Long-term Aggregates Supply: Part 2

Myths, perceptions, hazards, risks and solutions

By N.C. Jackson, Jackson Consulting

In this second instalment of his two-part article looking at the role aggregates play in the economy, how aggregates are treated politically and the outlook for demand and supply, Nigel Jackson examines the various options available to ensure that supply continues to meet demand and considers how the management of future aggregates provision may need to evolve and improve in order to ensure a steady and adequate supply for the long term.

Having already identified the potential scale of the task that lies ahead in part one of this article (see April edition of QM), this second installment examines the options available to ensure that supply meets demand and considers what contribution they might make.

Scenario building

The Managed Aggregate Supply System (MASS) provides good historical data, while the current forecasting process provides regularly reviewed and, in recent years, more reliable estimates of future demand. Curiously, however, unlike the energy industry, there is currently no existing process or work that has tried to link these two processes together.

Figure 10 attempts to do this by comparing past sales of land-won aggregates (from the AM data) and the current draft forecasts. Although somewhat approximate at the interface of the data sets, the approach provides the first scenario linking 15 years of history of supplied capacity to 15 years of future supply capacity required.

The data show the continuing decline in the total primary aggregate capacity to supply and the shortfall in future capacity that needs to be filled by increased supply from existing capacity, new sites or non-primary and imported sources.

Without additional replenishment or replacement, shortfalls in annual capacity to supply ranging from 10 million tonnes per annum around 2010, steadily growing up to around 60 million tonnes per annum, could emerge.

The graph helps to put in context the scale of what is really required from any MASS system looking forward and helps to test the scope of the various elements of supply to contribute, ie recycling, secondaries, marine and imports from Wales and elsewhere.

Recycling

Alternatives should be considered first, as the industry has, for many years, accepted that these are the foremost components of supply.

It appears to be broadly accepted, even by WRAP, Defra and CLG, that we are close to maximizing the contribution that recycled construction and demolition waste can make to supply. The issue is now more about the availability of sufficient waste and obtaining planning permissions for new sites in key markets, rather than the philosophy.

What we see now is probably not far short of what we will have to assume going forward. We are at around the 90% level of what is achievable.

The possibility that capacity could actually fall over time as construction site waste is reduced and construction methods change should not be ruled out.

However, looking at WRAP and other CLG research, it is not unreasonable to see the existing capacity of around 47 million tonnes per annum increasing to around 52 million tonnes per annum by 2013, and possibly to around 54 million tonnes per annum by 2018, although this is by no means guaranteed.

Secondaries

Whether secondary aggregates of slate, china clay, slag and mine waste can make much more of a contribution quickly is uncertain, and at what longer-term growth rate and to what extent remains debatable.

As the coal mining industry in England continues to diminish, mine waste’s prospects lessen, and with many slate tips in north Wales now regarded as industrial heritage or uneconomic, some questions may need to be asked about the sustainability of these elements to supply for the long term.

But the industry has got the message and these materials should continue to make a steadily growing contribution over time, albeit limited by poor infrastructure and logistics constraints.

It is possible to contemplate current capacity in England of around 8 million tonnes per annum growing to around 11 million tonnes per annum by 2013, and to around 12 million tonnes per annum by 2018.

In spite of the uncertainties, the Mineral Products Association believes that an annual contribution of 60 million tonnes per annum for all alternatives within the next five years is achievable, but not much more than that. The Association’s data also indicate that Great Britain already recycles, by quite a large tonnage, more than any other European country.

No matter how much hope there is for dramatic growth in the capacity of the alternatives to supply, it will not be possible to recycle away the need for new quarries and primary aggregates. They will continue to provide the vast majority of supply for the short, medium and long term.

In order to build sustainable communities, a sustainable aggregates industry with sustainable primary aggregate supply capacity will be needed.

Marine

Marine has a genuine capacity to increase its contribution provided the current licensing system can be made more effective and responsive and potential wharves are safeguarded in key markets.

Certainty is crucial to investment in replacement and new shipping capacity but this is not a feature of the existing licensing and planning system at the present time.

Marine will remain an essential element of supply but lead times are great and the investments required are large and assume that a long-term operating life is reasonably assured. This is against a backdrop of an ageing fleet where key investment decisions will need to be made in the short and medium term.

The industry can deliver more, but to do so it needs more clarity and speed of process to give more certainty. The current development of the Marine Bill could bring more order to the current licensing regime and if so this will be welcomed.

In England, it is feasible to increase the marine contribution from around 13 million tonnes per annum, currently, to 16 million tonnes per annum by 2013, and up to 18 million tonnes per annum by 2018.

Imports

There are those who would argue that there is no need to worry as our supplies can be imported. Maybe; maybe not.

Since devolution, the Welsh Assembly government has recast its aggregates policies, which now lean very firmly towards providing a more sustainable supply to Wales and do not particularly seek to offset declines in England. Consequently, it is difficult to foresee any material increase in capacity emerging that could be relied upon.

Scottish material can continue to contribute to supply provided suitably located deep-water wharves in key markets are available, but whether step changes in quantum are realistic is difficult to fully assess.

Norway continues to flatter to deceive. Assuming the country is a completely homogeneous lump of granite, which it is not, and assuming that the UK’s take of 1.6 million tonnes per annum (out of Norway’s total current level of exports of 11 million tonnes per annum) increased tenfold to a 16 million tonnes per annum, what then?

Where could it be imported into England? Which ports could handle it? And because the country’s congested roads may not be able to cope, which rail paths could handle it?

Imports have a role to play and are part of a solution, but they will be limited by the capacity of coastal infrastructure to receive and distribute to markets at acceptable amenity and environmental cost.

Currently, it is difficult to see any growth in supply capacity from Wales and little more than a doubling from Norway, Scotland and others, which, while significant as a percentage, would only convert into around an additional 2 million tonnes per annum by 2018.

A scenario

Pulling all this together helps to build a scenario of potential increased capacity that could develop and offset some of the theoretical decline in supply capacity identified earlier. Any residual shortfall will clearly identify the scale of the challenge facing MASS in driving out new permissions for primary land-won aggregates.

While each element of supply has limitations, there is undoubtedly potential growth capacity available of around 11 to 18 million tonnes per annum by 2013 to 2018, and possibly more if markets are willing. Adding this back to the existing primary permitted capacity to supply gives a new scenario of more sustainable supply, albeit with continuing capacity losses over time (see fig. 11).

By comparing this to the current draft forecasts of demand, it can be seen that the potential shortfall in capacity to supply (previously shown in figure 10) of between 10 to 60 million tonnes per annum over the next seven to nine years is reduced, but, nonetheless, significant shortfalls of up to 40 to 60 million tonnes per annum still emerge over time unless significant new or additional primary aggregate land-won capacity comes on stream (see fig. 12).

Current permitted reserves are unevenly distributed and the ability to move the reserve-rich ‘donor’ regions of the East Midlands and the South West to reserve-poor, high-consumption ‘receptor’ regions, such as the South East, are relatively constrained by rail depot capacity and rail paths, and the economics of long-distance haulage.

While additional feedstock can be pushed through these key pipelines, they too have capacity limits and, ultimately, the release of additional reserves within ‘receptor’ regions will probably be required.

Each 10 million tonnes per annum of capacity shortfall is equivalent to approximately 50 typical 200,000 tonnes per annum sand and gravel quarries or 13 crushed-rock quarries producing around 750,000 tonnes per annum.

With current replenishment rates having already fallen to around 60%, what are the prospects?

Primary sand and gravel

Applications for sand and gravel are as controversial today as they ever were. In spite of considerably improved applications enshrining best practice, EIA and modern design and engineering, the harsh reality is that local communities are even more knowledgeable, resourceful and capable of opposing proposed developments than they were even five years ago, let alone 10 and 25 years ago.

The collateral costs which a typical application now carries as a result of archaeology, noise and dust management, and those that will emerge as the Mine Waste Directive bites and the need for dewatering licences grows, are significant.

Most companies have to breathe very deeply before justifying the submission of an application that could entail costs of up to £250,000 for a process which typically takes two to four years, at the end of which vexatious decisions can still be made.

It is getting harder, slower and more costly to secure planning permission for new extensions and new sites. The prospects of materially increasing replenishment rates for sand and gravel are low and probably worsening.

The only light on the horizon is, possibly, the decarbonization agenda, which may, by default, encourage a return to sites closer to local markets. Indeed, this issue alone should, arguably, start to be given greater weight in determining applications and should give rise to a renaissance of sand and gravel extraction, if only to achieve 2005 replenishment rates.

Primary crushed rock

Crushed rock is currently the biggest component of supply, representing almost 50% of primary supply and nearly 40% of total supply.

This country is fortunate to have many significant rock quarries, many of which have latent extension potential. However, not all do and not all can make a contribution beyond their regional boundary.

Who understands this sufficiently well to be able to judge whether there is no problem and that existing supply patterns are secure for the long term, or whether many are entering the last chance saloon?

It is now around 25 years since any genuinely new major rail-linked greenfield rock quarry was permitted. In that time the country has probably consumed the best part of 2 billion tonnes of permitted rock reserves without meaningful greenfield replenishment.

How many companies have planning applications in preparation for new, large, inland greenfield rock quarries in middle England, whether rail linked or not?

Is it realistic to look at retreat from national parks and AONBs?

How would a major greenfield site be treated by the current planning system? If the quarry is not rail linked, can it contribute as a ‘donor’ quarry beyond its regional boundary?

Do sufficient rail paths exist and does sufficient stocking and traffic capacity exist at the receptor end of the supply process?

Where will the next generation of major greenfield rock quarry sites come from and, crucially, who has the commercial need to apply and the will and resources to spearhead the next wave of these nationally strategic developments?

Is there a case for designating some of the major rail-linked quarry sites as ‘nationally strategic’, as if they were SSSIs or AONBs?

There are many big questions surrounding the role of major rock quarries in the future supply mix, and the next five years or so could prove crucial in terms of future policy thinking.

Scenario conclusion

Pulling together the various elements of supply in this one scenario indicates that if we assume existing regional supply capacities continue for the notional life of the existing permitted reserves, add potential growth in capacity from alternatives, marine and imports, and then compare this to current draft forecasts of demand, there is a shortfall in capacity which new permissions for land-won primary aggregates alone must fill.

Capacity shortfalls of the order of 30 million tonnes per annum, and growing to 40 million tonnes per annum, could well emerge over the next five to 10 years unless replenishment rates increase significantly. The additional capacity will need to come from a significant extension of existing sites’ life spans or the granting of many more new sites. Currently, replenishment of existing reserves stands at around 60%, so it looks like a real and growing challenge to sustain the existing primary aggregate supply base will soon become apparent.

The MASS still has a very serious job of work to do.

Time and complacency

Currently, it can take around two to four years to secure planning permission for new aggregate reserves. But this takes no account of the time involved in identifying a site, securing control and warming it up through the current Local Development Framework process. This is the real lead-in time and, from the author’s personal experience, five to 10 years is not unreasonable.

Five to 15 years from securing control of a site to a possible permission is a reality. How will this affect boardroom decisions as 2042 approaches? What will happen post 2027?

For a major greenfield site requiring a 25-year commercial life, what happens beyond 2017?

We are fortunate to be living off the fat of the past but time is running out for many key sites. Replacing or extending these will get no easier but, as time goes by, the need for investment certainty will grow, as will the many permitting uncertainties.

Conclusions

While the MASS system has served reasonably well, it can, and needs to, improve. There are many ways this can be achieved. It is necessary to re-think how we look at the future; simple generalizations about reserves and life expectancy are not enough.

Sand and gravel reserves are declining fast. Crushed rock is not without issues and many nationally well-known sites have big decisions looming. Landbanks for sand and gravel are low, many are falling and the position is confused by parochial behaviour by too many local politicians who will not take responsibility for playing their part in the delivery of national aims.

Replenishment rates are already well below 100%, at 60% and possibly falling. This is the key indicator of the effectiveness of the planning system and it is neither calculated, nor reported or tracked.

There is too much focus on the quantum of permitted reserves at the expense of their capacity to supply. A better balance and more pragmatism is required.

The life cycles of sites from identification and control to production is five to 15 years, and time will become more important as 2042 approaches. Critical periods post 2017 and 2027 are emerging as investment decisions in major new sites will require more certainty to justify investment.

Declines in capacity to supply are likely to emerge over the next five to 10 years as the fat of the past which we continue to live off begins to run out.

Owing to production and logistical constraints, it should not be assumed that large reserves in rich ‘donor’ regions will be able offset reserve shortfalls in reserve-poor ‘receptor’ regions.

The MASS still has a very important role to play in ensuring the identification of around 6 billion tonnes of reserves at the right capacity to supply for the next 25 years.

Reverting to the theme of this paper, it is the author’s belief that it is a myth that sufficient reserves exist for the next 25 years. They may do in some areas, but there are others where they do not.

It is also a myth that the permitting and planning system is getting easier. It is not.

Moreover, there is a widespread perception that recycling, secondaries and imports are ‘the answer’ and are the way that unpopular local planning decisions can be avoided. They are not.

Indigenous primary extraction is a national necessity now and will continue to be so for the majority of our needs in the future.

We face a number of hazards in the form of complacency, simple generalizations about reserves, planning system churn, cumulative impacts of legislation and regulation, and landbank abuse. These are real and potentially damaging.

We have various risks to manage, including skill and resource shortages, inconsistent and unreliable data, and growing nimbyism and parochialism within some regions. These are combining to put future steady supply at risk.

It is never too late, however, to manage such issues, and a new agenda and new solutions are available to improve the current performance of the system.

New agenda and new solutions

There are many ways in which the quality of the current process of managed aggregate supply could be improved, 12 of which are indicated below:

• Education and engagement of planning committees – establish a regular assembly of chairmen of planning committees to hear about mineral planning issues, particularly the need for regional and sub-regional apportionment, landbanks, and for a fast and responsive Local Development Framework (LDF) process to allow a steady and adequate supply of aggregates in accordance with national and regional guidance.
• Resource mapping – adopt the existing BGS digital database as the base map for strategic thinking on future aggregate supply throughout all regions and build a holistic national picture.
• Reserve evaluation – adopt a pan-industry methodology for the estimation of reserves to increase the consistency of treatment. Ensure that geotechnical constraints are fully factored in.
• AM data presentation – review the way data are presented in the AM reviews to give more realistic and useful interpretations of the figures which link the past to the future, eg ‘capacity to supply’.
• Annual performance reports – prepare national league tables of applications submitted, planning success rates, landbanks and replenishment rates.
• Identify nationally strategic sites – identify those quarries that are significant regionally and nationally and consider whether there is a case for additional weight to be given to future extension applications.
• Recognize that rail-linked and wharf sites are significant – finding new rail-linked quarries and wharf sites is getting harder and so existing sites need protecting.
• Evaluate regional surpluses and shortfalls and the scope for transfer – identify whether, and how, those regions in ‘reserve surplus’ can realistically offset those in ‘reserve deficit’.
• Develop regional and national ‘capacity-to-supply’ tools – these can give a more realistic picture of sustainable supply prospects at the regional level and, in turn, at the national level.
• Develop scenario-planning tools – develop tools which allow the testing and variation of the various elements of supply so that the potential consequences can be better understood.
• Realism about alternatives and imports – further research is required to evaluate the realistic potential of alternative and imported sources of supply to replace primary indigenous production.
• Recognize that time is critical – aggregates planning is a long-term business with far longer lead-in times than is widely recognized. Supply issues will continue to emerge over the short and medium term, and 2042 will be an issue for potential 25-year-life sites from 2017.

None of the above ideas should be regarded as the only answers to the issues discussed, but if they serve to demonstrate that there is still scope to evolve and improve the current approaches to the long-term planning of aggregates supply, some benefit may be achieved.

One thing is certain, doing nothing is not an option and the next five years could prove critical to the next 25 years.

References

1. ODPM, BGS: ‘The Economic Importance of Minerals to the UK’, 2004.
2. CLG: ‘Minerals Policy Statement 1: Planning and Minerals’, 2006.
3. CLG: ‘Collation of the results of the 2005 Aggregate Minerals Survey for England and Wales’, 2007.
4. ODPM: ‘Collation of the results of the 2001 Aggregate Minerals Survey for England and Wales’, 2003.
5. CLG, BGS: ‘An appraisal of Primary Aggregate Reserves in England 190–2004’, 2006.
6. CLG, Capita Symonds: ‘Survey of Arisings and Use of Alternatives to Primary Aggregates in England, 2005’, 2007.
7. DOE: ‘Aggregates: The way ahead’, Report of the Advisory Committee on Aggregates, 1975.
8. QPA, BMAPA, Entec: ‘Planning4Minerals: A Guide on Aggregates’, 2006.
9. QPA: ‘2007 Sustainable Development Report’.
10. JACKSON, N.: ‘Sir Ralph, you are never going to believe this but…’, Quarry Management, 2005, vol. 32, no. 9, pp11–20.
11. CLG: ‘Draft Revised National and Regional Guidelines for Aggregates Provision In England: 2005-2020’, Consultation, 2008.