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Agent-based modeling of supply disruptions in the global rare earths market
Abstract
Several independent assessments have identified rare earth elements (REEs) as critical materials, notably neodymium (Nd), praseodymium (Pr), and dysprosium (Dy) used in permanent magnets. Factors affecting their criticality include expected growth in demand arising from their unique performance-enhancing properties in consumer, energy, and military applications and the supply risk associated with China's dominance in their production. We demonstrate the use of Argonne's Global Critical Materials (GCMat) agent-based model to explore the possible consequences to REE market dynamics of different types of regional supply disruptions including a temporary loss of production, shutdown of capacity, and diversion of supply. Results suggest that supply disruptions may foster earlier and more REE mine starts outside of China, although some of these mines may not be able to sustain operations post disruption. Further, price and associated market responses such as production, capacity, and demand tended to extend beyond the disruption period. Such market impacts in the magnet supply chain could affect the costs and availability of a number of emerging clean energy technology applications such as electric vehicles and wind turbines. In the future, GCMat could be used to evaluate the effectiveness of mitigation strategies — including recycling, conservation, product substitution, and diversification of supplies — on reducing the severity of disruptions in REE markets.
... Following the 2010-2011 China-Japan trade dispute and its ripple effects on the pricing of rareearth metals, several studies dedicated to the supply and demand of rare-earth metals were published (Du and Graedel 2011;Paulick and Machacek 2017;Tse 2011). Riddle et al. (2021) highlighted that out of the 10 rare-earth metals included in the analysis, dysprosium is the most vulnerable to supply disruption, showing the highest increases in prices. The study also shows that supply disruptions may foster more-and earlier-development of new mining projects outside China, which is in line with the rare-earth metal deposits exploration boom that followed the 2010-2011 trade dispute (Paulick and Machacek 2017). ...
... Another challenge posed by critical minerals is that they are often byproducts of host metals and, therefore, depend on the demand for the latter (Watari et al. 2020). For example, production of indium, gallium, and dysprosium relies on demand for their respective host metals of zinc, aluminum, and yttrium (Riddle et al. 2021;Watari et al. 2020). Dysprosium oxide production is constrained by the co-production of other rare-earth metals with lesser demand, which suggests that dysprosium production may fall short of demand (Riddle et al. 2021). ...
... For example, production of indium, gallium, and dysprosium relies on demand for their respective host metals of zinc, aluminum, and yttrium (Riddle et al. 2021;Watari et al. 2020). Dysprosium oxide production is constrained by the co-production of other rare-earth metals with lesser demand, which suggests that dysprosium production may fall short of demand (Riddle et al. 2021). While constraints from host metal mining may limit the supply of critical materials, removing those constraints may also create issues. ...
... 10 days while a mining project at the exploration stage today might only be operational in 10 years, yet the impact of this future mining operation in the current market should nevertheless be anticipated in decisions [3]. ...
... One of the main disadvantages attributed to ACE is often their low acceptance in the mining field [22], unlike the MFA and LCA approaches, which are more widely known and used by experts. However, in the past seven years, there is growing interest in the implementation of ACE for criticality: [23] on lithium, [24] on minerals in general, [3] on rare earths, and [11] on platinum. These few ACE projects have allowed us to begin to grasp some of the limitations pointed out by the state of art. ...
... But it also has limitations: for example, it ignores the representation of negotiations between agents. Conversely, the ACE model in [3] elucidates negotiations in the rare earths market but does not take into account the parameters of the axes of criticality. On the other hand, neither project uses methodologies that are already known and validated by experts (like LCA and MFA), which could complicate their acceptance by those same experts. ...
... For instance, the framework of [21] was designed for disruption recovery and post-disruption periods and to determine the influence of disruptions on production. Other studies, such as [37] and [8], have also developed integrated frameworks that associate key problemsolving components to achieve desirable outcomes. Since the key framework components of the i-PDIR framework form the baseline for the solution strategy envisaged for the problem discussed in this paper, it is considered an obvious option. ...
... The idea of the proposed messaging sequence within the agent-based environment is obtained from [37], where the idea was implemented in the supply chain industry for the supply chain entities representing the interactive ability of individual agents. ...
A flow-shop production-inventory system can become very complex in terms of production planning and scheduling. One of the causes of complexity in such a system is the uncertainty
of customer demand behaviour which disrupts production lines and inventory control. The uncertainty in customer demand behaviour that causes production disruptions can be in the
form of order cancellation, change in order delivery sequence and due time. In general, such disruptions cause order shortages, late order delivery, and the underperformance of resources, amongst others. This paper considers the random combination of occurrences of these disruptions under different production scenario problems. An innovative framework that embeds agent-based simulation, heuristic algorithm, and inventory replenishment strategy
is proposed to tackle these disruption problems. The integration of these methods formed a robust platform for adapting and accommodating disruptions with minimum impact on
production operations. An experimental study is performed, and the results determine the impact of disruptions under different demand and inventory statuses. An inventory replenishment method is compared with sequential and instantaneous replenishment methods to establish the significance of the proposed method. The proposed method outperformed
the sequential and instantaneous methods in terms of the total number of late or unsatisfied orders as well as the level of overall inventory sustainability as impacted by disruptions.
... Future work on developing mitigative actions to disruptions such as technology substitution and supplier diversifications was suggested. 17 An agent-based SCM framework was developed by Julka et al. 18 to model refinery SCs and capture the flow and relationships across each entity of a typical SC. The work was further applied to a refinery supply chain to test its effectiveness considering policy changes and other exogenous factors. ...
... Notably, terbium stands out as one of the rarest HREs, with a content of less than 0.01% in most rare earth mineral deposits, often geographically concentrated in a few countries (mainly China) 3 . China has emerged as the world's largest supplier and exporter of HREs since the beginning of the 21 st century, raising growing global concerns regarding China's control over HRE supply [4][5][6] . ...
... Beyond the automotive area, the vulnerability of rare-earth materials supply chain is a significant topic. The importance of rare-earth elements can also be understood through the studies that have been conducted on the hypothetical impact of supply disruptions on the rare-earth element market [1], [2]. Moreover, there is also the investigation of the environmental effect on rare-earth materials [3]. ...
According to vehicle electrification trends, the application of electric motors more often occurs. Therefore, in the aspect of the supply instability preparation for rare-earth materials, research on the rare-earth-free motor is getting more attention. Moreover, the electric motor for the vehicles should have not only high power density but also fast response. Especially, electric motors for advanced driver assistant systems or autonomous driving vehicles should have a fast response speed to secure the driver’s safety. This paper introduces the electro-mechanical response improvement design of concentrated flux synchronous motors for vehicle electrification. Improvement design is carried out targeting motors for electric power steering system. The development of the electro-mechanical analytic (EMA) model of the electric motor is firstly explained. Then, based on the developed EMA model, electro-mechanical response modeling is performed. Finally, the speed response improvement design is conducted using the developed EMA model. In addition, the results are validated not only in finite element analysis but also experimentally.
... In the case of Russia, two articles were found. However, both were not classified as open access [60,61]. Another point was that one of the articles found was written in Russian. ...
With the advancement of electric mobility, critical materials that are used in the batteries and electronic equipment of electric vehicles tend to become scarce. This work aims to analyse the state-of-art of the electric vehicle supply chain through bibliometric and systematic reviews, using quantitative and qualitative indicators, to find critical points that represent risks to the supply chain and that should be focused on and to identify trends for further studies. The bibliometric review was carried out with the support of the Bibliometrix software. The systematic review was performed using the PRISMA method. The bibliometric analysis showed the importance of the costs associated with electric vehicles, as well as trends in studies related to sustainability and transparency in the supply chain. Although risk management in the supply chain appears to be relatively little studied when considering the authors’ keyword analysis, the systematic review showed that this process was the most studied topic. Even so, raw materials supply appeared as the topic most focused on, followed by an environmental impact assessment and cost analysis. There were also studies aiming to achieve competitiveness and analyse ecologically correct practices. The battery was the most studied component, but other components must be analysed in search of greater competitiveness in relation to conventional vehicles.
... National and regional material flow analyses (Guyonnet et al., 2015;Xiao et al., 2022) and trade flow analyses (Geng et al., 2020) provide a window into some of the complexities across the supply chain. Modeling approaches such as system dynamics (Sprecher et al., 2015), Monte Carlo simulation (Sanematsu et al., 2019), and agent-based modeling (Riddle et al., 2021) that address the issue of data uncertainty and volatile and evolving market conditions are also underway and ongoing. ...
Estimating the material flows of rare earth elements (REEs) is essential to understanding which industries are most vulnerable to potential REE supply disruptions which, in turn, may inform policy recommendations aimed at reducing the supply risk. However, the REEs are a group of mineral commodities characterized by highly uncertain estimates of supply and demand due to the REE market's complexity, opacity, and small size. In this study, a streamlined methodology was applied to map mineral commodity first‐use to final‐use applications and to estimate total requirements at the national level based on available industrial data for final‐use finished goods. This analysis examines REEs both as a group and individually, showing that total US requirements are between 15% and 16.5% of world requirements for the year 2015, the latest year with the most complete information available. The findings shed light on US industrial capabilities by revealing the discrepancy between the types of REEs that go into US raw material consumption and those that are contained in embedded consumption. For instance, given the United States’ large oil refining industry, US raw material consumption of lanthanum is quite high. In contrast, US raw material consumption of neodymium is relatively low, whereas embedded demand is comparatively high. This reflects the lack of industrial capacity to process REE concentrates into magnet material combined with the US's high imports of products that contain rare earth permanent magnets.
... Moreover, today's technologies have complex supply chains that are sensitive to global markets and geopolitics. Supply disruptions can arise from many different sources, including those internal to the supply chain, such as operational problems or logistics failures, and those external to the supply chain, such as natural disasters or government actions (Riddle et al. 2021). Especially, the supply disruptions caused by the Covid-19 epidemic caused a great confusion in the techmetals sector, which is necessary for low carbon technologies (Akcil, Sun, and Panda 2020). ...
Increasing demand for low carbon technologies and renewable energy sources requires our resources and economies to be circular. Many countries agree that the responsible consumption, production, and
recycling of rare-earth-containing products is essential as a way to achieve the sustainable development goals also set out in the European Green Deal. Sustainable sourcing is targeted with carefully designed roadmap for cost efficient REE production from end-of-life products (EoLs) in addition to mining activities as providing primary sources. Hydrometallurgical methods, such as roasting, leaching, precipitation, crystallization, solvent extraction, and ion exchange includes fast developing, selective, eco-friendly, and cost-effective technologies especially for the extraction of REEs. This article provides an overview of primary and secondary resources and summarizes presents case scenario of studies carried out on the use
of some promising methods, which could serve as an economical means for recovering REEs.
... To some extent, there appear to be trade-offs between critical material and bulk material use; in the case of photovoltaics as well as wind turbines, where permanent magnet generators that rely on the rare-earth elements neodymium and dysprosium (Fishman and Graedel, 2019;Miyamoto et al., 2019;Moss et al., 2013) compete with magnet-free designs that require more copper (Pavel et al., 2017). Disruptions of rare-earths supply could affect the costs of permanent magnet turbines (see Riddle et al., 2021) and thus hamper efforts to reduce bulk material requirements. ...
Transforming and expanding the electricity sector are key for climate change mitigation and alleviation of energy poverty. Future energy systems based on renewable energy sources may reduce greenhouse gas (GHG) emissions but could require more materials during construction. We assess this trade-off by quantifying the requirements of the main bulk materials used in electricity infrastructures for 281 global electricity sector pathways until 2050. We identify main determinants for material requirements and gauge the relevance of socio-economic framework conditions and climate change mitigation regimes. Five selected, highly diverse scenarios are analysed in detail by quantifying their respective annual material stocks and flows, and cumulative GHG emissions to 2050. We find robust evidence that scenarios in line with the 1.5 °C target are associated with significantly higher material requirements than scenarios exceeding a global temperature rise of 2 °C. Material stocks in 2050 differ by up to 30% for copper, 100% for concrete, 150% for iron/steel and 260% for aluminium (3rd quartiles of Monte Carlo simulations), even when the particularly material-intensive “Below 1.5 °C″ scenarios are excluded. Although power plants account for the largest part of the material requirements, grid expansion and reinforcement, necessary to accommodate large shares of volatile power generation and provide universal access to electricity, also cause substantial material demand. In the absence of future GHG mitigation in the processing industries, GHG emissions related to bulk materials (primarily iron/steel and aluminium) could amount to one tenth of the remaining carbon budget for a 50% chance of limiting global warming to 1.5 °C. However, if preference is given to material-efficient technologies, low-carbon processes are applied in the industries and increased material recycling is achieved, GHG emissions related to bulk materials in decarbonisation pathways will not significantly exceed those in largely fossil fuel-based scenarios.
... Even in that case, the multi-level aspect is represented as an interplay between international and global levels (excluding the regional level) and the flow aspect mainly covers only primary metal resources circuits, not the recycled metals circuit. We can cite the work of the team of Knoeri and Riddle [30,31] or that of the team of Yuan [32] as rare examples of these works. The date of the latter work (between 2013 and 2021) and the state-of-the-art regarding the BTP sector confirms that the application of the ACE on mineral resources is still at its early stages. ...
For each region of France, there is currently a program to implement a plan for regional prevention and management of construction and demolition waste (CDW) used in the buildings and public works (e.g., roads) sector, also called the BTP (from the French Bâtiment et Travaux Publics) sector. To implement such a plan, its complexity must be considered; i.e., account (a) for how different scales are endogenously connected and (b) for decision-making rules at each scale being introduced. However, this complexity has rarely been taken into account in the literature. Using the PACA region as a case-study, this paper presents the first results of modelling that determines a hypotheses for the geographic distribution of the road renovation rate in each municipality (microscale) and Department (mesoscale) in a region of France. Such a renovation requires recycled aggregates (gravel) and asphalt supplies simultaneously. To consider this endogenous connection between scales, the model at the micro-scale must also be calibrated so the simulated values emerging at a higher-scale approach a supply–demand balance. We also discuss the transposition of the model to another French region (Ile-de-France). The method we used is the Agent-based Computational Economics (ACE) modelling approach. In addition, the coherent interplay between scales is determined by an approach called pattern-oriented modelling (POM). Our research revealed, at a thematic level, that for a circular economy to develop, the network of facilities in the territory is very important, and effective commercialization of secondary resources is major in the areas that group together recycling platforms and nearby asphalt plants. At a methodological level, our research revealed that in any multi-level modelling exercise, POM can be seen as an essential approach to accompany the ACE approach, particularly for a macroeconomic (here macro = regional) looping of a model designed at a microscale. However, convincing the BTP sector to integrate ACE/POM as a full part of a methodological support for regional prevention and management of CDW remains a challenge
Global supply chains depend on the steady flow of natural resources, which are transformed into raw materials for various industries. Guided by supply chain theories such as Transaction Cost Economics and the Resource‐Based View, firms often design complex supply networks that prioritize cost efficiency, leading them to source raw materials from low‐cost and remote locations. This practice leaves global supply chains vulnerable to significant challenges, including geopolitical tensions, sustainability risks, resource scarcity, transportation disruptions, and security threats. However, the existing literature on supply chain risks primarily focuses on the downstream management of the manufacturing, distribution, and retail tiers of the supply chain. Therefore, using a multidisciplinary systematic literature review, this study fills this gap by developing a ten‐category typology of raw material supply risks. Conceptual development also results in several propositions related to the supply risk categories and their potential interaction. Further, we propose that the commoditization of raw materials and the assumption of their availability exacerbate raw material supply risks, and we discuss the implications of geographical, political, and supply‐tier distances on supply chain risk. This research contributes to the literature by offering a nuanced perspective on raw material supply risks and providing actionable insights for improving supply chain practices.
Climate change is causing frequent extreme weather events, posing disruption risks to supply chains. A two‐echelon supply chain comprising two suppliers and one retailer is constructed from a risk perspective. A game theory model is utilized to analyze all parties' optimal decisions and risk management measures under climate disturbances. The reactions of the retailer and suppliers, who sell vertically differentiated substitute products, are examined, and the changes in social welfare are observed. Our analysis exhibits that (1) the retailer mitigated the negative impact of risk disturbance through product differentiation and pricing strategies and even achieved higher profits than without extreme weather events; (2) there is a possibility that the sales volume will be higher in extreme weather, which is related to the antidisturbance ability of the supply chain; and (3) although extreme weather disturbs the supply, it may lead to a win–win relationship between retailer's profit and social welfare. The operational decisions derived from this study exhibit robustness in mitigating the adverse effects of extreme weather, enabling maximization of both retailers' profits and social welfare, thus contributing to the theoretical foundation for sustainable socioeconomic systems.
As the global energy mix transforms and renewable energy technologies rapidly develop, there has been a significant increase in the demand for rare earth elements, which play a crucial role in renewable energy systems. By recycling rare earth resources from obsolete equipment, the reliance on newly mined rare earth resources can be reduced, thereby reducing the related environmental and energy footprints and increasing the stability of the supply chain. This study aims to systematically and strategically analyze and discuss the recycling impacts of renewable energy generation (REG)-related rare earth resources in terms of environmental, economic, social, and governance aspects. A SWOT strategical analysis framework integrating a management cycle and intelligent text data mining is built to address the above tasks from an ESG (Environment, Society, and Governance) perspective. The SWOT analysis of the rare earth recycling impacts focuses on strengths (e.g., reduced dependence on rare resources, reduced environmental and emission pressure), weaknesses (e.g., high cost, technology and management complexity), opportunities (e.g., policy support, technological innovations, diversification of the global supply chain), and threats (e.g., market volatility, the emergence of alternative materials). This analysis framework reveals textual topic changes and suggests cyclic and strategical improvement pathways to analyze the multi-dimensional recycling impacts. The text data analysis results indicate that the trend of rare earth recycling is gradually transformed from technologies, supply and demand, and secondary resources into resource and environment sustainable development. Beyond overcoming identified challenges, future pathways should focus more on the integration of advanced emerging technologies, life cycle management, and dynamic adjustment of recycling strategies. This study could provide policymakers and industry practitioners with recommendations and outlook on current development status and improvement strategies to promote REG-related rare earth recycling.
Rare earth elements (REE) are essential for the future of electric vehicles and renewable energy production, but currently there is limited REE production outside of China. Forecasting global future supplies of REE often relies on the valuation of advanced mining projects to assess if projects will initiate production. Classical valuation methods, such as net present value (NPV), require knowledge of initial capital and operating expenditures to assess the economic feasibility of a given project. Typical industry unit expenditure projections are highly precise but are extremely project dependent and require detailed knowledge of a site that is far beyond the level that a domestic and/or global supply-demand model can obtain. To model future REE supplies we developed a new globally representative, simplified, mining project cost model that can be used to approximate the capital and operating expenditures of greenfield REE mining projects. Results from this model allow users to estimate expenses of open-pit and underground mines with mineral processing operations that range from solely beneficiation to individual REE separation. Using our new model and an estimate of NPV, we evaluate several REE mining projects and assess the economic variables impacting the likelihood for these projects to advance to the production stage. Of 12 assessed projects located outside of China, in the early to advanced development stages, nine had positive NPV at 2011 peak REE prices, but none had positive NPV when prices reached bottom in 2016. Two projects yielded positive NPV’s using 2022 and projected 2028 prices. The viability of these projects given the impact of the volatility in REE prices explains the high uncertainty in the future supply for these mineral commodities.
The increasing interest from technology enthusiasts and organisational practitioners in big data applications in the supply chain has encouraged us to review recent research development. This paper proposes a systematic literature review to explore the available peer-reviewed literature on how big data is widely optimised and managed within the supply chain management context. Although big data applications in supply chain management appear to be often studied and reported in the literature, different angles of big data optimisation and management technologies in the supply chain are not clearly identified. This paper adopts the explanatory literature review involving bibliometric analysis as the primary research method to answer two research questions, namely: (1) How to optimise big data in supply chain management? and (2) What tools are most used to manage big data in supply chain management? A total of thirty-seven related papers are reviewed to answer the two research questions using the content analysis method. The paper also reveals some research gaps that lead to prospective future research directions.
Rare-earth materials play an essential role in the field of electromobility. These materials are frequently used in automotive components such as electric machines, battery packages, controller units, automotive actuators, and car multimedia applications. The research aims to examine the ecological effects of the rare-earth material usage and carefully analyse the market needs for rare-earth materials. It is essential to investigate how the other fields of the market (like consumer electronics or telecommunication) can affect the field of electromobility regarding rare-earth content usage. Rare earth magnets are key components for tablets, cell phones and many other electronic devices. It is very unlikely that the major electronic device manufacturers are decreasing their rare-earth material consumption despite the increasing demand for e-mobility. Statistic methodologies are used to conclude the rare-earth material usage. The geopolitical situation and the geographical distribution of the rare-earth production are all essential parts of this article. The recycling rates of the rare-earth materials and the rare-earth-material-based magnets are relatively low compared to other base materials in electromobility. The impact of the low recycling rates, together with the increasing demand for rare-earth materials, lead to a business situation which triggers engineering activities focusing on partially or fully rare-earth material free solutions. In this article, the current situation in the rare-earth market is analysed and conclusions are drawn regarding the predicted future situation. The future challenges are also identified, and solutions are proposed as well.KeywordsRare-earth materialsRare-earth magnetsElectromobilityElectric vehiclesAutomotive
The European transport sector is evolving rapidly, and so do the challenges associated with its fuel needs. The advanced biofuels of second and third generations based on Lignocellulosic (LC) and microalgae biomass have emerged as promising alternative biofuels producers. The paper reviews the renewable energy scenario and its contribution to the transport sector in the European region. A techno-economic analysis is presented for LC, algae-based advanced biofuels. A SWOT analysis is performed to understand the challenges and opportunities associated with 2nd and 3rd generation advanced biofuels for making them market-ready.
Critical materials such as rare earths underpin technologies needed for a decarbonized global economy. Recycling can mitigate the supply risks created by increasing demand and net import dependence, and enable a circular economy for critical materials. In this study, we analyze the feasibility and life cycle impacts of recovering critical materials from spent Nickel Metal Hydride batteries from hybrid electric vehicles in the U.S., accounting for stocks, battery scrappage, and end-of-life reverse logistics, given uncertain future availability scenarios. Our results show that the total collection and recycling costs depend strongly on future battery availability, with marginal costs exceeding marginal revenues when the availability of spent batteries declines. We quantify the potential of recycling to reduce primary imports, as well as the accompanying climate change and resource impacts. We explore the underlying reverse logistics infrastructure required for battery recycling, and evaluate strategies for reducing associated capital investment risk.
Los concentrados de óxidos de “tierras raras” son hoy considerados críticos para la industria tecnológica. Su extracción y procesamiento están concentrados en China, Australia y Estados Unidos y su cotización comercial va en ascenso. Chile posee recursos inexplotados de tierras raras y relaves mineros que las contienen, sin procesar. Este trabajo indaga si el marco normativo minero actual de Chile abarca la minería de tierras raras y su procesamiento local; y si la respuesta fuere negativa, qué incentivos podrían -entonces- impulsar tal actividad de forma económicamente eficiente y medioambientalmente sustentable. Metodológicamente, la investigación examina -primero- las particularidades de las tierras raras; para luego contrastarlas con la regulación minera tradicional chilena y comparada; y, finalmente, proponer estímulos jurídico-económicos que posibiliten la minería de tierras raras y aporten a su cadena de valor mediante el procesamiento local. El trabajo sostiene la necesidad de abordar constitucionalmente mejor el dominio de las tierras raras; y que el marco jurídico vigente de sustancias minerales concesibles no acusa sus particularidades; postula, además, que el régimen apropiado de concesiones mineras de estos metales debe ponderar su valoración estratégica y económica, incluyendo el factor ambiental. Más aún, sostiene que -para el desarrollo y gestión de proyectos de exploración, explotación, beneficio y procesamiento local de tierras raras- es fundamental impulsar la investigación industrial estratégica y la formación de capital humano, diseñar esquemas de financiamiento (capital de riesgo, subsidios, fondos de reserva, tributación) y privilegiar formas público-privadas de asociación. La investigación es relevante porque impulsa un marco regulatorio que estimule el desarrollo de la minería de tierras raras, capaz de otorgar a Chile una oportunidad real de contemporizar su minería, diversificándola con la explotación de productos estratégicos de creciente demanda global; e introduciendo tecnologías eficientes que recuperen valor del procesamiento de desechos, reduciendo los pasivos ambientales de la minería.
Heavy rare earth (HRE) has become a necessary metal material in the field of high-tech and new energy. China is rich in rare earth, but years of mining resulted in over-exploitation of HRE. And HRE's resource advantage position has been weakened gradually. Therefore, with the increasing demand for HRE, it is of great significance to understand the flow of HRE in sectors in China. In this article, the research model combines the input-output model and complex network model. From the perspective of sector supply chain, the network structure of embodied HRE flow network is analyzed, and the key sectors are identified. Subsequently, the impact of sectors' network roles on the consumption of embodied HRE is quantified based on panel regression model. Furthermore, structural path analysis is used to identify the critical path of the embodied HRE consumption. The main results are as follow: firstly, policy implication and supply-side disruption can cause fluctuation in embodied HRE consumption. But due to the rapid development of new energy industry, demand-side driving effect will be more and more prominent. Secondly, each sector plays a different role in the trading of embodied HRE. For example, metal mining and smelting processing is an important supply and consume sector and the consumption of HRE is largely affected by the sectors' network roles. Finally, the critical path of embodied HRE consumption shows that the main supply path is non-ferrous metal ore mining→ non-ferrous metal smelting and processing→ related electric machinery and metalworking machinery manufacturing/cultural, athletic and arts products manufacturing. However, with the development of new energy, the key supply chain may change. Therefore, we should pay attention to the role of the above key sectors and guide HRE to flow to key sectors of high-end applications. It is important to continuously improve the technology innovation of high-end application fields of HRE, promote resource utilization, and ensure the safety of key supply chains.
Critical Minerals Assessment (CMA) is concerned with the mineral inputs to a system (such as an economy or industry), the risks of a disruption to supply occurring, and the impacts that such a disruption would have on the system. Take for example Rare Earth Elements (REEs), which are presently considered to be critical minerals from the perspective of several sovereign entities. The current criticality of REEs is due to supply being dominated by one nation (China), and the significant impact to a sovereign entity’s defence, energy and/or electronics sectors if REE supply is disrupted.
From the perspective of Australia as a sovereign entity, the main interest in CMA has historically been as a potential supplier of critical minerals to the global market. For Australia, the criticality of minerals is generally seen as an opportunity, as Australia has the potential to increase the supply of minerals that other sovereign entities deem critical. The Australian Government therefore carefully examines the CMA results produced by other sovereign entities (e.g. Japan, EU, UK, US). However, each of these sovereign entities apply their own CMA methodology and these methodologies were not established with a supplier country’s perspective in mind. For Australia, this presents challenges when it comes to the consolidation and comparison of CMA results. These challenges lead to one of two question addressed in this paper: What CMA analytical framework would best suit Australia in its assessment and integration of CMA results from other sovereign entities?
As well as being a significant minerals exporter, Australia is also an importer of minerals and minerals-derived materials. Australia’s economic exposure to these minerals and materials has yet to be examined. This is now being recognised as an analytical gap that needs to be filled in the interests of sovereign resilience. However, such analysis is complicated by several factors. Firstly, Australia has a relatively limited industrial sector, relying more on minerals-derived materials than the direct outputs of mining. This implies that in conducting CMA from an Australian perspective, that several stages along the minerals value chain must be considered. The methods currently in use by other sovereign entities are generally not well suited to this. There are other deficiencies in current CMA methodologies, including a general inability to deal with minerals that are produced as by-products. By-products tend to have very low price-elasticity of supply, and in addition, there is a confounding cross-price elasticity with respect to the primary mineral produced. This presents significant challenges from a modelling perspective. The abovementioned deficiencies in current CMA methodologies leads to the other question addressed in this paper: What CMA methodology will meet the needs of Australia as a minerals and minerals-derived products importer?
In addressing the abovementioned questions, we review the CMA methods that have been applied by other countries; Australian contribution to the science of CMA; and the specific needs of CMA if it is to be conducted from an Australian perspective. Based on that analysis, we make recommendations for an analytical framework for conducting CMA and provide information as to its ongoing development.
Trade tensions, resource nationalism, and various other factors are increasing concerns regarding the supply reliability of nonfuel mineral commodities. This is especially the case for commodities required for new and emerging technologies ranging from electric vehicles to wind turbines. In this analysis, we use a conventional risk-modeling framework to develop and apply a new methodology for assessing the supply risk to the U.S. manufacturing sector. Specifically, supply risk is defined as the confluence of three factors: the likelihood of a foreign supply disruption, the dependency of U.S. manufacturers on foreign supplies, and the ability of U.S. manufacturers to withstand a supply disruption. The methodology is applied to 52 commodities for the decade spanning 2007–2016. The results indicate that a subset of 23 commodities, including cobalt, niobium, rare earth elements, and tungsten, pose the greatest supply risk. This supply risk is dynamic, shifting with changes in global market conditions.
Through the development and usage of an agent‐based model, this article investigates firms' adaptive strategies against disruptions in a supply chain network. Viewing supply chain networks as complex adaptive systems, we first construct and analyze a real‐world supply chain network among 2,971 firms spanning 90 industry sectors. We then develop an agent‐based simulation to show how the model of firms' adaptive behaviors can leverage competition relationships within a supply chain network. The simulation also models how disruptions propagate in the supply chain network through cascading failures. With the simulation, we seek to understand if a firm's adaptive behaviors can reduce the impact of disruptions in supply chain networks. Therefore, we propose, evaluate, and analyze two types of adaptive strategies a firm can leverage to reduce the negative effects of supply chain network disruptions. First, we deploy in our model a reactive strategy, which restructures the network in response to a disruption event among first‐tier suppliers. Next, we develop and propose proactive strategies, which are used when a distant disruption is observed but has not yet hit the focal firm. We discuss the implications related to how and when firms can improve their resilience against supply disruptions by leveraging adaptive strategies.
Wind power is often posed as a greenhouse gas emission mitigation option, yet from a global perspective, the constrained supplies of rare-earth metals required for large-scale offshore wind turbines seem increasingly likely to provide limits to offshore wind power and other rare-earth-metal applications in the coming years. A 2015 US Department of Energy study maps an ambitious roadmap for offshore wind power to be capable of meeting substantial US electric-generating capacity by 2050. Our study addresses the neodymium material requirements that would be needed. We find that regional differences in deployment schedules will result in complex patterns of new capacity additions occurring concomitantly with turbine retirements and replacement needs. These demands would total over 15.5 Gg (15.5 kt) of neodymium by 2050, of which 20% could potentially be avoided by circular usage from decommissioned turbines but only if recycling technologies are developed or, better still, magnets are designed for reuse. Because neodymium is deemed to be a ‘critical material’, these perspectives are vital information for the formation of policy related to wind-energy provisioning, to domestic production, and to the importation of the rare-earth elements that would be required.
Rare earths elements (REE) are considered as strategic resources because they interact with business and gov-ernments' direct policy interventions. Policy interventions can have a major effect on security of rare earth supply (Kooroshy et al., 2015). The purpose of this study is to scrutinize China's REE policies and its impacts on the supply chain resilience. We analyze the supply chain dynamics by specifically targeting a number of Chinese REE policies that have disruptive tendencies. We analyze various policies placing the price at the center as an overarching feedback loop. In other words, we focus on how price responds to various resilience influencing mechanisms such as diversity of supply, regulatory frameworks, and stockpiling. In the process, we investigate Chinese influence on rest of the world (RoW) supply chain and dynamics inside the Chinese supply chain as there are two different layers of supply chain one for China and another one for rest of the world. We show that the supply chain is a complex phenomenon and resilience of a system is not solely dependent on physical disruptions but also on dynamic factors such as societal and geo-political (eg. environmental regulation, speculative market and export ban). We identify links and interdependencies even where data is not readily available and examine how the overall system reacts to various constraints and disruptions.
We explore the long-term demand and supply potentials of rare earth elements in alternative energy vehicles (AEVs) in the United States until 2050. Using a stock-flow model, we compare a baseline scenario with scenarios that incorporate an exemplary technological innovation: a novel aluminum–cerium–magnesium alloy. We find that the introduction of the novel alloy demonstrates that even low penetration rates can exceed domestic cerium production capacity, illustrating possible consequences of technological innovations to material supply and demand. End-of-life vehicles can, however, overtake domestic mining as a source of materials, calling for proper technologies and policies to utilize this emerging source. The long-term importing of critical materials in manufactured and semi-manufactured products shifts the location of material stocks and hence future secondary supply of high-value materials, culminating in a double benefit to the importing country. This modeling approach is adaptable to the study of varied scenarios and materials, linking technologies with supply and demand dynamics in order to understand their potential economic and environmental consequences.
As the demand for personal electronic devices, wind turbines, and electric vehicles increases, the world becomes more dependent on rare earth elements. Given the volatile, Chinese-concentrated supply chain, global attempts have been made to diversify supply of these materials. However, the overall effect of supply diversification on the entire supply chain, including increasing low-value rare earth demand, is not fully understood. This paper is the first attempt to shed some light on China’s supply chain from both demand and supply perspectives, taking into account different Chinese policies such as mining quotas, separation quotas, export quotas, and resource taxes. We constructed a simulation model using Powersim Studio that analyzes production (both legal and illegal), production costs, Chinese and rest-of-world demand, and market dynamics. We also simulated new demand of an automotive aluminum-cerium alloy in the US market starting from 2018. Results showed that market share of the illegal sector has grown since 2007–2015, ranging between 22% and 25% of China’s rare earth supply, translating into 59–65% illegal heavy rare earths and 14–16% illegal light rare earths. There will be a shortage in certain light and heavy rare earths given three production quota scenarios and constant demand growth rate from 2015 to 2030. The new simulated Ce demand would require supply beyond that produced in China. Finally, we illustrate revenue streams for different ore compositions in China in 2015. © 2016 The Minerals, Metals & Materials Society (outside the U.S.)
Rare earths, sometimes called the vitamins of modern materials, captured public attention when their prices increased more than ten-fold in 2010 and 2011. As prices fell between 2011 and 2016, rare earths receded from public view—but less visibly they became a major focus of innovative activity in companies, government laboratories and universities. Geoscientists worked to better understand the resource base and improve our knowledge about mineral deposits that will be mines in the future. Process engineers carried out research that is making primary production and recycling more efficient. Materials scientists and engineers searched for substitutes that will require fewer or no rare earths while providing properties comparable or superior to those of existing materials. As a result, even though global supply chains are not significantly different now than they were before the market disruption, the innovative activity motivated by the disruption likely will have far-reaching, if unpredictable, consequences for supply chains of rare earths in the future.
With the advent of globalization, mitigating supply chain disruptions is the differential for any company. However, mitigating supply chain disruption-related risks in companies is a difficult task. There are some ISO norms that provide standards that can make systems to deal with supply chain disruptions and there are some modeling techniques that ensure that supply chain disruptions be mitigated. Although both approaches do not eliminate supply chain disruptions, they have a fundamental importance for supply chain mitigation. In this context, this paper presents an agent-based with the support of some supply chain and risk norms to mitigate supply chain disruptions. The objective of the proposed method is to identify possible hidden supply chain risks, often highlighting previous hidden or overlooked areas of high risk. An example application for a manufacturing firm demonstrates that this model is feasible and can be replicated to different sectors.
This paper presents a literature review on risk and disruption management in production-inventory and supply chain systems. The review is conducted on the basis of comparing various works published in this research domain, specifically the papers, which considered real-life risk factors, such as imperfect production processes, risk and disruption in production, supply, demand, and transportation, while developing models for production-inventory and supply chain systems. Emphasis is given on the assumptions and the types of problems considered in the published research. We also focus on reviewing the mathematical models and the solution approaches used in solving the models using both hypothetical and real-world problem scenarios. Finally, the literature review is summarized and future research directions are discussed.
Risk management plays a vital role in effectively operating supply chains in the presence of a variety of uncertainties. Over the years, many researchers have focused on supply chain risk management (SCRM) by contributing in the areas of defining, operationalising and mitigating risks. In this paper, we review and synthesise the extant literature in SCRM in the past decade in a comprehensive manner. The purpose of this paper is threefold. First, we present and categorise SCRM research appearing between 2003 and 2013. Second, we undertake a detailed review associated with research developments in supply chain risk definitions, risk types, risk factors and risk management/mitigation strategies. Third, we analyse the SCRM literature in exploring potential gaps.
Economic systems are increasingly prone to complexity and uncertainty. Therefore, making well-informed decisions requires risk analysis, control and mitigation. In some areas such as finance, insurance, crisis management and health care, the importance of considering risk is largely acknowledged and well-elaborated, yet rather heterogeneous concepts and approaches for risk management have been developed. The increased frequency and the severe consequences of past supply chain disruptions have resulted in an increasing interest in risk. This development has led to the adoption of the risk concepts, terminologies and methods from related fields. In this paper, existing approaches for quantitative supply chain risk management are reviewed by setting the focus on the definition of supply chain risk and related concepts.
Due to the complex nature and numerous interacting factors that contributes to the increased vulnerability of supply chains, traditional methods have been found to be inadequate for Supply Chain Risk Management (SCRM). Agent-Based Modeling and Simulation (ABMS), an agent-oriented approach to model and simulate complex adaptive systems, represents a recent development in supply chain planning that has been regarded highly appropriate for studying risk management. The objective of this paper is to provide a multi-perspective survey of the state-of-the-art agent based modeling and simulation approaches for SCRM.
Purpose
This paper is to describe development of the features and functions of Repast Simphony, the widely used, free, and open source agent-based modeling environment that builds on the Repast 3 library. Repast Simphony was designed from the ground up with a focus on well-factored abstractions. The resulting code has a modular architecture that allows individual components such as networks, logging, and time scheduling to be replaced as needed. The Repast family of agent-based modeling software has collectively been under continuous development for more than 10 years.
Method
Includes reviewing other free and open-source modeling libraries and environments as well as describing the architecture of Repast Simphony. The architectural description includes a discussion of the Simphony application framework, the core module, ReLogo, data collection, the geographical information system, visualization, freeze drying, and third party application integration.
Results
Include a review of several Repast Simphony applications and brief tutorial on how to use Repast Simphony to model a simple complex adaptive system.
Conclusions
We discuss opportunities for future work, including plans to provide support for increasingly large-scale modeling efforts.
A broadened typology describing the interconnection between energy and security is developed in this paper, with the aim of improving understanding of the relationship between energy and security by applying different research and policy perspectives. One approach involves studying energy as an object exposed to security threats, using concepts such as security of supply or security of demand. Another approach involves studying the role of the energy system as the subject in generating or enhancing insecurity. The latter approach includes studying the conflict-generating potential inherent in the economic value of energy, the risk of accidents and antagonistic attacks to energy infrastructure and the security risks related to the negative environmental impact of the energy system. In order to make a comprehensive analysis of the security consequences of proposed energy policies or strategies, all these aspects should be taken into account to varying degrees. The typology proposed here could be a valuable tool for ensuring that all security aspects have been considered.
Natural disasters, labor disputes, terrorism and more mundane risks can seriously disrupt or delay the flow of material, information and cash through an organization's supply chain. The authors assert that how well a company fares against such threats will depend on its level of preparedness, and the type of disruption. Each supply-chain risk - to forecasts, information systems, intellectual property, procurement, inventory and capacity - has its own drivers and effective mitigation strategies. To avoid lost sales, increased costs or both, managers need to tailor proven risk-reduction strategies to their organizations. Managing supply-chain risk is difficult, however. Dell, Toyota, Motorola and other leading manufacturers excel at identifying and neutralizing supply-chain risks through a delicate balancing act: keeping inventory, capacity and related elements at appropriate levels across the entire supply chain in a rapidly changing environment. Organizations can prepare for or avoid delays by "smart sizing" their capacity and inventory. The manager serves as a kind of financial portfolio manager, seeking to achieve the highest achievable profits (reward) for varying levels of supply-chain risk. The authors recommend a powerful what if? team exercise called stress testing to identify potentially weak links in the supply chain. Armed with this shared understanding, companies can then select the best mitigation strategy: holding "reserves," pooling inventory, using redundant suppliers, balancing capacity and inventory, implementing robust backup and recovery systems, adjusting pricing and incentives, bringing or keeping production in-house, and using Continuous Replenishment Programs (CRP), Collaborative Planning, Forecasting and Replenishment (CPFR) and other supply-chain initiatives.
In recent years the issue of supply chain risk has been pushed to the fore, initially by fears related to possible disruptions from the much publicised “millennium bug”. Y2K passed seemingly without incident, though the widespread disruptions caused by fuel protests and then Foot and Mouth Disease in the UK, and by terrorist attacks on the USA have underlined the vulnerability of modern supply chains. Despite increasing awareness among practitioners, the concepts of supply chain vulnerability and its managerial counterpart supply chain risk management are still in their infancy. This paper seeks to identify an agenda for future research and to that end the authors go on to clarify the concept of supply chain risk management and to provide a working definition. The existing literature on supply chain vulnerability and risk management is reviewed and compared with findings from exploratory interviews undertaken to discover practitioners' perceptions of supply chain risk and current supply chain risk management strategies.
Managers and researchers are coming to realize that Supply Chain Disruptions (SCDs) constitute a real and significant threat
– a threat that has to be better understood. However, the challenge facing many researchers is that of developing an understanding
of these disruptions, what causes them, what factors moderate or influence the disruptions, and of identifying, and comparing
alternative strategies and policies for dealing with such disruptions.
This chapter introduces such an approach – computer-based discrete event simulation. Simulation has long been used in Operations
Management, Logistics, and Supply Management to study problems such as scheduling (job sequencing, production scheduling,
order release, delivery reliability), capacity planning, process design-service, cellular manufacturing, and resource allocation
(Shafer and Smunt 2004). It is now being used as a vehicle for studying supply chain related problems (Bowersox and Closs
1989; Levy 1995; Parlar 1997; Ridall et al. 2000; van der Vorst et al. 2000; Holweg and Bicheno 2002; Shafer and Smunt 2004;
Terzi and Cavalieri 2004; Venkateswaran and Son 2004; Allwood and Lee 2005).
. In many domains, agent-based system modeling competes with equation-based approaches that identify system variables and evaluate or integrate sets of equations relating these variables. The distinction has been of great interest in a project that applies agent-based modeling to industrial supply networks, since virtually all computer-based modeling of such networks up to this point has used system dynamics, an approach based on ordinary differential equations (ODE's). This paper summarizes the domain of supply networks and illustrates how they can be modeled both with agents and with equations. It summarizes the similarities and differences of these two classes of models, and develops criteria for selecting one or the other approach. 1. Introduction In many domains, agent-based modeling competes with equation-based approaches that identify system variables and evaluate or integrate sets of equations relating these variables. Both approaches simulate the system by construct...
Increasing demand of abundant co-product rare earths such as cerium and lanthanum has become a focus for improving mine economics. The recent development of an aluminum-cerium (Al-Ce) alloy targeted toward broad market adoption in the automotive industry is one recent example. This alloy has shown exceptional mechanical properties and cost-saving potential. However, since market adoption is unknown, impacts of this alloy on Ce demand remains uncertain. We estimate Al-Ce impacts by simulating adoption in different automotive sectors using a dynamic material flow analysis model. We then project future Ce content in the recycled Al stream given current recycling practices. We also compute the required segregation given different Ce impurity tolerances of existing automotive Al alloys. Finally, once secondary supply is derived from segregation, we calculate primary Ce demand. Results showed that segregation of Al-Ce components from non-AlCe automotive Al components is needed for most adoption scenarios and impurity thresholds. Ce metal demand was found to be lowest at 1000 mt/yr if the target market is light duty trucks. If Al-Ce could penetrate the High Efficiency Spark Ignition market (i.e., turbocharger market), Ce demand could reach 23,200 mt Ce/year in 2045, without accounting for Chinese and Australian Ce primary production capacity. When accounting for primary Ce production capacity, demand could reach up to 16,200 mt/yr.
Environmental technologies depend on raw materials, some of which are subject to volatile costs and availability concerns. One way to address these concerns is through substitution, of which there are many types. An important form of substitution in the short term is adopting an alternative production process, yielding a material with the same functional properties with less material input. In effect, technology substitutes for material. This study elucidates the role increased and uncertain material costs play in inducing different substitution types in the short to medium term. Specifically, this paper uses an expert survey to determine the relative importance of eight specific industry responses taken by magnet and wind turbine manufacturers in response to the 2010/2011 rare-earth price spike through 2016. Statistical tests show adopting an existing production process for magnets was the most important response, followed by cost pass-through, using an alternate magnet grade in a redesigned generator system, and using alternate systems altogether. The paper also provides specific findings for the magnet and wind turbine industries with respect to each substitution type.
This study explores the effects of Chinese rare earth stockpiling, environmental taxation, and improvements in recovery rates on rare earth markets. It uses a Stackelberg model with a leading producer (legal Chinese producers) and two sequential followers (illegal Chinese producers and the Mount Weld mine in Australia), each producing multiple rare earths. The model is parameterized for the production and prices of separated rare earth oxides (REOs) from ore. Counterfactuals involving Chinese policies are compared to the no-policy, business-as-usual (BAU) scenario. The five counterfactuals are: (1) further Chinese State Reserve Bureau (SRB) stockpiling of neodymium, (2) further SRB stockpiling of dysprosium, (3) an environmental tax on the production of legal Chinese rare earths, (4) increased recovery rates of neodymium at legal Chinese operations, and (5) increased recovery rates of dysprosium also at legal Chinese operations. The BAU scenario and five counterfactuals are run with (a) four different levels of reference illegal Chinese production and (b) with and without the Chinese production quota, yielding 48 total outcomes (6×4×2). The first finding is that any SRB stockpile purchase increases the price of the stockpiled REO and increases legal Chinese ore production. However, given co-production, increased ore production involves more production of all REOs, and the prices of non-stockpiled REOs decrease. Thus if the stockpiled REO represents a large (small) portion of illegal Chinese and Mount Weld revenue, then illegal Chinese producers and the Mount Weld mine will increase (decrease) their production. An environmental tax decreases legal Chinese production, increases production by illegal Chinese producers and Mount Weld, and increases prices of all REOs. Increased legal Chinese recovery rates lead to increased legal Chinese production, decreased production by illegal Chinese producers and Mount Weld, and decreased REO prices. Increased levels of reference illegal Chinese production (a) exacerbate the policy-driven production increases or dampen production reductions of illegal producers and (b) conversely, for legal Chinese producers, reduce policy-driven production increases and further increase production reductions.
China was in the past the main driver when analysing rare earth prices and their market, since it commercialised around the 90% of the world's supply. After a cut in its exports during 2010 and 2011, rare earth prices dramatically spiked. The world's reaction to this fact was the development of a huge amount of mining projects outside China, many of whom failed when prices fell again. Nevertheless, several of them survived.
This paper analyses in first place the future trend of rare earth elements prices in order to contrast the stable tendency forecasted by different providers of price assessments and market data. Secondly, it studies in deep five ready-to-go rare earths mining projects around the world: Nechalacho Project (North-west Territories, Canada); Zandkopsdrift Project (Northern Cape, South Africa); Bear Lodge Project (Wyoming, USA); Kvanefjeld Project (Southern Greenland); and Dubbo Zirconia Project (New South Wales, Australia). The main purposes being to give an “order of magnitude” both technical and economic of this specific mining industry; to provide a tool for investors, potential investors and professional advisers addressing rare earth mining investment analysis; and to facilitate the development of preliminary economic assessments of future rare earth mining projects. These aims will also help to fight against several systemic problems of the rare earth market: lack of trust, market opacity, and short versus long-term approaches and profit orientation.
Conclusions clearly show that despite the complexity of rare earth mineral deposits and the fact that their mining operation usually includes different by-products, the evaluation of rare earth mining investments does not present much more difficulty than in the case of single element mining projects. Forecasted prices used in these economic studies are the Achilles’ heel of nowadays rare earth mining investment analysis.
Finally, although differences in demand of different rare earth elements will make really difficult to achieve “a priori” a market in balance, the five studied projects are anticipated to cover approximately the third part of the total rare earth consumption in the world. When their dysprosium oxide production was analysed, the resulting proportion for the most critical rare earth element based on its role in clean energy together with its biggest supply risk was almost the same, something optimistic regarding the achievement of a balanced market outside China.
We introduce several new resilience metrics for quantifying the resilience of critical material supply chains to disruptions, and validate these metrics using the 2010 rare earth element (REE) crisis as a case study. Our method is a novel application of Event Sequence Analysis, supplemented with interviews of actors across the entire supply chain. We discuss resilience mechanism in quantitative terms – time lags, response speeds and maximum magnitudes – and in light of cultural differences between Japanese and European corporate practice. This quantification is crucial if resilience is ever to be taken into account in criticality assessments, and a step towards determining supply and demand elasticities in the REE supply chain. We find that the REE system showed resilience mainly through substitution and increased non-Chinese primary production, with a distinct role for stockpiling. Overall, annual substitution rates reached 10% of total demand. Non-Chinese primary production ramped up at a speed of 4% of total market volume per year. The compound effect of these mechanism was that recovery from the 2010 disruption took two years. The supply disruption did not nudge a system towards an appreciable degree of recycling. This finding has important implications for the circular economy concept, indicating that quite a long period of sustained material constraints will be necessary for a production-consumption system to naturally evolve towards a circular configuration.
China?s dominance of the rare earth market has been raising issues of major concern since 2010. Reduced export quotas and consecutive price peaks led to fears concerning supply security. Forward integration is shifting the rare earth-dependent high-technology value chain to China. China?s export embargo to Japan showed the world the strategic relevance of its economic dependence on China?s rare earth products. Despite multiple political and industrial efforts outside China, it has not been possible to diminish the dependence on China, e.g. by building up an independent rare earth supply chain. We think that this is prevented by systemic problems of the rare earth market. This paper examines these distortions of the rare earth market with a systemic approach. Problems are identified and structured qualitatively in order to expose their economic and political connections. The systemic problems are (1) competing political-economic models, (2) resource nationalism, (3) market opacity, (4) a lack of trust, (5) weak cooperation and (6) short-versus long-term approaches and profit orientation. These problems are interconnected and amplify each other. In this context, the potential of four solutions to influence the rare earth market system is discussed.
Substitution is an important response for material users when faced with disruption to the availability or price of an essential material. In economic terms, substitution refers to the ability of firms to alter their patterns of material use in response to exogenous market shocks. Substitution comes in different forms which vary from situation to situation. This paper uses expert opinion to identify the specific forms of substitution that occurred in permanent magnets, specifically neodymium–iron–boron magnets, following the significant increase in rare earth prices in 2010–2011. The paper provides a framework for understanding the multifaceted nature of substitution and assesses the relative importance of five different types of substitution. Technology-for-element, grade-for-grade, and system-for-system substitution appear to have been more important than element-for-element and magnet-for-magnet substitution. Cost pass-through and absorption were also important responses.
The ionic clay rare earth resources in China are the cheapest and most accessible source of heavy rare earths. They are also the most valuable. The Chinese rare earth market has an uncontrolled illegal market segment that represents approximately 40% of the domestic market, which translates to 30% of the global market. This sector of the market pays little or no attention to the environmental damage of their mining and processing actions and, through their unregulated supply, depresses the market price such that external (and in some cases, internal) producers are having difficulties making or maintaining profit margins. It creates significant negative externalities that adversely affects the native environment and the international rare earth market.
In today's global and competitive markets, managing supply chain disruptions is a key factor in the success of any business. Disruption management, however, can be a challenging issue as disruptions can occur for a wide variety of reasons and the approaches to handle these risks are also ample. Moreover, evaluating the disruption impact and possible treatments is not a trivial task for a complex supply chain with many actors and different types of interactions. This calls for appropriate modeling and simulation frameworks. This paper presents a simulation-based risk analysis approach using an agent-based model and its application for a specific case of a lube oil supply chain.
As part of efforts to position the United States as a leader in clean energy technology production, the U. S. Department of Energy (DOE) issued two Critical Materials Strategy reports, which assessed 16 materials on the basis of their importance to clean energy development and their supply risk (DOE, 2010, 2011). To understand the implications for clean energy of disruptions in supplies of critical materials, it is important to understand supply chain dynamics from mining to final product production. As a case study of critical material supply chains, we focus on the supply of two rare earth metals, neodymium (Nd) and dysprosium (Dy), for permanent magnets used in wind turbines, electric vehicles and other applications. We introduce GCMat, a dynamic agent-based model that includes interacting agents at five supply chain stages consisting of mining, metal refining, magnet production, final product production and demand. Agents throughout the supply chain make pricing, production and inventory management decisions. Deposit developers choose which deposits to develop based on market conditions and detailed data on 57 rare earth deposits. Wind turbine and electric vehicle producers choose from a set of possible production technologies that require different amounts of rare earths. We ran the model under a baseline scenario and four alternative scenarios with different demand and production technology inputs. Model results from 2010 to 2013 fit well with historical data. Projections through 2025 show a number of possible future price, demand, and supply trajectories. For each scenario, we highlight reasons for turning points under market conditions, for differences between Nd and Dy markets, and for differences between scenarios. Because GCMat can model causal dynamics and provide fine-grain representation of agents and their decisions, it provides explanations for turning points under market conditions that are not otherwise available from other modeling approaches. Our baseline projections show very different behaviors for Nd and Dy prices. Nd prices continue to drop and remain low even at the end of our simulation period as new capacity comes online and leads to a market in which production capacity outpaces demand. Dy price movements, on the other hand, change directions several times with several key turning points related to inventory behaviors of particular agents in the supply chain and asymmetric supply and demand trends. Scenario analyses show the impact of stronger demand growth for rare earths, and in particular finds that Nd price impacts are significantly delayed as compared to Dy. This is explained by the substantial excess production capacity for Nd in the early simulation years that keeps prices down. Scenarios that explore the impact of reducing the Dy content of magnets show the intricate interdependencies of these two markets as price trends for both rare earths reverse directions - reducing the Dy content of magnets reduces Dy demand, which drives down Dy prices and translates into lower magnet prices. This in turn raises the demand for magnets and therefore the demand for Nd and eventually drives up the Nd price.
After top producer China decided in 2010 to tighten its export quotas for rare earth elements (REE), major customers feared being cut off from the valuable metals. The trade dispute intensified when the EU, the USA, and Japan brought the case before the WTO. The export controls raise questions about China's intentions and strategies. This article argues that China's export policy should not be viewed in isolation. The export controls are embedded in a greater transformation of the strategic REE industry. Beijing promotes a broad set of policies, including industry reorganization, resource conservation, and environmental protection. Next, the article examines three narratives that may be constitutive of the Chinese policy. Findings indicate that the geopolitical narrative, which sees natural resources as instruments of power politics, can be only partly attributed to China's REE policies. The major driving motives are domestic concerns for resource conservation and environmental protection, as well as the development of competitive downstream industries.
Recent constraints on supplies of the rare earth elements (REEs) have led to concerns about their long-term availability as well as the consequences that shortages would pose for modern technology. To assess this situation, we apply a comprehensive “criticality” methodology to the REE: lanthanum (La); cerium (Ce); praseodymium (Pr); neodymium (Nd); samarium (Sm); europium (Eu); gadolinium (Gd); terbium (Tb); dysprosium (Dy); holmium (Ho); erbium (Er); thulium (Tm); ytterbium (Yb); lutetium (Lu); and yttrium (Y). Assessments are made on national (U.S. and China) and global levels for the year 2008. Evaluations of each indicator are presented and the results plotted in “criticality space” on a 0 to 100 scale. Over the medium term (5 to 10 years), supply risk (SR) for all REEs is moderate with minimal variation (62.8 to 65.1). Over the long term (10 to 100 years), SR is low (42.1 to 49.2). Environmental implications scores, reflecting the economic allocation of environmental burdens, range from 4.2 for La to 34.4 for Lu. Eu, Er, and Dy have the highest vulnerability to supply restriction (VSR) at the global level (50.6, 49.2, and 47.4, respectively), whereas Sm has the lowest (15.1). This is mainly a reflection of their substitution potential. Similarly, at the national level for the United States and China, Eu and Sm have the highest and lowest VSR scores, respectively, although there are notable differences in scores among the REEs and between countries. Although China's export restrictions render REE supplies inadequate to meet demand at present, our analysis indicates a lower criticality for REEs over the longer term than for a number of other industrially used metals.
Neodymium, one of the more critically scarce rare earth metals, is often used in sustainable technologies. In this study we investigate the potential contribution of neodymium recycling to reducing scarcity in supply, with a case study on computer hard disk drives (HDDs). We first review the literature on neodymium production and recycling potential. From this review we find that recycling of computer HDDs is currently the most feasible pathway towards large-scale recycling of neodymium, even though HDDs do not represent the largest application of neodymium. We then use a combination of dynamic modelling and empirical experiments to conclude that within the application of NdFeB magnets for HDDs, the potential for loop-closing is significant: up to 57% in 2017. However, compared to the total NdFeB production capacity, the recovery potential from HDDs is relatively small (in the 1-3% range). The distributed nature of neodymium poses a significant challenge for recycling of neodymium.
Understanding disruptions and how their effects propagate through the supply chain is critical to promote security and efficient movement of goods. This research proposes a system dynamics model as an effective quantitative approach for analyzing the effects of the materialization and simultaneous propagation of disruptions produced by terrorist acts on global supply chains performance. The article shows that the impact on inventory levels in the supply chain can increase 600% compared to normal operating conditions as a result of increasing the security measures on international borders. Finally, useful conclusions for designing more resilient supply chains and future research are exposed.
Supply of some critical raw materials by European industry is becoming more and more difficult. After the case of natural textile fibres, in particular cotton, and timber, over the last few years the problem of rare earths (REs) availability has also risen. The 97% of the global supply of rare earth metals (REMs) is produced by China, that has recently done copious cuts of its exports, apparently in order to protect its environment. This fact has greatly increased the REs prices, causing tension and uncertainty among the world hi-tech markets. Many of these materials, in fact, have very few effective substitutes and low recycling rates too. In addition, their natural reserves of rare earths are concentrated in a small number of countries (China, Brazil, US, Russia, Democratic Republic of Congo). REMs are a group of 17 elements particularly used in many new electronic and advanced components: such as fuel cells, mobile phones, displays, hi-capacity batteries, permanent magnets for wind power generation, green energy devices, etc. Many analysts foresee much more requests in the next decades.
Given the size, complexity and dynamic nature of many supply chains, there is a need to understand the impact of disruptions on the operation of the system. This paper presents a network-based modelling methodology to determine how changes or disruptions propagate in supply chains and how those changes or disruptions affect the supply chain system. Understanding the propagation of disruptions and gaining insight into the operational performance of a supply chain system under the duress of an unexpected change can lead to a better understanding of supply chain disruptions and how to lessen their effects. The modelling approach presented, Disruption Analysis Network (DA_NET), models how changes disseminate through a supply chain system and calculates the impact of the attributes by determining the states that are reachable from a given initial marking in a supply chain network. This ability will permit better management of the supply chain and thus will allow an organization to offer quicker response times to the customer, lower costs throughout the chain, and to the end customer higher levels of flexibility and agility, lower inventories throughout the chain (both with work-in-process and inventories), lower levels of obsolescence and a reduced bullwhip effect throughout the chain. This is of particular benefit in large-scale systems, since it can give the user the ability to perform detailed analysis of a dynamic system without the computational burden of a full-scale execution of the model. Consequently, the model may then be segmented to evaluate only the portions or sub-networks that are affected by changes in an initial marking.
Emerging technologies such as information and communication-, photovoltaic- or battery technologies are expected to increase significantly the demand for scarce metals in the near future. The recently developed methods to evaluate the criticality of mineral raw materials typically provide a 'snapshot' of the criticality of a certain material at one point in time by using static indicators both for supply risk and for the impacts of supply restrictions. While allowing for insights into the mechanisms behind the criticality of raw materials, these methods cannot account for dynamic changes in products and/or activities over time. In this paper we propose a conceptual framework intended to overcome these limitations by including the dynamic interactions between different possible demand and supply configurations. The framework integrates an agent-based behaviour model, where demand emerges from individual agent decisions and interaction, into a dynamic material flow model, representing the materials' stocks and flows. Within the framework, the environmental implications of substitution decisions are evaluated by applying life-cycle assessment methodology. The approach makes a first step towards a dynamic criticality assessment and will enhance the understanding of industrial substitution decisions and environmental implications related to critical metals. We discuss the potential and limitation of such an approach in contrast to state-of-the-art methods and how it might lead to criticality assessments tailored to the specific circumstances of single industrial sectors or individual companies.
Purpose – The purpose of this paper is to review the growing literature examining supply chain risk management (SCRM) and to develop a typology of risks in the supply chain. Design/methodology/approach – The paper draws its insights and conclusions from a review of the literature on supply chain risk, and a synthesis of the broader domain of risk management. Findings – While the literature on SCRM is growing, the literature lacks an organized structure for the sources of supply chain risk. The current paper bridges this gap by synthesizing the diverse literature into a typology of risk sources, consisting of environmental factors, industry factors, organizational factors, problem-specific factors, and decision-maker related factors. Practical implications – The paper devises a typology that can be used by managers to measure and assess the vulnerabilities of their company and supply chain. The typology also provides avenues for future research that further guides practitioners in the management of their supply chain risk portfolio. Originality/value – SCRM is rapidly developing into a favored research area for academicians as well as practitioners, especially after the attacks of September 11 and the recent array of natural disasters. This paper develops a methodology for structuring academic inquiry in this important research area.
The rich stream of supply disruption risk (SDR) literature incorporates several different theories and constructs across studies, but lacks a unifying decision-making framework. We review 79 SDR studies and advance a comprehensive framework, grounded in enactment theory, which integrates the disparate elements of SDR research and offers new insights into the SDR decision-making process. Enactment theory posits a three-stage, closed-loop process, consisting of enactment, selection and retention, through which individuals process and make sense of equivocal environments. We suggest that this sense-making process also underlies SDR decision-making, and provides the theoretical underpinnings for the environmental, organizational and individual factors that affect the formation of buyers' perceptions of SDR and the actions they take to mitigate such risks. In accordance with our conceptual framework, we develop seven propositions that advance the social and psychological factors that drive the idiosyncratic nature of SDR decision-making.
This paper considers the problem of disruption risk management in global supply chains. We consider a supply chain with two participants, who face interdependent losses resulting from supply chain disruptions such as terrorist strikes and natural hazards. The Harsanyi–Selten–Nash bargaining framework is used to model the supply chain participants' choice of risk mitigation investments. The bargaining approach allows a framing of both joint financing of mitigation activities before the fact and loss-sharing net of insurance payouts after the fact. The disagreement outcome in the bargaining game is assumed to be the result of the corresponding non-cooperative game. We describe an incentive-compatible contract that leads to First Best investment and equal “gain” for all players, when the solution is “interior” (as it almost certainly is in practice). A supplier that has superior security practices (i.e., is inherently safer) exploits its informational advantage by extracting an “information rent” in the usual spirit of incomplete information games. We also identify a special case of this contract, which is robust to moral hazard. The role of auditing in reinforcing investment incentives is also examined.
This paper investigates the effect of a transportation disruption on supply chain performance using system dynamics simulation, comparing a traditional supply chain and a vendor managed inventory system (VMI) when a transportation disruption occurs between 2 echelons in a 5-echelon supply chain. The greatest impact occurs when transportation is disrupted between the tier 1 supplier and warehouse. In the traditional structure the retailer, warehouse, and tier 1 supplier experience the greatest inventory fluctuations and the highest goods in transit to their facilities. These impacts are less severe for the VMI structure, although unfilled orders are approximately the same for each.
The Armington substitution elasticity is a key parameter for trade-policy analysis. We estimate short- and long-run Armington elasticities for 309 manufacturing industries at the four-digit Standard Industrial Classification (SIC) level over the period 1989–1995. Our estimation results offer a comprehensive, disaggregated, and up-to-date set of Armington elasticities. On average, long-run estimates are approximately two times larger than the short-run estimates, which is important since long-run estimates are more appropriate for most trade-policy analysis. Also, statistically significant differences exist within most three-digit SIC categories, which highlights the importance of estimation at a disaggregated level.
The future availability of rare earth elements (REEs) is of concern due to monopolistic supply conditions, environmentally unsustainable mining practices, and rapid demand growth. We present an evaluation of potential future demand scenarios for REEs with a focus on the issue of comining. Many assumptions were made to simplify the analysis, but the scenarios identify some key variables that could affect future rare earth markets and market behavior. Increased use of wind energy and electric vehicles are key elements of a more sustainable future. However, since present technologies for electric vehicles and wind turbines rely heavily on dysprosium (Dy) and neodymium (Nd), in rare-earth magnets, future adoption of these technologies may result in large and disproportionate increases in the demand for these two elements. For this study, upper and lower bound usage projections for REE in these applications were developed to evaluate the state of future REE supply availability. In the absence of efficient reuse and recycling or the development of technologies which use lower amounts of Dy and Nd, following a path consistent with stabilization of atmospheric CO(2) at 450 ppm may lead to an increase of more than 700% and 2600% for Nd and Dy, respectively, over the next 25 years if the present REE needs in automotive and wind applications are representative of future needs.
As a result of globalization in the past two decades, supply chains are encountering more unknown conditions and risks. One important category of risks is disruptions that block material flowing through a supply chain and that may even result in end-product manufacturing failure. This paper uses a Petri nets-based model as a tool to understand the dissemination of disruptions and to trace the operational performance of a supply chain. The presented approach models how changes propagate through a supply chain and calculates the impact of disruptions on supply chain attributes by concluding the states that are obtainable from a given initial status in the supply chain.
Even though rare earth metals are indispensible in modern technology, very little quantitative information other than combined rare earth oxide extraction is available on their life cycles. We have drawn upon published and unpublished information from China, Japan, the United States, and elsewhere to estimate flows into use and in-use stocks for 15 of the metals: La, Ce, Pr, Nd, Sm, Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb, Lu, and Y. Here, we show that the combined flows into use comprised about 90 Gg in 2007; the highest for individual metals were ∼28 Gg Ce and ∼22 Gg La, the lowest were ∼0.16 Gg Tm and ∼0.15 Gg Lu. In-use stocks ranged from 144 Gg Ce to 0.2 Gg Tm; these stocks, if efficiently recycled, could provide a valuable supplement to geological stocks.
A quantitative analysis of disruption risk in a multi-echelon supply chain
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