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CHALLENGES FOR SUSTAINABILITY IN CRITICAL RAW MATERIAL ASSESSMENTS Keywords Closed loops diagram Critical raw material Indium, social drivers Sustainable development System dynamics Phosphorous


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Article History The commonly-used methodologies for raw material criticality assessments produce lists based on economic parameters. However, they do not provide qualitative guidance or recommendations as to how to reduce criticality. Paradoxically, publishing these lists impacts the system in a way that can make critical resources become even more critical, because markets may react by increasing prices for critical raw materials, and conflict for these resources may increase. We propose a complementary methodology, System Dynamics Modelling, which provides better guidance for policy makers because of its insights into the driving forces behind the criticality of raw materials. Also, this methodology allows us to take into account the biophysical limits and the social dynamics which underpin the system, and thus enables us to understand the context in which raw materials become critical. The clarification of the drivers of criticality of raw materials, provided by our research method, can enhance the recommendations and guidance for policy-and decision-makers to respond to warning signals in their management. The applicability of our approach is illustrated by two case studies, on phosphorus and indium. We conclude that the externalities (social and environmental) of raw material extraction, both for production and consumption, should be considered by policy makers in order to account for the true cost of critical raw materials.
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© 2018 Conscientia Beam. All Rights Reserved.
Arnaud DIEMER1+
1University of Clermont-Ferrand, France, CERDI
2,4University of Iceland, Iceland
3Stockholm University, Sweden
(+ Corresponding author)
Article History
Received: 21 May 2018
Revised: 13 July 2018
Accepted: 17 August 2018
Published: 28 September 2018
Closed loops diagram
Critical raw material
Indium, social drivers
Sustainable development
System dynamics
The commonly-used methodologies for raw material criticality assessments produce
lists based on economic parameters. However, they do not provide qualitative guidance
or recommendations as to how to reduce criticality. Paradoxically, publishing these lists
impacts the system in a way that can make critical resources become even more critical,
because markets may react by increasing prices for critical raw materials, and conflict
for these resources may increase. We propose a complementary methodology, System
Dynamics Modelling, which provides better guidance for policy makers because of its
insights into the driving forces behind the criticality of raw materials. Also, this
methodology allows us to take into account the biophysical limits and the social
dynamics which underpin the system, and thus enables us to understand the context in
which raw materials become critical. The clarification of the drivers of criticality of raw
materials, provided by our research method, can enhance the recommendations and
guidance for policy- and decision-makers to respond to warning signals in their
management. The applicability of our approach is illustrated by two case studies, on
phosphorus and indium. We conclude that the externalities (social and environmental)
of raw material extraction, both for production and consumption, should be considered
by policy makers in order to account for the true cost of critical raw materials.
Contribution/Originality: This study contributes in the existing literature on critical raw materials. It uses
logical methodology system dynamics (CLD) to understand social and economic drivers for phosphore and
Indium. This methodology could be helpful for the economists who work on Economy of natural resources or
Economy of Environment.
Raw materials are crucial to the world economy and essential to maintaining our welfare. They underpin
industry and support the modern technology we use daily, such as smartphones, computers, and the harvest of the
green economy. Securing reliable and unhindered access to certain raw materials is a growing concern for both
developed and developing countries. To address this challenge, many countries and international institutions have
created a list of Critical Raw Materials (CRMs) or commissioned a predictive analysis of future metal demand to
support the transition to a low carbon future (IEA, 2015; World Bank, 2016).
Historically, the concept of critical raw materials has mainly been developed by government agencies and has
been triggered by concerns over supply shortages or market price spikes in crisis years. For example, at the end of
International Journal of Management and Sustainability
2018 Vol. 7, No. 3, pp. 156-179
ISSN(e): 2306-0662
ISSN(p): 2306-9856
DOI: 10.18488/journal.11.2018.73.156.179
© 2018 Conscientia Beam. All Rights Reserved.
International Journal of Management and Sustainability, 2018, 7(3): 156-179
© 2018 Conscientia Beam. All Rights Reserved.
the first World War the United States (US) developed a ―Harbord list‖ with materials ―that had presented wartime
supply difficulties‖ (Haglund, 1984). Later, in 1939 and 1944, this list was further divided into critical and strategic
materials by the US Army and Navy munitions board, Haglund (1984). During the Cold War US interests in
critical raw materials intensified, and the definition of critical raw materials was revisited in 1979 by the US
Strategic and Critical Materials Stock Piling Act (Haglund, 1984). More recently, the economic crisis of 2007-2008
led to the development of several government reports (National Research Council, 2008; European Commission,
2010). Since the 2008/9 economic crisis, an increasing number of scientists have studied the issue of raw material
criticality and published their findings in academic journals (Rosenau-Tornow et al., 2009; Senk et al., 2012; Massari
and Ruberti, 2013).
There is currently no agreed definition of a critical raw material. The reasons for this is that criticality is often
thought of, or evaluated, from different perspectives, e.g. a national or regional perspective versus a company
perspective versus a technology or product perspective (Chakhmouradian et al., 2015; Malinauskienė et al., 2016).
The European Commission (EC) definition of 2010 considers that to be considered as critical: a raw material must
face high risks with regard to access to it, i.e. high supply risks or high environmental risks, and be of high economic importance.
In such a case, the likelihood that impediments to access occur is relatively high and impacts for the whole EU economy would be
relatively significant.”
The standard way of assessing the criticality of materials is by using a criticality matrix, in which materials are
located as dots between two axes (Erdmann and Graedel, 2011). The meaning of these two axes, or dimensions, of
criticality is derived from basic risk analysis: (1) the probability of a disruption in the resource supply, termed
‗supply risk‘, (2) the impact caused by such a constraint, termed ‗vulnerability‘ (Stafford Lloyd MEng and EngD,
2012; Habib and Wenzel, 2016). The overall risk, or criticality, is the product of these 2 dimensions, and creates
hyperbolic contours of constant criticality in the plot, allowing for comparison of criticality between different raw
materials, as shown in Figure 1 (Glöser-Chahoud et al., 2016).
Figure-1. Material criticality matrix based on basic risk theory
Source: Glöser et al. (2015)
However, these axes are often modified so much that the connection with risk theory is lost (Helbig et al., 2016;
Frenzel et al., 2017) for instance by changing the terminology and indicators of the axes (Dewulf et al., 2016; Helbig
et al., 2016) or by adding or omitting an axis (Frenzel et al., 2017). This leads to significant differences in the
findings on the criticality of a material between different assessments. In 2013 and 2016, US/Japan/EU trilateral
workshops on CRMs were organized to exchange information on the upcoming reviews of the critical raw materials
list, to discuss progress, and to compare analysis and data on critical raw materials (EC, 2014). The different
International Journal of Management and Sustainability, 2018, 7(3): 156-179
© 2018 Conscientia Beam. All Rights Reserved.
approaches to CRM assessments by US government agencies, Japan‘s mineral policy, the European Commission
Raw Materials Strategy, and the World Bank‘s CRM research activity are summarized below.
In the US, there is no single critical materials policy or strategy. Different government agencies represent
differing interests (King, 2013). The main players are the Department of Energy, that finances the Critical
Materials Institute, which is concerned with the supply of materials needed for clean energy technology; the
Department of the Interior that has the responsibility for the US Geological Survey; and the Department of
Defense. At the White House, the National Science and Technology Council (NSTC) has established a
Subcommittee on Critical and Strategic Mineral Supply Chains that co-ordinates the critical materials activities.
With regard to critical solid minerals, a variety of legislation is being considered in Congress. Both the Senate
and the House are looking at legislation that would result in the setting up of a national list of critical materials.
They have also addressed the simplification of the mining permit processes that are perceived to delay the
establishment of new sources of critical materials. Also they are discussing the encouragement of recycling,
workforce development, international collaborations, and actions on specific elements, e.g. lead. It has been
underlined that materials criticality is affecting the US now, while solutions (development of mines or substitute
materials) may take up to 20 years to take effect. In 2013, shortages of europium (Eu) and terbium (Tb) delayed the
transition to high-output T5 fluorescent lamps in buildings, thereby preventing energy savings of around 50% in
lighting. Also, shortages in neodymium (Ny) and dysprosium (Dy) needed for high-strength magnets prevented the
replacement of wind turbine gearboxes (the dominant cause of downtime) by direct-drive units (King, 2013).
Table-1. Screening of Minerals on ―potential criticality‖ based on a threshold C indicator value of 0.335 during at least one year.
Source: NSTC (2016)
The criticality assessment methodology of the National Science and Technology Council (NSTC) (2016)
introduces a compound criticality indicator, C, as an early-warning screening for each mineral studied, on a 0 to 1
scale. C is the geometric mean of 3 indicators: supply risk (R), production growth (G), and market dynamics (M).
These 3 indicators present complementary aspects of availability: ―R is a measure of the risk associated with
geopolitical production concentration, G incorporates changes in the mineral‘s market size and reliance on
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geological resources, and M tracks the mineral‘s price sensitivity to changes in its market." NSTC (2016) A cluster-
analysis considers a mineral to be considered ―potentially critical‖ if C is above 0.335. For 2013, 17 minerals were
identified as potentially critical: ferromolybdenum (FeMo), yttrium (Y), (La-Lu), rhodium (Rh), ruthenium (Ru),
mercury (Hg), monazite, tungsten (W), silicomanganese (SiMn), mica, iridium (Ir), magnesite, germanium (Ge),
vanadium (V), bismuth mine production (Bi), antimony (Sb), and cobalt mine production (Co). In a second stage,
these minerals identified as potentially critical were studied in-depth to understand the drivers of their criticality
and which of them poses a significant risk to US economic and national security interests.
In Japan, mineral policy is driven by the Ministry of Economy, Trade, and Industry METI) (Morita, 2013).
Within the METI, which has 9 bureaux and 3 agencies, 2 bureaux and 1 agency deal with Japan‘s minerals policy.
The first bureau is the Industrial Science and Technology Policy and Environment Bureau in charge of technology
development, which includes the division for the Promotion of Recycling. The second one is the Manufacturing
Industries Bureau, which is in charge of industrial promotion to strengthen Japanese industry, and which includes
the Nonferrous Metals division, in charge of non-ferrous industries in Japan. The third government function is
covered by the Agency for Natural Resources and Energy. This agency has the Mineral and Natural Resources
division to which the Japan Oil, Gas and Metals National Corporation (JOGMEC) belongs.
METI ensures the supply of natural resources to Japan, and conducts an annual material flow survey on various
raw materials including base metals and rare metals. The survey provides material flow diagrams for both national
and world-wide supply, demand trends, export and import trends, and on the share of recycled (secondary) products
in the domestic consumption.
In Japan 3 main strategies have been applied to secure natural resource supplies: - 1. Since 2009, the Strategy for
Securing Rare Metals has focused on policy measures to ensure the supply of strategic materials. Strategic materials
are chosen based on the stability of supply, e.g. supply and demand trends, trends in developing mines, or
misdistribution of resources, 2. Since 2010 the Energy Base Plan has set numeric targets to increase the metal
supply from mines and recycling. Base metals (aluminum, copper, iron, lead, tin, and zinc) are targeted to increase
from 40 % to over 80 % by 2030. Strategic rare metals are targeted to increase from 0 % to over 50 %, 3. Since 2012
the Strategy for Securing Natural Resources has identified ―Strategic Mineral Resources‖ to focus policy measures
on their supply. Not only for rare metals, but also for base metals, due to concerns about rapidly increasing demand
in emerging countries, and non-metal materials, which are essential for industry, are also considered. 30 minerals
were designated ―strategic minerals‖. Strategic minerals were selected against a background of their growing
importance in industry and rising supply risk, which resulted in the designation of minor metals such as indium,
platinum, rare-earth elements (REEs), and common metals such as iron, copper, and lead. The strategy aims at a
stable supply of these metals via 4 pillars: - (i) acquisition of mineral interests, (ii) recycling from industrial
processes and end-of-life products, (iii) developing substitution materials, (iv) stockpiling. Two of the criteria for
definition of strategic minerals - supply risk and vulnerability of industrial activities to supply restriction -
correspond to the concept of ―criticality‖ of materials.
Before the 2009 Strategy for strategic minerals, Japan‘s criticality assessment was reported by the New Energy
and Industrial Technology Development Organization (NEDO). The NEDO assessment designated elements
considered to be at risk of resource securement problems as ―important minerals‖, which were identified by
evaluating 5 risk categories with 12 components. Although the assessment report did not use the terms
―criticality‖ or ―critical material‖, the assessment evaluated the critical metals for Japan. In the NEDO assessment,
the 12 components were evaluated for 39 minor metals in 2008.
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© 2018 Conscientia Beam. All Rights Reserved.
Table-2. Criticality components used in the NEDO assessment
Source: NEDO (2009)
The results were then aggregated into single criticality scores. The NEDO assessment designated 14 of 39
metals with high criticality scores as important minerals. For each of the 12 components, scores representing their
securement importance were designated with 0, 1, 2, or 3 points. For ―depletion time‖, for example, 3 was given to
metals with less than 50 years of depletion time; 2 for 50-100 years; 1 for 100-150 years; 0 for over 150 years. For
―stockpiles‖, metals with stockpiles built up through governmental policy were evaluated as 0, and 1 for other
metals. The scores for the 12 components were aggregated into a single criticality score using weighting factors.
The factors used in the NEDO assessment were 25% of the aggregated score for supply risk, price risk, and demand
risk, 20% for recycling restriction, and 5% for potential risk. The weighting among components within each risk
category were equal (?). Finally, comprehensive criticality scores were calculated with a maximum of 32 points
possible for each of 39 metals. Metals with 18 points or higher were regarded as important minerals (Hatayama and
Tahara, 2015).
The European Commission (EC) regards Critical Raw Materials as economically important raw materials
which are subject to a high risk of supply interruption (EASAC, 2016). In this respect, the EC launched the Raw
Materials Initiative (RMI) in 2008 which established an integrated strategy to respond to the different challenges
related to access to non-energy and non-agricultural raw materials. The RMI is based on three pillars: 1. Ensuring
a level playing field in access to resources in third party countries, 2. Fostering a sustainable supply of raw
materials from European sources, 3. Boosting resource efficiency and promoting recycling.
For the EC, the initial steps (EC, 2008) were to identify critical materials on the basis of ‗supply risk‘ and an
‗environmental country risk‘ - where producing countries might place regulations on the supply of raw materials to
Europe to reduce their environmental impact.
In 2010, the EC (2010) introduced a methodology to identify raw materials deemed critical to the EU, with 3
dimensions: a) the ―economic importance‖ of the material - breaking down its main uses and attributing to each of
them the value added of the economic sector that has this raw material as an input; b) the "supply risk" - taking into
account the political/economic stability of the producing countries, the level of concentration of production, the
potential for substitution, and the recycling rate; and c) the "environmental country risk" - assessing the risk that
measures might be taken by countries with weak environmental performance in order to protect their environment
and, in doing so, endanger the supply of raw materials to the EU. Inclusion of this third environmental dimension is
said not to change the results compared to an assessment based only on the 2 primary dimensions: economic
importance and supply risk. Further, changes in the geopolitical/economic situation are regarded as having much
more impact on criticality within the considered time horizon (10 years) than geological availability, which is not
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included in the indicators, partly because of the lack of reliable indicators of long term geological availability. 41
materials were assessed for criticality and 14 initially identified as critical, representing a first EU list of CRMs in
2011. These were antimony (Sb), beryllium (Be), fluorspar, graphite, germanium (Ge), indium (In), magnesium
(Mg), rare earth elements (REEs), tungsten (W), cobalt (Co), tantalum (Ta), platinum group metals (PGMs),
niobium (Nb) and gallium (Ga). Subsequently, the EC recommended policy actions to ensure that recycling of raw
materials and products containing them becomes more efficient through promoting collections, stopping illegal exports of end of
life (EoL) products and promoting research on system optimization and on tackling technical challenges‖ (EC 2010, page 3).
Figure-2. First EC list of Critical Raw Material, 2010
Source: EC (2010)
Source: EC (2011)
In parallel, the EC charged the Joint Research Centre (JRC) with investigating potential bottlenecks associated
with the use of metals in 6 energy technologies: nuclear, solar, wind, bio-energy, carbon capture and storage, and
electricity grids Moss et al. (2013). The JRC assessed criticality against the risk criteria of supply constraints,
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demand growth rate, political risk, and geographical concentration, and summarized the most critical elements in
the following table.
Table-3. Critical elements and associated technologies
Source: JRC (2013)
In 2014, the EC updated its list of critical raw materials. After analyzing 54 materials with the criteria of
economic importance and supply risk, 20 CRMs were in the criticality zone of economic importance and high supply
risk. These CRMs were antimony, beryllium, borates, chromium, cobalt, coking coal, fluorspar, gallium,
germanium, indium, magnesite, magnesium, natural graphite, niobium, PGMs, phosphate rock, REEs (heavy),
REES (light), silicon metal and tungsten. In 2015, the third pillar in Box 1 was included in the circular economy
approach in the Commission‘s package (EC, 2015).
In 2017, the EC published a new list for which the methodology had been improved by the JRC (2016). It
covers a larger number of materials screened: 78 materials or 61 raw materials, consisting of 58 individual and 3
grouped materials (compared to 54 in 2012 and 41 in 2011). The methodology remains largely the same, focusing
on supply risk (SR) and economic importance (EI) as the main dimensions of criticality, to ensure comparability
with previous assessments. Updates to the methodology include: taking a supply chain perspective by identifying
the most critical points in the raw material production stages, inclusion of substitution potential of materials in EI
in supplement to SR, more specific allocation of raw materials to the relevant end-use applications and
corresponding manufacturing sectors to increase the accuracy of EI calculations, inclusion of import reliance for SR
by considering the shares of import vs. domestic sourcing of the global supply, and inclusion of trade-related
parameters based on export restrictions and EU trade agreements. Of the 61 materials screened, the following 26
were identified as critical: Antimony, Baryte, Beryllium, Bismuth, Borate, Cobalt, Fluorspar, Gallium, Germanium,
Hafnium, Helium, HREEs, Indium, LREEs, Magnesium, Natural graphite, Natural Rubber, Niobium, PGMs,
Phosphate rock, Phosphorus, Scandium, Silicon metal, Tantalum, Tungsten, and Vanadium (EC, 2017).
International Journal of Management and Sustainability, 2018, 7(3): 156-179
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Figure-3. Third list of Critical Raw Material from EC (2017)
Source: EC (2017)
The World Bank (WB), in 2016, in collaboration with the International Council on Mining and Metals
(ICMM) tackled the CRM question for green energy technology with a different methodology than the ones
described above. The WB modelled projections of future demand for mining and metals for a low carbon future,
applying the Energy Technology Perspective (ETP) scenarios developed by the International Energy Agency
(IEA). ―The metal use per unit of installed capacity was multiplied by the projected yearly capacity installation for
each energy technology under consideration.‖ Adding these calculations to the IEA‘s Energy Technology
Perspective scenarios, the annual demand between 2007 and 2050 was projected for a particular metal in a
particular energy technology. They identified copper, silver, aluminium (bauxite), nickel, zinc, and possibly
platinum, among others, as key base metals and neodymium and indium
among others, as key rare earth metals for
the transition to a low carbon future. Although they admit that ―the actual metals that will experience dramatic
increases is unclear and extremely difficult to predict.‖ (WB, 2017).
Considering these studies and reports (US, Japan, EC, and WB), there are some limits to their definitions and
methods for assessing the criticality of raw materials. Firstly, they identify CRMs from an exclusively macro-
economic perspective, only defining or assessing materials as critical if a supply disruption would be harmful to
their economies. Other values of the raw materials, such as socio-cultural and life-support functions are not
represented by criticality. Secondly, although the concept of criticality is a dynamic state of a material evolving
continuously depending on socio-economic conditions, these assessments only provide analyses of a snapshot in
time. A more dynamic approach, providing the possibility of analyzing trends through time by resource, is argued
for by Glöser and Faulstich (2012) linking the methods of System Dynamics with the Criticality Matrix. Thirdly, it
can be argued that by forcing multiple and diverse indicators into the 2 dimension of criticality matrices, the
overview of what is actually driving the criticality situation is lost (Jin et al., 2016) which in reality is the most
valuable information to develop policy recommendations for decision-makers.
See Stamp, Wäger and Hellweg (2014) for linking energy scenarios between indium and CIGS solar cells.
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So, in this article, we propose the use of System Dynamics and Scenario Planning to analyse raw material
criticality, which enables us (1) to consider a sustainability perspective rather than one based solely on economic
concerns, (2) to demonstrate the benefits of a dynamic approach, and (3) to present a tool which can help to identify
the drivers of the criticality level of a certain raw materials. We use two case studies, on phosphorus and indium, to
test our approach.
The methodological framework of this paper is based on System Dynamics.
System Dynamics was developed at MIT during the 1950s by J.J Forrester. For Forrester (1961) industrial
dynamics was a way of studying the behavior of industrial systems to show how policies, decisions, structures and
delays are interrelated in influencing growth and stability. To speak of systems implies a structure of interacting
functions. Both the separate functions and the interrelationships as defined by the structure contribute to the system behavior
(Forrester, 1967).
System Dynamics help us ―to learn about dynamic complexity, understand the sources of policy resistance and design
more effective policies(Sterman, 2000). As an interdisciplinary method, System Dynamics has its roots in the theory
of nonlinear dynamics and feedback control developed in mathematics, physics, and engineering (Milsum, 1968;
Wolstenholme and Coyle, 1983; Wolstenholme, 1985). Because it can be applied to understand the behavior of
human as well as physical and technical systems, system dynamics has also been used in Social Sciences and
The system dynamics approach has 4 hierarchies of structure (Coelho et al., 2017): (1) Closed boundary around
the system, (2) Feedback loops as the basic structural elements within the boundary, (3) Level (state) variables
representing accumulations within the feedback loops, (4) Rate (flow) variables representing activity within the
feedback loops.
Figure-4. Creating a System Dynamics Model
Source: Forrester (1975)
Closed System boundary
: To develop a complete concept of a system, the boundary must be established within
which the system interactions that give the system its characteristic behavior take place.
Feedback loop structure
: The dynamic behavior of systems is generated within feedback loops (Roberts, 1975). A
feedback loop is composed of two kinds of variables, called rate and level variables. A feedback loop is a structure
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within which a decision point, the rate equation, controls a flow or action stream. The action is integrated to
generate a system level. Information about the level is the basis on which the flow rate is controlled.
Table-4. Four steps in the theory of system structure
Source: Forrester (1967)
In a system dynamics model, the polarity of each feedback loop is a crucial part of understanding the model ‘s
behavior. The perturbation of a loop may result in the magnification of the original effect; this unstable response is
known as a positive feedback loop polarity (a reinforcing loop). Alternatively, a perturbation may be counteracted,
or resisted by the operation of the loop. This equilibrating response is known as a negative feedback loop polarity (a
balancing loop).
Two diagram methods are dominant in the system dynamics community. Broad representations of the variables
and the feedback structure of a model are conveyed using Causal Loop Diagrams (CLD). In contrast, stock/flow
diagrams (SFD) are more detailed, differentiating between state and flow variables.
Figure-5a. Balancing Loop for Phosphate
Figure-5b. Flowchart representation of the CLD
For instance, Figure 5a shows a balancing loop describing the interaction between prospecting for phosphate
rock (PR) and PR reserves. The more we prospect for PR, the more PR resources we find. This is shown with a
positive causality (+), as a change in the first variable will lead to a change in the same direction for the second
variable. Next, the more discovered PR resources we have, the more we explore with the purpose of exploitation
this is another positive interaction. The more we explore, the more PR reserves to exploit we will have. However,
the more PR reserves to exploit we have, the less we will be inclined to invest in further prospecting. Thus, a
positive change in PR reserves leads to a negative change in prospecting for PR. This is a negative causality.
Overall, if we start with a positive change in prospecting for PR, we will end up with a negative causality on the
same variable it means this loop is balancing. If hypothetically having more PR reserves led to more prospecting
for PR, then this loop would have been reinforcing: a positive change in prospecting for PR would have concluded
with more positive signals coming from the PR reserves and vice versa. Figure 5b shows the flowchart
representation of the CLD, how PR moves from stocks (squares) through flows (arrows). The unknown PR
resources stock moves through prospecting to the discovered PR resources, which ultimately reach the PR reserve
stock by means of exploration.
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Natural resources are often associated with goods that are storable but not reproducible. The impossibility of
reproducing these goods (apart from a discovery of new deposits) has led economists to insist on the following two
points: on the one hand, stocks (more precisely reserves) are considered to be given, and on the other hand, there is
a close link between the rate of extraction and sales of natural resources. If the rate of extraction can be equated
with sales, since substitution of production is impossible, the company in charge of mining operations may seek to
either accelerate extraction (i.e. substitute current sales for future sales) or slow it down (i.e. substitute future sales
for current sales). A company would thus be able to influence the price of natural resources by varying its sales by
modifying the extraction rate.
The relation between price and extraction rate for a natural resource was introduced by Hotelling (1931) in his
article "The Economics of Exhaustible Resources" by making a parallel between safeguarding the intergenerational
heritage and the influence of monopolies: « The conservation movement, in so far as it aims at absolute prohibitions rather
than taxation or regulation in the interest of efficiency, may be accused of playing into the hands of those who are interested in
maintaining high price for the sake of their own pockets rather than of posterity» (1931, p. 1937 1938).
Hotelling assumes
that owners of a natural resource always want to maximize the present value of their
future profits.
In perfect competition, the owners of a mine are indifferent between receiving now a price for a unit of its
product or receiving a price  after a time t, so the price can be expected to be a function over time of the form:
  (1)
Hotelling takes the price to be the net price after paying the cost of extraction and placing upon the market:
"Here p is to be interpreted as the net price received after paying the cost of extraction and placing upon the
market"(1931, p 141). Under these conditions, if interest rates (what Hotelling calls "the degrees of impatience") vary
among mine owners, this will also affect the extraction rate.
When the price is set, the different units of the resource will have the same (discounted) value at any point in
time and the mine owner will not seek to change the extraction rate from one period to another, that is
. The value of will depend on the demand and the total available quantity of the resource (noted A).
Considering that q = f (p, t) is the quantity taken at time t if the price is p, we have the following equation:
At T, the final extraction date, the requested quantity decreases and approaches 0, the equation becomes
   .
Therefore, as Hotelling points out, the net price will change in line with changes in interest rates
, whose
determinants are independent of the product in question, of the industry concerned, and of changes in mining
production: « The market rate of interest must be used by an entrepreneur in his calculations ... Of course, changes in this rate
are to be anticipated, especially in considering the remote future. If we look ahead to a distant time when all the resources of the
earth will be near exhaustion, and the human race reduced to complete poverty, we may expect very high interest rates indeed»
(1931, p. 144).
Omerani (1991) recalls that Hotelling's basic assumption is that the initial stock as well as the present and future conditions of extraction of this stock are certain.
Solow (1974) has highlighted the Hotelling‘s rule based on the financial asset market. For example, a mine owner is only interested in leaving a deposit of resources
in the ground if the latter is appreciated in value. On the other hand, asset markets can only be balanced when all assets in a certain risk class have the same rate of
return. Thus, at equilibrium, the value of a deposit of resources in the soil must grow at a rate equal to the interest rate.
International Journal of Management and Sustainability, 2018, 7(3): 156-179
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In the case of a monopoly, Hotelling argues that a company can influence the price by varying its extraction
rate (i.e. sales). The company will seek to maximize the present value of its future profits (we have reproduced
Hotelling's method of calculating variations) (1931, p. 146-147).
Under the constraint   
The maximization program can be presented from the Lagrangian
By setting λ = 0, this allows us to fall back on the case of inexhaustible resources (sustainable and reproducible
Hotelling‘s rule can then be written:   
   (5) (λ is a constant)
The contrast with the conditions of competition is seen in the term 
 .
Since p corresponds to the net price, the expression (5) means that it is the discounted marginal profit which
must be equalized over time   , either   . Therefore, it is the marginal benefit of the natural
resource (to be related to the marginal revenue) and not the price that must increase according to the interest rate.
      
    
The price will decrease more or less rapidly depending on the relationship between price and marginal income.
Hotelling puts forward 2 reasons
for believing that the price will rise less rapidly and that the depletion of the mine
will be delayed in a monopolistic market structure:
- The demand will be such that the resource will be exhausted in a finite time for a company subject to
competition, and in an "infinite" time for the company with a monopoly. In a competitive market situation and
depletion of mine, the price tends to move towards a finite value when demand approaches 0 (so the demand curve
intercepts the ordinate axis at a certain value). In a monopolistic situation, resource depletion means that marginal
revenue tends to move towards a finite value when demand approaches zero. Hotelling suggests that it is very likely
that the first condition is satisfied but not the second, given that "this is simply part of the general tendency for
production to be retarded under monopoly"(1931, p. 152).
- The numerical example given by Hotelling suggests that the competitive company and the monopoly
company exhaust the deposit in a finite time, however the monopoly takes longer. The monopoly's tendency would
be to keep output below the optimum rate and extort excessive prices from consumers
. Devarajan and Fisher
Stewart (1979; 1980) validated Hotelling's results under the assumption of an increasing extraction cost.
According to Kay and Mirrlees, (1975) the fact that for many resources, the price is greater than the marginal cost when stocks are large would be tantamount to
saying that the present price is substantially lower than the optimal or competitive price and that the resources in question are over-economized (meaning clear?).
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(1981) illustrated the time path followed by price and extraction (in perfect competition and monopoly) in the figure
Figure-6. Extraction, Price and market‘s structure
Source: Devarajan and Fisher (1981)
Recalling that Hotelling's results are based on the characteristics of the demand function (linear and stable
demand curve, decreasing elasticity when quantities increase), Devarajan and Fisher (1981) note that the reasoning
is still valid when demand shifts over time by becoming more elastic (Stiglitz, 1976).
But let us return here to an important point of Hotelling's reasoning, the stocks are considered as given. This
hypothesis illustrates the debates surrounding stock-flow dynamics and the position of economists. Adelman (1993)
summed up this dilemma
in a few words: Minerals are inexhaustible and will never be depleted. A stream of investment
creates additions to proven reserves, a very large in-ground inventory, constantly renewed as it is extracted. . .. How much was
in the ground at the start and how much will be left at the end are unknown and irrelevant. (p. xi) The fixed stock does not
exist. (p. xiii) What exists, and can be observed and measured, is not a stock but a flow‖ (1993, p. xi, xiii, xiv).
This simplistic economic model of natural resource may be expressed in a CLD. The only stock is the stock of
proven reserves, increased by a flow of investment and reduced by extraction.
Figure-7. CLD of Stocks‘ Dynamics
For Sterman (2002) Adelman’s statements violate conservation of matter. Every ton of titanium and every barrel of oil added to the stock of proven reserves reduces the stock of
titanium and oil remaining to be found in the future. Every ton and barrel extracted reduces the qua ntity remaining in the ground. As exploration adds to the stock of proven reserves,
the stock of undiscovered resource falls. Ceteris Paribus, the smaller the stock of resources remaining to be discovered, the lower the productivity of exploration activity must be, and the
smaller the rate of addition to proven reserves will be for any investment rate. In the limit, If the stock of undiscovered r esource fell to zero, the rate of additions to proven reserves
would necessarily fall to zero‖.
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In System Dynamics, a common practice is to define a reasonable system boundary, and analysis is then
conducted within that boundary. We have used this method for two case studies: phosphorus and indium. We chose
these two critical raw material for three reasons: (1) they are associated with two important sectors (phosphorus -
fertilizers for agriculture and food industries; indium - metal industries (zinc), electronic industries and renewable
energy; (2) the main producer is China (68% for phosphorous, 57% for indium, 44% for phosphate rocks), so the
world economy is dependent on one country; (3) their end-of life recycling input rate is close to 0 (17% for
phosphate rock) which is a big challenge for the circular economy in the future.
Table-5. Challenges for Indium, Phosphate Rocks and Phosphorous
Main Global
2010 2014)
Main Importers
to the EU
Sources of EU
input rate9
China 57%
South Korea 15%
Japan 10%
China 41%
Kazakhstan 19%
South Korea 11%
Hong Kong 8%
China 28%
Belgium 19%
Kazakhstan 13%
France 11%
South Korea 8%
Hong Kong 6%
China 44%
Morocco 13%
United State 13%
Morocco 31%
Russia 18%
Syria 12%
Algeria 12%
Morocco 28%
Russia 16%
Syria 11%
Algeria 10%
EU/Finland 12%
China 58%
Vietnam 19%
Kazakhstan 13%
United States
Kazakhstan 77%
China 14%
Vietnam 8%
Kazakhstan 77%
China 14%
Vietnam 8%
Source: EC (2017)
Figure-8. Countries accounting for largest share of global supply of CRMs
Source: EC (2017)
The import reliance rate takes into account global supply and actual EU sourcing in the calculations of supply risk. It is calculated as fol lows: EU net imports / (EU
net imports + EU domestic production)
The substitution index is a measure of the difficulty in substit uting the material, scored and weighted across all applications, calculated separately for both
Economic Importance and Supply Risks parameters. Values are between 0 and 1, with 1 being the least substitutable.
The End-of-Life recycling input rate measures the ratio of recycling from old scrap to EU demand of a given raw material, the latter equal to primary and
secondary material supply inputs to the EU.
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4.1. Phosphorus Case Study
Alongside nitrogen (N) and potassium (K), phosphorus (P) is one of the three essential macronutrients needed
for plant growth. In agriculture, more than 85% of the phosphorus-based fertilizer comes from mined phosphate
rock (PR) (Cordell et al., 2009). Phosphorus is processed from the mineral apatite (Ca10(PO4)6(OH, F, Cl)2), mined
from a very limited number of countries, notably Morocco, China, and the US. An extensive literature has been
written on the limited availability of phosphorus, and there are widespread concerns that phosphorus production
will soon peak or has already peaked (Dery and Anderson, 2007; Cordell et al., 2009). There are also concerns that
the world´s nations will become increasingly reliant on Morocco´s vast phosphate rock reserves for imports, as this
country consolidates its global position as the main exporter (Cooper et al., 2011). Those concerns were exacerbated
in 2007-2008 when phosphorus prices increased more than 5 times to almost USD 500/ton, although the market
has since stabilized at USD 120-140/ton (US Geological Survey, 2009).
Phosphorus is produced through the processing of phosphate rock, which is mined from a very limited number
of countries. According to USGS latest estimations, Morocco and Western Sahara hold 75% of the world reserves
(USGS, 2017). On the other hand, European countries have little or no phosphate rock reserves, a factor that has
made Europe highly dependent on phosphorus imports. There are valid concerns with regards to the dependency of
European agriculture on a handful of leading phosphorus exporters, and the five-fold increase in phosphorus prices
in 2007-2008 showed how unpredictable and volatile the market can be, with adverse effects on the European food
production sector and the food security of European citizens. Import dependency and market volatility convinced
European policy makers to include phosphorus on the list of critical raw materials.
Phosphate rock is mainly extracted by open-cast mining, which involves a range of processes with a direct
impact on the landscape and the environment, such as the removal of topsoil and overburden. Phosphate mining
generates millions of tons of waste, and phosphate processing creates a large volume of sludge, the rock waste and
sludge are deposited in rock piles and ponds in the vicinity of the mining area (Hakkou et al., 2016). It also leads to
rock desertification, an aesthetic depreciation of the landscape, and increases the risk of landslides and ground
erosion (Yang et al., 2014). Normally, countries require mining companies to carry out reclamation of land after the
mines are exhausted this includes contouring (returning the site to the pre-mining geomorphology) and re-
vegetation. However, many of the more than 200 closed mines in Morocco have had no post-closure management
plan, which effectively means that the waste generated by mining is still in situ and no reclamation activities have
been carried out (International Development Research Center, 2014).
There are lessons to be learnt from other countries in the world where phosphate rock mining was equally
important for the national economy. In the Republic of Nauru, for instance, the environment was critically damaged
by open-cast mining for phosphate rock. Biodiversity-rich habitats were scraped off in the search for the phosphate
ore, and with no post-mining restoration strategies, the formerly mined land was made inhospitable for most life
forms. Moreover, the newly formed wasteland also contributed to more frequent droughts (Fraser and Nguyen,
2005) which may also be of concern in Morocco and Western Sahara due to their low rainfall rate climatic
characteristics. Managing land resources sustainably is also important for Morocco in the context of national food
security for a growing population. From 1960 to 2015, Morocco´s population grew from 11 million to 34 million
and is expected to reach 42 million by 2050 (WB, 2015). This will inevitably require more land for agricultural
production in order to secure food supply, agricultural land which is itself also in competition with the build-up of
infrastructure and the expansion of urban areas.
Water security is another issue to be considered, because the storing of highly hazardous by-product waste
phosphor-gypsum can lead to serious leakages and pollution of groundwater. In the US´s largest phosphate mining
site in Florida, a sinkhole opened underneath a gypsum stack in 2016, leading to more than 215 million gallons of
contaminated water entering the Floridan Acquifer, which supplies water to 60% of the people in Florida (Sierra
Club Foundation, 2016). In addition to water pollution, large amounts of water are used in the processing of
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phosphate rock, and although the OCP claims that 95% of the wastewater is reused, the remaining 5% is still a
significant amount of water that is diverted from human consumption. The World Resource Institute has already
shown that by 2040, Morocco will be one of the world´s most water-scarce countries, with a water-scarcity score of
4.68 out of 5 (WRI, 2015).
Mining of phosphate rock is closely linked to the food production system, which in turn is influenced by
consumption patterns in society, the type of farming systems, global market economics, and the approach of
governments and societies to environmental pollution.
The Causal Loop Diagram for phosphorous depicts the cross-sectoral interactions between society,
government, and management of natural resources in the case of phosphorous.
Social aspects are included in the diagram, Figure 9, shown in a violet color, in order to demonstrate the
application of the System Dynamics methodology, in which the biophysical and economic aspects, shown in blue
color, are combined with social ones. 2 loops are included in the diagram to show the interconnectedness between
the biophysical elements of phosphate rock, the market dynamics, and the social aspects involved. We start with a
driving reinforcing loop (R1) and envision a business-as-usual scenario, where an increase in food production leads
to an increased need for nutrients on farms and consequently to more phosphate rock (PR) mining for phosphate
fertilizer production. Having P as a readily available source will in turn further incentivize food production.
However, both food production and PR mining and processing lead to increased environmental pollution and
degradation. From here, there are 2 reinforcing loops and 4 balancing loops that drive the system. The balancing
loops B1, B2 and B3 represent the connections between the biophysical and the economic aspects. The more P is
mined, the higher the stocks of P become, lowering the price of phosphate rock on the market. A lower price can
lead to less investments in the field, thus reducing the productive capacity of the sector, resulting in decreased
mining for phosphate rock, decreasing P stocks, and affecting the price. Recycling can help to maintain the stocks.
As the price responds to the available stocks on the market, so does demand, resulting in a change in the ratio
between the supply and demand of the resource, which in the end causes changes in the price.
The loops labelled R2 and B4 show that the costs for environmental rehabilitation and the increased healthcare
costs resulting from environmental degradation have a negative impact on the state budget. With less money to
spend in the state budget, government activity will be jeopardized and thus the quality of public service will
decrease. However, when the environmental regulations are enforced, it has a positive effect, resulting in less
environmental degradation and pollution.
Figure-9. A causal loop diagram representing the dynamics of phosphate rock mining
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It can also be argued that when environmental regulations are introduced and enforced, it can result in an
increased level of perceived criticality of the resource, which could increase the demand for it. This may be due to
the fact that it often takes time for industries to respond to new rules and regulations, causing delays in the system.
At least there will be the expectation that it will take time for the industry to adjust, thus increasing the perception
that supply disruptions could occur.
As a response to the challenges and problems that emerge from the system, governments can opt to support
more sustainable farming practices and thus decrease the need for nutrients on farms; support P recycling at a
national level and thus decrease the need for PR mining (R9); and/or support a more sustainable P production and
supply chain.
4.2. Indium Study Case
To present the indium system, the boundary must be established within which the system interactions that give
the system its characteristic behavior take place. Because indium is a by-product of zinc mining and refining,
demand and supply of zinc have to be included. Zinc demand is mainly influenced by the economic growth of
various sectors. Zinc's effectiveness in protecting steel against corrosion by galvanizing is well recognized, while its
ability to die-cast complicated components makes zinc indispensable in a multitude of industry and household
products. It also has important markets in the brass and construction industries and in chemicals and constitutes an
essential nutritional element.
Figure-10. End Uses of Zinc
Source: International Lead and Zinc Study Group (2018)
Zinc supply relies on primary production (mining) and secondary production (recycling from end of life
Table-6. World refined Zinc Supply and Usage 2012 2017 (000 tons)
Source: ILZSG (2018)
Indium is most commonly recovered from the zinc sulfide ore mineral sphalerite. The indium content of zinc
deposits from which it is recovered ranges from less than 1 part per million to 100 parts per million. Production of
indium tin oxide (ITO) accounts for 80% of global indium consumption (Choi et al., 2016). ITO thin-film coatings
are primarily used for electrical conductive purposes in a variety of flat panel displays, most commonly liquid
crystal displays (LCDs). Other indium end uses included alloys and solders, compounds, electrical components and
semiconductors. Indium is most commonly recovered from ITO scrap in Japan and Republic of Korea.
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Figure-11. Major end uses of Indium
Source: USGS (2017)
Data on the quantity of secondary indium recovered from scrap are not available and the last research
(Wellmer and Hagelüken, 2015) estimated at 1% the recycling rate of indium. It seems that the challenge is there.
Sverdrup and Ragnarsdottir (2014) considered that 50% of indium recycling would extend the life of supply by 38
years (190 years for 70% recycling).
Table-7. World Refinery Production (tons)?
Korea (Republic of)
United States
Source: USGS (2018)
For the United States, indium is a strategic resource (120 tons imported for consumption in 2017 and no
government stockpiling), and import sources may be a problem for security. From 2012 to 2015, the United States
imported indium from Canada (25%), China (14%), France (13%), Belgium (12%) and others (36%). When France
stopped producing indium in 2016, United States became more dependent on China (22%). So, the world indium
consumption and the price market are linked to Chinese production and export policy. In November 2016 and 2017,
Fanya Metal exchange warehouses reportedly held 3,600 tons of indium (and no information was available as to
when the inventory would be released into the market). In 2017, China‘s Ministry of Commerce implemented an
export license system and eliminated the previous used quota system which limited the amount of indium that could
be exported. This new policy is expected to encourage exports of indium (USGS, 2018) and to increase the market
price (322 dollars per kilogram on February 26, 2018).
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Figure-12. Price of indium, dollars per kilogram
Source: Les Echos, February 26, 2017
Table-8. Price of indium, annual average, dollars per kilogram
New York Dealer
Free Market
Source: USGS (2018)
According to the American Indium Corporation, indium tin oxide (ITO) demand will keep growing in 2018
(5.5% annual rate) to reach 1,680 tons in 2019 (in 2016, the demand was 1,356 tons). This increase (+ 25%) will
mostly come from China (50% in 2019 against 40% in 2016) and South Korea.
The Causal Loop Diagram for indium depicts the cross-sectoral interactions between an economic pillar
(business model), an ecological pillar (environmental regulation), and a social pillar (society and human health).
Indium is a by-product of zinc mining and refining, so demand and supply of zinc have to be included.
From the business perspective, indium supply is exclusively from primarily production and recycling processes.
Indium production may lead to an accumulation of indium stock but decrease indium reserves. There is a reverse
relation between indium demand (ITO, LED, Solar Electric) and stocks (and reserves). An increase in demand
reduces stocks and reserves of indium. The reinforcing loop R1 (growth of demand increases the price of indium)
interferes with a balancing loop (B4), where an increase in the price of indium leads the industries to find substitutes
and to reduce indium demand. From the environmental and social perspective, the more indium production there is,
the more environmental degradation and pollution can occur. With increased pollution comes worse human health
conditions, resulting in increased pressure for environmental regulation to protect both humans and the
environment. This pressure results in increased enforcement of environmental regulations, which ultimately results
in reductions in the environmental degradation and pollution. The process described can be seen in loop B6,
representing a balancing effect or counteractive behavior. A reinforcing loop that could easily interfere with the
balancing loop we just described can be seen labelled R2 in the diagram. With worse human health condition of the
public due to pollution, the cost of health care would increase, affecting the government budget negatively. As the
budget decreases, the quality of the public service goes down since financial resources are essential for its
effectiveness. Among other things, the government would have less capabilities to ensure enforcement of
environmental regulations, given that the quality of public service had decreased. When environmental regulations
are not enforced, the result would be increased environmental degradation and pollution. Increased enforcement of
environmental regulations could also cause higher levels of perceived criticality of indium, as discussed above for
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Figure-15. CLD for indium
When examining the policies for Critical Raw Materials (CRM) in the developed world, as seen in reports from
the EU, Japan, China and the USA, it becomes apparent that they are ultimately aimed at securing the supply of
these materials for their industries and economic activities. The assumption that ensuring national or regional
economic interests will provide social well-being, seems to be implicit. However, publishing such lists does not
happen in a vacuum, and the CRM lists could give signals which trigger processes leading to worsening social
conditions, especially for the developing countries producing the CRMs. Increased perceived criticality of materials
could lead to increased demand for them, resulting in more pressure on mining communities to produce more
materials since the price is expected to go up. This increased pressure could have unwanted consequences, such as
increased environmental degradation and pollution, human rights violations, illicit trade, poor working conditions,
and resource conflicts. Governments in the developed world must acknowledge that there are limits to the Critical
Raw Material lists, because they often ignore the social aspects of criticality and the social context in which
materials begin to be perceived as critical.
Raw materials are considered crucial to the world economy. They are essential for maintaining our welfare,
they underpin the functioning of our industry, and make possible modern technologies, such as green energy
production and communications. Supply shortages of these materials, or market price spikes in crisis years,
triggered the development of criticality assessments for raw materials by government agencies. We present the
commonly-used methodologies for criticality assessments from the USA, Japan, the EU and the World Bank. We
show that existing methodologies are compound indicators, represented within a criticality matrix, based on
economic indicators of supply risk and economic importance. In the EU, work on criticality assessments has
advanced in recent years with recommendations to include a number of other factors in the methodology. These
factors are related to i) land use competition: ii) mining governance; iii) by-product dynamics; iv) supply chain; and
v) environmental and social considerations. Nonetheless, we argue that current methodologies still identify critical
raw materials from a macro-economic perspective, and do not tackle issues related to sustainable development.
Paradoxically criticality assessments have the potential to increase raw material criticality. This can occur either by
a market signal that results in increased prices for raw materials, or by increased conflict over critical materials.
To tackle these methodological shortcomings, we propose a complementary methodology stemming from
System Dynamics Modelling. By presenting 2 case studies for Phosphorus and Indium, we demonstrate the value of
this proposed method which provides more information and guidance for policy development. Our method helps in
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clarifying underlying causalities and identifying driving forces and leverage points in the dynamics of criticality.
We argue that our method allows policy- and decision-makers to take social and environmental aspects of critical
raw materials into account. A key leverage point for policy-making is accountability for environmental degradation
and pollution, which requires policy-makers to consider a shadow price for raw materials which includes
externalities. From this perspective, reduced criticality can be achieved by enforcing stricter environmental
regulations and boosting the recycling sector with the double purpose of improving supply security and ensuring
environmental and human health. These analyses addressed the global market, as well as social and environmental
situations common to other raw materials. We suggest that our method is transferable to other raw materials (e.g.
Tantalum in Democratic Republic of Congo
), as long as any variables particular to the analyzed material are
accounted for. We encourage the use of System Dynamics Modelling to assess the drivers of criticality for these and
other raw materials, and to provide valuable insights for policy-makers about how to reduce criticality, and how to
work towards a raw materials supply that takes into account not only economic but also environmental and social
Funding: Research article has received funding from the European Union‘s Horizon 2020 Research and
Innovation Programme under the Marie Curie Sklodowska-Curie Grant Agreement n°675153
Competing Interests: The authors declare that they have no competing interests.
Contributors/Acknowledgement: All authors contributed equally to the conception and design of the
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... Energy information from the present (2015) and future energy potential are sourced from other literature and databases (see footnotes). Biomass is the total human appropriation of Net Primary Production, fossil is the calorific content of extracted oil, natural gas and coal 36 Based on on a satellite-based measurement of global marine NPP (Field, Behrenfeld, Randerson, & Falkowski, 1998), a measure that is similar to global model results (Carr et al. (2006); 37 Based on 38 The total human appropriation of biomass in the year 2000 has been estimated to be 18.7 PgC/year,or 16% of global terrestrial Net Primary Production. Of this amount, 12% (12.1 Pg/yr) served as human food, 58% were used as feed for livestock, 20% as raw material and 10% as fuelwood (F. ...
... One of the main methods to categorize and compare the behavior of different models is to calculate the equilibrium climate sensitivity (ECS). The ECS is a measure that quantifies the 'equilibrium global mean sea surface temperature change following a doubling of atmospheric CO2 concentration, allowing for the climate system to equilibrate' [36]. ...
... The rule of Hotelling is a simple equation to calculate the rate of return on investment when holding an exhaustible resource stock in private ownership : dP/P = s. The rate of increase of the price P (dP/P) is in economic literature equal to the so-called "socially optimal rate of extraction"[36]. ...
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Our material footprint, our energetic metabolism, climate change and anthropogenic impacts on the environment are intrinsically linked, and increased considerably in magnitude over the last several decades in line with the expansion of industrial and economic activity. In order to design feasible mitigation pathways that could help overcome future degradation of our natural and societal environment, a systemic understanding is needed of possible transition and mitigation scenarios. These scenarios can and should be studied from a purely physical- energetic point of view in order to understand material and energetic limits, but designing effective transformation pathways is an inherently social and institutional process. This dissertation relates to both the physical-energetic models that are used to study future transitions as well as related institutional-political structures that shape contemporary climate and energy policy, and aims to (i) contextualize the present and future climate mitigation challenge using historical insights on the dynamics of past transitions of our socio- economic metabolism, (ii) debate the institutional context, role and characteristics of integrated assessment models and energy system models in shaping mitigation scenarios and policies, and finally (iii) reflect on novel non-monetary methodological approaches that could help to design feasible and ambitious dematerialization and decarbonization trajectories. To study these aspects, the dissertation relies to several schools of practice: (i) social ecology, industrial ecology and (physical) input-output analysis, (ii) integrated assessment modelling, climate modelling and energy system modelling and (iii) system dynamics, dynamical system theory and process control theory. Over the course of 8 chapters, the reader is invited to explore (1) how historical, present and future societal energy-revolutions relate to the energetic metabolism of the environment; (2) how renewable energy is represented in Integrated Assessment Models (IAMs); (3) the main characteristics of frequently used IAMs, their institutional context and historical evolution; (4) a brief introduction to the functioning of climate models, the most important climate modelling metrics and the implications of future carbon budget uncertainty for public policy making; (5) an exploration of the impact of differing discount and interest rates on the outcomes of major integrated assessment models and energy system models that are used for European and national policy-making, including a debate on the viability of monetary versus non-monetary climate and energy assessment and policy making; (6) an appraisal of the contemporary concept of circular economy; (7) a methodological-institutional exploration on how to dynamically model sectoral energy and material exchanges using physical input-output models and finally (8) an exploration of the application of input-output models on an urban scale.
... As with most surface mining operations, phosphate rock mining has impacts on the landscape and on ecosystems close to the mines (Schroder et al., 2010). Even though countries generally require mining companies to restore the land after the mines are exhausted, this is not always done in practice (Diemer et al., 2018). For example, many closed phosphate mines in Morocco have no post-closure management plan, meaning that mining waste is still on site and no restoration activities have taken place (Diemer et al., 2018). ...
... Even though countries generally require mining companies to restore the land after the mines are exhausted, this is not always done in practice (Diemer et al., 2018). For example, many closed phosphate mines in Morocco have no post-closure management plan, meaning that mining waste is still on site and no restoration activities have taken place (Diemer et al., 2018). Another example is the Republic of Nauru, a small island in the southwestern Pacific Ocean, where the environment was critically damaged by mining for phosphate rock. ...
... Another example is the Republic of Nauru, a small island in the southwestern Pacific Ocean, where the environment was critically damaged by mining for phosphate rock. Biodiversity-rich habitats were destroyed, and no post-mining restoration strategies are in place (Diemer et al., 2018). The water use of the phosphate mining industry may disturb the local hydrology (Reta et al., 2018). ...
Technical Report
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This report describes the importance of critical raw materials, their substitution solutions and assesses the environmental aspects related to them and their possible substitution solutions. For the assessment, five key applications were selected through a screening process, namely: permanent magnets, batteries, alloys, mineral fertilisers and electronic components.
... Boron mineral is a rare element and belongs to the group of nonmetals [2]. Boron mineral was determined to be among the "critical" 26 minerals, according to Diemer [3]. Boron mineral was designated as "important," as it was categorized as a mineral needed for the economy, according to a review of criticality studies conducted by Jin et al. [4]. ...
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Borate is an essential material to numerous industries and even to individual countries’ economies, defense, and politics. Almost all industries need borates for production, and almost everybody needs their products. Borate is a compound that contains or supplies boric oxide (B2O3). Among the minerals that contain boric oxide, there are only four minerals significant from an economic standpoint, namely borax (tincal), colemanite, ulexite, and kernite. Turkey has almost 70% of all known reserves in the world. Therefore, borates and their products could be one of the main topics for sustainable development in the whole world. The recent development and pursuit of new boron-consuming technologies and alternative products to existing borate-consuming products introduce additional uncertainty to the sustainability of boron minerals. Therefore, the European Union (EU) Commission also declared borate one of the 30 critical raw materials. Turkey is a prosperous country in terms of boron reserves, and it exports almost 96% of borates’ production. In order to better understand the relation between borate minerals and borate products, a material flow analysis (MFA) study has been carried out within the content of this work in order to update the data about the current status of boron. For this purpose, a system has been established that shows the flow of boron material. The extraction, enrichment, and refining processes of boron products are drawn. The results indicate that about 41% of extracted colemanite ore is converted into refined borate, about 31% of tincal ore is converted to refined borate, and 4% of tincal ore is converted to end-usage products, such as detergent. The correctness of the data and the sensitivity of the processes are all estimated values. The results can help in the development of boron sustainability and boron production strategies. The MFA study on tincal and colemanite ore may be an example of boron studies in different countries.
... It has, for example, been used for different long-term planning studies of the c The rule of Hotelling is a simple equation to calculate the rate of return on investment when holding an exhaustible resource stock in private ownership: dP/P 5 s. The rate of increase of the price P (dP/P) is in economic literature equal to the so-called "socially optimal rate of extraction" [38]. energy-climate system, to make the case for an EU-wide Emission Trading Scheme [41,42] and to define baseline trajectories that serve as a benchmark for policy targets [43,44]. ...
The purpose of this chapter is to synthesize models and institutional frameworks that are used to evaluate and design global, regional (EU), and national climate and energy trajecto- ries or policies, with a particular focus on the role of monetary valuation. Does using mon- etary variables and pricing in modeling obscure or illuminate a clear understanding of the energy-climate system? Do monetary-based policies help design and evaluate effective cli- mate policies? What are the key monetary parameters used in models and climate policies and to which extent do they influence the outcome? And finally, what could be alternative modeling strategies or policies to overcome the identified shortcomings? To illustrate and concretize these questions, they are applied to global cost-benefit Integrated Assessment Models (IAMs) and regional Energy System Models (ESMs) that are frequently debated in academic literature or used in the policy-making process [1]. A particular focus is laid on the impact of using different discount rates on the outcomes of IAMs and ESMs, and two key European institutional climate and energy policy frameworks: the European Emission Trading Scheme (EU ETS) and the European Investment Bank energy lending policy.
... Lithium has been identified as an important critical material in studies focused on vehicles (Mancini et al., 2013). According to criticality assessment carried out in Japan by METI and MOFA, lithium, together with other 30 minerals, was determined as a highly critical metal (Diemer et al., 2018). The main reasons for selecting lithium for this dissertation are: a) it is essential for lithium-ion batteries (LIBs) which are very important for developing rechargeable batteries in different industries, such as portable electronic devices and electric vehicles b) its market structure is an oligopoly where four countries -Chile, Australia, Argentina, and Chinaaccount for more than 90% of global production of lithium; c) currently it has got a very low end-of-life recycling input (less than 1%) which is a big challenge for the circular economy in the future (Buchert et al., 2009;Wellmer and Hagelüken, 2015). ...
The world’s supply of critical materials such as phosphorus (P), niobium (Nb), lithium (Li) and other strategically important elements is under increasing pressure due to the rapidly growing global demand in the recent years and limited possibilities of substitution. These materials are used in producing a broad range of products in everyday life and forming an integral part of many advanced and clean energy technologies. Hence, such materials are significant for many industrial sectors and essential to societal wellbeing. Therefore, the steady supply of critical materials starts to be one of the key economic and environmental questions. Moreover, the analysis of flows of those materials coming from mining and recycling starts to evoke the growing interest. A systematic understanding of how such materials flow through the industrial and residential sectors is required. Such awareness of materials’ inclusion in various products and their current stocks in the anthroposphere improve the potential of recycling and reuse of those materials as well as minimize overall waste. This dissertation presents dynamic models for critical materials such as P, Nb, and Li by using system dynamicsmethodology. It considers all stages of supply chain by addressing material and energy flows as well as greenhouse gas emissions. The main finding assists in optimizing for environmentally sustainable operations in designing and modelling of the critical materials supply chain. The findings indicate a clear need to analyse the recycling processes carefully. The obtained results show that recycling of used products containing critical materials, in some cases, aims to prevent the shortage of those materials and contributes to developing a robust circular economy. However, the environmental sustainability of recycling procedures for all materials could not be taken for granted, because it could differ based on the type of the waste stream. For some critical materials, recycling can cause more environmental damage than mining. Therefore, we should not treat critical materials as a homogeneous group. Recycling carried out using the existing technologies is a partial solution for some materials. In addition, there are physical limitations to the increasing of the recycling rate for some materials. The main limiting conditions of recycling can be economic, environmental, and physical by nature. The lattermost means that even if recycling is both more profitable and “greener” than mining, it is still impossible to completely replace primary production with the secondary one.
... Jugend et al. (2018) defined innovative performance with focuses on both the technical aspects of innovation and the introduction of new products in the market. Innovation literature claims that innovation is one of the key factors for firm to succeed and to gain competitive advantage (Porter 1990;Singh & Jayraman, 2013;Khan & Ali, 2017;Diemer et al., 2018). Innovation study has become important in developing industries. ...
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Automotive industry in Malaysia started in 1985 with the launch of the first national car. However after thirty years, overall performance of the industry is still far behind the neighboring countries like Thailand and Indonesia which ranked first and second top producers in the automotive industry. In order for the automotive players in Malaysia to be globally competitive, innovation is an important element to drive competitiveness. Thus, the aim of this study is to determine the relationship between NAP strategies and innovation performance in the Malaysian automotive component industry. NAP was launched in 2006 with six main directions and strategies. Study is focused on local automotive vendor and a completed survey was completed with 300 respondents. Data was ana-lyzed through structural equation modelling (SEM) using SmartPLS 3.0. Empirical evidence shows that NAP supports all types of innovation among automotive vendors in Malaysia. The study also found innovation mediates between National Automotive Policy (NAP) and vendor’s performance except in the process innovation. This supported previous research in this area where government policy partially mediates on firm competitiveness. The finding of the study suggests NAP is still relevant for the automotive vendors in Malaysia in improving innovation and performance
Diatoms are among the opaquest photosynthetic microorganism found in oceans, rivers, and freshwaters. They play a major role in reducing global warming as they fix more than 25% of atmospheric carbon di oxide (CO2). They are a reservoir of untapped potential with the multifaceted application including CO2 mitigation, play a vital role in the aquatic food web as primary producers, and wastewater remediation by quenching pollutants originating from diverse sources such as industries, agricultural, and human sources. Despite their abundance and diversity in nature, only a few species are currently used for biotechnological applications. Diatom biorefinery has gained importance in recent years as more and more algae are identified and explored as a source for lipids, pigments, and other biomolecules. In this chapter, the role of diatom biorefinery has been elaborated extensively displaying the potential of diatoms in carbon dioxide (CO2) mitigation, lipid production for biofuel, nutraceutical potential, and development of new-age drug molecules for therapeutic applications.
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Considering employees are the ultimate valuable assets, most companies nowadays give lots of effort and capitalise vital resources to preserve them. The turnover of those employees will affect the achievement of the organisations’ goals as well as the maintaining of the competitive advantage. Therefore, it is imperative to call for more studies to understand the factors affecting this phenomenon in different settings and contexts of research, particularly in the non-western perspectives such as Malaysia who is facing big challenges toward the employees’ turnover in many sectors. Therefore, the drive of this paper is to examine the relationship between organisational justice (OJ), organisational citizenship behaviour (OCB) (benefiting the individual OCB-I and benefiting the organisation OCB-O) and turnover intention (TI). Consequently, this study proposed framework to study the effect of organisational justice on turnover intention via the mediation role of organisational citizenship behaviour (OCB-I, OCB-O). Also, the direct impact between the variables has been discussed. Hence this paper is expected to fill the research gap and contribute to the body of knowledge in this area of research.
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The past decade has seen a resurgence of interest in the supply security of mineral raw materials. A key to the current debate is the concept of “criticality”. The present article reviews the criticality concept, as well as the methodologies used in its assessment, including a critical evaluation of their validity in view of classical risk theory. Furthermore, it discusses a number of risks present in global raw materials markets that are not captured by most criticality assessments. Proposed measures for the alleviation of these risks are also presented. We find that current assessments of raw material criticality are fundamentally flawed in several ways. This is mostly due to a lack of adherence to risk theory, and highly limits their applicability. Many of the raw materials generally identified as critical are probably not critical. Still, the flaws of current assessments do not mean that the general issue of supply security can simply be ignored. Rather, it implies that new assessments are required. While the basic theoretical framework for such assessments is outlined in this review, detailed method development will require a major collaborative effort between different disciplines along the raw materials value chain. In the opinion of the authors, the greatest longer-term challenge in the raw materials sector is to stop, or counteract the effects of, the escalation of unit energy costs of production. This issue is particularly pressing due to its close link with the renewable energy transition, requiring more metal and mineral raw materials per unit energy produced. The solution to this problem will require coordinated policy action, as well as the collaboration of scientists from many different fields – with physics, as well as the materials and earth sciences in the lead.
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Due to mounting concerns about the security of raw material supplies, numerous studies dealing with the quantification of supply risks and material criticality at the national level have been carried out in previous years. Regarding these studies, most approaches are indicator based static screening methods analyzing large numbers of raw materials and identifying those which are most critical for an economy. The majority of these screening methods quantify supply risks and vulnerabilities for one base year without taking into account temporal changes. Dynamic approaches for specific raw materials analyzing affected value chains in detail have been introduced recently; however, these studies do not intend to provide a screening of larger numbers of commodities. In this paper, we present a simple dynamic screening approach to assess raw material criticality at the country level building upon methods from innovation economics. The indicators applied in this study are only based on broadly available production and trade data, which makes this approach relatively easy to apply. We test our methodology on the example of Germany and Japan-two economies with highly specialized industries and low domestic raw material deposits, and, hence, high import dependency. The results are comparable to those of previously conducted multi indicator based static screening methods. However, they provide additional insight into temporal developments over the previous decade.
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This paper brings a discussion on the current state-of-the-art in criticality assessment in an international context. It analyzes the status of resource criticality concepts and their calculation methods. The current practice often exhibits a common two-axis assessment framework but the way the two axes are further operationalized shows heterogeneous approaches. Apart from the two-axis as key element of criticality assessment, the scope of the materials, the role of substitution, the delineation of the supply chain and data, and indicator selection are addressed as key elements. The abovementioned criticality assessment practice is approached in function of the upcoming international debate on criticality. The paper tackles the role of criticality assessment in the context of the sustainability assessment toolbox and it proposes a clear distinction between criticality assessment and resilience to criticality. The insights offered in the paper may feed the international discussion in the identification of elements that may be harmonized and elements that may be better left open in function of the particular application.
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Sedimentary phosphate mines produce millions of tons of waste rocks during their open-pit mining. In addition, during ore phosphate beneficiation, fluorapatite is separated from associated gangue minerals by a combination of successive mineral processing steps that involve crushing / screening, washing, and flotation. These operations generate large volume of tailings (called phosphate sludge) that are deposited in large surface ponds and waste rocks stockpiled within the mining site. The potential reuse of these phosphate mine by-products (waste rocks and sludge) has been investigated in the last 10 years.The first investigated option consisted in using the alkaline waste rocks (APW) to control the acid mine drainage (AMD). Indeed, these alkaline mine wastes contain significant quantities of calcite (46 wt%) and dolomite (16 wt%) that help in neutralizing the acidity generated by the wastes from the closed Kettara mine, located near Marrakech, Morocco. The addition of 15 wt% APW to the coarse Kettara tailings produced leachates with significantly lower acidity and metal loads in comparison to the un-amended control sample. Secondly, the efficiency of APW was assessed in the laboratory as an alternative alkaline material for passive AMD water treatment. In semi-arid climate, the oxic passive treatment has been proven to be the most suitable. The pH of the water and its quality were significantly improved. As a third option, the hydrogeotechnical characterization of original and screened phosphate limestone waste rocks as well as the phosphate sludge showed their suitability for use as a component of store-and-release (SR) covers for industrial mine site reclamation. Lab tests (columns) and field tests (instrumented columns and experimental cells) showed that water infiltration can be controlled, even for extreme rainfall events (150mm/day), by 1 m thick of a SR cover made with APW. Further research is currently being investigated around the recycling and valorization of phosphate sludge from phosphate mines as ceramics. Furthermore, the overburden of the phosphates sedimentary basins are mainly composed of marls; limestones blocks; silex bed; silex nodule; marls and clays; silicified limestone; which have a significant reuse potential as marble-mosaic floor, mortars and concrete, and natural stone products slabs for floors and stairs.
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A stable and secure source of raw materials is the key to any successful industrial activity. Resource criticality is often discussed in the context of the impact on the economies of certain geographic regions. However, the availability of required resources first of all concerns the competitiveness of industrial companies, especially in those countries which do not possess abundant natural resources. The Lithuanian economy relies heavily on imports since the country does not have abundant natural resources. The paper introduces resource criticality as an additional dimension for evaluating and prioritizing resource efficiency improvement options. Evaluation of resource criticality was integrated into the methodology for evaluation of Cleaner Production. Simple additive weighting (SAW) was used to solve the multi-criteria decision-making problem. The previous study on the natural resources that are imported to Lithuania revealed that metals are among the most important raw materials in terms of economic importance, supply, and environmental risks. Therefore, a typical metal processing company in Lithuania was selected for the detailed investigation of technological processes and Cleaner Production possibilities. The selected company processes about 3000 tons of various metals per year. The results of Process Material Flow Analysis show that most of the metal waste is generated during the metal plate cutting process (about 30.3 % of total metal consumption). Three resource efficiency improvement alternatives were evaluated and compared. The suggested decision support system was tested in order to decide on a definitive solution. The results reveal that evaluation of resource criticality in terms of geostrategic supply risk and economic importance can be used as an advantageous criterion to support the prioritization of Cleaner Production alternatives.
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Sustainable development with regard to non-renewable resources can best be defined in terms of the inter-generational challenge of the Brundtland commission and the intra-generational challenge worked out in Agenda 21 of the 1992 Rio de Janeiro conference of United Nations Conference on Environment and Development (UNCED). In meeting these challenges, the trilemma of security of supply under conditions of economic viability and environmental sustainability also needs to be addressed in order to achieve sustainable development. To fulfil the natural resources needs of future generations we have three resources at our disposal: (1) the geosphere or primary resources; (2) the technosphere or secondary resources and (3) human ingenuity and creativity driving innovation. Man does not need natural resources as such, only the intrinsic property of a material that enables the fulfilment of a function is required. Any material that can perform the same function more efficiently or cheaply can replace any other material. In our constant drive to secure the supply of efficient raw materials, the feedback control cycle plays an indispensable role by virtue of it reacting to price signals on both the supply and demand sides. The feedback cycle of course goes hand in hand with a continuous learning process. On the supply side, the learning effects are in technology development around primary resources and the increased use of secondary resources; on the demand side with thriftier use of raw materials.
Trends towards more energy efficient lighting and high performance display technologies have recently increased the demand for certain materials, which are considered ‘critical’ in terms of potential supply constraints. In this article, we assessed the substitution possibilities of these critical materials and analysed the impact of technological trends on their short-term demand. Substitution of fluorescent with more advanced light-emitting diode (LED) technology significantly decrease the demand for europium and yttrium, though, demand for gallium and indium will increase. Germanium and terbium will no longer be significantly used by the lighting sector by 2020. The next-generation of lighting technology – organic-LED (OLED) – is expected to eliminate the need for critical materials with the exception of indium. However, a wide adoption of OLED technology in general lighting is not expected before 2025.
The cobalt crisis at the end of 20th century and the recent rare earth elements debate in World Trade Organisation (WTO) both showed the importance of certain materials to numerous industries and even to the economy, defence and politics of individual countries. This fact prompted some authorities to launch organisations which focus on these critical materials and conduct studies on them. A good understanding of current or potential future situations of criticality of materials can help stakeholders to make better decisions to mitigate the criticality issues or take measures in advance. Furthermore, a review of critical materials studies provides a global view of this research area and be served as a reference material for future critical material studies. However, there is not yet a comprehensive study on diagnosis of criticality. Only some studies focused on finding critical materials in one specific region, country or offering recommendations accordingly. Also no product level methodology is available publicly. Therefore, the purposes of this study are (1) to show existing works about critical materials; (2) to help readers who want to carry on a critical materials study by showing: extract definitions of criticality as well as methodologies for determining the critical materials, including dimensions, data sources etc.; (3) to illustrate a criticality research area map as well as research gaps. Studies on critical materials are still at an early stage, evaluation methodologies can be improved and more sectors and regions need critical materials studies.