Heavy Rare Earth

2012 Outlook: Uncertainty Continues For Rare Earths Prices, China Still Major Player

Published December 30, 2011 | By Swiss Metal Assets

Rare Earth Elements

(Kitco News) – After exploding onto the metals scene in 2010 and garnering widespread media and investor attention, rare earths element prices have dropped and have been unstable mainly due to demand tapering off in 2011, leading to uncertainty in 2012.

Low demand during 2011 was caused by high rare earths prices from both heavy and light rare earths metals, which despite their fluttering prices, remain historically high.

Despite unstable prices throughout 2011, there is some expectation that rare earths prices might become more stable in 2012.

“I think that rare earth metals, they tend to be more strategic in nature and supply versus demand remains quite balanced in favor of prices being stronger in 2012,” said Mike Frawley, global head of metals at Newedge Group. “The pace of consumption in mainland China is a critical component of demand, prices.”

The Chinese continue to control most of the rare earths supply but reports show that Chinese exports are extremely low. Information provided by Metal Pages, a news site that focuses on non-ferrous metals, ferro alloys and rare earths, indicated that rare earth elements exports have dropped 65% in 2011 and that China has only exported 11,000 metric tons of rare earths through the first three quarters of the year.

Reports suggested that the Chinese government may change regulations that would get around Chinese producers who have cut their supply while keeping prices high.

Rare earths prices alone are also an issue not only with volatility, but with their general cost.

According to a report focused on rare earth elements performance for the upcoming year from A.L. Waters Capital, the firm highlighted some specific rare earths and their current prices compared to their peak prices.

A heavy rare earth such as dysprosium, which is commonly used in televisions and lasers, reached a market high of $2,800 per kilogram while its current price is $2,000.

Another heavy rare earths type, europrium, which is used in television screens, peaked at $5,900/kg while its current price is $3,900.

Some light rare earths come at a substantially cheaper price, such as neodymium, which is used in magnets, peaked at $410/kg on the market and currently sits at $270. (A complete list of all 17 rare earth metals and their uses can be found at the end of the article.)

While rare earths are expensive to use in producing several products used daily, the drop in demand does not come from an alternate substance that can be as effective for a fraction of the cost.

“Demand has gone down (in 2011) but I also think that they haven’t really been able to replace rare earth metals,” said Arnett Waters, chairman of A.L. Waters Capital. “I think that part of what’s going on is that businesses are spending less money on more expensive stuff. If I have a use for europrium and I can use a quarter of a pound of it and it does ok in the product that I’m making, I’m not going to adopt a new product in this economy. It would cost too much money.”

Also, with current economic crises around the globe, it is expected that demand will not be strong in 2012 given the historical high prices of rare earths.

Waters used strategic military defense equipment as an example.

“In the case of strategic military equipment, defense budgets are declining,” Waters said. “I realize the U.S. may not be cutting stealth bomber production, but I am saying that in many countries that would like to use these rare earth metals for strategic purposes are cutting their defense budgets and they cannot afford it.”

Rare earths metals play a large role in current modern technology, cruise missiles and other weapons systems.

PRODUCING RARE EARTHS METALS OUTSIDE OF CHINA

China holds most of the processing capacity for rare earths metals.

“A lot of the processing capacity is in China and you can’t use Chinese capacity unless you’re actually getting your rare earths from them,” said Waters. “That’s why Lynas Corporation Ltd. (ASX: LYC) and others have been building their plants in Malaysia.”

Lynas currently has a concentration plant under construction at Mount Weld in Western Australia as well as an advanced materials plant in Kuantan, Malaysia. Neither plant has begun production yet.

Molycorp Inc. (NYSE:MCP) has three facilities, two located in the U.S., California and Arizona respectively, as well as one located in Estonia. The company stated earlier in 2011 that production from the three facilities would produce between 4,941 and 5,881 metric tons by the end of 2011. The company expects to raise production to 19,050 metric tons by the end of 2012.

The sentiment to mine and produce rare earths outside of China does not fall squarely on the shoulders of these two companies but it is still believed that bigger companies will gain more control of mines and production compared to smaller mining companies.

“At the end of the day it just means that there’ll be fewer smaller mines and there’s a natural evolutionary process that takes place in all developing parts of the world,” said Frawley. “You’ll have the small miners who will be succeeded by stronger companies. A more efficient process will begin to emerge.”

“That takes a long time and I don’t see it changing the balance of that supply any time soon.”

RARE EARTHS AS AN INVESTMENT OPTION FOR THE GENERAL PUBLIC

The biggest obstacle rare earths metals face as an investment is that although classified under the umbrella of rare earths metals, there are 17 different types and they are separated into two categories.

“Rare earth prices are not listed like precious and base metals prices so it is difficult for the average person to invest in,” said Waters. “It’s a barrier to the growth of the industry.

“As the market is maturing, there is going to be a need for a centralized source of information.”

Although newer in the metals world than precious and base metals, information can always be found.

“They’re small markets in comparison to gold, copper and aluminum in terms of tonnage and consumption tonnages,” Frawley said. “In terms of price transparency of these markets you’ll have to dig a little deeper.”

-List of heavy and light rare earths metals and their uses-

Heavy

Yttrium TV, glass and alloys

Promethium Nuclear batteries

Europium TV screens

Gadolinium Superconductors, magnets

Terbium Lasers, fuel cells and alloys

Dysprosium TVs, lasers

Holmium Lasers

Erbium Lasers, vanadium steel

Thulium X-ray source, ceramics

Yterrbium Infrared lasers, high reactive glass

Lutetium Catalyst, PET scanners

Light

Samarium Magnets, lasers, lighting

Neodymium Magnets

Lanthanum Re-chargeable batteries

Cerium Batteries, catalysts, glass polishing

Praseodymium Magnets, glass colorant

Scandium Aluminum alloy: aerospace

By Alex Létourneau of Kitco News
Source: ~~http://www.forbes.com/sites/kitconews/2011/12/30/2012-outlook-uncertainty-continues-for-rare-earths-prices-china-still-major-player/3/~~

Posted in Interesting Articles | Tagged aluminum, Base Metals Prices, Buy Gold, copper, dysprosium, europium, gold, Heavy Rare Earth, Invest Rare Earths, investment, KITCO, Kitco News, Light Rare Earths, Mine Rare Earths, Molycorp, Precious Metal Prices, Produce Rare Earths, Producing Rare Earth Metals, Rare Earth Element Prices, rare earth elements, rare earth metals, Rare Earth Prices, Rare Earth Supply, rare earths, Rare Earths Investment, Strategic Military Equipment

Can The U.S. Break China’s Stranglehold On Rare Earth Metals?

Published August 16, 2011 | By Swiss Metal Assets

These elements are the building blocks of a modern society, and China has all of them. Until now. The U.S. mining industry is starting to catch up.

rare-earths

You may not know what rare earth metals are, but they probably feature prominently in your life: These 17 chemical elements, which are buried in the Earth’s crust, are found in common electronics (lithium-ion batteries, laser pointers), and many clean technologies (electric car motors, solar panels, wind turbines). It’s not surprising, then, to learn that our demand for dysprosium, neodymium, terbium, and the like have increased in recent years. As it stands, the Western hemisphere is almost entirely beholden to China for its supply of rare earths. And China is willing to play hardball with its mineral deposits, putting the U.S. in a dangerous position where a key part of our economy and society is controlled by a not altogether friendly country. But that may be about to change.

Rare earth metals, paradoxically, are actually not that rare at all–in fact, many rare earths are more common than gold. But up until now, the economic incentives to mine them just haven’t been there. Recently, however, China started to curb exports and raise prices of these previously cheap metals, realizing both that they need a large domestic supply and that much of the world is dependent on them. Outside of China, rare earth metals are seen in high concentrations in select sites in the U.S., Canada, Australia, and elsewhere. And that’s creating a burgeoning rare earth industry in the U.S.

In the 1960s and 1970s, the USGS flew over the U.S., using airborne magnetometers to find anomalies in the Earth’s magnetic field that could signify big rare earth deposits. In recent years, mining companies have taken it upon themselves to confirm the presence of these deposits. They use everything from satellite technology to “almost old-fashioned prospecting. They go out in the field looking for interesting rocks and minerals, and indications of spots of interest,” says Gareth Hatch, Founding Principal of Technology Metals Research.

There are hurdles for ambitious companies to jump through. The U.S. used to produce rare earth metals at the Mountain Pass Mine in California, but it was shut down in 2002 largely because of lack of demand and environmental issues (the mine spilled a large amount of radioactive water into a neighboring lake). In 2008, Chevron sold the site to Molycorp, a company interested in reviving the old mine. Molycorp is currently expanding and modernizing the mine–a process that will yield 40,000 metric tons of rare earths by 2013, or 25% of the world’s supply.

The company, which is spending $2.4 million a year on environmental compliance and monitoring, says it plans to keep the process as clean as possible. “If what they say is what they do, you’re looking at a much more environmentally friendly process than in China, with the recycling of water and reducing effluent into the environment,” says Hatch. “But at the end of the day, you’re still messing around with some pretty nasty chemicals, and you still have waste piles of rock and radioactive material.” Fast Company’s calls to Molycorp have not been returned.

In China, rare earth mines are often responsible for egregious environmental violations, including air pollution and the production of wastewater that contains large amounts of radioactive material and acid. The pollution makes people sick, and it destroys local farmland and waterways.

California’s Mountain Pass is huge, but it isn’t enough to supply all of America’s rare earth metals. This is partially because it will produce mainly light rare earths instead of heavy rare earths, a group of chemicals that are often found in smaller concentrations. We need both types to manufacture the electronics and gadgets we enjoy so much.

There is hope for American independence in the heavy rare earth arena, however. The Pea Ridge iron mine in Missouri has a known deposit, and Quest Rare Minerals is exploring some major heavy rare earth mines in Quebec, a place that probably isn’t as likely as China to cut off the U.S. from imports or jack up prices impossibly high.

And the U.S. may soon have another major rare earth mine to count on in Nebraska, where Quantum Rare Earths is working on what may be the biggest untapped rare earths deposit in the world. But there’s a catch: Actually mining this deposit may not happen for a while. “It needs to be further explored and defined,” says Scott Wescott, a corporate communications representative for Quantum Rare Earths. That means it will take at least two to three years just to figure out the economics of mining and work on gathering permits for construction.

The permitting process is a major hurdle for U.S. companies. “The time it takes to get through the red tape is mind-boggling,” says Hatch. One DOE report claims that it will take 15 years to break dependence on Chinese rare earth metals (Hatch believes it’s more like eight to 10 years).

But we don’t necessarily have to wait for companies outside of China to get moving on their rare earth projects. In the meantime, it’s worth paying attention to companies like Nanosys, which manufactures more sustainable replacements for some of the rare earths found in LED backlighting.

Even with multiple mines and creative companies working on replacements, the U.S. will likely remain at least partially dependent on China for rare earths. It’s the classic problem of competing with China: Multiple layers of red tape may do some good in protecting the environment, but they really slow things down.

Ariel SchwartzTue Aug 16, 2011
www.fastcompany.com

Posted in Interesting Articles | Tagged gold, Heavy Rare Earth, Molycorp, Pea Ridge Iron Mine, Prices, Quantum Rare Earths, Quest Rare Minerals, rare earth metals, rare earths, Rare Earths Supply, Technology Metals Research, USGS

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2012 Outlook: Uncertainty Continues For Rare Earths Prices, China Still Major Player

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Can The U.S. Break China’s Stranglehold On Rare Earth Metals?

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