Eight Reports on Global Material Shortages

Eight reports with substantive data, information, and analysis on the state of global material shortages are identified below.  These reports were found during an exhaustive Internet search.

The reports are associated with what I judge to be authoritative institutions and authors.  The reports, in my opinion, represent very thorough research and analysis. The resources behind these reports are substantial.  If the resources were used in preparation of the reports, then collectively, the reports likely represent correct facts and views related to global material shortages as of the dates of the reports.   The reports are from: three organizations that represent governments (United States; United Kingdom, and European Union); one from a university (Germany); one from professional associations (United States); and three from consulting groups (the Netherlands; United States).

1.  A December 2011 US Department of Energy report (click here to read report; PDF file) identifies raw materials with potential supply risks.  The focus is on materials important in clean energy technologies, but many of the materials are important in several industries.  The report identifies strategies for addressing the potential risks.

2.  A March 2012 report from the UK Department for Business Innovation & Skills and the Department for Environment, Food, and Rural Affairs (click here; PDF file) was prepared because of concerns about the availability of raw materials.  The report provides an analysis of the various impacts of raw material shortages.

3.  A February 2011 European Commission report (click here; PDF file) identifies 14 raw materials that the authors consider critical to the European Union and which also have supply shortage risks.  The report makes suggestions for responses to material supply shortage risks.

4.  A 2011 University of Augsburg report (click here; PDF file) identifies 19 materials critical to the energy industry and which also have potential supply risks.  Each material is discussed with respect to its use in the energy industry and the potential supply risks.

5.  A November 2009 report from the Dutch Materials Innovation Institute and Corus Research, Development, and Technology (click here; PDF file) discusses expected material shortages.  The report provides analysis of the present situations with respect to material shortages, the potential impact, and solutions.

6.  A 2010/2011 report (click here; PDF file) from the American Physical Society and the Material Research Society makes recommendations on what the United States Government should do to insure the supply of energy-critical materials, which are identified.

7.  An August 2011 report (click here; PDF file) from Skyworks Solutions, Inc. provides a summary of several studies that addressed raw material scarcity.  The summary provides historical data and the various perspectives and assumptions that are used in conclusions made on raw material scarcity.

8.  A December 2011 report provides the results of a 2011 survey conducted by PriceWaterhouseCoopers (click here; PDF file).  Sixty-nine senior executives of manufacturing companies answered questions on the impacts, opportunities, and risks to their companies from material shortages.

These 8 reports likely represent as correct a recent assessment of global material shortages as is available on the Internet.  And, as such, the reports are a valuable resource for those seeking knowledge in this area.

A conclusion I reached from reading the reports is that several variables affect supplies, prices, and other aspects of material availability.  And, these variables change over time.  Therefore, it is very difficult to estimate future market availability of many materials.  Market availability does not equate to amounts of the materials available in the earth.  For amounts present in the earth, the materials will be available for long periods, at today’s annual usage rates.  Nevertheless, shortages can exist in market availability based on the many variables that influence market availability. And, these market availability levels change over time.

Pounds per Person of Acrylonitrile Use

Based on Internet data, the United States consumed approximately 545,000 metric tons of acrylonitrile in 2009 as a starting chemical from which many products were produced.   And, Western Europe in 2010 used approximately 750,000 metric tons.  Using these quantities and the approximate populations of these areas, this acrylonitrile consumption converts to approximately 4 pounds of acrylonitrile used per person in both the USA and Western Europe.

Does 4 pounds per person represent a “mature” amount of acrylonitrile to produce in order to have the desired products that well-developed economies want?  If yes, then estimating the per person use for the world population shows a gap in acrylonitrile needed to provide on a world-wide basis the types of products for everyone that those of us in well-developed economies desire and use.

The estimated world-wide consumption of acrylonitrile in 2011 was 5.25 million metric tons or approximately 1.7 pounds per person.   This suggests a need for a lot more acrylonitrile production as more people become better developed economically and seek to use those acrylonitrile-based products widely used in developed countries such as the United States and Western Europe.

Another conclusion is the importance of increasing demand in lesser-developed countries for certain mature industries in developed countries to grow.

Data used for the above were found at such sites as: clickhere (a Chemical & Engineering News report with acrylonitrile use); click here (a PCI Acrylonitrile, Ltd report on acrylonitrile prices and production); and click here (a Wikipedia site defining Western Europe and providing its population).

Fluorspar Price and Mine Production Data Trends

The United States Geological Survey (USGS) publishes regularly fluorspar price, mine production, and other data.  Using this data, the graphs below on fluorspar, using 1996 to 2012 price and mine production data, were created.

Also, a regression analysis of the data, using Excel, was done to determine how closely the price and mine production quantity changes correlated with one another from year to year.

The R square result of this regression analysis is 81%, generally considered to indicate a good correlation between changes in two sets of data.  This suggests that often when fluorspar price went up (or down) so did the amount of fluorspar mined go up (or down), from year to year.  There seems to be a relationship between the two events – price changes and amounts mined.

Fluorspar’s price per ton increased 287% from 1996 to 2012, using average fluorspar acid prices for the year provided by the USGS in their reports (from $141 per ton in 1996 to $545 per ton in the first quarter 2012).  This is an average annual increase of 22%.  And, the fluorspar mine production went from 4,090,000 metric tons in 1996 to 6,850,000 metric tons in 2012, a 5% per year increase.

USGS estimates 240,000,000 metric tons fluorspar in mining company’s reserves (2012).  This is enough fluorspar inventories to last 35 years at 2012 mine production levels (6,850,000 metric tons).  So, it seems that it is not insufficient amounts of fluorspar reserves but other constraints that mostly affect the price fluctuations from year to year.

Projecting the amount of fluorspar mined over the short-term upcoming months, based on best mining activity data available and good estimates, could be useful in predicting price trends.

The USGS reports used for the data in the graphs below can be read by clicking here: 1, 2, 3, 4, 5, and 6.   USGS issues similar reports on many other minerals, elements, and compounds mined.  The USGS reports are an excellent data source on these materials.

Quantity Estimates of Neodymium Used in Magnets in 2012

An exhausted Internet search was done to try to determine 2012 global use of neodymium in magnets found in the following five product categories: hard drives; electric vehicles; electric bicycles; wind electric generators; and mobile phones.  Determining the quantity of neodymium used in these products depended on finding the following estimates:  1) a reasonable range of the 2012 unit sales in each product category and 2) a reasonable range of the quantity of neodymium used in each unit sold.  What follows describes what was found for each category.

A.  Hard Drives.  2012 global hard drive sales was settled at between 900 million and 1.04 billion.  A range of neodymium used in hard drives was settled at between 2 and 6 grams.  This gives a total of between 1,800 and 6,240 metric tons of neodymium used in hard drives sold in 2012.

(For each product category, an exhaustive search of the Internet was done to find sources for product sales and for the amounts of neodymium used in the products.  These sources can be difficult to find, but sources were found for the data needed for each product.  Sources include: individual analysts/scientists estimates; market research product synopsizes (no reports were purchased or any other payments made to find the information in this blog article); news releases; company data; government data; conference presentation slides; trade associations; and research institutes.  I settled on the data to use from these source sites based on my subjective evaluation of the likelihood the sources and their data were reliable and what was presented was sensible and consistent with other data and my analysis of what I was finding.  Further details on the sources, data, and analysis used can be provided.  Click “View my complete profile” to the right to email me.)

B.  Electric Vehicles.  Global sales for electric vehicles (all electric and hybrid) were settled at between 1,775,000 and 2,427,000.  A range of neodymium use per vehicle was settled at between 0.193 and 1.8 kg.  This gives a total of between 343 and 4,369 metric tons of neodymium used in electric vehicles sold in 2012.

C.  Electric Bicycles.  A range of 2012 unit global sales of electric bicyles was settled on as between 30 and 34 million.  And, I settled on a range of neodymium used in each bicycle as between 85 and 115 grams.  With these amounts for electric bicycles sold and neodymium used per bicycle, and doing the math, gives a total of between 2,550 and 3,910 metric tons of neodymium used in electric bicycles sold in 2012.

D.  Wind Electric Generators.  The range of 29,946 to 68,250 megawatts of additional wind power generated in 2012 compared to 2011 was settled on.  And, based on data found in my searching, 15% of this additional power is estimated to have been delivered by generators using neodymium-base magnets, or a range of 4,492 to 10,238 megawatts.  A range of 0.12 to 0.4 metric tons was settled on as the amount of neodymium used for generating one megawatt of power from a wind electric generator.  This gives a total range of 539 to 4,095 metric tons of neodymium used in 2012 installed neodymium-based wind electric generators.

E.  Mobile Phones.  The 2012 sales of mobile phones (cell and smart) range was settled at between 1.6 and 1.75 billion units.  The range of grams used in each phone was settled at between 0.05 and 0.1 grams.  This gives a range of 80 to 175 metric tons of neodymium used in mobile phones sold in 2012.

Adding up the low and high neodymium-use range for each of the above five product categories in which neodymium is used gives a low amount of 5,312 metric tons and a high amount of 18,789 metric tons of neodymium used in these products sold in 2012. 

Some conclusions from the above work are:

1.  Too many data variables, gaps, and uncertainties and needed estimates and assumptions exist to ever be able to determine one amount for total neodymium used in a year with any degree of confidence that the amount is correct.  However, a range can be determined.

2.  Whenever an element (e.g. the rare earth element neodymium) or a chemical compound is used in multiple products, similar uncertainties are likely in estimating the quantity of that element or chemical compound that was used during the year.  A range is best provided.

3.  Using persistent and skillful search and the right analytical skills, the Internet can be a source of data for quantities of chemicals used.

4.  Chemical use data for a year can be determined from two sets of data:  sales and unit quantities.  The accuracy of the chemical use data depends on the accuracy of these two data sets.

5.  The use data is for product sales.  It does not include neodymium mined but not used in the products represented by the sales data, in products made but not sold, and neodymium lost as waste in the manufacturing process.  

Future Important Chemical Company Capabilities

The graph below was created using Google’s graphing tools.

The graph shows the results of a 2011 survey, conducted by Accenture, on important capabilities that chemical companies need in order to succeed.

Two interesting conclusions can be reached about the results. First, that effectively managing feedstock supply chains was found to be the most important capability suggests the importance that raw material availability and costs will have on chemical industry success in the future.   Second, that business intelligence and analytics rate second (tied with product/service innovation) indicates the growing importance of the Internet and available online information and technology on decision-making in the chemical industry.

The 2011 Accenture survey was sent to readers of ICIS Chemical Business, mostly in Western Europe and North America.  Most of the respondents held general manager and higher positions in their companies.  The results of the survey can be read by clicking here.

Chemical Executives’ Top Management Initiatives in 2013 & 2014

The graph below was created using Google’s graphing tools.

The graph shows the top 9 initiatives that top executives at chemical companies plan to take in 2013 and 2014.

The data in the graph was obtained by KPMG International in a 2012 KPMG survey of approximately 155 top US, European, and Asian Pacific chemical company executives.  The executives were asked to select the top initiative planned.  The graph shows the selections by percentage.

Click here to go to the KPMG report showing the results of this survey.

Besides top management initiatives, other areas surveyed and reported on include:  cash on hand; planned capital expenditures; highest strategic priorities; and expected revenues.

Interesting in the results is the high percentage of respondents who selected making significant changes in their business model as the top priority.  Just what this means with respect to the other initiatives that could have been selected, e.g., new products and geographic expansions is not clear, except that it suggests problems with the current business model.

Finding Chemical Prices on the Internet

My experience has been that finding current prices on the Internet for bulk-size amounts of chemicals is difficult, without providing information to the suppliers.  Producers and distributors of chemicals are willing to provide quotes, but require information from the requestor, e.g. requestor name, amounts, use, etc, before providing a quote, and likely only after the vendor judges the request to be legitimate.   Because pricing is likely to depend on so many factors, such as amounts, requestor, location, etc, the vendor’s need to obtain information from the requestor is understandable.  (This difficulty in obtaining chemical price data does not apply to laboratory quantities of chemicals.  Prices for laboratory sizes are readily available on the Internet without needing to send a request to the vendor.)

Although difficult, with determination, time, and the right search strategies, relative recent (but not current vendor’s pricing without contacting the vendor) bulk chemical prices often can be found on the Internet.  For example, with rigorous searching, I was able to find relatively recent bulk prices (2010, 2011, and/or 2012), with various terms and delivery locations, for the following chemicals:  benzene; sulfuric acid; titanium dioxide; sodium hydroxide (caustic acid); glycerin; polycarbonate; soda ash; caprolactam; ethylene; propylene; p-xylene; and polystyrene.  These were most, if not all, the chemical prices I searched for. 

The US Labor Department’s Bureau of Labor Statistics maintains producer price indexes for several categories of chemicals, e.g. petrochemicals; industrial gases; synthetic dyes and pigments; basic inorganic compounds; basic organic compounds; and plastics and resins.  (Click here to access these indexes.)   These chemical price indexes might be useful in projecting a dated price found on the Internet for a chemical, e.g. a 2010 or 2011 price, to a more recent price.  However, because of chemical price volatility, and probably other factors, using the chemical price index may not always give projected prices that are reasonable close to the actual current prices.