a CAGR of 7%. The global calcium carbonate market can be segmented in three ways; by application, product, and region. By product the market is bifurcated into precipitated calcium carbonate (PCC) and ground calcium carbonate (GCC). The rising applications of GCC in industries such as plastics, paper, and paints and coatings and in non-traditional end use industries will enable the GCC segment of the calcium carbonate market to grow at a 2.9% CAGR, while the desirable properties of PCC such as brightness, whiteness, and opaque visibility will enable growth at a CAGR of 3.9% from 2013 to 2019. Geographically, Asia-Pacific has around a 50% share of the total calcium carbonate demand volume and is growing at an estimated 4.4% CAGR form 2012 to 2020. Asia- Pacific owes this growth to the rapid industrial expansion in nations such as India and China. The consumption of calcium carbonate depends greatly on the growth of the paper industry. The demand for specialty papers such as packaging paper and tissue paper has risen in the Asia-Pacific region due to rise in hygiene awareness among the population, changing lifestyles, and higher education facilities. Europe is the second largest market for calcium carbonate accounting for 24% of global demand in 2012. North America accounts for around 20% of the overall demand for calcium carbonate. Growth in developed markets is likely to be sluggish due to the closure or restructuring of paper mills. However, the use of calcium carbonate in non- traditional end uses is expected to help the markets recover volume by 2020. The calcium propionate market is forecast to grow from US$220 million in 2012 to US$312 million by 2018, at a CAGR of 6% from 2013 to 2018. North America led the market, followed by Europe in terms of revenue in 2012. Calcium propionate is used in the bakery, feed, dairy, meat and processed meat sectors. Other calcium compound markets are many and varied but its marketability depends on quantity, purity, compound and form.

Gold Gold has an increasing range of uses despite its very high intrinsic value (Table 9 and Figure 39). It is widely used in jewellery and some coinage, in dental work, as a plating material for decoration and as a thread in high-end embroidery. However, non- traditional uses in electronics and microelectric circuits are becoming more common as gold ensures a corrosion-resistant and static-free environment. Gold-coated Mylar sheets are used as a solar heat shield.

Table 9: Gold use 2013, 2014

Figure 39: Gold price in US$ Source: GM/ Ford/ Chrysler 65

The isotope 198Au is used in cancer treatment and because of its good biocompatibility properties it is finding an increasing role in the treatment of some diseases. Advances in nanotechnology and a greater understanding of how to manipulate materials at the nano-scale have once again brought gold to the attention of medical researchers. Gold nanoparticles are at the heart of the hundreds of millions of Rapid Diagnostic Tests (RDTs) that are used globally every year. This well established, and critically important, technology has changed the face of disease diagnosis in the developing world over the last decade. For example, malaria RDTs work by applying a single drop of blood to a test strip. Gold nanoparticles drive a colour change on the strip if malaria is present. The tests are simple, reliable and robust; they can be used anywhere in the world without the need for expensive equipment or complex supply chains. According to the World Health Organisation (WHO), 155 million malaria RDTs were sold in 2011. Beyond RDT technology, new, more advanced diagnostic technologies are being developed for specific diseases, applying the unique properties of gold nanoparticles. Gold nanoparticles are also used to extend HIV-AIDS patient care and monitoring to the point-of-care in resource-limited settings.

Conclusions This report is designed to give detailed ideas of potential values and uses for minerals extracted from geothermal brines. These are principally speciality silica (colloidal and precipitated), lithium, boron, caesium and rubidium, potassium and sodium. For each of these there are market opportunities, in many cases highly specialised with very particular specification, but also in many cases close to commodity. Each of the compounds or minerals discussed above has a market suitability based on a matrix of considerations centred around three areas: 1. The physical nature of the product including compounds, purity and in many cases particle morphology, consistency of supply and any necessary product support; 2. The price and value chain; in that for each compound a point in the supply chain(s) where it may be desirable to insert product. This will naturally have a significant influence on the profitability of individual minerals. By identifying the correct customer/ price level within the supply chain for the finished product a much more robust idea of margin and therefore profitability will be gained; 3. Geographic market considerations such that supply to a New Zealand based supply chain will necessarily be less costly than a US based supply chain for a given quantity of compound. However, in some cases further processing might only take place in a few locations globally. These further considerations can only be taken into account once the physical nature and cost base of the product available is better established. This will enable detailed research on an individual product or compound level to establish real opportunity. It terms of the possible extracts all of the compounds examined hold some opportunity, although as with most such product supply, demand and market speciality are major dynamic drivers. New therapies increase the demand for high purity compounds at high prices, but this is not a closed opportunity. It is open to other suppliers that might increase capacity, and have established sales and support relationships. On the other hand the closer to a commodity a product becomes the less likely it is that a long-term competitive position can be maintained from New Zealand. It is therefore important to carefully consider market opportunities such that those chosen for pursuit are distanced from pure commodity while being practical in terms of the necessary customer relationship. Developing new markets or routes to market takes considerable investment and they must be protected from existing and other competitors with an ambition or strategy to follow quickly. On the other hand, if a long-term relationship into a supply chain or indeed with an end- user, can be successfully developed, satisfied and supported there is sustainable competitive advantage to be had.