Raw materials in the European defence industry Claudiu C. Pavel & Evangelos Tzimas European Commission, Joint Research Centre Directorate for Energy, Transport & Climate Knowledge for Energy Union Unit - 2016 – Table of contents Acknowledgements ................................................................................................ 2 Executive summary ............................................................................................... 3 1. Introduction ...................................................................................................... 6 1.1 Background ............................................................................................... 6 1.1.1 EU Raw Materials Initiative and critical raw materials ................................ 6 1.1.2 Tackling the raw materials supply risks in Europe's defence industry ........... 7 1.2 Overview of international efforts to identify the raw materials used in the defence industry .............................................................................................. 7 1.3 An overview of the importance of raw, processed and semi-finished materials in the defence industry ................................................................................... 11 1.4 Scope of the study and approach ............................................................... 12 2. Overview of the EU defence industry .................................................................. 14 2.1 General considerations ............................................................................. 14 2.2 Identification of key defence systems and applications .................................. 17 3. Inventory of materials used in defence applications at system and component level 20 4. Inventory of materials in the European defence industry ...................................... 39 4.1 List of processed materials used in defence applications ................................ 39 4.2 List of raw materials used in defence applications ........................................ 43 5. Industrial dependency on raw materials used in European defence applications ....... 50 5.1 Assessment of import dependency ............................................................. 50 5.2 Opportunities for increasing EU production .................................................. 56 6. Assessment of global and EU production capability for materials used in the defence industry: the case of high-performance alloys and aerospace materials .......... 59 6.1 High-performance alloys ........................................................................... 59 6.2 Materials for aeronautical applications ........................................................ 62 6.3 Global and EU production capability of high-performance alloys and aerospace materials ....................................................................................... 69 6.4 R&D initiatives related to materials development for the defence sector .......... 73 7. Conclusions .................................................................................................... 75 References ......................................................................................................... 79 List of abbreviations and definitions ....................................................................... 81 Appendix 1: Overview of the production of defence-related applications by the European defence sector ...................................................................................... 82 Appendix 2: Description of the European defence applications .................................. 90 Appendix 3: Composition of main alloys used in the defence industry ...................... 117 1 Acknowledgements This report has been produced in the context of Administrative Arrangement SI2.688731 between DG GROW and the JRC. It takes stock of the outcome of a prior contract study carried out by the European Company for Strategic Intelligence (CEIS) and the BIO Intelligence Service for the JRC (contract number 112892 with the European Commission). The authors would like to thank Patricia Alves Dias (JRC) for her contribution to data collection, and the following experts for their valuable comments during the preparation of the report: Andrew Clifton Rolls-Royce Plc Kerrill Grealy Meggitt Avionics Roland Lang Airbus Defence and Space Neil Watt Thales 2 Executive summary Policy context Access to raw materials is of growing concern for the European economy. Prepared in the context of the EU raw materials strategy and in support of the European Defence Action Plan (EDAP), this study identifies the raw materials that are important to the European defence industry. The screening of raw materials used in the European defence industry represents an action within the implementation roadmap, put forward by the European Commission, for promoting a more competitive and efficient defence and security sector1. The study was carried out by the Joint Research Centre (JRC) at the request of DG GROW through an Administrative Arrangement (AA). This assessment was built on the JRC’s experience on the analysis of the role of raw materials in the transition of the European energy system to a low-carbon economy. Methods and approach The study was conducted in close collaboration with DG GROW and has taken stock of a previous analysis subcontracted by the JRC to a consortium of the European Company for Strategic Intelligence (CEIS) and the BIO Intelligence Service. These specialised consultants identified the most important applications from the main defence sectors of the European industry, i.e. aeronautics, naval, land, space, electronic and missile, and further disaggregated these applications into subsystems, components and materials. The study has also benefited from input collected by the JRC from specialised reports, industrial experts and associations (e.g. Community of European Shipyards Associations). Finally, the report has been reviewed by industrial stakeholders (i.e. Rolls- Royce Plc, Meggitt Avionics, Airbus Defence and Space and Thales) and Member States in coordination with DG GROW. Main findings An assessment of the most representative applications of the European defence industry revealed that 47 different processed and semi-finished materials (i.e. alloys, composites, compounds) are important for the manufacture of defence application systems. In the context of this report, the term ‘important’ is used to denote materials with unique properties, necessary to fulfil the stringent requirements of defence applications. A further assessment of the composition of these 47 important processed and semi- finished materials revealed that 39 raw materials are necessary for their production (Figure I). An analysis of import dependency showed that the EU is almost 100 % import dependent on 19 of these 39 raw materials (beryllium, boron, dysprosium, germanium, gold, indium, magnesium, molybdenum, neodymium, niobium, praseodymium and other REEs, samarium, tantalum, thorium, titanium, vanadium, zirconium and yttrium) and is more than 50 % reliant on imports for over three-quarters of them. China is the major producer for one-third of the raw materials identified in defence applications. 1 COM(2014) 387 final: Implementation Roadmap for Communications COM(2013) 542; Towards a more competitive and efficient defence and security sector 3 Figure I: Raw materials in the European defence industry The defence sector’s materials supply chain is a complex multi-level network of material suppliers, manufacturers, distributors and retailers/wholesalers (Figure II). An efficient supply chain ensures the timely delivery at competitive prices of all intermediate and final products to the original equipment manufacturers (OEMs). The supply chain involves various stages, such as the supply of raw materials, metal refining and processing (e.g. alloying or composite production) and conversion into semi-finished and finished products. A strong and sustainable materials supply chain is essential for the overall growth and competitiveness of the European defence industry. Figure II: A simplified materials supply chain and the main European suppliers Main conclusions The European defence industry requires very specialised high-performance processed and semi-finished materials (e.g. special alloys, composites, etc.) for the production of its defence applications: 39 raw materials are necessary to produce these advanced materials. For about half of them, the defence industry relies 100 % on imports from countries outside the EU. Sixteen of the 39 raw materials used in defence applications are included in the EU’s critical raw materials list 2014. As regards those defence sectors that mainly use these 16 raw materials, it can be inferred that the defence industry’s aeronautics and electronics sectors are the most vulnerable to potential interruptions in the supply of materials. 4 The demand for raw materials in the manufacture of defence applications is relatively low. Moreover, the lead system integrators and top-tier contractors in the defence industry do not usually purchase raw materials as such, but rather semi-finished and finished products made of high-performance materials such as special alloys, composite materials, etc. The study identified 47 different alloys, compounds and composite materials that are important to the European defence industry. Given the very high level of performance and special properties of these materials which cannot be matched by readily