Pictures of the Future        Fall 2008

The Mother of Invention

Copper, indium, germanium—our world would not function without these raw materials and others like them. Yet their prices are increasing dramatically and reserves appear to be declining. A team at Siemens is analyzing what shortages would mean for the company, and suggesting some alternatives.

Computer chips are literally like sand on the beach. Silicon—which is basically just sand—is the raw material used for the inner workings of computers, MP3 players, and countless other examples of our digital world, What’s more, silicon is inexhaustible.

But other things aren’t. In fact, the world electronics industry is currently threatened by an acute shortage of raw materials. That’s because every microchip contains a tiny amount of rare materials such as germanium or tantalum, as well as silicon.

In the face of exploding oil prices, public attention has not exactly focused overwhelming attention on these materials. However, such an attitude is not without risk. Raw materials such as metals and minerals account for 40 % of industrial production costs in Germany. According to a 2006 report on the status of raw materials from Germany’s Federal Institute for Geosciences and Natural Materials (BGR), the nation’s metal, iron, and steel imports amounted to €16.3 billion in 2004 and €30.9 billion by 2006. These figures illustrate how dependent modern economies are on these resources—and how fragile this dependency is. Furthermore, as demand for raw materials continues to expand, even resource-rich countries such as China and the U.S. are being added to a lengthening list of importers.

A Question of Price, not Scarcity. In the last four years the prices in U.S. dollars of many metals and minerals have increased dramatically; for copper the increase has been threefold. This news has shaken the political world, as increasing prices could be a sign of declining resources. Germany’s Federal Ministry for Economics and Technology (BMWi) has therefore commissioned the Rhenish-Westphalian Institute for Economic Research, the Fraunhofer Institute for Systems and Innovation Research, and the Federal Institute for Geosciences and Natural Materials (BGR) to investigate how short the supply of the most vital metals and industrial minerals really is.

The good news is that there are sufficient reserves of almost all raw materials. "If a raw material is scarce, this is not a reflection of its geological availability," says Dr. Gerhard Angerer of the Fraunhofer Institute for Systems and Innovation Research in Karlsruhe, Germany. When it comes to a supply shortfall and rising prices, market shortage is always to blame—that is to say, an imbalance between the current supply and demand. Chromium is the best example of this. Although there are enough sources of chromium in the earth’s crust to last 600 years, the price of chromium has more than tripled since 2003.

"If a resource is finite, that doesn’t mean it’s exhausted; it just means that its price may be too high, and that using the material may eventually become uneconomical," says Dr. Friedrich Lupp of Siemens Corporate Technology in Munich.

So is it time to give the all-clear signal? Not quite. A few raw materials really are in short supply. Last year, for instance, New Scientist published the shocking prognosis that geological reserves of indium would last for only five more years. According to Germany’s BGR, however, this forecast only took known resources into account. Many deposits may not yet have been found. New Scientist’s conclusion is also based on the fact that indium is not mined separately; in fact, it is always extracted as a by-product of smelting zinc. Nonetheless, large industrial enterprises such as Siemens must seriously consider the implications of potential shortages. "Those who want to sustain their long-term position in the market must look to the future and thoroughly come to terms with change," says Stephan Gierszewski of CSP Manufacturing Development. Gierszewski coordinates the "Innovation in Manufacturing" initiative that was launched to raise awareness of this issue at Siemens. A key part of the Initiative is its "sustainable Material, Energy & Technology" (sMET) program, which is charged with setting up a global network of experts to deal with these three areas. The program’s objective is to distribute best practice solutions throughout Siemens to serve as trend-setting standards. "We are searching for both internal and external solutions and are initiating further developments," says Roland Kolbeck, spokesman of the sMET team.

Indium in LEDs. Indium may be rare, but that doesn’t mean it’s scarce at Siemens. Small amounts of the metal are used for X-ray tubes. "But this indium is completely recycled when the emitter expires, which means that our purchases are limited to new business," says Dr. Ludwig Herbst of the sMET team. Siemens’ sister company Osram would be directly affected by an indium shortage. The company uses the metal to produce indium tin oxide (ITO) for transparent electrodes, which are used in organic LED products, for example. According to Friedrich Lupp, Siemens CT is working on technologies using multi-layer systems that will dramatically decrease indium usage. The first prototypes of this kind of system have already been tested successfully. The sMET team believes that there is no need to act on the shortage of germanium, as Siemens doesn’t make products requiring this material.

The sMET team is primarily concerned with materials used in large quantities throughout  Siemens. The team has therefore investigated how much copper is used in each product family and how it can be replaced. The answer is simple. In many applications copper can be replaced with aluminum. In 2003 both metals were the same price; but today copper costs three times as much on the global market.

Despite this tempting price advantage, the transition to aluminum is difficult. Aluminum cannot be soldered without an aggressive flux because it immediately forms an oxide film on the surface when exposed to air. To deal with this problem, Siemens has developed a process that uses ultrasound to remove this film during soldering. A transition would be simplest in the case of busbar trunking systems—if the customers would accept it. "But many Asian markets simply don’t want any aluminum in their busbar systems," says Jochen Reitmeyer. "There is no logical reason for this stance, however."

In any case, substitute materials are not always the answer. For example, for health reasons, lead, which is comparatively inexpensive, is replaced with silver and tin, which are more expensive, scarcer raw materials. Each year demand for tin increases by 10 %. And for the past decade significantly more silver has been used each year than is mined. In 2007 alone, the figure was 800 t. This has been balanced by the sale of government silver reserves. "One problem has been solved and another has been created," points out Lupp. The sMET team at Siemens is therefore pushing for the use of a laser welding system that doesn’t require solder.

Recycling is the Answer. According to the Fraunhofer Institute’s Angerer, the relative optimism of the BMWi study is due mainly to the fact that the three participating institutes took technological progress into account. These considerations fell by the wayside in earlier evaluations, like those in the famous 1972 Club of Rome report The Limits to Growth. As the current study shows, increasing efficiency through the use of technologies that cut back on raw material use is, however, an important factor. Taking into account all raw materials, both metallic ones and those used in energy generation, German industry could save €120 billion per year if all potential efficiency improvements were exploited. That would amount to 20 % of resource costs.

The black market for nearly all metals is flourishing. Home owners, construction companies, and local authorities are complaining about the disappearance of copper gutters and even iron manhole covers.

The authors of the study are proposing that Germany, a country relatively poor in raw material resources, rely on lightweight construction, miniaturization, new production processes and, of course, recycling. This course of action is already bearing fruit. 56 % of the copper used in Germany is already extracted from copper scrap. Globally, the figure is only 13 %.
                                                                                                                       Bernd Müller