Byproducts II: Another Germanium Rush?

DETROIT () -- There is no, nor has there ever been, a primary germanium mine in the world. All of the world's annual new production of germanium, estimated by the U.S. Geological Survey (USGS) to be 100 metric tonnes in 2006, comes from the fact that the smelting and refining of some few primary metal ore deposits, in particular, those of zinc, can be set up so as to also recover germanium from the residue left after the zinc has been removed. There is no commercially abundant ore from which germanium can be extracted primarily.

Up until 1946 this didn't matter, since there no commercial uses for germanium. In fact, there were people alive and working in 1946 that had been born before germanium was discovered (in 1886). Germanium's discovery was not made because minerals were being surveyed for new properties that might have commercial value - the reason that such surveys of metallic compounds are done today.

In fact a German chemist was looking for evidence to support the theory of the Russian schoolteacher, Dimitri Mendeleyev, that the properties of the chemical elements were "periodic" functions of their atomic weights. This theory held that the chemical elements were organized into families that were related by very similar chemical properties and physical properties that changed in a regular way; for example, the densities of the elements in a given "family" increased along with the atomic weights in a regular way, it was believed. This theory, though wrong, had enough about it that was right to induce the German chemist, Winkler, to look for an element like silicon but heavier. The unknown element was called eka-silicon among the chemists who subscribed to Mendeleyev theory and were looking for it.

In 1886 Winkler narrowed his search to a locally (Germany) obtained silver bearing mineral. He found that after removing the silver there was a residue from which he could separate a material that had the properties that the Mendeleyev theory predicted for eka-silicon. He was able to reproduce his work with other minerals and his work was confirmed also by the accepted scientific method, then as now, that other workers could reproduce his work and get the same results. Since he was the first to publish the "discovery" of eka-silicon he was, by a tradition that is still followed, given the right to name the new "element." He called it "germanium" after his native country.

Germanium was rare and had no commercial uses, so for the next half century anyone who wanted some - usually for academic research - would have to track down refineries, such as those that might have produced silver from the mineral, in order to get germanium (salts) from the tailings by refining them (the tailings) themselves. Such research eventually found that zinc-lead ores more commonly contained some germanium than silver ores and with the vast expansion of zinc production in the early twentieth century to produce brass, batteries and corrosion resistant steels and coatings, it became a little easier to find some tailings or residues from which germanium could be recovered.

During World War II it was discovered that ultra pure silicon, a difficult and expensive material to produce in quantity because it took extreme high temperature and vacuum conditions held at tight tolerances for long periods of time to make, had the property that it could be treated to produce a form that could transform high frequency radio signals to make them more easily detectable and readable. Solid state "silicon" devices became critical for the manufacturing of sensitive radars, so no expense was spared to develop the chemical engineering techniques to make the underlying ultrahigh purity silicon crystals. This research had unintended, though not unforeseeable consequences.

It became possible through the silicon research to also ultra purify eka-silicon, germanium, as the same techniques of purification and of growing single crystals of silicon, could logically be applied. Germanium was easier to work with because it could be purified and crystallized at lower temperatures the uniformity of which during processing was much easier to maintain. Germanium, however, was not easy to find, and so, during the war, it was mostly of academic interest.

After the war a group of scientists, physicists and engineers, at the privately funded Bell Telephone Laboratories got their hands on some single crystal germanium and decided to try some ideas that had grown out of wartime research. They found that they could make a solid state device based on germanium, which would switch electric currents like a vacuum tube, so it could be used to make devices operating at radio frequencies with much less generation of (wasted and disruptive of stable operation) heat and without the inherent fragility of evacuated glass tubes with delicate internal structures. They called this "device" the transistor, and a second industrial revolution was kicked into high gear. The three men were within a few years of their discovery jointly awarded the Nobel Prize for Physics.

The first germanium rush kicked off almost as soon as news of the transistor broke. AT&T, parent of Bell Telephone Laboratories, was in a panic. AT&T was probably then the largest user of vacuum tubers and mechanical relays (i.e., mechanical electric current switches) in the world. The company had backed the transistor research with the goal of producing smaller, faster, more reliable telephone switching equipment, so, not for the first time, and certainly not for the last, it turned to chemical engineers and mining engineers with a plea to get us germanium.

Simultaneously to the sudden demand for germanium in the U.S. the Soviet Union decided that it was a matter of state security that they not allow a transistor-gap to be created, but they didn't have any germanium production. The Soviet Union found that one of their eastern European "allies," then known as Czechoslovakia had at its leading university, Charles University in Prague, a chemistry department that was aware of the fact that fly ash produced in Czechoslovakia from burning local, high lignite, coal could be processed to recover germanium, which although present only in very low concentrations, was nonetheless present in high enough concentration for its recovery to be feasible. This recovery was successful and combined with information openly available then on ultra purification and with the fact that the process for growing single crystals of high melting point materials, even ones with high vapor pressure, like germanium had been developed in Czechoslovakia by Czolcraski they were soon providing Soviet block researchers with high purity germanium for military electronics use.

Bell Telephone in conjunction with the U.S. Department of Defense had at the same time recognized that zinc and lead-zinc-copper sulphide ores found in the U.S. contained germanium as a recoverable byproduct.

By 1950 a germanium mini-rush was on, but only a very few companies mined the primary materials, zinc and lead, in which germanium was found as a byproduct, and only the largest chemical producers could undertake to process the enormous quantities of coal fly ash necessary to recover the germanium contained in them. So the first germanium rush was a contest between subsidies from the U.S. Department of Defense for American mining and chemical companies and subsidies from the Soviet Union's equivalent government department for Soviet Block mining and chemical companies. Contracts for military production were always at cost plus, so no producer cared what the costs were. Also, such projects were top secret so small investors could not become aware of this first rush anyway.

As the solid state electronics revolution took hold and, literally, thousands of materials were prepared and tested for electronic properties the critical need for germanium fell until it was in surplus at a high, but acceptable, market price. It then entered into use for civilian electronic items that were becoming cheaper and cheaper. Finally with the invention of the integrated circuit, or "chip," as it has become known, the actual amount of any material used to make a chip for an electronic circuit became tiny, and the processing costs for producing devices became the dominant cost.

The 50 years after the invention of the transistor and the first rush to find sources of germanium ended with a number of well defined uses for germanium primarily in the chemical and glass industry with less than a third still in use by the electronics industry. The use of germanium was stable and supply and demand were in balance as recently as 2003.

Last week, I wrote about , another byproduct. The reason I chose germanium as the topic for my second article on byproducts is that germanium, tellurium and antimony constitute the materials of construction of the amorphous-crystalline-amorphous phase-change memory, which will be introduced as a commercial device this fall of 2007, after 40 years in development by Intel [Nasdaq:INTC] and Samsung as a faster and cheaper non-volatile (it retains its memory with the power off thus eliminating power drain on the battery and the possibility of losing the memory configuration in the event of a power failure) computer memory.

This "new" use of germanium may ramp up the need for germanium dramatically. If so then I predict a second germanium rush, but this time there will be no government subsidies from the U.S. government, at any rate.

In the U.S. there are exactly today two still open zinc mines producing concentrates from which germanium can be recovered, Teck Cominco's [NYSE:TCK] Red Dog zinc-lead open pit mine in Alaska and Teck Cominco's Pend Oreille zinc lead (underground) mine in Washington State. The recovery of germanium from the concentrates of both mines is done in Canada, also by Teck Cominco, at its Trail, British Columbia, Canada.

The U.S. used 40 tonnes of germanium for all purposes in 2006, but produced less than 5 tonnes of new material from domestic mining. Germanium end use chemicals are produced from feed stocks of fly ash, germanium concentrates (such as those produced by Teck at Trail), scrap and imported lower grade germanium compounds in the U.S. at two metallurgical processing sites, Quapaw, Oklahoma, operated by Umicore Materials [Euronext:UMI] and Utica, New York, operated by Germanium Corporation of America (a subsidiary of Indium Corporation of America). A previous producer of germanium rich concentrates in Tennessee was closed for environmental reasons, pertaining to lead and zinc, not germanium, in 2003, but it has since been acquired by Glencore and should be reopening.

Investing in byproducts requires thinking out of the box. If zinc demand and production goes down, germanium byproduct production will drop, if that happens, but at the same time the new use of germanium in phase-change memories takes off then germanium prices will increase. In either case there is no easy way to ramp up germanium production. In fact there is no way to do it without also increasing zinc-lead production. New coal fired electric power plants mean additional coal ash, which in many cases may be suitable for processing for metals such as germanium, but this, of course, will be true only if the feed coal is high in germanium to start with.

However even if such plants, fed by the right kind of coal, are built in the U.S. is there enough fly ash processing capacity in Oklahoma, or anywhere else? Next time, by the way, you wonder why a company like Intel is building its next big "chip" plant in China you might ask yourself how much of the reason for that is to insure access to critical-no build without-supplies of indium, tellurium, antimony and germanium. It is rarely noticed by environmental activists that each time they shut down a copper or zinc-lead producer they are also eliminating a substantial part of America's source of critical materials for electronic device production, the byproducts of those mines.

Keep in mind also that a bored hedge fund manager could one day write a check from petty cash for $100 million and buy up all of next year's production of germanium in an attempt to hold hostage the global fibre optics, PET plastics, infrared sensor, high speed electronics and phase-change memory industries. In that case, or in case of the perception that it is occurring, the price of new germanium as well as germanium rich scrap might go through the roof.

About the Author
Jack Lifton

Jack Lifton is a leading authority on the sourcing and end use trends of rare and strategic metals. He is a founding principal of Technology Metals Research LLC and president of Jack Lifton LLC, consulting for institutional investors doing due diligence on metal- and material-related opportunities.

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