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Where in the World do Rare Earth Metals Come From
Rare Strategic Metals
Rare earth metals are becoming more and more important in manufacturing and industrial applications. To understand their potential value as an investment, you need to understand where these metals come from in the first place.
Some of the elements includes in the list of strategic and rare earth metals include indium, gallium, hafnium, tellurium, tantalum, bismuth, molybdenum, chromium, cobalt, zirconium, tungsten, and rhenium. Almost all of these elements are found as components in deposits of other elements. For example, indium is often found in zinc ore as a contaminant. The term “rare earth metal” comes from the fact that these elements are not found in large amounts, only in trace amounts.
The reality is that some of the rare earth metals are not that rare. But, because they are found in such small amounts, extracting them for manufacturing and industrial use is very expensive.
According to the latest theories, the ultimate origin of rare earth elements is as a by-product of star explosions billions of years ago. The high levels of energy and heat created the right circumstances to produce these complex elements. They became trace components in larger element deposits that eventually formed the earth’s crust.
As far as production here on Earth, over 95 percent of rare earth metal extraction comes out of China. In recent years this has allowed China to control the prices. To protect its domestic production, China also placed trade restrictions on the metals going to major industrial nations like the United States and Japan.
Despite China’s current dominance in the area of rare earth metal production, there are deposits of these elements to be found all around the world. To break the stranglehold that China has on these markets, major production projects are under way in the United States, Canada, Brazil, and South Africa, among other nations. Counties in other parts of Africa as well as South America hold promise for future mining of these elements as well.
Rare earth elements are important in the production of modern electronics and high-end components. They play a critical part in many forms of clean energy production. Modern defense applications depend on a steady supply of these rare earth elements. Emerging markets in South America, Africa, and Asia are increasing the demand as well. All of this activity is placing a strain on the currently available supplies. This is driving prices up every year.
While rare earth metals have been gaining popularity in the investing market, Swiss Metal Assets has changed the game considerably with their offerings in Rare strategic metals, a very specific and targeted group of critical metals. If you want to diversify your portfolio in an area that shows great growth potential, rare strategic metals are a good choice. It will provide a hedge against inflation and give you an inside road to a growing commodities market.
Not all Rare Earth Metals are Rare. But they are messy.
Rare Strategic Metals
Rare Earth Metals
Although seldom precisely defined or understood, the term ‘rare earth metals’ is nevertheless familiar to many in a casual way. That’s because they are:
- not quite as scarce as might be expected when associated with the word ‘rare,’ and
- commonly used in an increasing array of information technology (IT) and other consumer / industrial products.
Rare earth metals consist of 17 elements found in the center of the periodic table that were once exceptionally difficult and expensive to extract from nature, making them equally difficult to commercially acquire.
Very useful, they can be found in such products as aerospace components, camera lenses, computer monitors, fluorescent lamps, glass, hybrid cars, lasers, magnets, refrigeration units, televisions, vanadium steel, X-ray components, and wind turbines, among numerous other items.
Rare earth metals can be an actual part of the finished product or instrumental to the process of manufacturing them. Their uses continue to proliferate.
Extracting and Using Rare Earth Metals
One of the major problems using rare earth metals is the high cost of extraction and production. In addition, the overall environmental impact of either process can be excessive and dangerous. Thus, some nations remain reluctant to excavate their own rare earth reserves and seek them from other countries, primarily China, which produces about 92% of the current international market.
Moreover, relatively few countries have access to rare earth metals in their natural form and, of these, only several of the 17 are available in a pure state. Part of their rarity is a result of their limited natural availability or the hesitance of nations to access them, because of potentially dire environmental consequences.
In addition, many are more frequently derived as bi-products of producing other metals, complicating their overall acquisition.
However, their importance is growing, since they can be innovatively applied for extremely specialized tasks, either during manufacturing processes or as finished products.
The ‘messiness’ inherent in extraction of rare earth metals is threefold; they:
- require often specialized mining processes that can be very expensive, while
- generating significant ecological distress to the surrounding environment, leading to
- strained diplomatic relations among certain nations (basically much of the West v. China), and the potential of subsequent economic sanctions.
Investing in Rare Earth Metals
The fact is, however, despite these issues, diplomatic repercussions and economic sanctions have thus far been essentially confined to warnings, for the simple reason that rare earth metals are so valuable. They are used in too many manufacturing processes or as finished products to exclude their exploitation on the largest possible scale.
The fact that many of these products are connected to IT — cell phone components, computer monitors, high-temperature superconductors — medicine — PET Scan detectors, X-ray tubes — or anything connected with aerospace, chemical reducing agents, lasers, or nuclear batteries, strongly suggests a growing market well into the future. Under these circumstances, investment in rare earth metals is well advised, negative publicity attached to their extraction notwithstanding.
Moreover, the use of these elements in the manufacture of such environmentally green products as automobile hybrids, catalytic converters, and wind turbines at least somewhat diminishes the impact of pollution caused by mining them. And while China has yet to implement any real reduction in ecologically-challenged extraction processes, these will develop as technologies for rare element mining improve. Better removal processes and entry of more nations into the marketplace should lower investment costs while increasing competition, diminishing China’s current monopolistic position in the industry.
Revenues and profits should improve for all. Thus, no one should be dissuaded from investing in rare earth metals.
Why Rare Strategic Metals for Asset Protection?
Over the last few years there has been a flurry of news reports discussing how important the rare earth metals are to the world economy and technology of today. We have heard how China controls over 95% of the production of the rare earth metals. The rare strategic metals are a group of metals also vital to the world economy that do not make it to the headlines because they are a much smaller market and most are not traded on the LME, (London Metals Exchange). This market is quietly gaining attention among private investors.
Similar to the rare earth metals, rare strategic metals are 95% or more controlled by China. In the 1990´s China made the decision to focus on the metals, and quickly put many mines out of business throughout the world. In 1992 Deng Xiaoping, President of China said, ¨The Middle East has its oil, China has rare earth metals¨. In 2010-2011 China restricted exports of these rare strategic metals by 70%. The Chinese have decided that they no longer need to export the metals. The demand for rare strategic metals within China´s borders are enough to use up 100% of all metals produced. China can now tell companies to produce their high tech products in China with low priced local metals or risk being cut off from metals by producing their products in other countries.
The rare strategic metals are a very inelastic group of metals. These metals are mined primarily as a bi-product of other metals like copper and zinc. This makes it very difficult to increase the amount of metals mined. It is not profitable for mining companies to open mines for the sole purpose of mining these relatively low profit metals as far as mining is concerned.
Demand for these metals is growing exponentially. Smart phone sales, solar power, LCD screens, national defense, Apple iPads, aviation, hybrid vehicles and nuclear energy are all using these metals. National Geographic calls these elements, ¨The Secret Ingredient of almost Everything¨.
The convergence of growing demand and restriction of exports out of China has produced an opportunity of grand proportions for people who see the future use of technology and alternative energy growing. One company out of Germany stepped up and saw the trend. Schweizerische Mettallhandels and its partner for the America´s Swiss Metal Assets saw an opportunity to assist forward thinking clients in setting aside some of these rare strategic metals in their own portfolios.
Swiss Metal Assets has designed the product around small portions of the metals so that most clients can afford to enter the rare strategic metal market. Previously only large companies or institutional investors could afford entry in to this little known market. The metals are put in, ¨Baskets¨, of metals used in certain industries. Swiss Metal Assets purchases the metals from Haines and Maassen a metals trader who has been in business since 1948 supplying German companies with metals.
- The Key Industries Basket contains 6 metals
- The Solar and Energy Basket contains 3 metals
- The Construction and Engineering Basket contains 6 metals
- The Defense Basket contains 5 metals
- Gold
- Silver
The process of storing these rare strategic metals for your portfolio is relatively simple.
- Buyer chooses what baskets of metals to purchase.
- Basket is filled by, Haines and Maassen in Germany.
- Baskets are transported to Switzerland to be added to the vault in the tax free zone.
- Buyer decides to sell.
- Baskets are liquidated through Haines and Maassen free of Swiss taxes.
- Funds are transferred into preferred currency/bank of the seller.
This product was designed to assist in sheltering client assets from the uncertainty of the world currency and financial markets. The team at Swiss Metal Assets can also set up an IRA account for interested parties. If this is something that interests you please contact the team at Swiss Metal Assets.
China angers the world as battle for rare earth metals escalates
Last week, the EU, US and Japan formally asked the World Trade Organisation (WTO) to look at China’s export restriction on rare earth metals. Lawyers believe the case will run and run.
- The 17 rare earth metals, including dysprosium and neodymium, are essential components in precision-guided missiles Photo: Getty Images
The 17 rare earth metals, including dysprosium and neodymium, are essential components in modern technology such as iPhones, wind turbines, halogen lights and even precision-guided missiles. China produces more than 95pc of these minerals and it has imposed a quota restriction on their export.
EU Trade Commissioner Karel De Gucht said China’s export quotas and export duties give Chinese companies an unfair competitive advantage.
“China’s restrictions on rare earths and other products violate international trade rules and must be removed,” Mr De Gucht said. “These measures hurt our producers and consumers in the EU and across the world, including manufacturers of pioneering hi-tech and ‘green’ business applications.”
Rare earth metals are not rare, despite the moniker. Cerium, for example, is more common in the Earth’s crust than copper or lead. It is the 25th most common element of the Periodic Table.
However, the problem is that they are not really found in mineable deposits in many areas. They also tend to be associated with the radioactive elements, which makes the mining process costly and potentially environmentally damaging.
The WTO has been asked to arbitrate in a dispute settle request, which is the first step before a full trade case.
“This will be a very fact-intensive case,” Konstantinos Adamantopoulos, partner at law firm Holman Fenwick Willan, said. He believes the case could run for some time.
The country has imposed a quota on the export of rare earths. However, because of the economic backdrop, the quota has not been met.
Its rare earth exports totalled 14,750 tons during the first 11 months of 2011, accounting for only 49pc of the total quota. China set the 2012 rare earth export quota at roughly the same level as 2011.
“China will argue that the quota is so generous that it is not a quota at all. They will point to the fact that last year the quota was not used up,” Mr Adamantopoulos explained.
Then there’s the issue of a restriction on exports. “Goods may not be subject to export restrictions. This is not allowed under the WTO,” he said.
“The question will be: is the 42pc tax on exported metals a quantitative export restriction or is it an export duty?” Mr Adamantopoulos said. “The WTO does not prohibit duties, but says they must agree a multilaterally negotiated solution. The WTO hates ‘unilaterally’ when it comes to tariffs.”
“As a second line of defence, China may invoke special clauses in the WTO rules,” Mr Adamantopoulos noted.
These clauses mean production can be restricted to protect the environment or to ensure security of supply to the domestic industry.
“The US used this in its oil trading agreement in NAFTA and China may wish to put forward such an argument,” said Mr Adamantopoulos.
Indeed, it already has. China needs to limit environmental damage and conserve scarce resources, Liu Weimin, a Chinese foreign ministry spokesman, said. “We think the policy is in line with WTO rules. Despite such huge environmental pressure China has been taking measures to maintain rare earth exports. China will continue to supply rare earths to the international market.”
China plans to consolidate its rare earths industry into two to three companies, according to the Shanghai Securities News, which cited Miao Wei, minister of industry and information technology (MIIT). This is ahead of the country’s plan to develop new rare earth materials to boost manufacturing capacity.
China will “make full use of its rare earth resources to expand the industrial scale of new materials made with rare earth”, said a MIIT publication issued last month.
Because this battle is set to drag on, it is essential that countries other than China start to produce more of these metals. Until then, we are likely to have to live with Chinese restrictions.
By: Garry White and Emma Rowley
Source: http://www.telegraph.co.uk/finance/commodities/9151608/China-angers-the-world-as-battle-for-rare-earth-metals-escalates.html
Rare Earths Supply at Risk Due to Growing Shift to Green Energy
Rare Earth Elements
Any global effort to save and prolong the life of Mother Earth, such as investing into and inventing technologies that use clean fuel and green energy are most welcome. But with the world still yet to determine a suitable, dependable and reliable source of rare earths outside of China, these efforts could prove detrimental to the rare earths supply chain.
Production of two rare earths metals, dysprosium and neodymium, critical components used to aid technologies in manufacturing wind turbines to generate electricity and make electric vehicles, have been found to have increased by only a few percentage points per year, according to www.clickgreen.org.uk. Versus projected global demand seen to grow by 700 per cent for neodymium and 2,600 per cent for dysprosium over the next 25 years, it is believed the supply of the precious metal could not keep up given that the two metals are most especially available almost exclusively in China.
Citing a publication in the ACS journal Environmental Science & Technology authored by Dr Randolph E. Kirchain, inventions of green technologies would definitely carry out a proposed stabilisation in atmospheric levels of carbon dioxide, the main greenhouse gas, at 450 parts per million.
However, to meet the objectives of these green technologies would mean a parallel growth in the supply of rare earths.
“To meet that need, production of dysprosium would have to grow each year at nearly twice the historic growth rate for rare earth supplies,” Mr Kirchain said.
“Although the rare earths supply base has demonstrated an impressive ability to expand over recent history, even the rare earths industry may struggle to keep up with that pace of demand growth,” the author said.
In order to keep up, shortfalls in future supply could be mitigated “through materials substitution, improved efficiency, and the increased reuse, recycling, and use of scrap.”
Rare earth metals are essential for clean energy technologies, such as PVs; hybrid and electric vehicles; high-efficiency wind turbines; smart grid technologies; compact fluorescent lights; fiber optics; lasers and hard disk drives, defense guidance and control systems; global positioning systems; and advanced industrial, military and outdoor recreation water treatment technology.
Rare earth metals are not really rare. It is the mining procedure and operations that make them rare. Unfortunately, majority of the world’s rare earth metals, about 97 per cent, are mined in China, which have considerably slashed export quotas in 2010 and 2011 for domestic consumption and manufacturing purposes.
These “economically important metals are at risk of supply disruption due to human factors such as geopolitics, resource nationalism, along with events such as strikes and accidents,” www.energytrend.com said, citing a report by the British Geological Survey.
In December 2011, the U.S. Department of Energy (DOE), in its 2011 Critical Materials Strategy, said “many clean energy technologies depend on raw materials with potential supply risks” as it assessed the 16 elements considered most critical.
Dysprosium, neodymium, terbium, europium and yttrium were included in the short-term critical supply list. On the medium term were lithium and tellurium.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
By: Esther Tanquintic-Misa
Source: http://community.nasdaq.com/News/2012-03/rare-earths-supply-at-risk-due-to-growing-shift-to-green-energy.aspx?storyid=125795
Obama’s Rare-Earths Case With WTO Won’t Ensure Security: View
Photograph by Doug Kanter/Bloomberg
The Cold War had Americans worried about a “missile gap.” Should the rise of China have us nervous about a neodymium gap?
It’s a question President Barack Obama is taking seriously, as he showed Tuesday in asking the World Trade Organization to look into China’s manipulation of the global market in so-called rare-earth elements. We wish the U.S. Defense Department would show an equal amount of concern.
Neodymium is one of 17 rare-earth metals that have become vital to industrial production and national security in our high-tech age. Its unique magnetic properties are integral to computer hard drives, hybrid-car motors, aircraft turbines and those Beats by Dr. Dre headphones your teenager apparently can’t live without.
One thing neodymium isn’t is rare — it is as commonplace in the earth’s crust as prosaic metals like copper, and scattered around the globe. Much the same can be said of praseodymium (used in Hollywood’s arc lights), samarium (guided missiles) and lanthanum (night-vision goggles). Yet, despite this abundance, China produces more than 90 percent of the global supply of rare earths.
Mining Isn’t Easy
There are many reasons for this: The ore is usually found in small quantities that aren’t cost-effective to mine and refine. Because it is often in seams of thorium and other radioactive or harmful substances, extraction can create an environmental disaster. Opening a new mine in the U.S. can cost upward of $1 billion, and can take as long as 15 years before it becomes operational. These difficulties give an advantage to China, with its vast rare-earth deposits in Inner Mongolia and elsewhere, state-financed mining operations, and lax environmental and worker protections.
It’s never good to have a single supplier develop a market stranglehold, and the problem is compounded in this case because China is a commercial and military rival with no qualms about pressing every advantage. It places quotas on exports and sets prices for rare earths far lower for the domestic market — a ploy to get Western manufacturers to move factories inside China. According to a study by Bloomberg Government, the average Chinese export price of neodymium oxide was $321 per kilogram in the summer of 2011, 66 percent higher than the domestic price and a 563 percent increase compared with the same period in 2010.
The stakes go beyond commerce: In 2010, after Japan detained a Chinese fishing captain near some disputed offshore islands, Beijing played some power diplomacy by placing an embargo on rare-earth exports to its island neighbor.
In response, Japan has been shaping a national strategy on rare earths, centered on increasing stockpiles, recycling from discarded electronics and finding new sources (its scientists believe they may have found large deposits under the ocean). Yet the jury is out on Japan’s approach, and such steps may not lend themselves to the U.S.’s military-industrial structure. Congress is rightly leery of intervening in the market through creation of a large-scale defense stockpile, and most electronic devices contain too little rare-earth metal to make recycling financially worthwhile.
On new sources, however, things are looking up. Molycorp (MCP) of Greenwood Village, Colorado, has recently reopened its Mountain Pass mine in California’s Mojave Desert, which is particularly rich in so-called light rare earths such as lanthanum, cerium, praseodymium and neodymium. Mountain Pass was shut down more than a decade ago because of radioactive discharge. This time around, however, Molycorp seems to be saying and doing all the right things environmentally, and plans to be at full production later this year.
A Market Success
Congress had considered providing loan guarantees for Molycorp’s efforts to reopen Mountain Pass. In the end, the market worked just fine. The company raised nearly $400 million in an initial public offering last July and this month reached a $1.3 billion deal to purchase Canada’s Neo Material Technologies Inc. (NEM), a major refiner of rare earths. (Although this is mostly good news, Neo Material has two plants in China, raising the troubling possibility that ore from Mountain Pass could be exported there.) Meanwhile, the other major Western company in the field, Lynas Corp. of Australia, is running into local opposition in efforts to build a refinery in Malaysia.
Still, given the importance of rare earths to the U.S. economy and national defense, the government has a role to play in the success of Molycorp and its smaller domestic rivals.
The complaint to the WTO is justified, but is hardly certain to succeed. This is a tougher issue than a 2009 case on broader raw materials that China lost, as Beijing will probably cite concerns over the environmental impact of rare-earth mining as reason for restricting exports.
Better to concentrate on increasing non-Chinese supplies. Representative Mike Coffman, a Republican who represents the Colorado district where Molycorp is based, has been pressing the Pentagon for years for a report on its rare-earths strategy. Defense officials, who have blithely dismissed the idea of a rare-earth security threat in the past, are expected to give Congress a classified briefing on the issue this month.
At the very minimum, the Pentagon needs to have its Defense Logistics Agency conduct an inventory of rare earths on hand and its potential needs over the next five years, and develop a plan should Beijing officials jack up prices or turn off the supply. It could also look at long-term purchasing contracts with Molycorp, smaller U.S. companies and even foreign, non-Chinese firms like Lynas to assure diversity of supply. These minerals could eventually be sold off to military contractors and other manufacturers.
Thirty years ago, Deng Xiaoping presciently said: “There is oil in the Middle East, there is rare earth in China.” The U.S. has seen the ill-effects of dependence on Middle Eastern petroleum. We have a chance to avoid a similar fate with neodymium.
Source: http://www.bloomberg.com/news/2012-03-13/obama-s-rare-earths-complaint-before-wto-won-t-ensure-u-s-security-view.html
China to develop rare-earth based new materials
Rare Earth Elements
BEIJING – China will develop rare-earth-based new materials during the 2011-2015 period, in an effort to boost manufacturing capacity, according to a five-year plan for the new materials industry released on Wednesday.
The government will “make full use of its rare earth resources to expand the industrial scale of new materials made with rare earth,” said the publication by the Ministry of Industry and Information Technology.
The government will focus on developing rare earth functional materials, increasing efforts to improve performances of new materials made with rare earth, promote its application in high-end manufacturing, and increase product added-value, the plan said.
Rare earth metals are a group of 17 elements that are widely used in high-tech products, including flat-screen televisions, lasers and hybrid cars.
The plan aims to promote the application rate of production technologies for rare earth functional materials to 70 percent in the country’s high-tech industries by 2015, it said.
It also set goals to increase the output capacity for rare earth permanent magnet materials by 20,000 tonnes a year and that of rare earth hydrogen-containing alloy powder by 15,000 tonnes a year.
Rare earth permanent magnet materials, which have rare earth elements in their composition, are widely used in electrical motors, medical treatment and spaceflight, while hydrogen-containing alloy powder is used in high-performance batteries.
The plan also sets higher output goals for a range of other new materials that contain rare earth metals.
Production bases for rare earth functional materials will be mainly built in Beijing, Baotou city in Inner Mongolia autonomous region, Ganzhou city in Jiangxi province, Liangshan and Leshan in Sichuan province, Longyan in Fujian province and Ningbo in Zhejiang province, the plan said.
While pledging policy supports to accomplish the goals, the plan also stresses efforts to protect energy resources and promote integrated utilization by developing reproducible resource technologies.
China’s rare earth sales account for nearly 90 percent of the global total, but its reserves only account for one-third of the world’s total. Decades of excessive exploitation has resulted in serious environmental damage.
To promote healthy development of the industry, China has suspended the issuance of new licenses for prospecting and mining and adopted production caps, export quotas and stringent environmental standards, while launching crackdowns on illegal mining activities.
China sets the 2012 rare earth export quota at basically the same level of 2011. Its rare earth exports totaled 14,750 tonnes during the first 11 months of 2011, accounting for only 49 percent of the total quota.
The plan, which maps out development of the nation’s new material industry, prioritizes the development of six types of advanced materials, including special metal functional materials, high-end metal structural materials, advanced macromolecular materials, new inorganic non-metal materials, high performance composite materials and frontier new materials.
The plan targets a 2-trillion-yuan output in the country’s new material industry by 2015. The industry’s output value stood at 650 billion yuan in 2010, growing by an annual rate of 20 percent since 2005.
Source: http://www.chinadaily.com.cn/usa/business/2012-02/23/content_14677240.htm
Obama’s Budget: Dollars for Manufacturing Education, Rare Earths Research
Continuing with our look at President Obama’s budget proposal, a few Mineweb articles this week point out a few important line items regarding mining. But first, a look at something MetalMiner has spent some time reporting on: educating — and hiring — the next generation of American manufacturing workers.
Education in Trades
Obama is evidently continuing his push to get young workers interested in making the US competitive in terms of manufacturing, as he had been with his Skills for America’s Future initiative.
“As part of his short-term stimulus efforts, Obama today announced an $8 billion Community College to Career Fund proposal that would link businesses and community colleges to train as many as 2 million workers for jobs in high-growth, high demand industries,” Bloomberg reported yesterday. This is on top of the $2 billion in competitive funds Obama pledged in 2010 to community colleges over four years, according to a November 2010 White House press release.
The departments of Education and Labor would tag-team this effort, the canopy of which includes health care, advanced manufacturing, transportation, clean energy and information technology, according to an official statement as reported by Bloomberg.
The question becomes, with more than $10 billion sunken into this endeavor, what will the ROI be? And at what rates are companies hiring these types of grads for worthwhile positions?
There are signs that, to some degree, the plan is working. One good example is in San Diego, where Solar Turbines accepts (and has been for 30 years) apprentices who work at the company while getting certification at San Diego City College, according to a KPBS article. Also, Southwestern Community College partners with Puget Sound Naval Shipyard and Intermediate Maintenance Facility to train shipyard workers.
However, state budget cuts may prove a roadblock to Obama’s hopes down the line: California cut funding for apprenticeship programs at community colleges two years ago by 51 percent, according to KPBS.
Mining Safety, Mining Royalties and Rare Earths Research
Back to how the budget proposes to affect domestic metals and mining directly. A Mineweb article claims, “approvals of mine ventilation and roof plans face more delays” in the proposed 2013 Mine Safety and Health Administration (MSHA) budget, which is proposed to be cut by $1 million from last year.
Granted, most of this proposal deals with coal mines and coal-mine safety, but at least some jobs in the mining sector will be retained: the article states that the “budget maintains the 597 fulltime positions currently in the metal and nonmetal mine safety and health division,” and “requests an increase of $1,834,000 to fully fund enforcement staff positions.”
A separate Mineweb article details Obama’s “calls for a 5% gross mining royalty on federal lands, and a hardrock abandoned mined land fee on all private and public lands.” Obama proposed the same last year, only to be shot down by Congress. The administration says the royalties will yield $74.5 million in revenue over the next decade, and “would be instituted under a leasing program under the Mineral Leasing Act of 1920 for certain hardrock minerals, such as silver, gold and copper.”
Lastly, the proposed budget for the United States Geological Survey (USGS) has been upped $34.5 million from last year, including an increase of $1 million to support research on rare earth elements.
By: Taras Berezowsky
Source: http://agmetalminer.com/2012/02/15/obamas-budget-dollars-manufacturing-education-rare-earths-research/
Dodd-Frank, Australian Cuts Threaten Tantalum
CAPE TOWN, South Africa — Markets for tantalum metals used primarily in electronics could face short supplies by as early as 2014 in part because of reduced Australian primary production and impending restrictions from the US Dodd-Frank Wall Street reform law aimed at curbing trade of illegal and artisanal produced minerals from the Democratic Republic of Congo that are the source of the metal.
“Consequently the establishment of new tantalum sources outside the DRC we believe is imperative,” Lara Smith, managing director of Johannesburg-based Core Consultants told the Investing in Africa Mining Indaba conference here this week.
Smith said the 2008-2009 recession had caused a reduction in demand for electronics which had a knock-on effect on tantalum supplies but that studies done by her firm had concluded that if the market moves beyond a a conservative steady growth of 4% in the coming years a supply shortage could develop within three years. Consequently we believe that prices should ultimately move to reflect this circumstance.
Smith noted that tantalum reserves are dispersed around the globe with only 10% of proven reserved actually found in Africa, and only 2% located in Central Africa. “That being said, it has been estimated that since 2009 over 50% of the world tantalum supply originated from Africa and a significant portion of that is said to come from artisanal mining in the DRC,” she said.
Smith added that is probably more sensible to talk about the most likely resource base, recognizing that artisanal mine and illegal miners typically do not prove up their reserve base. “If you consider the most likely resource base then Africa would account for about 16% of global resources and Central Africa 9%,” she said.
New technologies leading to miniaturization of electric devices – which have become smaller, lighter and with more processing power – have resulted in increased usage of tantalum, Smith said, noting that in particular, tantalum-based capacitors are on the rise in automotive electronics, mobile phones, personal computers and wireless devices. Capacitors now account for 60% of tantalum consumption, compared to only 51% in 2004, she noted.
While tantalum consumption has increased by around 3.5 million tonnes since 2004, growth in tantalum demand has been relatively lackluster over the past 15 years or so when compared to other metals used in electronic sectors. But Smith said here analysis found that demand from the automotive sector could lead to three-fold growth in tantalum consumption from 2007.
On the supply side, production has traditionally been supplemented by secondary sources, including the US Defense Logistics Agency’s (DLA) stockpile sales, recycling, long-term contracts and sourcing from slags resulting from production of other metals. These secondary sources accounted for about 45% of supply in 2007, Smith noted.
But she noted that since 2007 there have been no DLA sales of tantalum. Additionally, recycling is becoming more difficult because of high costs and the miniaturization of electronic parts, which use less tantalum metal . Retrieval of tantalum from tin slag is also declining, she said, noting that another speaker at the conference had shown fore forecasts of tin supply projecting 0.8% of increased supply in 2012 and 0.2% for the next five years.
“Moreover tantalum is traditionally sold under long-term contracts as opposed to the spot market,” Smith said, noting that end-user companies have always engaged in preemptive buying. During the tech boom tantalum inventories were stored up by companies based on their projection of their demand for their products and when the tech bubble burst those stockpiles were prolonged further.
Similarly. in 2008 the economic recession and ensuing slowdown in consumer demand insured that tantalum consumers were long on supply, Smith said. “We conjecture that the reason the prices are not yet perspective of a deficit market is due to these stockpiles, which we estimate will be depleted over the next 12 months or so as consumer demand improves,” Smith said.
In terms of primary sources, in December 2008 Australia’s Talison Minerals Pty. Ltd., which since been renamed Global Advanced Metals, placed its two Australian mines on care and maintenance. The mines, Greenbushes and Wodgina, together annually accounted for 2.4 million pounds tantalum pentoxide or 38% of global tantalum supply.
Operations of the Wodgina mine restarted in January 2011 but the company indicated that they would only produce around 700,000 pounds per year, Smith said. “In reality we understand that they are producing closer to half a million pounds,” she added.
In addition to the global financial crisis, the other reason cited for halting production in Australia, was the influx of low-priced coltan minerals, from which tantalum metal is extract, coming from the DRC’s illegal and artisanal miners, Smith said.
The Dodd-Frank law enacted in July 2010 requires that companies who consume minerals from conflict zones, in particular tantalum, tin, tungsten and gold from the DRC, have to now show provenance of these minerals and demonstrate that they are not conflict or “blood” minerals.
“This could facilitate the issue of lower priced imports of coltan,” Smith said but noted that the implementation of the act has since been delayed a number of times, most recently in December.
Under the act companies are expected to be granted a grace period of 12 months to either demonstrate provenance or find alternative supply sources, Smith said. “This means that full implementation of this legislation will most likely not come into effect before the end of 2013,” she said. “Subsequently cheaper coltan from the DRC and Rwanda may continue to fill the supply gap and stabilize prices.”
Consideration of current and future tantalum project plans were used by Core Consultants in forecasting the outlook for supply demand and future price direction of this strategic metal, she said.
BY PHILIP BURGERT
Source: http://www.resourceinvestor.com/2012/02/10/dodd-frank-australian-cuts-threaten-tantalum?ref=hp
Demand for minor metals to rise, but supply disruptions a risk
CAPE TOWN (miningweekly.com) – Demand for cobalt, tantalum and rare earth metals – seen as critical minor metals necessary for the continuation of the modern way of life – would continue to increase, but a mining consultancy group said on Monday that there was a risk of supply disruptions.
Speaking at the Investing in Africa Mining Indaba in Cape Town, Core Consultants MD Lara Smith cited the political situation in the Democratic Republic of Congo (DRC), where 50% of the world’s cobalt reserves were found, as a potential risk to supply.
“Moreover, transport logistics in Africa as a whole are in need of a continental overhaul and are extremely problematic and could bring supply disruption,” she said.
Smith also said that China, which refines most of the world’s cobalt, could restrict exports, as the country had already done with other commodities, leading to greater price volatility and increased risk of supply disruptions.
However, she remained bullish about the sector, and said demand for cobalt continued to increase.
Approximately 3.6 g of cobalt is used in almost every single mobile phone battery and the penetration of mobile phones, especially in Africa and Asia is expected to continue to increase driving cobalt demand. With laptop and tablet production expected to double over the next five years, Smith said this would require an estimated 11 000 tons of cobalt.
“Cobalt has numerous uses, including super alloys and catalysts, but its growth in battery application has outpaced all other end-uses and now accounts for over 27% of overall consumption compared to 11% in 2002,” said Smith.
Electric vehicles and electric bicycles are also expected to strongly drive cobalt demand, as approximately 4 kg of cobalt would be required for a hybrid electric vehicle battery and 6 kg for a fully electric vehicle. With between 12- and 13-million hybrid electric vehicles expected to be on the road by 2020, this would necessitate between 20 000 t and 30 000 t of cobalt, said Smith. Increased manufacture of electric bicycles and continued demand for aircraft would add further upward pressure on the metal.
Smith said that tantalum was similar in that Core Consultants expected demand of the metal to increase, as the miniaturisation of electronic devices has resulted in higher use of tantalum. The primary requirement for tantalum was now in capacitors for application in automotive electronics, mobile phones, computers and wireless devices.
“The 2008/9 recession caused a reduction in the demand for electronics which had a knock-on effect on tantalum, however if we assume a conservative steady growth rate of 4% in coming years the demand will be perfectly balanced. Growth above 4% will result in a supply shortage as early as 2014. Consequently we believe that prices should ultimately move to reflect this deficit,” said Smith.
With China having reduced their export quota of rare earth metals by 40% in 2010 there is continued concern for the supply of these metals. Smith noted particularly that deficits of selected rare earth metals could affect a number of industries including those producing solar panels, fluorescent bulbs, wind turbines and electric car batteries.
“Considering all the rare earth (metals) then we project a surplus market by 2014, however if we consider only . . . critical rare earths then even on those optimistic projections it leads us to the conclusion that the market will be in deficit by some 20 000 t as early as 2015.”
By: Jean McKenzie
Source: http://www.miningweekly.com/article/demand-for-minor-metals-to-rise-but-supply-disruptions-seen-as-risk-2012-02-06
Could the renewables industry suffer from a lack of scarce metals?
Solar Panels
It is not just in laptop computers, mobile telephones and LED screens that scarce metals are to be found but also in solar cells, batteries for mobile technologies and many other similar applications. And the rising demand for these metals increases the risk of a bottleneck in supplies…
“There is no future without scarce metals!” This was the very clear message with which Peter Hofer, a member of Empa’s Board of Directors, greeted guests at the recent Technology Briefing on scarce metals held at the Empa Academy.
After all, it is scarce metals in batteries and motors that keep electric vehicles rolling and which, in automobile catalytic converters, clean up the exhaust gases.
Hofer said: “Materials with special properties are essential if we are to find solutions to the problems caused by our ever-increasing mobility requirements.”
The term scarce metals includes gallium, indium, cobalt and the platinum metals, in addition to the rare earth metals which are used (together with iron and boron), for example, to make the very strong magnets needed in wind turbines.
And manufacturers like to use tantalum for the capacitors on mobile telephone printed circuit boards (PCBs) because this transition metal, when used in these tiny components, enables them to store and release large amounts of electrical energy. The demand is high, with more than 60% of the tantalum mined being used for this application.
The darker side
But, as Patrick Wäger, the initiator of the Technology Briefing and an expert on scarce metals, explained, everything has a darker side to it. Raw materials which can only be mined and refined in a few countries, for which alternatives are not easy to find and which have a low rate of recycling must are considered to be critical. China, for example, almost completely controls the supply of rare earth metals from which high-performance permanent magnets are manufactured.
Wäger, who is a staff member of Empa’s Technology and Society laboratory, added that by imposing export restrictions the Chinese Government has forced prices to rise, leading to delivery bottlenecks. Currently great efforts are being made to reduce this dependency by expanding supply capacities outside of China, such as in the USA, Australia or Greenland – with implications also for the environment.
Tantalum, required for high-performance micro-capacitors, is viewed in the microelectronics industry as a material which is difficult to substitute, and to date it has not been possible to recover it from end-of-life products. Particularly worrying are the facts that tantalum is illegally mined in certain Central African countries under degrading conditions, and the profits from its sale are used to finance civil wars.
“Swiss companies also need to think closely about how they can reduce this dependency and avoid the possibility of delivery bottlenecks,” remarked Jean-Philippe Kohl, the Head of Swissmem’s Economic Policy Group.
A recent survey of the industry association’s members in the Swiss mechanical engineering, electrical and metal sectors showed that every single company contacted used at least one of the critical raw materials. In order to protect themselves from possible shortages many of the companies had signed long-term delivery contracts with their suppliers. The others are cooperating with research institutions, either to develop alternative raw materials and technologies, or to optimise existing processes.
Alternatives from research labs
As an example of this approach, Stephan Buecheler explained how Empa’s Thin-Films and Photovoltaic laboratory was working to reduce the thickness of the critical tellurium layer in flexible solar cells which use cadmium telluride (CdTe) as the active material.
Similarly, efforts are being made in solar cells based on copper-indium-gallium-diselenide (CIGS) to replace the critical indium oxide with zinc oxide. In making these changes no loss of performance is expected. Quite the opposite, in fact – the aim is to increase the efficiency of these devices by optimal use of raw materials and fast processes. Researchers have already shown that this is possible, having set a new efficiency record last year.
Again with the aim of reducing scarce metal usage, the institution’s Internal Combustion Engine laboratory has developed an extremely efficient and economic foam catalyst. Changing the form of the ceramic substrate has enabled the use of less of the noble metals palladium and rhodium in comparison to conventional catalysts.
In collaboration with Empa’s Solid-State Chemistry and Catalysis laboratory, the motor scientists are conducting research work on regenerative exhaust gas catalysts which employed perovskites instead of scarce metals. The former are multifunctional metal oxides which, because of their special crystal structure, are capable of transforming heat directly into electrical energy.
The recycling challenge
Despite all the doom and gloom, we will not have to do without scarce metals entirely. As Heinz Boeni, head of the Technology and Society laboratory, maintained there is of course a reserve of scarce metals to be found in end-of-life electrical and electronic products.
While natural primary deposits are being used up, the ‘anthropogenic’ secondary deposits created by man are increasing continuously. In a ton of natural ore as mined there is typically about 5 g of gold. In a ton of discarded mobile telephones, on the other hand, there is about 280 g, while the same weight of scrap PCBs contains as much as 1.4 kg of the precious metal! But recovering scarce metals is anything but easy.
“You can’t just pull them out from electronic waste with a screwdriver and a hammer. The recovery process is at least as complex as the design and development of the old appliances themselves,” recycling expert Christian Hagelüken made clear.
A large percentage of scarce metals are to be found in the form of very thin layers or mixed with other substances in the form of alloys, added Hagelüken, whose employer, Umicore, is one of the largest recycling companies involved in the recovery of precious metals from complex waste material. Recycling scarce metals demands the use of complicated recovery processes.
Furthermore, suitable recovery processes alone are not enough to guarantee high recycling rates. According to the experts it is necessary to keep an eye on the whole recycling chain, from collection, disassembly and sorting of the scrap to the actual recovery process itself.
The greatest efforts are in vain if, as is the case in certain countries, end-of-life computers and other electronic appliances are exported to developing and threshold countries where the scarce metals are lost through the inappropriate treatment of the electronic waste, which also represents a danger to human health and the environment. Or, if with a mechanical disassembly – which is common today in Switzerland – the scarce metals are dissipated into fractions from which they cannot be recovered.
Source: http://www.renewableenergyfocus.com/view/23613/could-the-renewables-industry-suffer-from-a-lack-of-scarce-metals/
No future without scarce metals
(Nanowerk News) It is not just in laptop computers, mobile telephones and LED screens that scarce metals are to be found but also in solar cells, batteries for mobile technologies and many other similar applications. The rising demand for these metals increases the risk of a bottleneck in supplies.
Empa researchers and representatives from industry explained at the “Technology Briefing” why scarce metals are essential for many key technologies and how an impending scarcity might be avoided.
“There is no future without scarce metals!” This was the very clear message with which Peter Hofer, a member of Empa’s Board of Directors, greeted guests at the recent Technology Briefing on scarce metals held at the Empa Academy. After all, it is scarce metals in batteries and motors that keep electric vehicles rolling and which, in automobile catalytic converters, clean up the exhaust gases. Hofer again: “Materials with special properties are essential if we are to find solutions to the problems caused by our ever-increasing mobility requirements.”
The term scarce metals includes gallium, indium, cobalt and the platinum metals, in addition to the rare earth metals which are used (together with iron and boron), for example, to make the very strong magnets needed in wind turbines. And manufacturers like to use tantalum for the capacitors on mobile telephone printed circuit boards (PCBs) because this transition metal, when used in these tiny components, enables them to store and release large amounts of electrical energy. The demand is high, with more than 60 per cent of the tantalum mined being used for this application.
The darker side
But, as Patrick Wäger, the initiator of this Technology Briefing and an expert on scarce metals, explained, everything has a darker side to it. Raw materials which can only be mined and refined in a few countries, for which alternatives are not easy to find and which have a low rate of recycling must are considered to be critical. China, for example, almost completely controls the supply of rare earth metals from which high-performance permanent magnets are manufactured. Wäger, who is a staff member of Empa’s Technology and Society laboratory, added that by imposing export restrictions the Chinese government has forced prices to rise, leading to delivery bottlenecks. Currently great efforts are being made to reduce this dependency by expanding supply capacities outside of China, such as in the USA, Australia or Greenland – with implications also for the environment.
Tantalum, required for high-performance micro-capacitors, is viewed in the microelectronics industry as a material which is difficult to substitute, and to date it has not been possible to recover it from end-of-life products. Particularly worrying are the facts that tantalum is illegally mined in certain Central African countries under degrading conditions, and the profits from its sale are used to finance civil wars.
“Swiss companies also need to think closely about how they can reduce this dependency and avoid the possibility of delivery bottlenecks, ” remarked Jean-Philippe Kohl, the head of Swissmem’s Economic Policy Group. A recent survey of the industry association’s members in the Swiss mechanical engineering, electrical and metal sectors showed that every single company contacted used at least one of the critical raw materials. In order to protect themselves from possible shortages many of the companies had signed long-term delivery contracts with their suppliers. The others are cooperating with research institutions, either to develop alternative raw materials and technologies, or to optimize existing processes.
Alternatives from research labs
As an example of this approach, Stephan Buecheler explained how Empa’s Thin-Films and Photovoltaic laboratory was working to reduce the thickness of the critical tellurium layer in flexible solar cells which use cadmium telluride (CdTe) as the active material. Similarly, efforts are being made in solar cells based on copper-indium-gallium-diselenide (CIGS) to replace the critical indium oxide with zinc oxide. In making these changes no loss of performance is expected. Quite the opposite, in fact – the aim is to increase the efficiency of these devices by optimal use of raw materials and fast processes. Researchers have already shown that this is possible, having set a new efficiency record last year.
Again with the aim of reducing scarce metal usage, the institution’s Internal Combustion Engine laboratory has developed an extremely efficient and economic foam catalyst. Changing the form of the ceramic substrate has enabled the use of less of the noble metals palladium and rhodium in comparison to conventional catalysts. In collaboration with Empa’s Solid-State Chemistry and Catalysis laboratory, the motor scientists are conducting research work on regenerative exhaust gas catalysts which employed perovskites instead of scarce metals. The former are multifunctional metal oxides which, because of their special crystal structure, are capable of transforming heat directly into electrical energy.
The “recycling” challenge
Despite all the doom and gloom, we will not have to do without scarce metals entirely. As Heinz Boeni, head of the Technology and Society laboratory, maintained there is of course a reserve of scarce metals to be found in end-of-life electrical and electronic products. While natural primary deposits are being used up, the “anthropogenic” secondary deposits created by man are increasing continuously. In a ton of natural ore as mined there is typically about 5 g of gold. In a ton of discarded mobile telephones, on the other hand, there is about 280 g, while the same weight of scrap PCBs contains as much as 1.4 kg of the precious metal!
But recovering scarce metals is anything but easy. “You can’t just pull them out from electronic waste with a screwdriver and a hammer. The recovery process is at least as complex as the design and development of the old appliances themselves”, recycling expert Christian Hagelüken made clear. A large percentage of scarce metals are to be found in the form of very thin layers or mixed with other substances in the form of alloys, added Hagelüken, whose employer, Umicore, is one of the largest recycling companies involved in the recovery of precious metals from complex waste material. Recycling scarce metals demands the use of complicated recovery processes.
Furthermore, suitable recovery processes alone are not enough to guarantee high recycling rates. According to the experts it is necessary to keep an eye on the whole recycling chain, from collection, disassembly and sorting of the scrap to the actual recovery process itself. The greatest efforts are in vain if, as is the case in certain countries, end-of-life computers and other electronic appliances are exported to developing and threshold countries where the scarce metals are lost through the inappropriate treatment of the electronic waste, which also represents a danger to human health and the environment. Or, if with a mechanical disassembly – which is common today in Switzerland – the scarce metals are dissipated into fractions from which they cannot be recovered.
Source: http://www.nanowerk.com/news/newsid=24127.php
WTO: China rare earth trade defies rules
In a picture taken on September 5, 2010 a man driving a front loader shifts soil containing rare earth minerals to be loaded at a port in Lianyungang, east China's Jiangsu province, for export.
(Financial Times) – The EU has demanded that China loosen its policy on sales of rare earth materials after the World Trade Organisation upheld a ruling that Beijing’s policies to limit raw material exports violated international trade rules.
The case, brought in 2009 by the EU, US and Mexico, touches on one of the biggest sources of tension in the world trading system: the use of export restrictions to hoard raw materials for the use of domestic manufacturers.
The WTO’s appellate body issued its decision on Monday, endorsing a previous finding that export duties, quotas and other policies enacted by Beijing to limit the foreign sale of nine raw materials were not justified on environmental or self-sufficiency grounds.
The EU, US and Mexico argued that the higher prices their manufacturers were forced to pay for goods such as bauxite, coke and zinc put them at a disadvantage across a wide swath of industries — from steel to batteries, chemicals and ceramics.
The case highlights the global scramble to secure supplies of raw materials after huge swings in commodity prices over the past few years. It also represents an example of the US and the EU joining forces to confront China on trade matters — a strategy that both Washington and Brussels believe will help maintain leverage over the world’s second-largest economy.
The WTO case has acquired even greater importance amid Beijing’s moves to impose similar restrictions on the export of a rare earths, a category of 17 elements that are found in an array of high-tech products, including solar panels, wind turbines and mobile phones. Such goods are themselves becoming an increasingly important battleground for trade conflicts, with the US having launched a wide-ranging investigation against China’s support for its renewable energy industry. Solar power companies in America have recently sought emergency anti-subsidy tariffs against imports of Chinese solar cells.
China accounts for more than 90 per cent of global production of rare earth materials. That dominance has unnerved its trading partners — particularly since Beijing has moved repeatedly over the past four years to tighten its supplies.
The EU and the US have so far refrained from filing WTO complaints against China over rare earths, hoping that their victory in the raw materials case would convince Beijing to revise its policies.
In a statement issued shortly after the ruling, Karel De Gucht, the EU trade commissioner, urged China to take action.
“China now must comply by removing these export restrictions swiftly and furthermore, I expect China to bring its overall export regime — including for rare earths — in line with WTO rules,” Mr De Gucht said.
Ron Kirk, the US trade representative, called the ruling “a tremendous victory” that “ensures that core manufacturing industries in this country can get the materials they need to produce and compete on a level playing field”.
The Chinese mission in Geneva said expressed regret over the ruling but said that Beijing would respect the decision.
China agreed to cut export quotas and taxes when it joined the WTO in 2001.
The issue has been particularly sensitive for the EU because its manufacturers are so reliant on imported raw materials for production.
The commission estimated that the bloc’s annual imports of the materials cited in the case, which also include fluorspar, magnesium, manganese, silicon carbide, silicon metal and yellow phosphorous, exceeded €1bn.
In order to obtain such materials at competitive prices, European companies have been forced to relocate manufacturing operations to China, the commission said.
By: Joshua Chaffin and Alan Beattie
Source: http://www.ft.com
Rare earth crisis: Innovate, or be crushed by China
Niobium Crystals
Laptops, cars, smartphones, TVs, MRI scanners, LCD displays, light bulbs, optical networks, jet engines, cameras, headphones, nuclear reactors. It might seem like a random selection of high-tech gizmos, but every single object on that list has one very important thing in common: Their manufacture requires one or more rare earth metals.
Rare earths — a block of seventeen elements in the middle of the Periodic Table — aren’t actually all that rare, but they tend to be very hard to obtain commercially. Generally, rare earth elements are only found in minute quantities in mineral deposits of clay, sand, and rock (earths!), which must then be processed to extract the rare metals — an expensive process, and also costly for the environment as billions of tons of ore must be mined and refined to yield just a few tons of usable rare earths.
Many rare earths are also geochemically rare — they can only be mined in a handful of countries. This is simply down to Mother Nature being a tempestuous so-and-so: Some countries have deposits of rare earths, and some don’t. This results in massively skewed production (China famously produces 97% of the world’s rare earth metals), and, as you can imagine, a lot of national security and geopolitical troubles, too.
It doesn’t stop with rare earths, either: Many other important elements, such as platinum, are only available from one or two mines in the entire world. If South Africa sustained a huge earthquake — or was on the receiving end of a thermonuclear bomb, perhaps — the world’s supply of platinum would literally dry up over night. The continued existence of technologies that rely on platinum, like car exhaust catalytic converters and fuel cells, would be unlikely.
If geochemistry and politics weren’t enough, though, we even have to factor in ethical concerns: Just like blood/conflict diamonds — diamonds that originate from war-torn African nations, where forced labor is used and the proceeds go towards buying more weapons for the warlord — some rare metals could be considered “blood metals.” Tantalum, an element that’s used to make the capacitors found in almost every modern computer, is extracted from coltan — and the world’s second largest producer of coltan is the Democratic Republic of the Congo, the home of the bloodiest wars since World War II. Not only do the proceeds from coltan exports get spent on weapons, but the main focus of the wars were the stretches of land rich in diamonds and coltan.
Also along the same humanist vein, it’s important to note that extracting these rare elements is usually a very expensive and disruptive activity. Indium, probably the single most important element for the manufacture of LCDs and touchscreens, is recovered in minute quantities as a byproduct of zinc extraction. You can’t just set up an indium plant; you have to produce zinc in huge quantities, find buyers and arrange transport for that zinc, and then go to town on producing indium. In short, extracting rare elements is generally a very intensive task that is likely to disrupt or destroy existing settlements and businesses.
The rare earth apocalypse
The doomsday event that everyone is praying will never come to pass, but which every Western nation is currently planning for, is the eventual cut-off of Chinese rare earth exports. Last year, 97% of the world’s rare earth metals were produced in China — but over the last few years, the Chinese government has been shutting down mines, ostensibly to save what resources it has, and also reducing the amount of rare earth that can be exported. Last year, China produced some 130,000 tons of rare earths, but export restrictions meant that only 35,000 tons were sent to other countries. As a result, demand outside China now outstrips supply by some 40,000 tons per year, and — as expected — many countries are now stockpiling the reserves that they have.
Almost every Western country is now digging around in their backyard for rare earth-rich mud and sand, but it’ll probably be too little too late — and anyway, due to geochemistry, there’s no guarantee that explorers and assayers will find what they’re looking for. The price of rare earths are already going up, and so are the non-Chinese-made gadgets and gizmos that use them. Exacerbating the issue yet further, as technology grows more advanced, our reliance on the strange and magical properties of rare earths increases — and China, with the world’s largest workforce and a fire hose of rare earths, is perfectly poised to become the only real producer of solar power photovoltaic cells, computer chips, and more.
In short, China has the world by the short hairs, and when combined with a hotting-up cyber front, it’s not hard to see how this situation might devolve into World War III. The alternate, ecological point of view, is that we’re simply living beyond the planet’s means. Either way, strategic and logistic planning to make the most of scarce metals and minerals is now one of the most important tasks that face governments and corporations. Even if large rare earth deposits are found soon, or we start recycling our gadgets in a big way, the only real solution is to somehow lessen our reliance on a finite resource. Just like oil and energy, this will probably require drastic technological leaps. Instead of reducing the amount of tantalum used in capacitors, or indium in LCD displays, we will probably have to discover completely different ways of storing energy or displaying images. My money’s on graphene.
By Sebastian Anthony
Source: http://www.extremetech.com/extreme/111029-rare-earth-crisis-innovate-or-be-crushed-by-china
Critical Reading for Rare Earth Metals Investors
Rare Earth Element - Yttrium
A quick search of media stories from the month of December, 2009 shows 24 clips including references to the 15 lanthanides and their related elements scandium and yttrium. By contrast, one day in December, 2011 produced 56 stories on the same resources. Even the tone of REE coverage has transformed over the years. Two years ago, an analyst piece from veteran metals consultant Jack Lifton titled “Underpriced Rare Earth Metals from China Have Created a Supply Crisis ” was a common headline as the world discovered that cheap supplies had left manufacturers vulnerable to a monopoly with an agenda. That supply fear made REE the investment de jour and sent almost all of the rare earth prices through the roof. In December of 2010, the headlines in big outlets like The Motley Fool announced that the “Spot Price of Rare Earth Elements Soar as much as 750% since Jan. 2010.”
Reality soon set in as investors realized that this was not a simple supply and demand industry. First, demand was still vague, subject to change and very specific about the type and purity of the product being delivered. Second, the ramp-up period for companies exploring, getting approval for development, mining, processing efficiently and delivering to an end-user was very, very long. Some became discouraged. That is why this year, the consumer finance site, The Daily Markets ran an article with the headline: “Why You Shouldn’t Give Up on the Rare Earth Element Minerals” by Gold Stock Trades Newsletter Writer Jeb Handwerger.
Through it all, Streetwise Reports has focused on cutting through the hype to explain what is really driving demand, how the economy and geopolitics shape supplies going forward and which few of the hundreds of companies adding REE to their company descriptions actually had a chance of making a profit.
Back in June of 2009, in an interview titled “The Race to Rare Earths,” we ran an interview with Kaiser Research Online Editor John Kaiser that concluded “China’s export-based economy, once dependent on American greed, is now but a fading memory. While the U.S. was busy printing and preening, the Chinese were long-range planning. But America wasn’t the only country caught off guard by China’s strategic, if surreptitious, supply procurement.” Even while other analysts were panicking, Kaiser was pointing out how investors could be part of the solution–and make a profit in the process.
“For the juniors, the opportunity right now is to source these projects. They get title to them, and when these end users want to develop them, they’re going to have to pay a premium to have these projects developed,” Kaiser said. “So it will not be economic logic that results in these companies getting bought out and having their deposits developed. It’ll be a strategic logic linked to long-term security-of-supply and redundancy concerns. And we’re seeing that sort of psychology at work in this market. It’s a bit of a niche in this market. Not as big as gold, but it is an interesting one because of the long-term real economy link implications.”
After years of covering the space by interviewing the growing chorus of analysts and newsletter writers singing the praises of rare earth elements, in June of 2011, we launched The Critical Metals Report to give exclusive coverage to the entire space, including rare earth elements, strategic metals and specialty metals. One of the first experts interviewed was Emerging Trends Report Managing Editor Richard Karn in an article called “50 Specialty Metals under Supply Threat.” He warned that investing in the space is not as simple as some other mining operations. “The market is just starting to become aware of the difficulty involved with processing these metals, which, in many cases, more closely resemble sophisticated industrial chemistry than traditional onsite brute processing. Putting flow sheets together that process these metals and elements economically is no mean feat.”
In this early article, Karn busted the myth that manufacturers would find substitutions, engineer out or use recycled supplies for hard-to-access materials. “The advances we have seen especially in consumer electronics over the last decade and a half have not been driven by lone inventors or college kids tinkering in their parents’ garages, but rather by very large, well-equipped and well-staffed research arms of powerful corporations. The stakes are high and if a certain metal is critical in an application, they will buy it regardless of the price,” he said.
Similarly, a July 2011 article for The Critical Metals Report featured Energy and Scarcity Editor Byron King sharing “The Real REE Demand Opportunity” driven by the automobile industry and beyond. He was one of the first to point out that not all rare earths are the same with Heavy Rare Earth Elements demanding big premiums.
“Going forward, the serious money will be in HREEs, which have a lot of uses other than EVs,” King said. “For example, yttrium is used in high-temperature refractory products. There’s no substitute for yttrium. Without it, you can’t make the refractory molds needed to make jet-engine turbine blades. If you can’t make jet-engine turbine blades, you don’t have jet engines or power turbines. The price points for these HREEs will reflect true scarcity and unalterable demand. People will bite the bullet and pay what they have to in order to get the yttrium.”
House Mountain Partners Founder Chris Berry also addressed the impact of electric vehicle demand on vanadium, a popular steel alloy strengthener now being used in lithium-ion batteries in the interview “Can Electric Vehicles Drive Vanadium Demand? “
“The use of vanadium in LIBs for EVs is not significant yet, but could eventually become important as the transportation sector electrifies. One of the real challenges surrounding LIBs is settling on the most effective battery chemistry. In other words, what battery chemistry allows for the greatest number of charge recycles, depletes its charge the slowest and allows us to recharge the fastest? Today, based on my research, lithium-vanadium-phosphate batteries appear to offer the highest charge and the fastest recharge cycle. It seems that the lithium-vanadium-phosphate battery holds a great deal of promise, offering a blend of substantial power and reliability. I am watching for advances in battery chemistry here with great interest,” Berry said.
In September, Technology Metals Research Founding Principal Jack Lifton shared his insights on why some junior REE companies are prospering while others wither and die. In the article, “Profit from Really Critical Rare Earth Elements,” he said: “Rare earth junior miners are now being culled by their inability to raise enough capital to carry their projects forward to a place where either the product produced directly or the value to be gained from the company’s development to that point by a buyer can be more profitable than a less risky investment. The majority of the rare earth junior miners do not understand the supply chain through which the critical rare earth metals become industrial or consumer products. Additionally, they do not seem to recognize the value chain issue, which can be stated as ‘How far downstream in the supply chain do I need to take my rare earths in order to be able to sell them at a profit?’”
Then Lifton made this important point for Critical Metals Report readers. “It is very important for the small investor to understand that the share market does not directly benefit the listed company unless the company either sells more of its ownership or pledges future production for present, almost always sharply discounted, revenue.” As always, Lifton encouraged investors to follow the money to a specific end rather than the general market demand often envisioned by investors accustomed to the more defined gold market.
In October, JF Zhang Associates’ Principal Consultant and Chief China Strategist J. Peter Zhang shared his insights on “U.S. Manganese Supply as a Strategic Necessity.”
Manganese is now largely used largely in the production of low quality stainless steel, but is being incorporated into lithium-ion batteries. That increased demand is focusing attention on the limited supply outside China. “There really is no electrolytic manganese metals production in the U.S. or anywhere outside China except for a small percentage from South Africa. We don’t produce even a single ounce in North America. Relying on other countries to supply essential commodities (like oil for instance) is always a problem. If China suddenly decided to reduce production, or in the likely event that its domestic demand increases, the world would be out of options. Policymakers need to understand this risk and Congress needs to take action to minimize the potential impacts,” he said. “From the end of 2008 to 2009, China tied things up. Since then, the price has doubled, tripled and quadrupled. That should be a wakeup call. North America needs to either establish a strategic reserve system for critical metals or build production capacity to mitigate supply risk. I think there is some sense of urgency right now, but a lot more needs to be done.”
Picking the right junior is the trick. In the November article “Navigating the Rare Earth Metals Landscape” Technology Metals Research Founding Principal Gareth Hatch outlined the odds. “TMR is tracking well over 390 different rare earth projects at present; I can’t see more than 8-10 coming onstream in the next 5-7 years. Projects already well past exploration and into the development and engineering stage, and beyond, clearly have first-mover advantage.”
Just this month, in an interview entitled, “The Age of Rare Earth Metals” Jacob Securities Analyst Luisa Moreno compared the impact REEs will have on our daily lives with the transformation in the Bronze Age.
“There is an economic war over the rare earths, with China on one side and other industrialized nations on the other—Japan, the United States and the E.U. China is probably winning. It has decreased exports in the last few years and increased protection. It has attracted a great deal of the downstream business and it is positioning itself well. At this point, it produces most of the world’s rare earths, and prices are at record highs. Japan and the other countries have been left with few options, and those options are more expensive, such as substitution, recycling and adapting production lines to use less efficient materials.” Moreno then pointed to the seven companies that could come to the world’s rescue and usher in a miraculous new world of smaller, stronger, more powerful gadgets based on a steady supply of REE materials from reliable sources.
By: The Gold Report
Source: http://jutiagroup.com/20111227-critical-reading-for-rare-earth-metals-investors/
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