House of Commons Science and Technology Committee Strategically important metals Fifth Report of Session 2010–12 Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/science Ordered by the House of Commons to be printed 4 May 2011 HC 726 Published on 17 May 2011 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Science and Technology Committee The Science and Technology Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the Government Office for Science and associated public bodies. Current membership Andrew Miller (Labour, Ellesmere Port and Neston) (Chair) Gavin Barwell (Conservative, Croydon Central) Gregg McClymont (Labour, Cumbernauld, Kilsyth and Kirkintilloch East) Stephen McPartland (Conservative, Stevenage) Stephen Metcalfe (Conservative, South Basildon and East Thurrock) David Morris (Conservative, Morecambe and Lunesdale) Stephen Mosley (Conservative, City of Chester) Pamela Nash (Labour, Airdrie and Shotts) Jonathan Reynolds (Labour/Co-operative, Stalybridge and Hyde) Graham Stringer (Labour, Blackley and Broughton) Roger Williams (Liberal Democrat, Brecon and Radnorshire) Alok Sharma (Conservative, Reading West) was a Member of the Committee during part of the inquiry. Powers The Committee is one of the departmental Select Committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No.152. These are available on the Internet via www.parliament.uk Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at http://www.parliament.uk/science. A list of reports from the Committee in this Parliament is included at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in printed volume(s). Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are: Glenn McKee (Clerk); Ed Beale (Second Clerk); Farrah Bhatti (Committee Specialist); Xameerah Malik (Committee Specialist); Anthony Walker (POST Intern); Andy Boyd (Senior Committee Assistant); Julie Storey (Committee Assistant); Pam Morris (Committee Assistant); and Becky Jones (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Science and Technology Committee, Committee Office, 7 Millbank, London SW1P 3JA. The telephone number for general inquiries is: 020 7219 2793; the Committee’s e- mail address is: [email protected] Strategically important metals 1 Contents Report Page Summary 3 1 Introduction 5 Why metals? 5 The inquiry 6 Structure of the report 7 2 Background 8 What are strategically important metals? 8 Metals terminology 9 How important are strategic metals to the UK? 11 Metal management 12 Resource information 12 A role for Government 13 Non-metals 15 3 Trade and geopolitics 16 Metals supply 17 Are metals running out? 17 National monopolies 18 Demand for metals 21 Market responsiveness 22 Stockpiling 23 Trading metals 25 Speculation in the metal markets 25 Market dominance 26 REACH legislation 26 4 Social and Environmental Impact of Metal Extraction 29 Raising global standards 30 Regulation 30 Voluntary schemes 33 Getting a fair deal for developing countries 35 “Conflict metals” in the Democratic Republic of Congo 36 5 Metal Use Efficiency 39 The life cycle approach and product design 39 Recycling strategic metals 43 Meeting demand with recycling 43 WEEE legislation 47 Exporting metal waste 49 6 Domestic extraction 52 Exploiting potential reserves 52 2 Strategically important metals Impact of domestic extraction 54 UK planning law 56 Conclusions and recommendations 59 Formal Minutes 65 Witnesses 66 List of printed written evidence 67 List of additional written evidence 67 List of Reports from the Committee during the current Parliament 68 Strategically important metals 3 Summary Strategically important metals comprise the rare earth elements, the platinum group elements and other main group elements of importance to the UK. Of particular importance are those specialist metals that are vital to advanced manufacturing, low- carbon technologies and other growing industries. Supply risks to strategically important metals have been a focus of recent media attention. The perception of scarcity of certain minerals and metals may lead to increased speculation and volatility in price and supply. For this reason, there is a need for accurate and reliable information on the potential scarcity of strategic metals. We heard that most strategic metal reserves are unlikely to run out over the coming decades. In practice, improved technology, the use of alternative materials and the discovery of new reserves are likely to ensure that strategic metals are accessible but there may be price implications. There are, however, concerns about supplies to UK users. The fact that China currently supplies over 97% of the world’s rare earth elements has highlighted the risk of monopolies and oligopolies in strategic metals. China recently imposed export quotas. We are also concerned by reports of hedge funds buying up significant quantities of strategic metals. Furthermore, the increasing global demand for strategically important metals from emerging economies and new technologies will be a significant factor affecting their price, and therefore availability in the future. In order to meet the growing demand for strategically important metals, there may be a need to exploit lower grade minerals, much of which can be found in developing countries outside China. Although there will be a significant environmental and monetary cost, there is an opportunity for developing nations to benefit from mining revenues. Fair royalties on mining sales will equip governments with funds that could be used to help improve social and environmental conditions. Broader action on improving the social and environmental impact of mining needs to be taken internationally. There is a need for the Government to be “joined up” on resource issues. In particular, the Government needs to clarify which department leads in the provision of information on strategic metal resources and how this information is updated and shared across government and then disseminated to businesses. The provision of such information will help businesses prepare for any potential future resource risks. We also found that there is a lack of information available on the strategically important metals contained in finished and semi-finished imports, as well as the amounts and locations of strategic metals in the national waste stream. We recommend that the Government conduct a review of metal resources—finished and semi-finished goods and waste—in the UK. This will help to identify routes to the recovery of strategic metals, and will also empower the private sector to realise the economic potential of recovery and recycling. 4 Strategically important metals We are pleased that the metal recycling industry in the UK is recycling 90%, by weight, of collected waste and that substantial quantities of platinum, rhodium, palladium, gold and silver are being recovered, mainly from recovered waste electrical and electronic equipment. However, it is of great concern to us that some strategic metals, which are often in products in small quantities, are likely to be lost in the 10% not being recycled. These small quantities of strategic metals might be more effectively recycled by embracing a “cradle-to-cradle approach” whereby products are designed for disassembly. These products can then be returned to manufacturers at the end of their useful life for resource recovery. We have been given examples of the financial benefits to manufacturers that have tried this approach. We would like to see widespread use of this approach in UK manufacturing, and intelligent product design is key to its effective implementation. We heard concerns that the UK was exporting large quantities of scrap metal and that the export of scrap and waste electrical and electronic equipment was environmentally damaging. Given that scrap metal and waste electrical and electronic equipment are a potential resource for the UK, it seems nonsensical to be exporting them abroad. The Government should be actively working towards minimising the export of these materials. Finally, there are unexploited deposits of various strategic metals in the UK but, in many areas, it is unclear whether extraction is economically viable. It is important that the Government invests in the necessary research, to ensure that future domestic mining has the least possible environmental impact. The Government needs a comprehensive and up- to-date understanding of potentially valuable domestic mineral resources. We are concerned, however, by reports that uncertainty and delay in the planning process is preventing some mining companies from even considering prospecting for reserves in the UK. We recommend that the Government classify mines, in particular those containing strategic metal reserves, as nationally significant infrastructure, under the Planning Act 2008. Strategically important metals 5 1 Introduction Why metals? 1. Metals are essential for the quality of life that modern society is accustomed