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Monthly Archives: September 2011

China’s Rare Earths Monopoly – Peril or Opportunity?

Rare Earth Elements critical to 80% of Modern Industry.

Rare Earth Elements critical to 80% of Modern Industry

September 30, 2011 (Source: Market Oracle) — The prosperity of China’s “authoritarian capitalism” is increasingly rewriting the ground-rules worldwide on the capitalist principles that have dominated the West’s economy for nearly two centuries.

Nowhere is this shadow war more between the two systems more pronounced than in the global arena of production of rare earths elements (REEs), where China currently holds a de facto monopoly, raising concerns from Washington through London to Tokyo about what China might do with its hand across the throat of high-end western technology.

In the capitalist West, as so convincingly dissected by Karl Marx, such a commanding position is a supreme and unique opportunity to squeeze the markets to maximize profits.

Except China apparently has a different agenda, poking yet another hole in Marx’s ironclad dictums about capitalism and monopolies, further refined by Lenin’s screeds after his Bolsheviks inadvertently acceded to power in 1917 in the debacle of Russia’s disastrous involvement in World War One. Far from squeezing its degenerate capitalist customers for maximum profit (and it’s relevant here to call Lenin’s dictum that if you want to hang a capitalist, he’ll sell you the rope to do it), Beijing has apparently adopted a “soft landing” approach on rare earths production, gradually constricting supplies whilst inveigling Western (and particularly Japanese) high tech companies to relocate production lines to China to ensure continued access to the essential commodities.

REEs are found in everyday products, from laptops to iPods to flat screen televisions and hybrid cars, which use more than 20 pounds of REEs per car. Other RRE uses include phosphors in television displays, PDAs, lasers, green engine technology, fiber optics, magnets, catalytic converters, fluorescent lamps, rechargeable batteries, magnetic refrigeration, wind turbines, and, of most interest to the Pentagon, strategic military weaponry, including cruise missiles.

Technology transfer is the essential overlooked component in China’s economic rise, and Beijing played Western greed on the subject like a Stradivarius, promising future access to China’s massive market in return, an opium dream that rarely occurred for most companies. You want unimpeded access to Chinese RREs? Fine – relocate a portion on your production lines here, or…

Which brings us back to today’s topic.

Rare earths and investment – where to go?

China is riding a profitable wave, which depending on what figures you read, produces 95-97 percent of current global supply, and unprocessed raw earth earths ores are currently going for more than $100,000 a ton, or $50 a pound, which some of the exotica fetching far more (niobium prices has increase an astounding 1,000 percent over the last year). Rare earth elements like dysprosium, terbium and europium come mainly from southern China.

According to a United States Energy Department report, dysprosium, crucial for clean energy products rose to $132 a pound in 2010 from $6.50 a pound in 2003.

The soaring prices however have also invigorated many countries and producers to begin looking in their own back yards, for both new deposits and former mining sites that were shuttered when production cost made them uneconomic before prices went through the ceiling.

However, a number of unknown factors play into developing alternative sources to current Chinese RRE production. These include first prospecting possible sites, secondly, their purity and third, initial production costs, where modest Chinese labor costs are a clear factor.

The 17 RRE elements on the Periodic Table are actually not rare, with the two least abundant of the group 200 times more abundant than gold. They are, however, hard to find in large enough concentrations to support costs of extraction, and are frequently found in conjunction with radioactive thorium, leading to significant waste problems.

At hearings last week before U.S. House of Representatives Committee on Foreign Affairs Subcommittee on Asia and the Pacific, Molycorp, Inc. President and Chief Executive Officer Mark A. Smith stated that his company was positioned to fulfill American rare earth needs, currently estimated at 15,000-18,000 tons per year, by the end of 2012 if it can ramp up production at its Mountain Pass, California facility.

Which brings us back to foreign producers. A year ago Molycorp announced that it was reopening its former RRE mine in Mountain Pass, Calif., which years ago used to be the world’s main mine for rare earth elements, filing with the SEC for an initial public offering to help raise the nearly $500 million needed to reopen and expand the mine. Low prices caused by Chinese competition caused the Mountain Pass mine to be shuttered in 2002.

Mountain Pass was discovered in 1949 by uranium prospectors who noticed radioactivity and its output dominated rare earth element production through the 1980s; Mountain Pass Europium made the world’s first color televisions possible.

Molycorp plans to increase its capacity to mine and refine neodymium for rare earth magnets, which are extremely lightweight and are used in many high-tech applications and intends to resume production of lower-value rare earth elements like cerium, used in industrial processes like polishing glass and water filtration.

In one of those historic economic ironies, China was able to increase its RRE production in the 1980s by initially hiring American advisers who formerly worked at Mountain Pass.

The record-high REE prices are also underwriting exploration activities worldwide by more than six dozen other companies in the United States, Canada, South Africa, Malaysia and Central Asia to open new RRE mines, but with each start-up typically raising $10 million to $30 million, not all will succeed. That said, the future is bright, as almost two-thirds of the world’s supply of REEs exists outside of China and accordingly, China’s current monopoly of REE production will not last.

So where do investors look to cash in on the RRE boom?

First, do your homework.

Exhibit A is Moylcorp, which would seem to be in unassailable position as regards U.S. production, but which nevertheless on 20 September after JPMorgan Chase & Co. lowered its rating of the company, citing declines in rare-earth prices, causing its stock to plummet 22 percent in New York Stock Exchange composite trading, despite being the best-performing U.S. IPO in 2010 after beginning trading in July, more than tripling after rare-earth prices soared as China cut export quotas.

Is there money to be made in RREs?

Undoubtedly – but the homework for the canny investor needs to extend beyond spreadsheets to geopolitics, mining lore, chemistry and Wall Street puffery. That said, it seems likely that whatever U.S.-based company can cover the Pentagon’s RRE requirements is likely to see more than a minor boost in its bottom line.

Gentlemen, place your bets – but do your homework first.

Higher Prices for Numerous Rare Earth-Based Consumer Products

Consumers can expect significantly higher prices for a variety of consumer goods that use rare earth metals as at least one raw material, according to Michael Silver, president and chairman of the board of American Elements, a global manufacturer of engineered and advanced materials including rare earth metals and chemicals.

“The U.S. consumer has no idea the number of simple everyday products that will be impacted by the huge jump over the last year in rare earth prices,” says Silver. “Over the past two decades rare earths have become essential to the state of the art version of hundreds of household goods.”

According to Silver, computers, cell phones and other electronics will see manufacturing costs rise as neodymium is in computer hard drives, cerium is in the monitor screens and other rare earths play a part in the electronics. Products that rely on small electric motors often contain Neodymium magnets which have increased many fold in price.

Possibly the biggest impact will be felt in the cost of the family car.

“Rare Earths are ubiquitous in automobiles, he says. “Cerium is in the window glass to prevent yellowing and used as a glass polish in production. Yttrium is in spark plugs. Neodymium is in the electric motors that run everything from seat adjustments to windshield wipers. Lanthanum is in the batteries for electric and hybrid vehicles.”

He predicts higher prices will ripple through not just cars but all forms of transportation. The applications effecting automobiles will equally raise costs for other forms of transportation such as flight and rail.

Silver cites light bulbs as an example that consumers do not realize are affected by rare earth prices as Cerium is in bulb glass and Europium acts as the phosphor in fluorescent lights.

He predicts dental care costs will rise. Silver reports amalgam used to fill cavities is now based on a rare earth compound to get the new all white fillings to show up on an X-Ray the way the old metal fillings did.

Neodymium is used in modern welding goggles to remove glare. “Neodymium is a very magical material with many unrelated capabilities. When dispersed in glass, it prevents the wave length associated with yellow-green light from passing through, which is the wave length that causes eye damage,” Silver says.

Silver says the consumer will ultimately feel the pinch in cable television costs as well. Fiber optic cables run on EDFA technology which stands for ‘Erbium-Doped Fiber Amplification’, a technology reliant on the availability of Erbium which has skyrocketed in price. Existing infrastructures will not be impacted. New and replacement lines will.

American consumers may even be impacted at tax time. Silver says, “Our entire military equipment budget will increase due to higher rare earth costs and that will translate into higher government demand for revenue.” Rare earths are essential in the production of bullet proof vests (yttrium), night vision goggles (gadolinium) and F-35 and F-22 Fighter Jets, Bradley Armored Vehicle and AIM-9x Sidewinder missiles (neodymium).

American Elements is the world’s manufacturer of engineered & advanced materials with corporate offices and primary research & laboratory facilities in the United States and manufacturing & warehousing in the United States, China, Mexico and the United Kingdom.

September 27, 2011
(Source: PRNewswire)
By Rob Wynne

National Defense and Tungsten

F22 Raptor

Recently we have heard a lot of news about the rare earth metals, and the supply issues these metals are having. There are a few highly critical rare industrial metals that are also having supply issues. China has a near monopoly with many of these metals. Currently China has up to a 95% monopoly on the mining and refining of many of the most important rare industrial metals also known as rare technical metals. The British Geological Survey has produced an interesting report called the Risk List 2011. Read over the list and see for yourself. The metals on this list and other lists like it are needed for over 80% of all worldwide industrial uses.

The rare industrial metal I would like to discuss today is tungsten. On the list it scored 8.5 out of 10. According to the USGS China mines 85% of all tungsten. Similar to rare earth elements China has decided to cut back on its exports of tungsten. The British Geological Survey ranks tungsten higher on its list, than it does rare earth metals. In 2010 recycled tungsten was a promising 37% of all metal used. When you have a tight supply chain and then the top producer cuts its exports, this causes huge ripples throughout the world’s economy. China is the largest producer and the largest user of tungsten. In order to protect its own supplies of tungsten, China has begun to invest in mining projects outside of its borders.

The national defense industry has grown to depend more on tungsten due to its extraordinary properties. Tungsten has the highest melting point of all metals, the highest tensile strength of all metals, and it is highly resistant to corrosion. Tungsten is one of the refractory metals, which means it has high resistance to heat and water. The other refractory metals include molybdenum, tantalum, niobium and rhenium. Here I am going to list some of the military applications of tungsten.

  1. Replacement for depleted uranium bullets
  2. Armor piercing bullets, anti-tank weapons, bunker busting systems
  3. Penetrators
  4. Shrapnel head
  5. Radiation protection (Submarines)
  6. Lubricants
  7. Armored vehicles
  8. Grenades
  9. Anti-vibration, counter and anti-flutter weights (Aviation)
  10. Superalloys for turbine blades, propellers, rotor blades and flight control surfaces.

According to the USGS the total tungsten mined in 2010 was approximately 61,000t. Total worldwide reserves are around 2,900,000t of which China has 2,000,000t. Canada, Kazakhstan, Russia and USA have significant tungsten resources. Many nations are attempting to invest in their mining industries. We have seen many news stories concerning countries like the USA, Canada, Japan, EU, Russia and Brazil investing large sums of money looking for new resources within their nations and abroad. There is much geo-political uncertainty throughout the world. Countries are seeing that they need to be independent or be at the mercy of other nations. This all means profits for rare industrial metal investors for the foreseeable future.

By Randy Hilarski – The Rare Metals Guy

China Consolidates Grip on Rare Earths

BEIJING€” In the name of fighting pollution, China has sent the price of compact fluorescent light bulbs soaring in the United States.

The price of compact fluorescent light bulbs has risen drastically in the last year because of the rising cost of rare earth metals.
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By closing or nationalizing dozens of the producers of rare earth metals — which are used in energy-efficient bulbs and many other green-energy products — China is temporarily shutting down most of the industry and crimping the global supply of the vital resources.

China produces nearly 95 percent of the world’s rare earth materials, and it is taking the steps to improve pollution controls in a notoriously toxic mining and processing industry. But the moves also have potential international trade implications and have started yet another round of price increases for rare earths, which are vital for green-energy products including giant wind turbines, hybrid gasoline-electric cars and compact fluorescent bulbs.

General Electric, facing complaints in the United States about rising prices for its compact fluorescent bulbs, recently noted in a statement that if the rate of inflation over the last 12 months on the rare earth element europium oxide had been applied to a $2 cup of coffee, that coffee would now cost $24.55.

A pack of three 11-watt G.E. compact fluorescent bulbs each the lighting equivalent of a 40-watt incandescent bulb€” was priced on Thursday at $15.88 on Wal-Mart’€™s Web site for pickup in a Nashville, Ark., store. The average price for fluorescent bulbs has risen 37 percent this year, according to the National Electrical Manufacturers Association.

Wal-Mart, which has made a big push for compact fluorescent bulbs, acknowledged that it needed to raise prices on some brands lately. €œObviously we don’t want to pass along price increases to our customers, but occasionally market conditions require it, Tara Raddohl, a spokeswoman, said. The Chinese actions on rare earths were a prime topic of conversation at a conference here on Thursday that was organized by Metal-Pages, an industry data firm based in London.

Soaring prices are rippling through a long list of industries.

The high cost of rare earths is having a significant chilling effect on wind turbine and electric motor production in spite of offsetting government subsidies for green tech products, said one of the conference attendees, Michael N. Silver, chairman and chief executive of American Elements, a chemical company based in Los Angeles. It supplies rare earths and other high-tech materials to businesses.

But with light bulbs, especially, the timing of the latest price increases is politically awkward for the lighting industry and for environmentalists who backed a shift to energy-efficient lighting.

In January, legislation that President George W. Bush signed into law in 2007 will begin phasing out traditional incandescent bulbs in favor of spiral compact fluorescent bulbs and other technologies. The European Union has also mandated a switch from incandescent bulbs to energy-efficient lighting.

Representative Michele Bachmann of Minnesota is running for the Republican presidential nomination on a platform that includes strong opposition to the new lighting rules in the United States and has been a leader of efforts by House Republicans to repeal it.

China says it has largely shut down its rare earth industry for three months to address pollution problems. By invoking environmental concerns, China could potentially try to circumvent international trade rules that are supposed to prohibit export restrictions of vital materials.

In July, the European Union said in a statement on rare earth policy that the organization supported efforts to protect the environment, but that discrimination against foreign buyers of rare earths was not allowed under World Trade Organization rules.

China has been imposing tariffs and quotas on its rare earth exports for several years, curtailing global supplies and forcing prices to rise eightfold to fortyfold during that period for the various 17 rare earth elements.

Even before this latest move by China, the United States and the European Union were preparing to file a case at the W.T.O. this winter that would challenge Chinese export taxes and export quotas on rare earths.

Chinese officials here at the conference said the government was worried about polluted water, polluted air and radioactive residues from the rare earth industry, particularly among many small and private companies, some of which operate without the proper licenses. While rare earths themselves are not radioactive, they are always found in ore containing radioactive thorium and require careful handling and processing to avoid contaminating the environment.

Most of the country’€™s rare earth factories have been closed since early August, including those under government control, to allow for installation of pollution control equipment that must be in place by Oct. 1, executives and regulators said.

The government is determined to clean up the industry, said Xu Xu, chairman of the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters, a government-controlled group that oversees the rare earth industry. €œThe entrepreneurs don’€™t care about environmental problems, don’t care about labor problems and don’€™t care about their social responsibility,€ he said. €œAnd now we have to educate them.

Beijing authorities are creating a single government-controlled monopoly, Bao Gang Rare Earth, to mine and process ore in northern China, the region that accounts for two-thirds of China’s output. The government is ordering 31 mostly private rare earth processing companies to close this year in that region and is forcing four other companies into mergers with Bao Gang, said Li Zhong, the vice general manager of Bao Gang Rare Earth.

The government also plans to consolidate 80 percent of the production from southern China, which produces the rest of China’€™s rare earths, into three companies within the next year or two, Mr. Li said. All three of these companies are former ministries of the Chinese government that were spun out as corporations, and the central government still owns most of the shares.

The taxes and quotas China had in place to restrict rare earth exports caused many companies to move their factories to China from the United States and Europe so that they could secure a reliable and inexpensive source of raw materials.

China promised when it joined the W.T.O. in 2001 that it would not restrict exports except for a handful of obscure materials. Rare earths were not among the exceptions.

But even if the W.T.O. orders China to dismantle its export tariffs and quotas, the industry consolidation now under way could enable China to retain tight control over exports and continue to put pressure on foreign companies to relocate to China.

The four state-owned companies might limit sales to foreign buyers, a tactic that would be hard to address through the W.T.O., Western trade officials said.

Hedge funds and other speculators have been buying and hoarding rare earths this year, with prices rising particularly quickly through early August, and dipping since then as some have sold their inventories to take profits, said Constantine Karayannopoulos, the chief executive of Neo Material Technologies, a Canadian company that is one of the largest processors in China of raw rare earths.

“€œThe real hot money got into the industry building neodymium and europium inventories in Shanghai warehouses,”€ he said.

Correction: September 17, 2011
An article on Friday about the effect of China’s control over rare earth metals on energy-efficient products like light bulbs misstated the price of 11-watt G.E. compact fluorescent bulbs listed on Wal-Mart’€™s Web site. The price of $15.88 is for a three-pack, not a single bulb.
Sephanie Clifford

The Most At Risk Metals

Rare Earth Elements critical to 80% of Modern Industry.

Rare Earth Elements critical to 80% of Modern Industry

Much has been made, maybe too much, of the dire straits the world will shortly be in when the Chinese finally choke off supplies of rare earth metals, or elements (REE) to the outside world. No one would deny REEs have many critical uses, but you can’€™t help wondering if there aren’t a lot of vested interests behind some of the clamor.

In the process, the supply side constraints on many other metals (with a few exceptions) are overlooked, until now, that is. The British Geological Survey has produced an intriguing report called the Risk List 2011. The analysis is, in their own words, intended to give a quick and simple indication of the relative risk to the supply of 52 chemical elements or element groups which we need to maintain our economy and lifestyle.

The list is much more than a simple list of rarity, REEs being a case in point; they are not rare, but the combination of relative abundance, location of deposits and concentration of production in certain countries makes them a much higher risk than metals that are rarer, but whose production is more widely distributed among politically reliable sources. Each element is given a score from 1.0 to 5.0 for each of the following criteria:

A score of 1 indicates a low risk, a score of 5 a high risk. The scores for each criterion are summed to give an overall risk to supply score, obviously the larger the score, the greater the risk.

Low-Risk Metals

The lowest scores are (from the bottom up):

  • Titanium 2.5
  • Aluminium 3.5
  • Chromium 3.5
  • Iron 3.5
  • Thorium 7.0
  • Bismuth 7.0
  • Rare Earth’s 8.0
  • Tungsten 8.5
  • PGM’s 8.5
  • Antimony 8.5

No major surprises there. Occurrence is plentiful and widely distributed, as is production. One may have expected to see titanium and chrome, both of which rely in part on supplies from Russia and South Africa, to have scored a little higher, but the report lists Australia and Canada as the leading producers for the first three and although China is listed as the leading producer for iron ore, they are also the leading consumer and a net importer.

Higher-Risk Metals

Unfortunately, not so at the other end of the list. China comes out as the leading producer of 27 of the elements listed and ranks as the leading producer in six of the top nine most at-risk elements, all of which are metals. The reason we chose nine instead of the top 10 is because items 10 and 11 are bromine and graphite respectively, but following these, the list promptly gets back into metals through the middle orders.

Extract from BGS Risk List 2011:

*PGM’€™s include the Platinum Group Metals: Ruthenium, Palladium, Osmium, Iridium and of course Platinum, but interestingly Rhodium is not mentioned. Source: British Geological Survey.

How often do we hear of supply risks to antimony, mercury or tungsten? Yet these metals are used in a bewildering array of applications. China produces nearly 90 percent of the world’€™s mined antimony and 85 percent of the world’€™s mined tungsten, according to the USGS. Arguably, tungsten is as critical as REEs, used as it is in a huge array of metal alloys for electrical, strength and wear resistant applications. Like REEs, China is restricting exports of tungsten and the BGS ranks the supply risks as even higher than REEs.

The purpose of the Risk List is not to cause alarm, but to alert policy makers and consumers to possible supply disruption in the future. As competition for resources grows, these metals currently present the highest risk due to geopolitics, resource nationalism (state control of production), strikes and natural disasters impacting a highly concentrated supply base. Metals buyers and product designers could do worse than spend a few minutes perusing this list and reflecting on their own raw material supply arrangements.

By Stuart Burns
September 15th, 2011

Rare earth elements vital to electronics industry

What do ics, lasers, optical fibres, capacitors, displays and headphones have in common? Answer: they are all electronic products that depend on one or more of the rare earth elements. And that list is far from complete.

Rare Earth Elements critical to industry.

 There are 17 rare earth elements, all vital to the electronics industry in some form. Yet, despite their name, some rare earth element

s are relatively plentiful: cerium is, apparently, as abundant as copper. They are regarded as ‘rare’ because deposits of these elements are generally not exploitable commercially.

Though typically used in relatively small quantities per product, a major worry has emerged recently about the guaranteed continuation of their supply – some 97% of rare earths are currently supplied by China.

Over the last few years, China has been reducing its exports of rare earths and recently cut back more drastically, by around 70%

. And an ominous note was sounded when China completely halted supplies to Japan after a row about Japan’s arrest of a Chinese boat captain. He was released and supplies resumed. Squabbles aside, the prediction is that, within a few years, China will need its entire output of rare earths to satisfy its own domestic demand.

So action is being taken to avoid the drastic scenario of the supply of rare earths simply coming to a halt (see below). If it did, it is astonishing how many electronic products we use every day would become either much more difficult – even impossible – to make or much more expensive.

Take one of the most widely used rare earths – neodymium. It was first used to generate the light in green laser pointers, but then it was found that, when mixed with iron and boron, neodymium makes magnets that are weight for weight 12 times stronger than conventional iron magnets. Result: neodymium magnets are used in in-ear headphones, microphones, loudspeakers and hard disk drives, as well as electric motors for hybrid cars and generators.

Where low mass is important, they are vital: for example, in laptops, they provide finer control in the motors that spin the hard disk and the arm that writes and reads data to and from it, allowing much more information to be stored in the same area.

In its Critical Materials Strategy, the US Department of Energy (DoE) estimates new uses of neodymium, in products like wind tu

rbines and electric cars, could make up 40% of demand in an already overstretched market, which is why any shortages would be critical.

Most of the rare earths vital to electronics are less well known: erbium is one example, a crucial ingredient in optical fibres. For long distance optical fibre transmission, amplification is vital and is achieved with the help of erbium. Embedded within short sections of the optical fibre, excitable ions of erbium are pushed into a high energy state by irradiating them with a laser. Light signals travelling down the fibre stimulate the erbium ions to release their stored energy as more light of precisely the correct wavelength, amplifying the signals.

Tellurium is an element that could see a huge increase in demand because in 2009, solar cells made from thin films of cadmium telluride became the first to outdo silicon panels in terms of the cost of generating a Watt of electricity. Until now, there has been little interest in tellurium, but if it leads to significantly cheaper solar power, demand will rocket and that is why the DoE anticipates potential shortages by 2025.

Hafnium is another rare earth proving itself vital to the semiconductor industry; hafnium oxide is a highly effective electrical ins

ulator. It outperforms the standard transistor material, silicon dioxide, in reducing leakage current, while switching 20% faster. It has been a major factor in enabling the industry to move to ever smaller process nodes.

Also central to semiconductors is tantalum, key to billions of capacitors used worldwide in products like smartphones and tablet computers. In its pure form, this metal forms one of two conducting plates on which charge is stored. As an oxide, it is an excellent insulator, preventing current leakage between the plates, and is also self healing, reforming to plug any current leakage.

One of the most widely used rare earths is indium, which we all spend a lot of time looking at. The alloy indium tin oxide (ITO) provides the rare combination of both electrical conductivity and optical transparency, which makes it perfect for flat screen displays and tvs,

where it forms the see through front electrode controlling each pixel. A layer of ITO on a smartphone’s screen gives it the touch sensitive conductivity to which we have been accustomed in the last few years. Mixed with other metals, indium becomes a light collector and can be used to create new kinds of solar cells, together with copper and selenium.

Another rare earth valuable for its magnetic properties is dysprosium. When mixed with terbium and iron, it creates the alloy Terfenol D, which changes shape in response to a magnetic field; a property known as magnetostriction. Dysprosium can also handle heat

; while magnets made from a pure neodymium-iron-boron alloy lose magnetisation at more than 300°C, adding a small amount of dysprosium solves the problem. This make the element invaluable in magnets used in devices such as turbines and hard disk drives.

Other rare earths include: technetium, used in medical imaging; lanthanum and, the main components of a ‘mischmetal’ (an alloy of rare earth elements) used to create the negative electrode in nickel metal hydride batteries – and cerium also helps to polish disk drives and monitor screens; yttrium, important in microwave communication, and yttrium iron garnets act as resonators in frequency meters; and europium and terbium.

The last have been used for decades to produce images in colour tvs, thanks to their phosphorescent properties – terbium for yellow-green and europium for blue and red. More recently, energy saving compact fluorescent light bulbs have used them to generate the same warm light as the incandescent tungsten bulbs they replaced.

Is there a single reason why the rare earths have proved so valuable for such a range of technologies? The answer is no – it is more a result of each element’s particular physical characteristics, notably the electron configuration of the atoms, according to one of the world’s leading experts, Karl Gschneidner, a senior metallurgist at the DoE’s Ames Laboratory.

“Some of the properties are quite similar; basically, their chemical properties. That is why they are difficult to separate from each other in their ores and that is why they are mixed together in the ores. But many of the physical properties vary quite a bit from one another, especially those which depend upon the 4f electron (a particular electron shell in the configuration of the atom), that is the magnetic, optical and electronic properties. Even some of the physical properties, which are not directly connected to the 4f electrons, vary considerably. For example the melting points vary from 798°C for cerium to 1663°C for lutetium.”

What makes the rare earths so special is the way they can react with other elements to get results that neither could achieve alone, especially in the areas of magnets and phosphors, as Robert Jaffe, a Professor of Physics at MIT, explains.

“The result is high field strength, high coercivity, light weight magnets, clearly valuable in tiny devices where magnetically stored information has to be moved around, like hard disk read/write operations. The magnetic properties of pure metals and relatively simple alloys have been thoroughly explored and there is nothing as good as rare earth magnets. Two paradigms for magnetic material are NeBFe (neodymium-boron-iron) and SmCo (samarium-cobalt), with the former most popular now.

“In phosphors, europium, terbium and others absorb high frequency light and then re emit the light in regions of the spectrum that are very useful in manipulation of colour, hence their use in flat panel displays and compact fluorescent lights.”

Another example is neodymium oxide, which can be added to crt glass to enhance picture brightness by absorbing yellow light waves. Neodymium has a strong absorption band centred at 580nm, which helps clarify the eye’s discrimination between reds and greens.

Given how vital they are for the electronics industry and other technologies – by one estimate, £3trillion worth of industries depend on them – it is remarkable that the world has been so complacent about sourcing rare earths, allowing a single country to virtually monopolise the supply. But that is now changing.

For example, the Mountain Pass mine in California is being reactivated by Molycorp Minerals in a $781million project, having been mothballed in 2002. Others include the Nolans and Mount Weld Projects in Australia, a site at Hoidas Lake in Canada, Lai Chau in Vietnam and others in Russia and Malaysia.

In Elk Creek, Nebraska, Canadian company Quantum Rare Earth Development is drilling to look for supplies and has called on President Obama to move aggressively to create a stockpile of rare earths.

Another associated problem is the lack of people with rare earth expertise, as Gschneidner says.

“There is a serious lack of technically trained personnel to bring the entire rare earth industry – from mining to OEMs – up to full speed in the next few years. Before the disruption of the US rare earth industry, about 25,000 people were employed in all aspects. Today, there are only about 1500.”

Despite these moves, it could be years before they enhance supplies significantly. For the longer term, there are prospects of better sources emerging. Just a couple of months ago, Japanese scientists from the University of Tokyo announced they had found the minerals in the floor of the Pacific Ocean in such high density that a single square kilometre of ocean floor could provide 20% of current annual world consumption. Two regions near Hawaii and Tahiti might contain as much as 100billion tonnes.

The team was led to the sea floor because they reasoned that many rock samples on land containing metallic elements were originally laid down as ocean sediments. “It seems natural to find rare earth element rich mud on the sea floor,” they said.

A final extraordinary fact about rare earths is that, despite their importance, we have hardly bothered to recycle them at all. In an age when metals like aluminium, copper, lead and tin have recycling rates of between 25% and 75%, it is estimated that only 1% of rare earths are recycled. Japan alone is estimated to have 300,000 tons of rare earths in unused electronic goods. If we do not correct that quickly, over the next few years at least, rare earths could live up to their name with a vengeance.

David Boothroyd

Why Buy and Store Metals Offshore

Storage Facility in Zurcher Freilager AG free zone in Switzerland

One of the most common questions I hear in the metals business is, “€œwhere do I store my metals?”. This question is often posed by a person, foundation or trust that is looking to secure their investments. Usually we hear about buyers of gold, silver, platinum and palladium who want to protect their assets but now there is a growing number of clients who are looking to diversify beyond the core metals we all know so well. How do we best protect our assets today with all the uncertainty? Here I will discuss why a portion of your metals should be stored offshore, and in what form works best.

What kinds of Metals can an Entity Store Offshore?
The metals people most often store outside of the country are gold and silver although experienced metals buyers might also buy platinum and palladium. Recently clients have been able to buy other rare industrial metals like tellurium, cobalt, molybdenum, hafnium, indium and tantalum. A few years ago the average investor would not have had the ability to buy some of these metals unless they owned a company that produced items which needed these rare industrial metals.

Why is it Wise to Store Offshore?
In the 1930’s during the Great Depression the US government confiscated all privately held gold. US citizens were not able to possess their own gold again until the 1970’s. Will we have a similar situation this time around with the world in its current state of transition? How is the US government planning on fixing this situation? Many countries are choosing inflation, currency devaluation, low interest rates and austerity measures. When these techniques fail to rein in the problems will governments turn to gold and their populations’ assets? One thing I know is that indium, cobalt, tantalum, tungsten and many of the other rare industrial metals and rare earth metals are on the critical metals list of the USA, EU, Japan, Korea and China. The question is whether rare earth metals and rare industrial metals will ever be deemed so crucial to economic and industrial applications that a country may decide to control the purchase of these metals. We see what China is doing with these metals and one must ask ones’€™ self, “€œCould these control measures spread to my country?”€.

The old saying, “€œdon’€™t put all your eggs in one basket”€, applies here. Clients commonly say, “€œI want to be able to touch my metals”€. This is great, and encouraged but the stress of knowing so much of your assets are under one roof can be too much to handle for the average person. The metals can possibly become a liability and risk to you and your family’€™s safety.

Why would I not take delivery of Rare Industrial Metals and Rare Earths?
Some clients may wish to take delivery of their metals. This can be done just like gold and silver but the big difference is that these metals are used in industry. When the client takes the metals to the broker they will ask for the metals to be assayed. This is the process of taking a sample and sending it to a lab to verify purity. Also when dealing with rare industrial metals the amounts can be quite large and take up a good deal of space. Some elements like hafnium are controlled because of its use in nuclear technologies and it cannot be transported internationally. The metals trader stores the metals for the client and upon request resells the metals.

How do I Store the Metals Offshore?
When researching where to store your metals make sure to do thorough due diligence. There are many options for the investor. The most common choice is a safety deposit box in a bank. Safety deposit boxes are the most widely recognized. They are great for small allocations of metals. Storing in your second home offshore is also a common choice. This is also good for the client who has a small allocation of metals. Offshore bank vaults are also an option but can be rather expensive. The best option for clients with medium to large amounts of metals is an offshore private vault or depository. The prices are reasonable and they offer unparalleled privacy. A good example would be the Zurcher Freilager AG free zone in Switzerland.

What about Taxes?
This is a complicated issue that needs to be addressed by a tax professional. Every country has its own tax rules which are far beyond my expertise. As far as the Zurcher Freilager AG is concerned, as long as the assets are sold within the free zone it is a tax free event.

What are you doing about securing your future? Every day we hear more and more about an unstable financial market, geo political uncertainty, governments overreaching and bad economies. Wouldn’t it be prudent to have your assets spread out across the world?

What is holding you back?

By: Randy Hilarski – The Rare Metals Guy

Silver Q4 Outlook

Silver Bullion

Silver Bullion

The silver has made impressive gains since the downgrade of US debt renewed fears about the global economy. Now sitting at a price of $42.34 per ounce, nearly its highest level since April when silver nearly reached its historic $50 per ounce high. The main factor holding silver back from matching the run up in price seen in gold is the industrial component to silver’€™s demand. Investors fear that a slowing economy will dampen the industrial demand component to silver.

Both silver and gold have upside potential as the global economy is unlikely to make a dramatic turnaround by the end of Q4. This is a key factor behind some of the world’s largest banks to revise their price projections for silver in the coming months.

Ongoing economic concerns
On top of the downgrade of US debt, an unexpected rise in jobless claims, as well as mounting speculation surrounding another round of easing measures from the Federal Reserve have added to the recent rally in precious metals prices.

Gold and silver are €œbeing lifted by expectations that the failure of the US economic recovery to gain traction will force the Federal Reserve to embark on a third round of quantitative easing, which essentially translates into printing money,€ reported Jan Harvey for Reuters.

Loose monetary policy has been the single most powerful argument of gold and silver bugs since the economic collapse of 2008. If a third round of quantitative easing measures comes from the Fed, most analysts expect aggressive buying of silver and gold.

The Eurozone is no better off. The ECB lowered its growth forecasts, which sent European shares falling early in the week. Growing fears of a recession and more evidence of political disunity in the Euro zone hampers the regions ability to solve the debt crisis.

Price forecast

Recently, UBS upped its price forecast for silver and gold, but warned that a correction to the precious metals rally is an increasingly possible scenario. The bank noted that volatile trades may come with rising margin requirements in Chicago and Shanghai, as well as ahead of Ben Bernanke’s speech on Friday.

Edel Tully, an analyst with UBS commented, “€œthose who have missed out on the last few hundred dollar rally in the gold price perhaps believe that gold is near its short-term peak. And instead of playing gold from the short side, they prefer buying silver.”

UBS raised its price forecast for silver for one month prices up from $35 per ounce to $46 per ounce, and three-month prices to $50 per ounce up from $33 previously. The key short term resistance level is the $44 per ounce mark. Silver yet to breakthrough $44 since pulling back from over the $48 highs in April.

For the long term, if silver can break through the $44 level, as UBS forecasts for the next month, then the $50 per ounce mark seems to still be the psychological resistance level for silver market observers.

One can only speculate what events will have to take place to break the high water mark for silver. The implementation of QE3 from the Fed? A meltdown of stock markets worldwide which would mark another economic collapse?

Regardless of the doomsday scenarios, the global economic recovery is not gaining traction. Further debt concerns and loose monetary policy will continue to support silver. If the key short term resistance level of $44 per ounce is breached, most analysts expect silver to continue upward to the $50 mark before significant profit taking occurs.

By Michael Montgomery

Rare Earth Q4 Outlook

It’€™s a familiar story for rare earth market watchers,€“ sky-high prices and tight supply outside of China.

But until significant production outside of China is established, analysts foresee few changes to this trend,€“ barring end users shutting up shop to cut demand.

2011 has thus far seen prices for most rare earth elements take off in the wake of tight control from over production and export quotas. Total production in China for 2011 has been capped at 93,800 tonnes , an increase of 5 percent from 2010, while exports have been restricted to 30,184 tonnes,slightly less than the 30,258 tonnes permitted last year.

Although Lynas Corporation Ltd . (ASX:LYC ) officially opened their Mount Weld mine in Western Australia on August 4th , production from this facility, which will initially be 11,000 tonnes per year, is not likely to make an impact on the REE market until 2012, as the first feed of rare earths concentrate into the yet-to-be-fully-licensed Lynas Advanced Materials Plant (LAMP) in Malaysia is scheduled for Q4 .

In the meantime, Molycorp Inc . (NYSE:MCP) remain the only major producer filling the gap outside of China, and the Colorado-based company has profited nicely from the comparatively modest amount of supply it has been able to pump into REE markets so far this year.

Last month Molycorp’€™s reported production results of 815 metric tonnes of rare earth oxides for Q2, and also announced that they expected output of 977-1,321 metric tonnes during Q3, and 1,017-1,377 metric tonnes for Q4.

Coupled with the sky-high prices most REE are currently fetching, the anticipated increase in output from Molycorp has left some analysts quite bullish on the company’€™s performance outlook for the remainder of the year.

Prices may climb further still as China halts production at 3 mines

One twist that may still play a major role in REE markets before the year is out is the halt in production announced by the Chinese government on Monday .

State media reported that production has been ordered suspended by year’s end at 3 out of 8 mines in Ganzhou, Jiangxi Province. The Ganzhou region produces nearly 40 percent of China’€™s rare earths.

Li Guoqing , Director of the Ganzhou City Mining Management Bureau, commented on Monday that it was unknown when production at the 3 mines would resume, and that an eventual resumption of operations would be based on directives from the provincial government.

Although the shutdown is mostly a consequence of China hitting its annual production quota too early and the government clamping down on illegal mining and exports, it is unlikely to have an impact on the 15,000 tonnes of rare earths slated to be exported from China over the last half of the year. The prospect of a prolonged shutdown in one of China’€™s key mining regions may well begin to ripple through REE markets during Q4.

EU reveals it is stockpiling rare earths to reduce dependence on China

Another development that could play out on REE markets over Q4 was the disclosure by the European Union (EU) on Tuesday that they are stockpiling rare earths to reduce their dependence on China.

Speaking to Reuters , Andrea Maresi, press officer for EU industry minister Antonio Tajani confirmed that they were “€œworking to secure supplies of these minerals from outside of the EU, such as from Latin America, or from Africa or other countries like Russia.”€

“€œWe are trying to improve our sourcing and reduce our dependence on China”€, he added.

David O’Brock , CEO of Molycorp’€™s majority owned Molycorp Silmet AS in Estonia, revealed to Reuters in a recent interview that he had been approached by the EU about stockpiling, and had advocated stockpiling at least 3,000 tonnes of rare earth carbonate.

In spite of his conviction that the EU should be stockpiling to offset export restrictions from China, however, O’€™Brock believes REE prices will level-out in Q4.

“€œI think that prices have already started to stabilize. And consumers have found their upper boundaries that they can pass on to their customers, unless the Chinese suddenly open the flood gates, I don’€™t see prices dropping and I don’t see a continued climb in the prices,”€ he said.

By Robert Sullivan
Rare Earth Investing News

Rare earths On the wrong foot

The skyrocketing prices of some rare earths in professional circles have long been a controversial subject. Meanwhile, some rare earths have become so expensive that it now expected to increase the prices of end products. Manufacturers are looking for alternatives.

Dirty and expensive: there is plenty of rare earths, but they are funded almost exclusively in China.

The permanent magnet, many know him as a horseshoe magnet, has become an important part of the auto industry for electric and hybrid drives, which are developed with high pressure. It could also be electromagnets. But many have opted for the simpler permanent magnets – which they might regret in the long run. Because the magnets are not just made of iron, cobalt or nickel. Without neodymium and dysprosium they would not work. These are two of a total of 17 rare earths, raw materials whose prices have skyrocketed.

BMW still can not see any effects. There are no bottlenecks, especially the needs of such magnets for new, alternative drives in the development stage is still low, says a spokesman for the Munich carmaker. Their suppliers would be secured through long-term contracts also. Of course, he must concede, the increased cost could become an issue as soon as a volume production run.

A time bomb is ticking: The skyrocketing prices of lanthanum, neodymium, dysprosium and europium is since 2010 in professional circles has long been a controversial subject. The negative effects that made creating mainly producers on the procurement side, with increased raw material prices are now slowly in the long chain from production to up to the consumer. Thus, the largest European manufacturer of home appliances, Bosch and Siemens Hausgeräte GmbH (BSH), has not ruled out price increases for products 2011/12. This is caused not only become expensive steel and stainless steel, so the whole industry wants to raise prices. Rare earths have become a factor. “We are doing everything that we pass on the increased costs of steel and rare earth is not 1:1 on our product prices,” says a spokeswoman for BSH.

Rare earths BSH needed for the enamelling of stoves. For motors and pumps up those permanent magnets are needed, how they want to incorporate into his BMW alternative drives. The wind turbines are also used in small consumer-related components of information and communications technology and consumer electronics (MP3 player). Rare earths are found in rechargeable nickel-metal hydride batteries, cell phones, tablet PCs, X-ray machines, CT scanners, plasma screens and energy-saving lamps.

The manufacturer of energy saving lamps have justified the price increase on the wholesale distribution of 20 to 25 percent more expensive with the strong resources. Rare earths were once terms of value in the low single-digit percentage, he is now risen to almost one third. These dimensions can be used in the pricing of end products can not be ignored. “The rise in prices of materials are currently the biggest challenge for electronics companies,” said Bernhard Rohleder, Director General of the Association of Information Technology, Telecommunications and New Media (Bitkom). He is likely not alone my problems on the purchasing side, but also the challenges in the markets – because the cost is often compared to the excesses of pressure on margins due to fierce competition.

The name confused: Rare earths are not rare. Rather, they are found in very low concentrations in minerals, so their production is complicated and expensive. That is the reason why many countries have largely retreated with resources such as the United States, Australia and the former CIS states from the promotion. They left China the field. The country has the largest presence by far the world and today it is 97 percent. For a long time is the accusation that China is artificially scarce supply.

Now, behind closed doors, according to allegations in industry circles, that the Chinese would not hold well for long-term supply and prices change quickly. So often loses the argument about long-term contracts to hedge on weight. The Munich manufacturer BSH Home Appliances has been working on alternative strategies. “There were already taking measures to reduce the compensation,” said the spokeswoman. “We expect success from it in one to two years.”

The Siemens Group, builder of wind turbines, has agreed to secure its supply base for neodymium permanent magnet, a joint venture with Australia’s Lynas. Lynas, the rare earth supports, would provide long-term partner, the company with raw materials. Computer manufacturer Fujitsu is also, according to a spokeswoman in search of replacement. The extent of the rise was still not fully recognize. Suppliers there have been no suggestion to raise prices. But Fujitsu is cautious: That could indeed come.

This article was translated from German.
By Ruediger Koehn

Alternative Metals to Gold and Silver

Cobalt is a chemical element with symbol Co and atomic number 27.
Rare Industrial Metal – Cobalt

The last decade has been a wonderful time for Gold Bugs and Silver Bugs. We have profited and protected our wealth against inflation. Gold has risen from around $250 per ounce in 2001 to a recent high of $1917.90 and silver has risen from around $5 per ounce in 2001 to a recent high of $49.81. These numbers are quite exciting for anyone involved in the precious metals markets. Being a Silver Bug myself, I have to admit the ride up has been rather erratic. Long ago I had to learn to ignore the daily Comex price of Silver. Gold and Silver will continue to be an important part of my future holdings, but going forward I am beginning diversification into other metals. Here is a brief overview of some of the rare industrial metals I like and why I believe they are a good choice for anyone who believes in holding physical metals as part of their asset strategy.

There are many who believe the world is in a recession and this may be true in the USA, EU, and other Western nations. There are a few of us who still believe that the speed of industry and commerce is accelerating. I have spent time in Africa, had an opportunity to live in Europe for a few years and I currently live in Panama. This experience has opened my eyes to what is happening outside of the USA. What I see is a great mass of people who were once walking now driving cars. These same people are talking on mobile phones, watching television on a flat screen, using their laptop at a cafe, getting better medical care, flying on vacations, living in modern homes and working jobs that require technology. This is happening across the planet! Can you imagine the impact on demand for rare industrial metals from countries of the BRIC, (Brazil, Russia, India, China), with the size of their populations? Like it or not commercialization was tested in the USA and was a huge success and now it has been exported worldwide. Here in Panama with a population of just over 3 Million we are adding 3000 automobiles a month to the roads. There are enough mobile phones in Panama to give every citizen 3 handsets. All of this takes a lot of natural resources and metals. Below are some of the important metals I would like to introduce to you.

Tantalum, the rare technical and industrial metal that gives technology the ability to be compact. Have you ever wondered why we no longer have to carry around mobile phones the size of a brick? The tantalum capacitor was a revolutionary invention for the world. Today you find tantalum in all of your personal electronics. Tantalum is now being used in in medical implants because it is non-toxic and does not react with body fluids. It is also used in jet aircraft as an alloying agent. Current worldwide production of tantalum is approximately 1160t annually. By 2030 just the demand is estimated to be 1410t. A few years back there was a lot of controversy surrounding tantalum because of its “Conflict Metal” tag. The metal was originally being mined in the Congo but most tantalum is mined in Australia, Brazil, and Canada.

Indium, how do you like that touch screen on your mobile phone? This rare technical and industrial metal has become a star among the elements recently. Indium’s uses in phones, computers, semi-conductors and televisions are well known. The one use that I would really like to highlight is in CIGS (copper-indium-gallium-selenide) thin film solar cells. These solar panels are the latest technology to hit the solar industry. Recently we have heard India, Japan, USA, Germany, Spain and many other countries announce huge solar initiatives. India alone signed into law a US $19 billion plan to produce 20 GW of solar power by 2020. Under the plan, the use of solar-powered equipment and applications would be made compulsory on all government buildings, as well as hospitals and hotels. This initiative alone will use up all the entire world’s production of solar cells. According to the USGS 84% of all indium production is currently used in solar cell production. Current worldwide production of Indium is approximately 600t per year. The future amount of indium required will depend greatly on the solar industry. Indium is mined in China, Canada, Bolivia and Japan.

Cobalt, have you driven a hybrid or electric vehicle lately? This rare technical and industrial metal is the one of the elements that makes the batteries in these cars possible. Cobalt is also used in pigments, super-alloys, non-corrosive medical implants, dental implants and jet engines. The top use today is as an alloy to make metals resistant to corrosion. The one I see real promise in is the use of hybrid and electric vehicle batteries. By 2012 the estimated sales of hybrid vehicles worldwide is approximately 2.2 Million and by 2015 to be at least 10% of the world auto market. Currently the biggest hurdle to these vehicles is the added cost and the ability to produce enough batteries to meet the demand. Cobalt has gained a lot of attention since the London Metal Exchange (LME) launched a cobalt contract in February 2010. Current worldwide production of cobalt is approximately 57,500t annually. The future is bright for cobalt. Every aircraft that goes in the air and every hybrid vehicle sold will put greater pressure on the supply of this metal. Cobalt is mined in Australia, Congo, Russia, Zambia and a few other countries.

These are just a few of the metals that our world needs to operate and the future is looking great for all commodities. I like the rare technical and industrial metals because of the tight supply and all of the wonderful uses for them. The mining of these metals is often a by-product of base metal like copper, lead and zinc. Most of the large deposits have been found and are in production. This translates into a very tight supply for the future and profits for investors. Silver and Gold have been my metals of choice for many years, but I see great opportunity for the person who is adventurous and willing to add another asset to their portfolio before the masses catch on.

By: Randy Hilarski – The Rare Metals Guy