Why understanding mineral associations is key to managing the critical minerals supply gap

It is acknowledged that the intensity of the demand for critical minerals and metals, both in quantity and diversity, is unlikely to be met. This is particularly relevant for key metals such as cobalt, lithium or rare earth elements.

Projections addressing the supply gaps often focus on the number of mines that would have to be built to produce more metals. However, those forecasts often need to pay more attention to the inherent geological characteristics of mineral accumulations and ore deposits and the complexity of metallurgical processes.

Metals are very seldom found as pure elements in the ground. Most of the time, they are associated with other elements such as oxygen, sulphur, carbon, or other metals to form minerals, that are themselves associated in rocks.

After exploration, the minerals that are found in sufficiently high concentrations can be considered for commercial exploitation. However, this threshold may not be attained for some minor but key, metals and minerals when their intrinsic value in the deposit is too low to have any significative influence on the mining operations. These metals can, therefore, only be extracted as by-products of the major (or host) metal, making their supplies highly dependent on the extraction of the latter.

Metal companionality, i.e. the degree to which an element is produced as a by-product, is illustrated in the metal wheel (see Figure 1 below). The main host elements are displayed in the centre circle in dark blue. Each sector shows which percentage of minor (or companion) elements are their by-products.

For critical minerals whose supply gap is expected to widen in the coming years, more than 60% are produced as by-products.

The platinum group metals (PGM) example illustrates the importance of understanding companionability. PGM comprises six metals (platinum, palladium, rhodium, iridium, ruthenium and osmium) that are not just “grouped” on the periodic table. They also tend to occur together in geological deposits.

The main source of primary PGM – and by far the largest known deposit of these metals on Earth – is the Bushveld Igneous Complex (BIC) in South Africa. Mining of the complex accounts for around 70% of primary platinum supply, 80% of rhodium, 85-90% of ruthenium and iridium, and nearly 40% of palladium.

Palladium supply is characterised by two major associations, as it is also a significant by-product of nickel mining in Russia. But the supply of rhodium, ruthenium and iridium is almost entirely a factor of association with platinum in the BIC. Because of their minor occurrence in the ore, it is highly improbable that these metals would ever be mined in their own right, despite their status as critical metals.

Unlike markets for non-mining products, a rise in demand for companion metals will not necessarily translate into an increase in supply. Even with higher prices, the additional value of by-products is not sufficient to trigger investments in mining and processing activities. The supply of companion elements will remain entirely reliant on the economic viability of the extraction process for the host metal.

Generally speaking, in part due to the long lead time necessary to react to market demand, supply for mineral commodities is quite inelastic. In the case of by-products tributary to host metal production, supply inelasticity is even higher.

In the case of PGM, association means that the supply of individual elements is highly inelastic. Output is dictated by price (and therefore demand) for the overall “basket” of metals each mining company produces from its ore, and how this basket demand is expected to evolve, because each mine is productive for decades.

The consequences of this complex supply-demand dynamic are well illustrated by the history of palladium and its imbalanced market. The 1990s and early years of this century saw substantial overproduction of palladium, driven mainly by the demand for nickel. More recently, as demand for palladium for automotive catalytic converters soared, there have been significant shortfalls in mined supply, sending the palladium price to record levels and depleting the stocks built up over previous years.

By-products are also subject to higher price volatility: 50% higher than main metals. This disincentivizes companies to invest in such companion metals, because future markets are too unpredictable. The volatility risk has already been identified by the Securing Minerals for the Energy Transition (SMET) initiative, led by the World Economic Forum working group as having high likelihood to occur and high impact.

If mining companies reassess the mineralogy and by-production potential for each deposit and mining operation, there might be opportunities to expand the processing lines to separate and extract companion elements and produce them as by-products. It is the occasion for companies and producing countries alike to get higher value for existing mining operations when they can become new source of metals.

Many critical minerals used to be, and sometimes still are, discarded in waste dumps and tailing storage facilities. There is generally limited interest in recovering them and their value is considered too low to justify further processing and separation. However, tailings from operating mines or from closed, abandoned or orphaned mines is a potential source of new production. If economically feasible, in addition to contributing to critical minerals supply, this could also help manage a significant environmental legacy.

These opportunities could be considered as an extension of the existing toolbox available to mitigate some of the risks identified by the SMET working group, such as “higher environmental pressure on ecosystems and waste generation”, “uncoordinated land use”, and “lower acceptance of mining projects” as these would not be new mining projects, but enhancement of current ones.

In the case of PGMs, miners will continue to produce their basket of metals, although the contribution of the individual metals is expected to change as demand transitions from fossil-fuel based applications to clean energy applications. For instance, fuel cell vehicles can benefit from a currently well-supplied metal in the form of platinum.

As production of these vehicles scales up, the associated growth in platinum demand will support ongoing mining of PGM from the BIC in South Africa, synergistically assuring continued supply of ruthenium and iridium for their emerging energy transition applications. And the co-produced palladium and rhodium will, in future, become available for new uses to unlock some of the challenges we face in shifting to net-zero emissions. Given the significant risks arising from supply and demand gaps for energy transition metals, the opportunities presented by PGM association are there to be seized.

However, complementarity illustrated in the PGM example, may not be the usual situation. Markets for companions and main metals can be unaligned, such is the case for bismuth being mainly a by-product of lead.

Overall, considering the time, energy and investment required to put a mine into production, not to mention the associated environmental and social impacts, not recovering as many by-products as possible represent a dramatic loss of value.

Understanding companionality and metal associations is key to assessing risks associated with critical minerals supply gaps and to identify ways to manage them. For producing countries, it allows them to design incentives to support the business case for otherwise less profitable mining production.

For destination countries, it allows them to calibrate their response to the resilience of their supply chains, bearing in mind the higher risks associated with specific metals and minerals. From a business perspective, it creates new avenues to engage policy-makers to support access to finance to expand production. Importantly, collaboration across the different stakeholders is necessary to build synergies.

At the global level, strategic partnerships across institutions, such as the World Economic Forum, the IGF and Johnson Matthey, play a vital role in supporting efforts by actors at the national and transnational level.

This blog is part of a series, written by members of the Securing Minerals for the Energy Transition (SMET) initiative, led by the World Economic Forum. The initiative seeks to identify and characterize the risks related to the increasing gap between the demand and supply of critical minerals needed for the energy transition and to propose strategies for their collective management.