How Minor Metals Could Cause Major Electrification Bottlenecks – CleanTechnica

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In the discourse around global electrification, much of the attention is mistakenly drawn to the purported shortages of primary metals such as lithium and cobalt. As I’ve argued extensively elsewhere, including in critiques of the flawed models by Michaux and Cathles, these scenarios vastly overstate scarcity due to extreme and inaccurate assumptions and disregard of market-driven adjustments and innovation. Primary metals, by their nature, have clearly defined markets, identifiable reserves, straightforward economic incentives, high substitutability and easy recycling pathways.

What presents a more interesting and nuanced challenge are the metals produced not directly for themselves, but as incidental by-products in the extraction of primary metals. These by-product metals, such as indium, gallium, germanium, tellurium, selenium, and certain rare earth elements, present fundamentally different supply-chain dynamics, market structures, and economic challenges. Understanding this difference is essential for stakeholders navigating the electrification transition, particularly in the face of recent geopolitical shifts.

The defining characteristic of by-product metals is that their supply is inherently bound to the mining and refining of major metals like copper, zinc, nickel, and aluminum. Unlike lithium or cobalt, whose production scales relatively independently according to demand signals, by-product metals cannot be ramped up easily because they rely entirely upon the scale and economics of the host metal’s extraction.

A surge in demand for indium, essential for various electronics, does not directly lead to more indium mining. Rather, it relies on increased zinc production, since indium is primarily extracted from zinc refinery residues. Tellurium, an essential element for certain specialized technologies, depends almost exclusively on copper refining slimes. The availability of these by-product metals fluctuates unpredictably in tandem with unrelated market forces shaping primary metal markets. The electrification sector must deal with supply uncertainty not dictated by their own demand but by entirely external economic cycles.

This structural reality creates a challenging economic dynamic. Because these metals are incidental outputs, their extraction is economically marginal. A zinc refiner does not produce indium as its core business; it does so only when the cost of recovery is justified by indium’s price in the market. If indium prices dip even slightly, it becomes economically rational for zinc refiners to leave indium in waste streams rather than recovering it, creating intermittent shortages and price volatility. This economic uncertainty complicates strategic planning for industries relying on these materials and frequently deters investment in the extraction infrastructure necessary for steady supply. The financial calculus is entirely different from primary metals, where predictable demand generally justifies sustained investment.

The geographic concentration of production adds another critical dimension. Many by-product metals’ global supplies are dominated by a small number of countries or even specific industrial facilities. China is most notable in this regard, of course. Over the past two decades, China has systematically positioned itself as the dominant global processor of metals like gallium and germanium, which are critical inputs for semiconductors and advanced electronics.

China’s recent strategic move — instituting licensing and export control requirements for critical minerals — highlights how precarious this concentration can be. As I’ve emphasized in a recent presentation to global investors through Jefferies, China’s tightening control of these by-product metals fundamentally alters strategic risk assessments for technology companies and renewable energy developers worldwide. Unlike lithium or cobalt, where production can diversify geographically more readily, by-product metals face substantial hurdles to diversification because their recovery depends on complex and specialized refining infrastructures already entrenched in places like China.

Further complicating this scenario is the global trend toward increased recycling of primary metals. As recycling rates for metals like copper and aluminum rise, less virgin ore needs to be extracted, directly reducing the production of associated by-product metals. While recycling is unequivocally beneficial for the environment and the sustainability of primary metals, it paradoxically reduces the flow of critical by-products.

The refining of recycled copper, for instance, does not yield tellurium, as this element is recovered only from primary copper ore refining processes. Ironically, more recycling in primary metal markets may exacerbate scarcity in the by-product metals supply, reinforcing their fundamentally different economic and environmental dynamic.

Environmental considerations compound the challenges further. Extracting these by-product metals frequently involves complex chemical processes that can produce environmentally harmful waste streams if not managed correctly. Because these metals are typically present in tiny concentrations, the extraction methods require intensive chemical inputs and sophisticated recovery systems, often leading to high environmental and regulatory compliance costs. These factors may disincentivize recovery unless strong market prices or policy incentives are in place, further limiting supply.

A viable and increasingly critical strategy to navigate these challenges is robust recycling and advanced circular economy practices specifically targeted toward by-product metals. Unlike the recycling of primary metals, recycling by-products remains technically challenging due to their diffuse usage and low concentrations in products. A significant investment in specialized recycling infrastructure and product design is necessary to recover these metals efficiently. Yet, this approach provides a crucial mitigation strategy for addressing inherent supply constraints. Encouragingly, some industrial players are already moving in this direction, developing closed-loop supply chains for materials like rare earth elements used in electric vehicle motors.

Extracting by-product metals from previously uneconomic slag generated during mining, refining, and metallurgical processing represents an increasingly promising avenue to address supply constraints inherent in these materials. Historically, vast amounts of slag and refinery residues containing trace but valuable elements such as germanium, indium, and rare earth elements were discarded because recovering them was not economically viable under prevailing market conditions.

With today’s higher market prices, growing strategic value, and technological advances in metallurgy and hydrometallurgy, these legacy waste streams have become potentially significant secondary sources. Innovations in extraction methods, including solvent extraction, bioleaching, and advanced chemical treatments, have improved recovery efficiencies sufficiently to make slag reprocessing economically feasible. While I’ve personally been skeptical about slag reprocessing for trace elements, that was in the context of firms not doing it as a primary business, but as a supplement to bad business ideas such as oceanic alkalization to make them pencil out. It’s either worth doing economically for its own merits, or it’s not.

The policy implications here are significant and distinct from the previously addressed concerns around lithium and cobalt. Governments seeking to ensure stable supplies of by-product metals must consider interventions such as strategic stockpiling, long-term procurement contracts, and international cooperation frameworks explicitly addressing the unique dynamics of these metals. The European Union’s Critical Raw Materials Act provides an early example of policy explicitly recognizing the distinct characteristics of these by-products, advocating for supply diversification, enhanced recycling infrastructure, and strategic stockpiling of specific critical metals. Similarly, in North America, policy moves like Canada’s Critical Minerals Strategy and the United States’ under siege Inflation Reduction Act implicitly recognize these metals’ strategic importance, though greater emphasis specifically on their unique dynamics is still necessary.

The global electrification narrative must shift its attention from overstated anxieties about primary metal shortages, debunked extensively in analyses I and others have published previously, toward the genuinely intricate and structurally challenging dynamics of by-product metals. These metals represent a nuanced but critical facet of the global minerals landscape, heavily influenced by the external market cycles of unrelated commodities, concentrated refining locations, environmentally challenging extraction processes, and paradoxical outcomes of enhanced recycling practices. Policymakers, investors, and industry leaders would benefit from focusing attention here, as the inherent complexities of these by-product metals truly represent an intriguing and critical minerals concern worthy of thoughtful strategic engagement.