[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 04.06.2007

SEC(2007) 771

COMMISSION STAFF WORKING DOCUMENT

Analysis of the competitiveness of the non-energy extractive industry in the EU

TABLE OF CONTENTS

EXECUTIVE SUMMARY 5

1. INTRODUCTION 7

1.1. Background 7

1.2. Definition of competitiveness 8

1.3. Data availability and accuracy 9

1.4. Content and structure of the report 10

2. OVERVIEW OF THE NON-ENERGY EXTRACTIVE INDUSTRY (NEEI) IN EUROPE 12

2.1. Definition and scope 12

2.2. Description of the sector 13

2.3. Location of the industry 14

2.3.1. Introduction 14

2.3.2. Construction minerals 16

2.3.3. Industrial minerals 16

2.3.4. Metallic minerals 18

2.4. Ownership of mineral rights 19

2.5. Land use 23

2.6. Regulatory framework 25

2.7. Control over extraction and approaches to forward planning for mineral supply 25

3. MINERAL PRODUCTION, USES AND MARKETS 28

3.1. Introduction 28

3.2. Construction minerals 28

3.2.1. Aggregates 28

3.2.2. Gypsum 33

3.2.3. Natural stone 35

3.3. Industrial minerals 37

3.4. Metallic minerals 44

4. INTERNATIONAL TRADE IN MINERALS 56

4.1. Introduction 56

4.2. Imports 56

4.3. Exports 61

4.4. Trade balance 65

5. ECONOMIC ACTIVITY OF THE INDUSTRY WITHIN THE EU 67

5.1. Introduction 67

5.2. Number of enterprises 69

5.3. Number of persons employed 71

5.4. Turnover, production value and value added 72

5.5. Personnel costs 79

5.6. Unit labour costs 79

5.7. Value added per employee (apparent labour productivity) 82

5.8. Wage-adjusted labour productivity 86

5.9. Capital intensity 87

6. ASSESSMENT OF FACTORS CONSIDERED TO AFFECT THE COMPETITIVENESS OF THE INDUSTRY 90

6.1. Introduction 90

6.2. Exploration 90

6.2.1. Introduction 90

6.2.2. Current extent of geological surveying in the EU and approaches to exploration 92

6.2.3. Trends in exploration activity 96

6.2.4. Approaches to encourage exploration 97

6.3. Costs 99

6.3.1. Investment costs for new mines and quarries 99

6.3.2. Operating costs 99

6.3.2.1. Introduction 99

6.3.2.2. Overall operating costs 99

6.3.3. Energy costs 103

6.3.4. Transport costs 105

6.4. Regulatory framework 107

6.4.1. Introduction 107

6.4.2. Legislation affecting access to land 107

6.4.3. Legislation affecting operating costs 113

6.5. Planning for minerals supply 116

6.6. Availability of a skilled workforce 122

6.7. Research and innovation 128

6.8. Health and safety 131

7. DRAWING TOGETHER THE MAIN ISSUES 136

7.1. Introduction 136

7.2. Assessing the competitiveness of the non-energy extractive industry in the EU 138

7.2.1. Construction minerals 139

7.2.2. Industrial minerals 139

7.2.3. Metallic minerals 140

7.3. Access to land and the sustainability of the industry 141

7.4. Sustainable use of resources 144

7.5. Research needs 145

ANNEX 1 - PRODUCTION TRENDS FOR INDIVIDUAL MINERALS 147

ANNEX 2 - EXTENT OF MODERN GEOLOGICAL MAPPING AND RECORDED OVERLAP BETWEEN NATURA 2000 SITES AND MINERAL RESOURCES OR PROSPECTS 196

EXECUTIVE SUMMARY

In 2004 (latest year for which complete statistics are available) the non-energy extractive industry (NEEI) in the EU 25 generated a turnover of about 40 billion € and provided employment to about 250,000 people. The data on production and use and markets for minerals in the EU underline the importance of the industry as a supplier of high quality raw materials to much larger downstream sectors, most of which are consumed within the EU.

In particular for metallic minerals , despite the presence of an active metal mining industry in the EU, there is significant import dependency for most metallic minerals. The EU had net imports of 203 billion tonnes of minerals in 2004 with a trade deficit of 11 billion €; metallic minerals accounted for 90% of the deficit. Many metallic minerals are being extracted in relatively small volumes compared with global production, e.g. copper (5%), iron ore (2%), nickel (1.7%) and zinc (8.5%). The underlying reasons for this concern the EU’s geology, the absence of some mineral types, the emergence of new players such as China and the exhaustion of deposits in the past. Nevertheless, there is potential to optimise production in the EU through for instance modern extraction and processing techniques.

The EU produces a wide range of industrial minerals , and for mineral types such as feldspar, kaolin, magnesite, perlite and salt, the EU is either the largest or second largest producer in the world. Overall, EU production of most industrial minerals has remained stable over the last 10 years, and for some, increases of over 20% were recorded. These minerals are traded globally, but most are processed and used in manufacturing within the EU, supplying a very wide range of industrial sectors. One of the main strengths seems to be the close working relationship between the industrial minerals sector and the companies it supplies.

The situation is quite different for construction minerals (in particular aggregates) which is the largest sub-sector in terms of value and volume. There are many suitable resources in the EU and despite the large quantities used (3 billion tonnes annually), industry is able to meet demand. Transport costs dominate the price of aggregates which means that most markets are local or regional and there is relatively little international trade.

Different factors that are considered to have the biggest potential impact on the competitiveness of the NEEI were assessed: exploration, investment and operating costs, the regulatory framework, access to resources within the EU, the availability of a skilled workforce, research and innovation and health & safety requirements.

Many stakeholders consider the access to land as the key challenge for the industry. It has to be recognised that, in contrast to other industrial sectors, the NEEI is confined to locations which possess known and commercially viable deposits of minerals. Its need to develop new mines and quarries to replace exhausted deposits brings it into conflict with other land uses.

Concerns have been raised about the impact of the regulatory framework on the competitiveness of the industry. The analysis considered those EU legislative provisions that potentially affect its ability to gain access to land and operational costs, in particular those of the Habitats Directive and its requirement to designate areas of land as Sites of Community Importance and form a network of protected areas (Natura 2000).

Access to new resources requires knowledge through exploration . Exploration expenditure in Europe is low compared with major mining countries such as Canada and Australia. The analysis pointed at the importance of achieving improvements in exploration technology for new discoveries of deeply buried resources. It also highlighted a number of approaches in Europe and elsewhere to encourage exploration activities.

The section dealing with investment and operating costs pointed at the cost of energy as an important factor. For industrial and metallic minerals the energy costs can account for 10-20% of total operating costs. Industry is concerned about the significant increase in energy costs in recent years. Transport is also an important cost factor, in particular for the bulky lower value minerals such as aggregates.

The NEEI is faced with a growing problem of skills shortage . The number of graduates in subjects that are relevant to the sector is falling as is the number of graduates taking up positions in the industry. At the same time the average age of the workforce is increasing, with a significant percentage of professionals likely to retire over the next 5-10 years.

The NEEI is becoming increasingly innovative in order to remain competitive in a global market. Recently the industry launched a European Technology Platform on Sustainable Mineral Resources, which aims to provide a focal point for the industry’s research efforts. Developments in exploration techniques help to find new resources, modern rehabilitation techniques enable sites to be returned to other beneficial uses, while automation makes the working environment in mines safer. It is quite clear that this initiative will need to be fully in line with the EU’s competition rules.

The latter is particularly important, as the NEEI remains one of the more dangerous industrial sectors in terms of health and safety with one of the highest rates of accidents at work of all occupations.

This factual analysis is an essential input to a wider consideration of the question of availability and efficient use of raw materials which should encompass the international dimension, including trade and development aims, as well as internal policies, including environmental, social, and research and development aims within the framework of a coherent approach to raw materials.

1. INTRODUCTION

1.1. Background

The non-energy extractive industry provides many of the basic raw materials required by Europe’s manufacturing and construction industries. A wide range of minerals, including metallic ores, clays and aggregates[1], are mined or quarried to build infrastructure, such as roads, homes, schools and hospitals, and produce many of the industrial and consumer products which are often taken for granted in a modern economy, such as computers, cars and household appliances.

Globally, demand for minerals has been increasing steadily for many decades, but the rate of increase has accelerated significantly in recent years, mainly because of the rapid industrialisation of highly populated countries such as China and India. This has resulted in large increases in the cost of some raw materials and bottlenecks in supply. This has raised questions about whether Europe’s manufacturing industries will be able to obtain reliable and steady supplies of raw materials at competitive prices. A longer-term concern expressed by some stakeholders[2] is that, without a strategic resource policy for the EU, some minerals could become unavailable to European industry as developing countries make increasing use of their indigenous resources and/or secure access to resources in third countries, for example in Africa, by purchasing mineral rights or by entering into joint ventures. One potential effect is an avoidable loss of some sectors of manufacturing to countries outside the EU. Concerns have also been voiced that in some parts of the EU the sector's ability to optimise domestic production is being unnecessarily constrained by factors such as over-regulation and inefficient, costly and inconsistent decision-making.

At political level, these issues fall under the general umbrella of industrial policy. The cornerstone of EU industrial policy is the relaunched Lisbon Strategy which seeks to provide the right framework conditions for enterprises to develop and innovate in order to make the EU an attractive place for industrial development and job creation. The European Economic and Social Committee recently published an Opinion on “Risks and problems associated with the supply of raw materials to European industry”[3] which recognised the importance of raw materials supply to European industry and recommended that achieving the Lisbon objectives requires an innovative industrial policy which involves making the value-added process more mineral-efficient, making sparing use of all resources and progressively replacing finite resources by renewable ones.

More generally, a series of Communications from the Commission have set out an integrated approach to achieving the objectives of industrial policy, which includes more supportive, business-friendly regulations (“better regulation”), developing knowledge through research, innovation and skills, and harnessing synergies between competitiveness, energy and the environment. It is recognised that, in order to optimise policy development, it is often necessary to take the specific characteristics of individual sectors of industry into account and, where appropriate, to develop tailor-made policies which fit the particular opportunities and challenges they face[4].

This report aims to provide an objective overview of the non-energy extractive industry operating in the EU, its markets and its main competitors. It also identifies and assesses the factors which could potentially have the greatest impact on the competitiveness of the sector. It is intended to provide a sound platform for any future policy discussion concerning the non-energy extractive industry and access to mineral resources in the EU. This includes the work of the High-Level Group (HLG) on Competitiveness, Energy and the Environment which was set up by the European Commission to ensure synergy in European policy-making[5]. The HLG will consider access to raw materials in 2007. This analysis supplements and was undertaken in parallel with other sectoral competitiveness studies, including on the EU metals industry and the ceramics and glass sectors, all of which are major users of mineral resources.

In May 2007 the Competitiveness Council called for further actions in the domain of industrial policy. It requested the Commission in particular to develop a coherent political approach with regard to raw materials supplies for industry, including all relevant policy areas (foreign affairs, trade, environmental, development and research and innovation policy) and to identify appropriate measures for cost-effective, reliable and environmentally friendly access to and exploitation of natural resources, secondary raw materials and recyclable waste, especially concerning third-country markets. This report has to be seen as an essential input into the wider consideration of these issues.

This report was produced by European Commission staff working closely with the Raw Material Supply Group (RMSG), a stakeholder forum chaired by the Directorate-General for Enterprise and Industry, which brings together representatives of Member States, the EU non-energy extractive industry, European Geological Surveys[6] and other organisations (including environmental NGOs and trade unions). Presentations on the work in progress were made in numerous fora. The Commission also made various requests for contributions to the analysis. The University of Leoben was contracted to assess the different mineral planning policies in the EU-25 Member States, and an evaluation of the Communication from the Commission on “Promoting sustainable development in the EU non-energy extractive industry”[7] provided further views from stakeholders relevant to the assessment.

1.2. Definition of competitiveness

In this assessment competitiveness is defined as “the performance of the sector represented by changes in its level of production and international market share”. A number of indicators are used to measure performance and market share in order to compare the sector with the non-energy extractive industry operating in other countries and with other sectors of European industry.

1.3. Data availability and accuracy

Many of the economic data used in this study were published by the Statistical Office of the European Communities (Eurostat) which collates and reports data provided by the National Statistical Offices (NSO) and other national statistical authorities in each Member State. Other key sources were the British Geological Survey (BGS), the United States Geological Survey (USGS) and the Austrian Federal Ministry for Economic Affairs and Labour[8] (World Mining Data), each of which publishes comprehensive annual statistics on production of individual minerals. Trade federations and individual mining and quarrying companies in turn provided data, while relevant statistics were also obtained from commercial companies, including Minecost.com and Raw Materials Data.

A number of limitations were encountered with the data on the size and economic importance of the sector. One difficulty is that many quarrying companies also manufacture intermediate products, such as cement, lime and plaster. These vertically integrated companies operate their own quarries in the vicinity of their production plant. In such cases, Eurostat will often record the whole extraction and manufacturing operation under the main economic activity. As most of the value added is generated at the manufacturing stage, this unavoidably leads to the whole activity being recorded under the relevant manufacturing code and not as mining. This results in some under-representation of the economic value of the extractive industry. Unfortunately, even at company level operators are often unable to separate activities accurately, as some workers carry out multiple tasks involving both extraction and production operations. One notable point is that some national statistical offices (e.g. in Australia and Canada) include the value of such intermediate products in their figures for the extractive industry and not as manufacturing.

Where an industrial sector within a Member State is comprised of a large number of small companies (e.g. with fewer than 20 workers), the NSO may sometimes provide Eurostat with data derived from a representative survey of that sector. This is understood to be the case with the construction minerals sub-sector (particularly aggregates producers) in some Member States. In such circumstances, the NSO would not seek information from every company, but would obtain data from a representative sample[9].

In its annual statistical reports the BGS also refers to the difficulties of collecting accurate production data, particularly for the aggregates sub-sector. This is not only because of the large number of small aggregates companies spread across Europe but also because different countries have different systems for producing statistics. The terminology used in Member States for materials such as sand, gravel, crushed rock, building stone or limestone can also vary, leading to some materials which are not aggregates sometimes being recorded as such and vice versa. To help address some of these potential shortcomings, the European Aggregates Association (UEPG) undertook a survey of its national members (federations) to obtain estimates by the industry of total aggregates production (i.e. not only that of its member companies) in the 16 Member States in which it is represented.

Organisations such as the OECD and UNCTAD[10] also publish data on the extractive industry, but in most cases they combine the figures for the energy and non-energy sectors. The very different nature and scale of the two sectors and the policies affecting them meant that much of that information was of limited use for this exercise.

Despite these shortcomings, the data presented in this report are thought to provide a reasonably accurate picture of the non-energy extractive industry operating within the EU.

1.4. Content and structure of the report

As indicated above, the aim of this report is to present an analysis of the non-energy extractive industry in the EU. It attempts to describe the industry in the EU, to identify its main markets and global competitors and to understand the specific needs of the sector, so that the particular opportunities and challenges it faces can be taken into account in future policy-making.

Section 2 provides an overview of the general structure of the industry in the EU, describing its main sub-sectors, the wide range of types of mineral worked and the general location and land-use requirements of the industry. A brief assessment is then made of different patterns of ownership of minerals, the regulatory framework governing their extraction and approaches to forward planning to secure future supplies of minerals in different Member States.

Section 3 looks at minerals production, use and markets in the EU. It reflects the importance of minerals as vital raw materials for Europe’s continued development and the complex links between mining and the downstream manufacturing and construction industries. It examines recent trends in production of more than 20 of the main types of mineral extracted within the EU and draws a comparison with global production. Consideration is also given to minerals that are not extracted within the EU and for which the EU depends totally on imports.

Section 4 provides recent international trade statistics on the sector, illustrating the levels of imports and exports for each sub-sector and the main countries of origin or initial destination of the minerals traded.

Section 5 examines the economic activity of the industry and compares it with key sectors of manufacturing and the construction industry. It looks at the number of enterprises in the sector in the EU and the importance of the industry as an employer. It then considers a number of other economic indicators, such as turnover, value added, labour costs and productivity, and draws comparisons, where possible, with other major mining regions.

Section 6 then considers the main factors that stakeholders identified during the study as potentially affecting the competitiveness of the industry within the EU. It covers:

- the level of exploration activity;

- costs, including the level of investment required for a new site and energy and transport costs;

- the regulatory framework within which the industry operates;

- planning for future minerals supplies and land-use;

- the availability of a skilled workforce;

- research and innovation; and

- health and safety.

Section 7 attempts to draw the key findings of the report together in order to bring out the main issues for the future competitiveness of the industry.

2. OVERVIEW OF THE NON-ENERGY EXTRACTIVE INDUSTRY (NEEI) IN EUROPE

2.1. Definition and scope

“ Extractive industry ” is defined as “all establishments and undertakings engaged in surface or underground extraction of mineral resources for commercial purposes, including extraction by drilling boreholes, or treatment of the extracted material”. “ Mineral resource ” is defined as a “naturally occurring deposit in the earth's crust of an organic or inorganic substance, such as energy fuels, (metal) ores, industrial minerals and construction minerals, but excluding water”[11].

This report deals with the “non-energy extractive industry” (referred to as the “NEEI” in this report), which mines and quarries[12] over 50 broad categories of mineral within the EU[13]. It also considers a number of other minerals which are not currently mined within the EU, but for which demand is met by a combination of imports and use of recycled materials.

The sector is usually considered to consist of three main sub-sectors - “construction”, “industrial” and “metallic” minerals, depending on the physical and chemical characteristics of the minerals produced and, in particular, on their uses and on the downstream industries they supply.

[pic]

Figure 2.1 provides a basic illustration of the supply chain for a range of minerals from extraction, through transformation into intermediate products to incorporation into finished products.

2.2. Description of the sector

The European Statistical Office (Eurostat) classifies the whole of the extractive industry (i.e. extraction of both energy and non-energy minerals) under NACE[14] code C. It records the non-energy extractive industry, which is the subject of this assessment, under code CB, separating it from the energy minerals sector. The NEEI is further divided into categories CB13 and CB14 to differentiate mining of metal ores from other forms of mining and quarrying, and at lower levels still into small groupings of mineral types, as indicated in Box 2.1.

Box 2.1 Eurostat classification of non-energy minerals

CB Mining and quarrying except energy -producing materials

CB 13 Mining of metal ores

CB 13.1 Mining of iron ores

CB 13.2 Mining of non-ferrous metal ores, except uranium and thorium ores

CB 14 Other mining and quarrying

CB 14.1 Quarrying of stone

CB 14.11 Quarrying of ornamental and building stone

CB 14.12 Quarrying of limestone, gypsum and chalk

CB 14.13 Quarrying of slate

CB 14.2 Quarrying of sand and clay

CB 14.21 Operation of gravel and sand pits

CB 14.22 Mining of clays and kaolin

CB 14.3 Mining of chemical and fertiliser minerals

CB 14.4 Production of salt

CB 14.5 Other mining and quarrying n.e.c.

In this report Eurostat’s economic data on the sector have been broken down (where possible) to allow individual assessment of the performance of the three main sub-sectors[15]. Construction minerals are usually considered to include aggregates such as sand, gravel and various types of crushed rock (e.g. limestone, sandstone, chalk, granite and slate), natural stone (also known as dimension, ornamental or building stone) such as marble and granite, plus a range of clays, shale and gypsum. They are therefore more or less covered by sub-categories CB14.1 (quarrying of stone) and CB14.21 (operation of gravel and sand pits). Industrial minerals can loosely be classified as “physical” minerals (e.g. calcium carbonates, borates, diatomite, kaolin, plastic clays, bentonite, feldspar, silica and talc) or “chemical” minerals (e.g. salt, potash and sulphur). However, they also include metallic minerals used for non-metallic purposes, such as ilmenite, and “construction minerals” used for non-construction purposes, such as silica sand and limestone. In Eurostat’s nomenclature they are most closely defined by NACE classes CB14.22 (clays and kaolin), CB14.3 (chemical and fertiliser minerals), CB14.4 (production of salt) and CB14.5 (other mining and quarrying). Metallic ores, as indicated above, fall within class CB13.

Individual companies may operate in more than one sub-sector, and some minerals do not always fall into just one category. Some sands and clays, for example, would be regarded as industrial minerals when used to produce glass or ceramics, but as construction minerals when used as aggregates or to produce bricks. Similarly, limestone and dolomite are mainly used as an aggregate by the construction industry, but are also important industrial minerals. Unfortunately, it is not possible to draw such distinctions when using Eurostat data. Nor is it always possible to obtain separate data on operation of gravel and sand pits (CB14.21) and clay and kaolin (CB14.22) within NACE category CB14.2.

2.3. Location of the industry

2.3.1. Introduction

The extractive industry can only operate where the geological resources are present in sufficient quantity and quality and at depths that can be worked economically with the available technology. As the resource in a particular area is finite, and often of variable quality, the industry occupies an area of land for a limited time – even if this period spans from just a few years to many centuries. The industry therefore has to discover and work new resources to replace those that are becoming, or have become, exhausted if it is to remain in operation. Most new resources are found close to existing operations as exploration activities tend to concentrate around the same areas. Most new operations are therefore extensions of existing sites, although new “greenfield” sites are also developed.

The location of many downstream industries (and human settlements) has long been a direct consequence of the presence of locally available mineral resources, and local stone used in buildings has given many villages, towns and cities their unique characteristics. The steel industry and the towns built up around it, for example, were traditionally located near to the iron ore and coal mines which produced the basic raw materials for steel production (e.g. the Saar, the Ruhr, Lorraine, Wallonia, Silesia, South Wales and the English Midlands)[16]. However, since the 1970s the availability of cheaper iron ore and coal from developing countries and the relatively low cost of overseas transport have meant that new steel plants are now usually located along coastlines near to harbours enabling companies to minimise the transport of imported raw materials. The ceramics industry is still concentrated in regions such as Staffordshire in the UK, Bavaria in Germany, Limousin in France, Maastricht in the Netherlands, Sassuolo in Italy and Castellón in Spain because of the locally available supplies of suitable raw minerals and fuels[17]. However, ceramics manufacture is increasingly moving to new locations which are closer to the markets rather than to the supplies of raw materials. The specific characteristics of some minerals makes them particularly sought after.

A number of downstream sectors are vertically integrated with the extractive industry and are also present at particular locations because of the availability of suitable geological resources. Companies producing cement, lime and plasterboard, for example, usually operate their own quarries in the vicinity of their manufacturing plant in order to reduce the cost of transporting raw materials (although some new plasterboard manufacturing capacity is being established in the vicinity of coal-fired power stations to make use of synthetic gypsum produced as a by-product of flue gas desulphurisation). The heavy investment required for infrastructure such as calcination plant for gypsum manufacture or kilns for cement and lime manufacture is another important consideration when planning a site. This has wide-reaching implications for the volume of resources which need to be available to such industries. The European Lime Association (EULA), for example, has indicated that geological reserves of limestone need to be sufficient for between 30 and 60 years of operation to justify the high capital investment costs of starting up a lime production plant[18].

This interdependence of different sectors of EU industry can be seen all along the production chain. Parts of the non-ferrous metals processing industry (e.g. companies manufacturing semi-finished products) are thought to be able to continue to operate at their current levels within the EU because of the size and proximity of the downstream industries that they supply in the EU (e.g. the automobile, aerospace, electrical and mechanical machinery sectors)[19]. This interdependence means that if one link in the chain relocates production out of Europe, it is likely to affect those above and below it.

The extractive industry also makes a significant contribution to the local economy in remote and economically depressed areas in the form of both direct and indirect employment. Many mines and quarries are located in remote areas, such as the metal mines in the Arctic regions of northern Sweden and Finland, or in depressed regions such as the Alentejo marble region in Portugal, Castro-Verde in the Iberian pyrite belt and the Maciço Calcário Estremenho limestone region[20].

Because different geological deposits are unevenly distributed across Europe the industry is highly dispersed and different types of mineral are extracted in each Member State. The next few paragraphs look in greater detail at the distribution of each of the three sub-sectors of the industry across the EU.

2.3.2. Construction minerals

Extraction of minerals, and particularly aggregates[21], for the construction industry accounts for by far the largest proportion of the industry’s activity within the EU (see section 3.2). The wide distribution of minerals suitable for use as aggregates, combined with the high demand for them and their relatively low cost per tonne, means that markets tend to be relatively close to the production sites[22]. This requires a tight network of pits and quarries in order to reduce transport distances and, therefore, the cost and environmental impact of transport. There are therefore a large number of sites across Europe (currently over 22 000), many of which are close to built-up areas[23]. There are also a number of very large sites (often referred to as “super-quarries”) which are usually closely linked to rail or harbour facilities and serve more distant markets. The aggregates industry is therefore present in every Member State, although the amount produced varies greatly between countries. Germany, France, Italy, Spain and the UK combined account for 66% of all production in EU-25.

Construction minerals also include clays used in the manufacture of bricks, plus gypsum and natural stone (also known as “ornamental”, “dimension” or “building” stone). As indicated in Table 2.1, natural gypsum is extracted in at least 15 Member States, although France, Germany and Spain produce about three quarters of the EU’s output. Brickworks are also widely distributed, usually making use of locally sourced raw materials.

Table 2.1. Location of other construction minerals in the EU

Mineral type | Member State |

Brick clay | Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Poland, Portugal, Slovakia, Spain, Sweden, UK |

Gypsum | Austria, Cyprus, Czech Republic, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Poland, Portugal, Slovakia, Spain, UK |

Natural stone | All Member States except the Netherlands but, in particular, Italy, Greece, Spain and Portugal. |

2.3.3. Industrial minerals

Many different types of industrial mineral are extracted within the EU. The EU is the world’s largest producer of feldspar, perlite and salt and the second largest producer of bentonite, Fuller’s earth, kaolin, magnesite, potash and talc (see Section 3.3). The geographical distribution of suitable resources is very uneven across the EU (see Table 2.2). While the industry extracts minerals such as kaolin, industrial limestone and talc in around half of the Member States, others, such as fluorspar, mica, phosphate rock and sulphur, are extracted in just one or two countries. Other industrial minerals, such as iodine, are not mined at all in the EU.

However, natural variability in the quality and characteristics of a particular mineral found in different parts of the EU and the location of different markets mean that, while a number of Member States might extract the same mineral, they may serve quite different markets. Magnesite extracted in Greece, for example, is predominantly used in agriculture, whereas the main markets for magnesite produced in other European countries are refractory products.

Table 2.2. Industrial minerals extracted in the EU in 2003 and Member States involved (countries with >2% of world production in bold)

Industrial mineral | Member State |

Barytes | Belgium, France, Germany, Greece, Italy, Poland, Slovakia, Spain, UK |

Bentonite and Fuller’s earth | Cyprus, Czech Republic, Denmark, Germany, Greece, Hungary, Italy, Poland, Slovakia, Spain, UK |

Bromine | France, Germany, Italy, Spain, UK |

Diatomite | Czech Republic, Denmark, France, Hungary, Italy, Poland, Spain |

Feldspar | Czech Republic, Finland, France, Germany, Greece, Italy, Poland, Portugal, Spain, Sweden, UK |

Fluorspar | France, Germany, Italy, Spain, UK |

Graphite | Czech Republic, Germany, Sweden |

Kaolin | Austria, Belgium, Czech Republic, France, Germany, Greece, Italy, Poland, Portugal, Slovakia, Spain, UK |

Industrial limestone/dolomite | Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Poland, Portugal, Slovakia, Spain, Sweden, UK |

Magnesite | Austria, Greece, Netherlands, Poland, Slovakia, Spain |

Mica | Finland, France, Spain |

Perlite | Greece, Hungary, Italy, Slovakia |

Phosphate rock | Finland |

Potash | France, Germany, Spain, UK |

Quartz, silica sand | Austria, France, Germany, Greece, Italy, Poland, Slovakia, Slovenia, Spain, Sweden, UK |

Salt | Austria, Denmark, France, Germany, Greece, Italy, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, UK |

Sillimanite minerals | France, Spain |

Sulphur and pyrites | Finland, Spain |

Talc | Austria, Finland, France, Germany, Greece, Italy, Portugal, Slovakia, Spain, Sweden, UK |

Data sources: BGS (2005) European Mineral Statistics; EULA, EuroGeoSurveys (for quartz and silica sand).

2.3.4. Metallic minerals

Metallic minerals include a wide range of ores which, following processing, yield metals or metallic substances. A number of metal ores are extracted within the EU and for some, such as chromium, copper, lead, silver and zinc, the EU is a relatively important producer. The current distribution of active mines is, however, limited to a relatively small number of Member States (see Table 2.3). Only Austria, Finland, Greece, Ireland, Poland, Portugal and Sweden have metal mining industries that contribute more than 1% to global production of one particular metallic mineral.

Table 2.3. Location of metal mining in the EU in 2003 (countries with >1% of world production in bold)

Metal ore | Member State |

Arsenic | Belgium, France, Germany |

Bauxite | France, Greece, Hungary |

Cadmium | Belgium, Finland, France, Germany, Italy, Poland, UK |

Chromium | Finland |

Copper | Cyprus, Finland, Poland, Portugal, Spain, Sweden |

Gold | Finland, France, Italy, Poland, Slovakia, Spain, Sweden |

Iron | Austria, France, Germany, Slovakia, Spain, Sweden, UK |

Lead | Greece, Ireland, Italy, Poland, Spain, Sweden, UK |

Lithium | Portugal |

Manganese | Hungary, Italy |

Mercury | Finland, (Spain)[24] |

Nickel | Finland, Greece |

Selenium | Belgium, Finland, Germany, Poland |

Silver | France, Greece, Ireland, Italy, Poland, Spain, Sweden |

Strontium | Spain |

Tin | Portugal |

Tungsten | Austria, Portugal |

Zinc | Finland, Greece, Ireland, Poland, Spain, Sweden |

Data source: BGS (2005) European Mineral Statistics.

2.4. Ownership of mineral rights

The ownership of minerals in the ground differs between Member States (see Table 2.4). Higher value minerals, such as metallic ores and energy minerals, plus some industrial minerals are often owned by the State. Other categories of mineral are usually privately owned (mainly by the owner of the land under which they are found). The legislation controlling exploration and extraction activities is often different depending on whether the minerals are State- or privately owned. While the industry has pointed to administrative procedures as a significant issue in determining a company’s ability to exploit an area, ownership rights have not been identified as an issue. In some cases there are issues with expropriation, which usually involves compensation or variable royalty payments either to the land owner or to the State (where different), but there is no evidence that this has a profound effect on the industry’s competitiveness. Regarding the ability of State- or privately owned companies to access markets, it has been suggested that downstream sectors are indifferent to the source of supply, provided the minerals meet the specifications, perform satisfactorily and are freely available at competitive prices[25].

Table 2.4. Overview of ownership of minerals in different Member States[26]

Member State | Minerals owned by the State | Privately owned minerals | Comments |

Austria | Rock salt and all other types of salt occurring together with rock salt, hydrocarbons and natural mineral resources containing uranium or thorium. | Free minerals: All mineral resources from which iron, manganese, chromium, molybdenum, tungsten, vanadium, titanium, zirconium, cobalt, nickel, copper, silver, gold, platinum and platinum group metals, zinc, mercury, lead, tin, bismuth, antimony, arsenic, sulphur, aluminium, beryllium, lithium and rare earth minerals could be extracted technically. In addition, gypsum, anhydrite, barytes, fluorite, graphite, talc, china clay (kaolin), leukophyllite, plus all kinds of coal and oil schists and magnesite, limestone (with calcium carbonate content of more than 95%) and diabase, if these mineral resources occur as hard rock, quartz (with a silicon dioxide content of more than 80%) and clays, if they occur as soft rocks. Landowner minerals: all other minerals. | All mining operations are subject to the 1999 “Mineral Resources Law” (MinroG), which requires operators to have a mining licence. |

Belgium | Metal ores and coal. | Industrial and construction minerals. | Responsibility for land-based extraction lies at regional level. Both specific mining and quarrying laws and land-use planning legislation apply. |

Czech Republic | Reserved minerals. Most minerals. | Building stone, gravel and clay. | Mining Act. Access to reserved minerals can be achieved without the consent of the landowner, although compensation is payable. |

Denmark | Off-shore minerals and deep-seated minerals such as salt, oil and gas. | Onshore minerals. | Access to State-owned minerals is administered by the Ministry for the Environment and Energy. Land-based mineral rights are owned by the landowner and are acquired by private contract between the landowner and mineral operator. |

Estonia | Bedrock clay, dolomite, phosphorite, crystalline building stone, limestone, oil shale, silica sand and minerals under State-owned land. | All other minerals (except bedrock defined as pre-glacial). | A permit is required under the Earth’s Crust Act for mining activities and liabilities under a Mining Act. |

Finland | Claimable minerals: Metalliferous ores, industrial minerals, gemstones, marble and soapstone. | “Non-claimable minerals”: All other minerals. | Claimable minerals are controlled at national level by a Mining Act administered by the Ministry for Trade and Industry. Non-claimable minerals are controlled by permits governed by the Land Extraction Act or Planning and Building Act. |

France | Minerals of high value or national importance, including gold, silver, copper and zinc. | “Quarried” substances such as limestone, igneous rock, sand and gravel. | Concessions to mine State-owned minerals are granted by an order from the Council of State following consultation with the General Mines Council. Quarries are left at the disposal of landowners, although in some cases public authorities can issue permits without the consent of the landowner. |

Germany | Free minerals: Metals, hydrocarbons, coal and lignite, rock, potassium, magnesia and boron salts, brine, fluorite and barytes. In the former East Germany, also high-grade rock, stone and related products. | All other minerals. | A Mining Act applies to State-controlled minerals and some landowner minerals, including bauxite, bentonite, feldspar, clays for refractory and ceramic use, quartz, kaolin and all minerals mined underground. Permits to exploit “free minerals” must be obtained from the regional mining inspectorate. Agreement from the landowner to use the land is necessary, although compulsory purchase is possible if in the public interest. Land regulations (national and Federal State) apply to other minerals. |

Greece | Energy minerals, emery, mineral sodium chloride, metallic minerals and strategically important minerals such as feldspar. | Other minerals. | The Mining Code draws a distinction between mineral ores and quarrying minerals. For non-State-owned mineral ores, the Code establishes a freedom to mine by the private sector. Landowners have the right to extract quarry materials (e.g. marble, industrial minerals and aggregates). |

Hungary | All minerals. | The Mining Act controls all aspects of use. The State plans and controls mineral extraction by deciding whether to open certain areas for extraction and calling for tenders. |

Ireland | Scheduled minerals (of which 35-40% are privately owned), including chalk and dolomite, china and ball clay, silica sand, gypsum and anhydrite, salt and potash, barytes, fluorspar and metals. | Non-scheduled minerals: Peat, sandstone, other igneous/metamorphic rocks, limestone, sand and gravel and common clay. | The right to extract “scheduled minerals” is vested in the Minister for Transport, Energy and Communication (unless they were already being privately worked by 15 December 1978). A mining licence (as opposed to a mining lease) is required to extract privately owned scheduled minerals. Planning permission is required for working both scheduled and non-scheduled minerals. |

Italy | Category 1 minerals: Energy minerals (except peat), metallic ores, non-metallic ores of significant industrial importance (i.e. salt and potash, Fuller’s earth, barytes and fluorspar), marine sand and gravel. | Category 2 minerals: All other minerals (which are mainly quarried) – peat, sandstone, igneous rock, limestone, chalk and dolomite, sand and gravel, silica sand, common clay, shale and fireclay, china and ball clay, gypsum and anhydrite. | Permits to work category 1 minerals are issued by the Ministry for Industry, while category 2 minerals are subject to regional administrative regulations. |

Latvia | All minerals belong to the landowner which might be the State, local authorities, private individuals or legal entities. | The Subsoil Law requires permits for mining activities. Permits to work land owned by the State or a local authority are put out to open competition. |

Lithuania | All minerals. | Landowners can extract minerals for their own use without a permit as long as the area is less than 0.5 hectares and to a maximum depth of 2 metres. |

Luxembourg | All mineral resources deeper than 6 metres. | Mineral resources shallower than 6 metres. | Permit issued by the national government. |

Netherlands | Off-shore minerals. On-shore non-surface minerals (e.g. salt). | On-shore surface minerals (e.g. construction minerals). | Extraction permit required from the relevant province or regional directorate of the Directorate-General for Public Works and Water Management. For non-surface minerals a permit is required from the Minister for Economic Affairs. For off-shore surface materials a contract with the State Property Directorate is required in addition to the permit. |

Poland | Minerals extracted by underground or “hole” mining. | Minerals extracted from open pits. | Permit required from the Environment Minister for “basic” minerals (energy, metallic and chemical minerals) and from the Voivod for most other minerals. |

Portugal | Ore deposits (including all metallic and radioactive ores, graphite, pyrites, phosphates, asbestos, talc, kaolin, quartz, feldspar, precious and semi-precious stones, potassium salts and rock salt). | Clays, limestone, marbles, gypsum, granites, sand and ornamental and building stone not included under ore deposits. | Mineral rights for extraction of State-owned minerals are granted by the Minister for Economic Affairs. The Regional Directorate for Economic Affairs or Municipal Council issues licences for quarrying construction minerals. |

Slovakia | Reserved minerals: minerals other than construction minerals. | Non-reserved minerals: building/crushed stone, gravel, sand and brick clay. | The Ministry for Economic Affairs is the main body responsible for control over the extractive industry. |

Slovenia | All minerals. | A Mining Act regulates exploration, extraction and management of all mineral resources. |

Spain | All minerals. | All deposits of natural origin and all other geological resources are “public-domain assets”. The State may either work them or assign the rights to private operators under a system of permits and licences in accordance with the Mines Act. |

Sweden | Concession minerals: Metallic ores, a wide range of industrial minerals, coal, oil, gaseous hydrocarbons and diamonds. | Non-concession minerals: Other minerals. | Rights to concession minerals are obtained from the Mining Inspectorate. In the event of lack of agreement with the landowner, compulsory purchase is possible. For non-concessionary minerals, agreement to work them is negotiated with the landowner. |

United Kingdom | Oil and gas, coal, most seabed minerals, silver and gold. | All other minerals. | Permits granted under land-use planning legislation at local authority level. |

Source: Summarised from the Leoben University study on mineral planning policies and supply practices in Europe with additional contributions from EuroGeoSurveys and the Geological Survey of Sweden.

2.5. Land use

Extraction of minerals unavoidably has an impact on land use, even if, following land rehabilitation, this is temporary. The most visible signs of a surface mineral working are usually the hole created by the removal of soil, overburden and the mineral; storage mounds containing soil and overburden; spoil tips and lagoons (also known as dumps and tailings ponds), together with associated plant (e.g. crushers and conveyor belts), buildings and access roads. While underground mining activities, by nature, are less visible, sites are usually marked at the surface by spoil tips and lagoons, buildings and access roads. Many underground mines started as opencast operations and exhibit a combination of visible characteristics.

Eurostat has published data on the area used for mining and quarrying in a limited number of Member States. Most of the figures relate to the situation in 2000 (see Table 2.5), although for Austria and Sweden they are for 1995. The data cover both energy and non-energy extraction and are thought to provide a measure of the surface footprint of the industry (i.e. the operational area on the surface). They therefore exclude areas such as underground tunnels, undisturbed land within the boundary of sites and rehabilitated areas. This suggests that the industry’s surface footprint was equivalent to between 0.05% and 0.5% of the total land area of the Member States concerned[27].

Table 2.5. Area of land used for mining and quarrying in selected Member States in 2000 and as % of national land area

Member State | Area used | % of total |

for mines and | land area |

quarries (km2) |

Belgium | 37.1 | 0.12 |

Denmark | 20.0 | 0.05 |

Germany | 1 795.8 | 0.51 |

France | 662.8 | 0.12 |

Netherlands | 51.0 | 0.15 |

Austria (1995) | 74.0 | 0.09 |

Poland | 380.0 | 0.12 |

Portugal | 217.0 | 0.24 |

Slovenia | 14.8 | 0.07 |

Sweden (1995) | 350.0 | 0.09 |

UK | 555.0 | 0.23 |

Data source: Eurostat.

Modern working methods, including progressive extraction and rehabilitation (including new concepts like “function combination”[28]), can often minimise the area of land being worked at any one time (i.e. the industry’s surface “footprint”), while careful landscaping and screening of operations (e.g. using trees or bunds) can limit the visibility of sites. However it should be pointed out that the actual 'footprint' (i.e. total land and associated functions affected by mineral workings) can be much broader (e.g. acid drainage from mine voids or waste tips affecting downstream water bodies) and they require careful short and long term measures and planning.

Besides land management issues, the industry is likely to have an environmental impact (e.g. water pollution, changes in groundwater flow patterns, loss of biodiversity, air pollution, dust and noise). Managing these impacts effectively requires that activities are in line with all relevant legislation that covers these areas. It has also to be pointed out that the industry has made very large strides in recent years to improve its environmental performance, and there is general acceptance within companies that they have to reconcile their activities with sustainable development and environmental concerns. For example, the European Aggregates Association UEPG has joined the Countdown 2010 Initiative[29] of the World Conservation Union (IUCN) to contribute to halting the loss of biodiversity by 2010. There are several examples of individual companies like Rio Tinto and Lafarge that have embarked on joint projects with environmental organisations. The International Mining and Minerals Council[30] has also produced guidelines for the mining industry to incorporate biodiversity considerations into corporate strategies and practices.

2.6. Regulatory framework

Much of the legislation used to regulate the industry is national or regional. It has developed over many years, often in response to specific incidents, such as mining accidents, but also to minimise the environmental and health effects of extraction and processing activities. If not adequately controlled, mining and quarrying have the potential to cause significant damage to the environment and to human health. It is beyond the scope of this analysis to consider in any detail the wide range of national legislation in place in each of the Member States. However, Table 2.4 provides some insight and further information can be found in the report on mineral planning policies in the EU produced for the European Commission by the University of Leoben[31],[32].

A significant body of legislation has also been adopted at EU level which affects the activities of the extractive industry. Most of this legislation is horizontal and was not specifically developed to control the extractive industries. This includes Directives dealing with environmental protection, health and safety and consumer health. As the industry considers that some of the horizontal EU legislation has an impact on its competitiveness, key provisions are considered further in Section 6.4.

The only Directives developed specifically for the extractive industry are:

- Directive 2006/21/EC on the management of waste from extractive industries (which will come into force in 2008);

- Directive 92/91/EEC concerning the minimum requirements for improving the safety and health protection of workers in the mineral-extracting industries through drilling (eleventh individual Directive within the meaning of Article 16(1) of Directive 89/391/EEC)[33]; and

- Directive 92/104/EEC on the minimum requirements for improving the safety and health protection of workers in surface and underground mineral-extracting industries (twelfth individual Directive within the meaning of Article 16(1) of Directive 89/391/EEC)[34].

The last two Directives lay down minimum requirements for the health and safety of workers in the surface and underground mineral extractive industries and are discussed further in Section 6.8.

2.7. Control over extraction and approaches to forward planning for mineral supply

The fourth column in Table 2.4 provides an indication of the different approaches to gaining access to mineral resources in each Member State (this is summarised in greater detail in the report by Leoben University). All Member States usually require at least one permit for extraction operations, although some have more than one permitting authority and multiple permits may be required before operations can begin. The higher value minerals , such as metallic and industrial minerals, often fall within the jurisdiction of national authorities, such as a government department or mining authority, while in many Member States permits to extract aggregates and similar materials are a matter for lower tiers of government. The national legislation is often contained within a Mining Act (or similar act) or within land-use planning legislation. When the Mine Waste Directive comes into force in 2008 it will require operators to produce waste management plans and to obtain a permit from the relevant competent authority before they can operate eligible waste management facilities. This is discussed further in Section 6.4.

One of the most frequently cited concerns of the industry is the difficulty it has with obtaining new permits to replace exhausted sites. Particular concern has been expressed that some governments do not appreciate the importance of the extractive industry and, more generally, that the permit regime in some Member States is often cumbersome, inefficient and inconsistent when it comes to decision-making. The Leoben study reports cases where applications for permits to operate new sites took longer to work their way through the permitting procedure than the lifetime of the permits that were eventually granted. The reluctance of competent authorities to grant permits may also reflect the low acceptance by the public due to possible cases of poor environmental record.

Matters affecting use of land for activities such as mining are not within the competence of the EU institutions. It is therefore up to Member States to decide if and where mining activities should take place within their national borders – subject to compliance with the relevant directives and their own national and local legislation, as explained above. One of the main conclusions of the Leoben study was that some Member States do not appear to have a coherent system for planning future extraction activities or an effective system for considering proposals for new sites. This often results in uncertainty on the part of the applicant plus unnecessary costs and delays. Representatives of the industry have suggested that this is one reason for companies not investing in exploration or mining in some Member States.

The Leoben study also concluded that the main difference between Member States is the degree to which land-use plans are produced and provide detailed prescriptive information on where mineral extraction might be acceptable. Some Member States provide national policy guidance which has to be taken into account by lower tiers of government responsible for planning and permitting mineral extraction in their area.

Overall, a number of different approaches by national governments were identified, including development of:

- national minerals policies (e.g. Austria, the Czech Republic and the UK);

- national mining plans (e.g. Austria and Portugal);

- policy guidance (e.g. Denmark, Portugal, Slovenia and the UK);

- specific requirements in legislation (e.g. France, Germany, the Netherlands, Poland and Sweden); and

- indirect measures, in the form of exclusion of mining in defined areas via other legislation – for example, nature conservation designations (most Member States).

It is not the purpose of this assessment to identify particular Member States operating what might be considered good practice or others where practices are inefficient or bad. Instead, the aim is to draw attention to general approaches which many stakeholders consider to have the potential to enable the industry to operate where it is possible within the general framework of sustainable development. This is discussed further in Section 6.5.

3. MINERAL PRODUCTION, USES AND MARKETS

3.1. Introduction

One important component of the analysis was to identify the links between the non-energy extractive industry in the EU and the downstream sectors it supplies with raw materials. This not only provides continuity with other sectoral analyses, but also reflects the important issue that the demand for minerals is largely driven by downstream industries. The importance of the industry is therefore much greater than its direct contribution to the national and European economies. The level of production of minerals within the EU is therefore also likely to depend on the competitive success of key manufacturing sectors in the EU and, for construction minerals in particular, the cyclic behaviour of the economy in different Member States.

Table 3.1 provides a very general overview of the wide range of applications for minerals and of the economic importance of the downstream manufacturing and construction industries supplied.

Table 3.1. Example of the economic importance of EU industries consuming non-metallic minerals

Application | Value added (€ million) | Employment | Mineral content |

Construction |

Glass | 16 336 | 375 400 | 100% |

Ceramic tiles and flags | 4 253 | 94 900 | 100% |

Bricks, tiles and construction products | 3 891 | 78 300 | 100% |

Concrete | 10 515 | 256 600 | 100% |

Cement, lime and plaster | 8 717 | 77 700 | 100% |

Natural stone production | 5 492 | 189 300 | 100% |

Non-construction |

Rubber products | 17 057 | 359 400 | up to 50% |

Plastic products | 55 534 | 1 310 400 | up to 50% |

Paints and varnishes | 10 601 | 179 400 | up to 70% |

Paper and paper board | 17 429 | 223 800 | up to 30% |

Ceramics used for non-construction uses | 6 514 | 199 100 | 100% |

Basic chemicals | 64 928 | 584 500 | variable |

Basic pharmaceuticals | 6 812 | 66 700 | variable |

Mineral filters | 100% |

Sugar | process aid |

Source: Based on “Good Environmental Practice in the European Extractive Industry: A Reference Guide”, with figures for value added and employment updated to 2002-2003 by DG Enterprise and Industry using Eurostat data.

As the markets for different minerals vary significantly, the following sections look at the three sub-sectors in turn. They explain in more detail the types of mineral in each sub-sector, their uses and recent production trends.

3.2. Construction minerals

3.2.1. Aggregates

Aggregates are a granular material used in construction. Most are of mineral origin and they include sand, gravel and crushed rock (often referred to as “primary aggregate”). However, a relatively small, but increasing, amount of aggregate is produced from by-products of other industrial processes, such as blast and electric furnace slags or residues from mineral processing such as china clay sands and left-overs from stone quarrying (“secondary aggregates”) and from reprocessing of materials previously used in construction, including construction and demolition waste and railway ballast (“recycled aggregates”). In 2004 over 5% of the aggregates used in the EU were recycled, although the relative contribution varied greatly between Member States. At the low end, some countries report that they use no secondary or recycled aggregates, while others report that over 20% of their national consumption is met from such sources[35].

Aggregates have a wide range of uses, including in construction of buildings, roads and railways. They are used directly as railway ballast and armourstone and also as raw materials in the manufacture of other construction products such as ready-mixed concrete (which contains 80-90% aggregates), pre-cast products, asphalt (which contains 95% aggregates), lime and cement[36]. It is estimated that a typical new home can require around 400 tonnes of aggregates[37], a high-speed railway up to 9 000 tonnes of aggregates per kilometre and a motorway up to 30 000 tonnes of aggregate per kilometre.

Figure 3.1 illustrates some of the many uses of aggregates in the UK construction industry in 2004. Approximately 16% were used for housing, 22% for road-building and maintenance, 27% for private industrial and commercial development and 11% for other public works. Lafarge Granulats[38] estimates that of the 400 million tonnes of aggregates used in France in 2003[39], 17% were used in ready-mixed concrete, 6% in concrete products, 9% in other types of concrete, 13% in asphalt and 55% in applications such as road sub-base layers, ornamental purposes and filtration. Broadly similar figures were provided for Finland (50% for roads, 10% in asphalt, 10% in concrete, 15% in house-building and 15% for other uses)[40].

Demand for aggregates is therefore closely related to the level of new house-building, maintenance and repair of existing buildings and the scale of civil engineering projects[41]. During periods of weak economic growth, repair and maintenance of the existing building stock is thought to dominate demand, although this also depends on the extent of the existing building stock and the number of national and local urban renewal programmes. In the Netherlands, Germany, France and Italy, renovation of the existing stock accounts for the majority of the market, while in the UK and Belgium there is parity between new construction and renovation. In Portugal, Ireland and Spain, and also in many new Member States, new construction predominates.

Figure 3.1. Estimated use of aggregates by the UK construction sector in 2004

[pic]

As indicated earlier, the aggregates industry is present in every Member State. Annual production in 2004 was estimated to be in the region of 2.8 billion to 3.0 billion tonnes, although production varies significantly in each Member State (see Figure 3.2). The same figure also illustrates the relatively limited international trade in aggregates compared with domestic production (with the exception of Belgium and the Netherlands) and the generally local nature of the industry and its markets. In view of the generally national and local level of consumption of aggregates, it is perhaps not surprising to see a general relationship between consumption and population (see Figure 3.3).

Figure 3.2. Production, imports and exports of aggregates (sand, gravel and hard rock) by Member State in 2004 (except where stated otherwise)

[pic]

Data source: UEPG (all 2004 data); Department of Public Works and Water Management, Road and Hydraulic Engineering Institute (Netherlands data) and BGS (all other data).

Figure 3.3. Relationship between consumption of aggregates and population

[pic]

Consumption data based on BGS figures for production, imports and exports of aggregates in 2003.

Production trends

Despite being the largest sub-sector of the industry in the EU, construction minerals have proved to be the hardest on which to obtain accurate and comprehensive data. The BGS was the first organisation to publish figures for production, imports and exports in each of the 25 Member States, but these (currently) cover only the period 1997-2004 (see Figure 3.4) and, as discussed earlier, are thought to under-represent the industry’s activities. Figure 3.5 provides a longer time series (1980 to 2000) for the former EU-15 Member States which suggests a generally stable picture, at least since the late 1980s[42], although this masks fluctuations over that period within individual Member States.

Figure 3.4. Reported production of aggregates within EU-25 (1997-2004)

[pic]

Data source: BGS.

Figure 3.5. Extraction of aggregates in EU-15 (1980-2000)

[pic]

Data source: “Material Use in the European Union, 1980-2000”.

3.2.2. Gypsum

Gypsum is widely used in the construction industry as plaster or in plasterboard products. It is also an important ingredient in the manufacture of cement and other products. Until the late 1990s most of the gypsum used in the EU was mined. However, alternative sources, and in particular synthetic gypsum produced at coal-fired power stations as a by-product of flue gas desulphurisation (FGD), are increasingly being used. There is a high degree of vertical integration between the extraction side of the industry and the processing and manufacture of plaster products. The industry estimates that 22% of its total costs relate to mineral extraction and the remainder to manufacturing plaster products[43]. In the past, plasterboard production facilities were located close to natural gypsum deposits and the market for building materials. An increasing number of production facilities are now being established across Europe close to large coal-fired power stations and new gypsum markets have opened up[44].

Despite the increased use of synthetic gypsum, EU mine production has generally increased since the early 1990s (see Figure 3.6) and, in 2004, totalled around 25 million tonnes. Spain is by far the biggest producer of mined gypsum (over 10 million tonnes a year) and, with France and Germany, accounts for two thirds of EU production. The EU is the largest producer of mined gypsum in the world (see Figure 3.7), accounting for about 25% of the global total (see Figure 3.8). Other major producing countries are the USA, Canada and Iran.

Figure 3.6. Mine production of gypsum in EU-25 (1992-2004)

[pic]

Data source: BGS. Graphs produced by DG Enterprise and Industry.

Figure 3.7. EU-25 and global production of mined gypsum

[pic]

Data source: BGS. Graphs produced by DG Enterprise and Industry.

Figure 3.8. EU-25 production of mined gypsum as a percentage of global production

[pic]

Data source: BGS. Graphs produced by DG Enterprise and Industry.

Recycled gypsum

In addition to synthetic gypsum, about 10% of annual plasterboard production is thought to be lost as scrap, while significant amounts are also present in construction and demolition waste. At least one company has developed the technology to recycle gypsum waste. It has been suggested that increasing supplies of synthetic gypsum, tighter controls on the landfilling of gypsum wastes and increased recycling of gypsum products could lead to a reduction in demand for natural gypsum in the future. Representatives of the industry, however, have expressed concern about relying too heavily on FGD gypsum, particularly as the quantities available are closely linked to the activities of power generators. Any change in energy policy which reduced the need for FGD (e.g. increased use of low-sulphur coal or alternatives such as natural gas) could affect the availability of future supplies of synthetic gypsum.

3.2.3. Natural stone

Natural stone (also known as ornamental, dimension or building stone) is a natural rock material which is quarried to obtain blocks or slabs that meet specifications such as size and shape. It includes a range of igneous, metamorphic and sedimentary rocks, such as marble, granite, sandstone, slate and limestone. Factors such as colour, grain texture and pattern along with the surface finish of the stone are important requirements, as are durability, strength and the ability of the stone to take a polish[45].

Approximately 35% of global stone production is in Europe, of which over 80% is in Italy, Greece, Spain and Portugal. The sector has been facing increasing competition in recent years from countries such as China, India and Brazil which have much lower labour costs. A number of recent initiatives, such as the Thematic Network on Ornamental Stones (OSNET)[46] and I-Stone[47], have significantly improved the competitiveness of the sector. They have improved production processes to reduce waste, and much of the waste which is produced is now processed to produce aggregates and other saleable products.

EU production trends between 1997 and 2001 are shown in Figure 3.9, illustrating the dominance of production in Italy, but also a steady increase in annual production in France, Portugal and Spain. However, much of this is traded within the EU, as raw stone, semi-finished or finished products - with 84% initially being consumed in Italy, Germany, Spain, Belgium, the UK and the Netherlands (see Figure 3.10). Much of this is then exported to other Member States or globally[48]. The Netherlands and Belgium, for example, are major traders in natural stone. Globally, the EU consumes 40% of all the natural stone produced, well ahead of any country elsewhere (e.g. China 11%, USA 7% and India 6%).

Consumption patterns appear relatively similar in different Member States, with approximately 36% being used in flooring and paving, 32% in special works, 12% in funerary art and the remainder in internal and external cladding and structural works (see Figure 3.11).

Figure 3.9. EU production of natural stone (1997-2001)

[pic]

Source: OSNET website.

Figure 3.10. Initial consumption of natural stone in the EU (2005)

[pic]

Data source: Euroroc.

Figure 3.11. Uses of natural stone in selected Member States

[pic]

Data source: Euroroc.

One of the strengths of the industry within the EU is the very large number of old historic buildings requiring renovation. According to Euroroc, estimates of the number of stone monuments, buildings and pavements being considered for restoration range from 12 to 18 times the present annual consumption of stone within the EU.

3.3. Industrial minerals

Many industrial minerals are extracted within the EU to supply a very wide range of industries. Industrial minerals are generally low-priced ex-works commodities. In contrast to base and precious metals (see below), industrial minerals are not marketed or sold as standardised products via centralised markets, such as the London Metal Exchange (LME), but are sold directly to the formulator or end-user. The price of industrial minerals is usually negotiated between the buyer and the seller. A number of factors influence the negotiated price[49], including the:

- source of the mineral;

- volume required;

- grade/end-use;

- quality of the mineral, dictated by the desired end-use (some minerals can comprise 50 or more grades suitable for different end-uses);

- additional processing requirements;

- freight/shipping costs;

- port handling fees;

- warehousing/storage;

- mineral inspection costs;

- insurance; and

- relationship between buyer and seller.

The relatively high cost of transport has a significant impact on the delivery price to the end-user. This situation effectively limits the geographic availability of suitable resources.

As indicated earlier, industrial minerals are selected because of their particular physical and/or chemical properties. Some are important as sources of specific chemical elements or compounds, others because of a combination of physical properties, such as particle size and shape, natural and fired brightness (whiteness), plasticity, viscosity in suspension and density or a combination of physical and chemical properties (see Table 3.2). Some minerals have many grades – more than 50 in some cases (e.g. limestone) – which serve different markets and command different prices[50].

Table 3.2. Summary of some of the key physical or chemical properties of a range of industrial minerals[51]

Industrial mineral | Physical properties |

Kaolin | Whiteness, fine particle size, rheology |

Ball clay | Plasticity, unfired strength, white firing |

Fuller’s earth | Plasticity, bonding strength |

Ground calcium carbonates | Whiteness, fine particle size, rheology |

Barytes | High density, relative inertness and non-abrasiveness |

Silica sand | Particle size and shape |

Gypsum | Whiteness |

Chemical properties |

Salt (NaCl) | Source of chlorine and soda |

Potash | Source of potassium |

Gypsum | Rehydration properties |

Limestone | Source of lime and carbon dioxide |

Dolomite | Source of magnesia |

Fluorspar | Source of fluorine |

Kaolin and ball clays | Low iron content |

Silica sand | Source of silica |

Fuller’s earth | Cation-exchange capacity, chemically active surfaces |

The EU is the world’s largest producer of a number of industrial minerals and the second or third largest producer of a number of others (see Table 3.3). It accounts for 39% of the world’s production of perlite, 36% of world production of feldspar and approximately a fifth of the world’s mine production of bentonite, kaolin, salt and talc. Another notable point is that for the limited range of industrial minerals considered in Table 3.3, the two other dominant producers are China and the USA.

Table 3.3. Top three producing regions for selected industrial minerals

First | Second | Third |

Bentonite | USA | 32% | EU | 19% | Turkey | 7% |

Feldspar | EU | 36% | China | 13% | Turkey | 12% |

Fluorspar | China | 52% | Mexico | 17% | EU | 8% |

Fuller’s earth | USA | 72% | EU | 12% | Senegal | 4% |

Gypsum[52] | EU | 24% | USA | 16% | Iran | 12% |

Kaolin | USA | 34% | EU | 23% | Brazil | 19% |

Magnesite | China | 47% | EU | 17% | Turkey | 15% |

Perlite | EU | 39% | China | 20% | USA | 15% |

Potash | Canada | 32% | EU | 16% | Russia | 16% |

Talc | China | 46% | EU | 20% | USA | 13% |

Salt | EU | 21% | USA | 20% | China | 16% |

Source: DG Enterprise and Industry calculations based on BGS data.

Table 3.4 provides a brief summary of production, uses and competitiveness issues associated with the main industrial minerals extracted within the EU.

Table 3.4. Summary of production of selected industrial minerals, their main downstream markets and factors identified as affecting demand

Mineral | EU mine production (and as % of global mine production) in 2003 | Main uses/ downstream industries supplied | Factors affecting demand |

Barytes | 350 300 tonnes (5.6%) | Oil industry (drilling mud), chemicals, tiles and glass bricks. As a filler in paints, plastics, rubber and inks. | Growing demand for drilling quality barytes. In Europe the chemical and filler industries account for almost half the barytes consumption. In the USA over 90% of consumption is by the oil industry. Leading world producers: China, India and the USA. |

Bentonite and Fuller’s earth | 3 380 400 tonnes (20%) | Used as a bonding material in preparation of moulding sands for production of iron, steel and non-ferrous castings; as a binding agent in production of iron-ore pellets; in civil engineering applications as a thixotropic, support and lubricant agent in, for example, diaphragm walls and foundations; as a sealing material in construction and rehabilitation of landfills; in the oils/food markets as a purifier; in agriculture, pharmaceuticals, cosmetics and medical markets; in detergents, paints, dyes and polishes; in cat litter; in paper manufacture and as a catalyst in a range of applications. | A fall in demand for iron-ore pelletisation in the early 1990s affected demand for bentonite. |

Feldspar | 5 456 900 tonnes (36.4%) | Ceramics, glass and also paints, plastics and rubber. | The performance of the ceramics and flat-glass industries are closely linked to construction activity and, therefore, general economic development. A very abundant mineral, therefore theoretical reserves are unlimited. Low value and abundance can make transport costs important. |

Fluorspar | 344 900 tonnes (7.8%) | Production of hydrofluoric acid which is used to produce other chemicals used in production of aluminium, steel pickling, enamelling, glass etching, etc. Glass and ceramics industries (as an opacifier) and metallurgy (fluxing agent for electric steel plants). | Uses have changed rapidly in response to technological developments. Changes in the smelting process for the iron and steel industry and aluminium production were predicted to reduce demand from these sectors. Chinese export quota identified as an issue. |

Kaolin | 5 080 200 tonnes (22.8%) | Manufacture of paper, ceramics, refractories, rubber, plastics, paint, cement and glass fibres. | Competition from other white minerals, particularly calcium carbonate and talc. Although widely distributed globally, only a small number of deposits are suitable for production of high-quality paper-coating grades (e.g. in the USA, UK, Brazil and Australia). |

Industrial limestone | 50 000 000+ tonnes | Production of lime – used in iron and steel production; cement, flue gas desulphurisation, drinking water treatment, chemicals industry, paper, food and healthcare. |

Magnesite | 3 755 600 tonnes (17.5%) | Manufacture of refractory products (e.g. bricks). Also chemicals, paper and pulp, flue gas treatment and pharmaceuticals. Industries using fused magnesia. | Increasing quality demands of consumers in refractory industries have led to longer kiln life and therefore limited consumption growth. Chinese imports are seen as a problem (anti-dumping duty on imports from China since 1990s and new regulation adopted in May 2006), along with imports from Australia. Extractive industry in direct competition with identical products derived from chemical processes using brine and seawater as a basic material. If land-based resources were to become depleted, most products could be manufactured from brine and seawater. |

Perlite | 1 251 100 tonnes (38.5%) | Formed construction products, plasters, mortars, agribusiness/ horticulture, industrial filtration (food, beverages, wine, beer, pharmaceuticals, etc.), cement and thermal insulation products. | Linked mainly to construction activity. Trend towards lighter/insulating products on the construction markets. Although perlite is mainly mined and initially processed in Greece, Hungary and Italy, expansion (secondary processing) takes place closer to the final markets (all European countries). Logistics play an important role. Europe is a major exporter of perlite to the east coast of the USA, being more competitive than mines located in the west of the USA. |

Potash | 4 690 000 tonnes (16.5%) | Agriculture (fertiliser production). Also glassware, ceramics, batteries, drilling muds, soaps and detergents, pharmaceuticals and chemicals. | Agricultural land policies (e.g. CAP) affect use of fertilisers. Climate and farming practices also affect use. World markets are predicted to change as lower use of fertilisers in the EU contrasts with increased use in developing countries. Use of potash fertilisers in EU-25 fell from about 7.5 million tonnes in 1979 to approximately 3.5 million tonnes in 2002[53]. Use has increased in developing countries due to the increasing demand for food for a steadily growing population. |

Talc | 1 285 400 tonnes (20%) | Paper, plastics and paints. Also agribusiness, pharmaceuticals, ceramics, pesticides and fillers in rubber and asphalt roofing products. | Use of talc in the paper industry is being replaced by precipitated carbonates and kaolin which are cheaper. Production of plastics is using increasing amounts of talc, particularly for automobile construction and household appliances. There is competition from mica and other substitutes. Large reserves within the EU (particularly in France) and globally (China, India, Japan, USA and Brazil). Imports into the EU are mainly from China and Australia. |

Salt | 46 122 200 tonnes (21%) | Chemical industry (chlor-alkakli and other sectors), winter maintenance (de-icing), water treatment (softening and disinfection), food and feed industry and many other uses. | Economic situation of the chemical industry, winter weather, overcapacity within the EU and high imports into the EU. The industry is under pressure from overcapacity, high imports (about 25%), especially from eastern Mediterranean countries but also from South America. High energy costs for production (mining and evaporation) and transportation of salt (about 30 million tonnes) and for the industry’s main customer - the chemical industry - with energy-intensive electrolysis. |

Sources: European Minerals Yearbook 1996-1997; EULA; K+S-Schätzung; the Industrial Minerals Association website (http://www.ima-eu.org/en/index.htm); EuSalt.

Production trends

Mine production trends between 1992 and 2004 for each of the 12 industrial minerals covered in Table 3.4 can be seen in Annex 1, which shows the following details for each mineral:

(i) annual mine production in each of the main producing countries within the EU;

(ii) annual mine production in the EU and in the main non-EU producing countries; and

(iii) the contribution that the EU made to global mine production in those years.

To provide a general indicator of recent changes in EU mine production and the contribution that the EU made to global production, data for 2003 were compared with 1993. The results are presented as the percentage change over that period for both indicators in Figure 3.12. Figures above zero indicate an increase in EU mine production (light bar) or an increase relative to changes in global production (dark bar) in 2003 compared with 1993. Figures below zero indicate relative decreases.

The results indicate that EU mine production of bentonite, feldspar, magnesite, perlite, talc and salt were all higher in 2003 than in 1993, while production of barytes, fluorspar, Fuller’s earth and potash fell. The trend in the EU contribution to world production over the period was upwards for some minerals (e.g. bentonite, feldspar, kaolin, perlite and talc) but significantly downwards for others, in particular for barytes, fluorspar, magnesite and potash.

The explanations for the observed trends differ for each mineral type, as indicated in the fourth column of Table 3.4. In some cases they are the result of a change in demand from downstream sectors. Demand for barytes, for example, is closely linked to the level of oil well drilling activity, while demand for potash, the main source of potassium in fertilisers, is affected by changing agricultural practices in the EU (a general reduction in use) and in developing countries (a general increase). Demand for potash produced in the EU was also significantly affected by the loss of former eastern bloc markets (e.g. Russia and Ukraine) for East German potash following the reunification of Germany. In other cases increased mine production in some developing countries has not only increased the global supply, putting pressure on EU exports, but also led to direct competition within the EU. Chinese magnesite is a good example of this.

Figure 3.12. Change in EU production (%) of selected industrial minerals between 1993 and 2003 and change in EU’s percentage share of global mine production

[pic]Data sources: BGS and Euromines (perlite). Calculations by DG Enterprise and Industry.

Overall the results suggest that over the last ten years or so EU production of most industrial minerals has remained relatively stable, while for some increases of over 20% have been recorded. However, it should be recognised that the overall picture at EU level masks variations at national and, particularly, company level. This is probably truer for industrial minerals than for the other two sub-sectors because of the wide variations in the grade of minerals found at different sites and, hence, their applications and markets.

3.4. Metallic minerals

The extractive industry mines metallic ores and usually undertakes the initial processing, such as milling, to reduce the bulk and concentrate the ore before it is transported to a smelter for further processing. There is much more global trade in metallic minerals than in industrial or construction minerals. For many, prices are set by central exchanges, such as the London Metal Exchange (LME).

Global demand for metallic minerals

Global mine production of many metallic minerals has increased significantly since the middle of the 20th century (see Figure 3.13). Metal markets have changed rapidly in recent years, as a result both of new producing countries entering the market and fast economic growth in developing countries such as China and India. Huge demand for metals in China has led to big increases in global metals prices, especially since 2003.

There are, however, notable differences between the trends for different minerals. Global mine production of mercury, for example, has fallen to only 36% of 1950 levels, while tin and lead production have increased by relatively modest amounts (140% and 177% respectively). By contrast, mine production of copper, zinc and iron ores has increased by around 400% to 500%, nickel by 900% and mine production of platinum group metals and bauxite by around 2 000% over the same period.

Figure 3.14 illustrates the changing dominance of different metal-mining regions in the world from the mid-19th century to the present and the forecasts (by the Raw Materials Group) to 2030, based on the location of new projects expected to start within the next 10 years. The graph is based on a calculation of the total value of all non-fuel minerals produced globally every 10th year. The growing importance of China, Australia, Canada and a number of developing countries (the six resource-rich countries are Chile, Peru, Brazil, the Congo, Zambia and South Africa) contrasts with the relative decline in production in Europe, Russia and the USA.

Figure 3.13. Relative change in global production of metallic minerals between 1950 and 2002 (1950=100)

[pic]Data source: DG Enterprise and Industry calculations based on USGS data.

Figure 3.14. Trends in global metal mining since 1850

[pic]Data source: W. Sames (to 1975) and Raw Materials Group (to 2000 and forecast to 2030).

Figure 3.15 provides an analysis of annual global production of industrial minerals and metallic ores (measured as metal content and including iron, ferro-alloys and non-ferrous metals), based on the level of economic development of the producing countries (drawn mainly from UNCTAD classifications[54]). The growing importance of the “less developed countries”, which include Chile, Peru and Brazil, can clearly be seen, while the “least developed countries” which comprise mainly African countries remain at a low level.

Figure 3.15. World mine production based on the development status of the producer country

[pic]Source: Weber, L. and Zsak, G. World Mining Data 2006.

Table 3.5 provides a ranking of the main producing countries of metals which are also extracted in the EU. Australia, China, Peru and South Africa are most frequently listed, although for particular metallic minerals other countries are important producers (e.g. Chile for copper, Brazil for iron ore and Russia for nickel).

Table 3.5. Top three producing regions for selected metallic minerals (2004)

First | Second | Third |

Bauxite | Australia | 40% | Guinea | 12% | Jamaica | 10% |

Cadmium | Japan | 22% | China | 20% | Mexico | 12% |

Chromium | South Africa | 53% | Kazakhstan | 18% | India | 8% |

Copper | Chile | 37% | USA | 8% | Peru | 7% |

Iron ore | Brazil | 23% | Australia | 20% | China | 14% |

Lead | China | 30% | Australia | 21% | USA | 14% |

Manganese | China | 24% | Gabon | 17% | South Africa | 13% |

Mercury | EU | 43% | Kyrgyzstan | 26% | China | 23% |

Nickel | Russia | 24% | Australia | 14% | Canada | 14% |

Silver | Mexico | 16% | Peru | 15% | Australia | 12% |

Tungsten | China | 87% | Russia | 6% | EU | 4% |

Zinc | China | 26% | Peru | 14% | Australia | 14% |

Data source: World Mining Data (2006).

Demand and production in the EU

The main initial markets for metal ores and concentrates in the EU are the refining and processing sectors which produce semi-finished and finished products for many sectors of manufacturing industry. The EU is the second largest producer of iron and steel products, after China, and also has large refining capacities for processing non-ferrous ores and concentrates and for recycling secondary metals. Demand from manufacturing industry and the construction sector in the EU has been strong and increasing in recent decades. In 2003 the EU metals industry, for example, employed over 1 million people and had a turnover of €227 billion[55].

The summary of the main metallic minerals extracted in the EU and their uses in Table 3.6 illustrates that many metallic minerals are extracted within the EU, although for most the amounts are relatively small compared with total global production. Graphs showing annual production of 12 of these metals (asterisked in Table 3.6) from 1992 to 2004 in different Member States and globally are presented in Annex 1.

Table 3.6. Mine production of selected metals in the EU, the EU’s contribution to global mine production and examples of the wide-ranging uses of metals

Metal | EU mine production | EU production as % of global | Uses |

(metal content) in 2003 (tonnes) | mine production (2003) |

Arsenic | 2 100 | 5.7% | Wood preservatives, fertilisers, fireworks, herbicides and insecticides. Alloy in ammunition and solders. Semi-conductors for telecommunications, solar cells and space research. |

Bauxite* | 3 251 900 | 2.1% | Production of aluminium. Important in the automobile industry and also in the building sector, aircraft manufacture, pharmaceutical and hospital equipment, food packaging, high-voltage cables and wires. |

Cadmium* | 1 674 | 9.6% | Batteries, pigments, coating and plating, plastic stabilisers and non-ferrous alloys. |

Chromium* | 549 040 | 3.4% | Chemicals, metals and refractory materials. Used in iron, non-ferrous alloys and steel to enhance hardness and resistance to corrosion. Also steel alloys, catalysts, leather processing, pigments and plating of metals. |

Copper* | 682 311 | 5.0% | Production of electrical cables and wires, plumbing, heat-exchangers in fridges, in roofing and building construction, chemicals, pharmaceuticals and electrical machinery, in alloys, alloy castings and electroplated protective coatings. |

Gold | 15 | 0.6% | Jewellery, bullion and industrial applications, including high-quality electrical circuitry. |

Iron ore* | 24 340 028 | 2.0% | Steel production. |

Lead* | 163 127 | 5.4% | Lead-acid batteries, sheathing cables and roofing, pigments, glass, ammunition and ceramics. |

Lithium | 418 | 3.0% | Ceramics, glass, aluminium production, lubricants and greases, rechargeable batteries and synthetic rubber. |

Manganese* | 48 763 | 0.2% | Steel production, dry batteries, additives in paints, brick colouring, fertilisers and pet food. |

Mercury* | 770 | 38.5% | Electrical and electronics uses, production of chlorine and caustic soda and batteries. |

Nickel* | 22 800 | 1.7% | Production of stainless steel, non-ferrous alloys, steel alloys, foundry products, plating, rechargeable batteries and catalysts. |

Selenium | 430 | 25.2% | Glass manufacture, chemicals and pigments, electronics, agriculture and metallurgy. |

Silver* | 1 750 | 9.3% | Precious metal and photography. |

Strontium | 152 383 | 28.3% | Television tubes, magnets and fireworks. |

Tin | 203 | 0.1% | Tinplate for food and beverage containers, alloys and solders. |

Tungsten* | 2 096 | 4.6% | Electrical applications, super alloys, cutting tools for metal working, drilling for oil and gas, mining and construction. |

Zinc* | 816 099 | 8.5% | Production of galvanising and die-casting alloys. Constituent of brass and bronze. Used to protect steel and as sheets for roofing and rainwater systems. Electric fuel zinc-air battery. |

Statistical data source: BGS. Summary of uses taken from various sources.

Analysis of changes in mine production of these 12 metals in the EU and globally between 1993 and 2003 indicates that production of chromium, copper, nickel, silver and tungsten was higher in 2003 than in 1993. Production of bauxite, cadmium, iron, lead, manganese and mercury all fell (see Figure 3.16). Gold production within the EU is expected to increase as a number of gold mines will start operations within the next few years. Greece, for example, has identified proven reserves of about 10 million ounces[56].

However, despite increases in EU production of some metals, the rate has been lower than the global rate of increase, with the result that for all but two metals (mercury and tungsten) production in the EU has decreased relative to global production (and EU production of mercury virtually ceased after 2003).

Figure 3.16. Change in EU production (%) of selected metallic minerals between 1993 and 2003 and change in the EU’s percentage share of global mine production

[pic]Data source: BGS. Calculations by DG Enterprise and Industry.

Metals not mined in the EU

A number of other metals required by European downstream industries are not mined within the EU. These include antimony, beryllium, boron, cobalt, molybdenum, niobium, platinum and palladium ores, rare earths, rhenium ore, tantalum, ilmenite, rutile and vanadium. Table 3.7 illustrates the important uses of many of these metals (particularly for “high-tech” applications) and the global distribution of reserves[57]. Most of them have not been found in the EU in quantities economically viable for extraction. The same table also illustrates that the known distribution of some metallic minerals, such as platinum group metals, niobium and vanadium, is highly concentrated in a very limited number of countries. South Africa, for example, is thought to possess almost 90% of the world’s reserves of platinum group metals (used as catalysts), Brazil has over three quarters of the world’s niobium (used in special steels and super alloys), while Russia, South Africa and China combined share almost all of the world’s reserves of vanadium (used in alloys and as a catalyst). China already controls 90% of world tungsten production.

Table 3.7. Metals which are not mined in the EU, indicating the countries with significant known reserves, and summary of their uses

Mineral | Uses and production | Share of global reserves |

Antimony | Alloyed with lead to increase hardness and strength, used in semi-conductors and flame retardants. China accounted for 86% of mine production (2002), although antimony can be produced as a by-product of lead refining. Imported into the EU as ore, metal or oxide. | China (43%), Russia (17%), Bolivia (15%), South Africa (12%), Kyrgyzstan (6%) |

Beryllium | A lightweight, high-strength metal with high thermal conductivity. Used in electronic components, electrical equipment and aerospace and defence applications. Portugal is thought to possess approximately 0.2% of global reserves. | Brazil (32%), India (15%), China (11%), Russia (11%), Argentina (6%), USA (4%) |

Bismuth | Used in pharmaceuticals and as a metal in fusible (low-melting) alloys. Mexico and China accounted for 59% of world production in 2002. Can be produced as a by-product of lead and zinc refining. Bulgaria and Romania both mine bismuth. | China (18%), Australia (16%), Peru (10%), Bolivia (9%), Mexico (9%), USA (8%), Japan (8%) |

Boron (Boric oxide) | Glass manufacture (particularly fibreglass) and ceramics. Turkey is the world’s largest producer. | Russia (24%), USA (24%), Turkey (18%), China (16%), Kazakhstan (8%), Chile (5%) |

Cobalt | Used in steel alloys, super alloys, magnet alloys, batteries, catalysts and as the cement for carbides in tools. Also used in pigments and paint-dryers. Mine production is dominated by just five countries (Zambia, Democratic Republic of Congo, Canada, Russia and Brazil). Belgium and Finland produce significant quantities of cobalt metal from imported ores, while the UK, Finland and France produce significant quantities of cobalt compounds. Often mined as a by-product of other metals (copper, nickel, platinum, silver or zinc). Finland has 0.5% of global reserves. | Congo (44%), Cuba (22%), Australia (15%), Zambia (8%), New Caledonia (5%) |

Molybdenum | Used in high-tensile steel to impart hardness, tolerance to high temperatures and resistance to corrosion. It is usually produced as a by-product of copper mining. Production in 2002 was confined to 13 countries, of which the USA, Chile and China accounted for 75% of global production. | USA (49%), Chile (20%), China (9%), Canada (8%), Russia (4%) |

Niobium | A soft ductile metal used mainly in special steels and super alloys. Brazil produces approximately 85% of the global total. | Brazil (77%), Russia and other CIS countries (16%) |

Platinum group | Used as catalysts (e.g. catalytic converters in cars), in electronics and jewellery. The largest producers in 2002 were South Africa (61%, mainly platinum) and Russia (27%, mainly palladium). Finland is thought to possess approximately 0.1% of global reserves. | South Africa (89%), Russia (9%) |

Rare earth elements | A group of 15 metallic elements, of which cerium, lanthanum and neodymium are the most commonly used. Used in automobile catalysts, as metallurgical additives and in glass and ceramics. China produces more than 90% of the global total. Finland and Sweden combined are thought to have relatively small amounts (<0.01% of global reserves). | China (42%), Russia and the former Soviet Union (18%), USA (17%), Australia (5%) |

Rhenium | The main uses are in high-temperature super alloys and petroleum refining. | Chile (52%), USA (15%), Russia (12%), Kazakhstan (8%) |

Tantalum | A heavy, very hard, ductile metallic element with a very high melting point (2 996oC) and strong resistance to chemical attack. Used in electronic applications, especially miniature capacitors. Global production dominated by Australia (60%). | Australia (41%), Nigeria (18%), Canada (17%), Congo (11%), Brazil (5%) |

Tellurium | Mainly recovered from the anode slimes obtained from the electrolytic refining of copper. Used in iron and steel products