rare earths

Cobalt, tantalum and rare earths among main topics at indaba’s commodities review

The increased global interest in minor metals will shape the Commodities Review and Outlook ferroalloys and minor metals’ presentation at the 2012 Investing in African Mining Indaba, says commodity research and consultancy company Core Consultants.

Feature speaker, Core Consultants MD Lara Smith, tells Mining Weekly the company will particularly highlight minor metals cobalt and tantalum, as well as rare earths, as these metals are increasingly used in everyday technology and are experiencing an increase in demand.

“Cobalt, for instance, is used in lithium batteries and, with the manufacturing of electronic devices booming, we are seeing greater demand for cobalt as most electronic devices, such as mobile phones, tablets and laptops, rely on this type of battery for power,” she explains.

Further, she notes that 50% of global cobalt reserves are along the Copperbelt in the Democratic Republic of Congo (DRC) and Zambia, with only 5% of copper refined in the DRC and the rest refined in China.

However, Smith highlights that, although cobalt represents an opportunity for Central Africa through global demand, supply will be a challenge.

“Mining licences have been granted in the DRC but logistics are still a major concern,” she says.

Nevertheless, Smith predicts the price of cobalt will increase if supply is disrupted.

Meanwhile, tantalum, which is used in the production of capacitors for automotive and electronic equipment, is also experiencing increased demand.

“Supply of tantalum was traditionally supplemented by secondary sources, including DLA inventory sales and recycling. However, in 2007, the DLA ceased selling tantalum.

“Recycling has become increasingly costly as, in many instances, the recovery costs outweigh the extraction of tantalum owing to the miniaturisation of electronic devices.”

Also experiencing high demand are rare earths, the bulk of which are concentrated and produced in China.

Smith says substantial funds have been raised by Japan and invested in the research and development of rare earths recycling methods, as more countries attempt to diversify away from reliance on Chinese rare- earth material.

She notes that the introduction of new rare earths producers in other countries will be costly, compared with China, where the orebodies are more favourable and amenable to extraction and capital, and labour and environment costs are lower.

Smith will also provide Core Consultants’ price projections for these metals to attendees of this year’s Mining Indaba.

By: Reggie Sikhakhane
Source: http://www.miningweekly.com/article/cobalt-tantalum-and-rare-earths-among-main-topics-at-indabas-commodities-review-2012-01-27

Rare Earths and Strategic Metals: A Lateral Look at 2011

Nationalism, the search for substitutes and deals to address short supplies consumed the spotlight in 2011 for rare earth elements.

In addition to the skyrocketing of rare earth elements’ prices (and their subsequent fall to Earth), and constant speculation as to which junior rare earth exploration companies are going to survive, the calendars of both the rare earths and strategic metals have been quite full in 2011.

While some of the events filling their calendars have received often considerable coverage in the press, others have not drawn so much attention. As 2011 has come to a close, it is perhaps worth looking to see if any themes have emerged.

I have singled out three themes, not all of which have received the spotlight, but that I consider to be of interest as well as importance:

  • Resource nationalism
  • The search for substitutes
  • Deals to address dearth

Resource Nationalism

If nothing else, the intense interest in rare earths over the past several years has coincided with countries focusing on several issues, e.g., their own access to strategic minerals (and not just rare earths) and the value of the mineral resources they already own.

With the example of China aside, the focus on these has coincided with proposed and actual government policy developments among various mining nations, in the areas of resource protection as well as the further realization and “distribution” of the value of those resources.

Back in November, the lower house of the Australian parliament approved the new Mineral Resource Rent Tax (MRRT). Aimed at further tapping the earnings of the country’s resources sector, the tax currently targets only coal and iron ore. However, only time will tell if the targets remain solely those resources.

On the other hand, events in two African countries have not received as much press. In South Africa, the future of the country’s natural resources sector (and the fate of its mining companies) is soon to be squarely in the limelight. On Jan. 30, the ANC’s national executive committee will consider just how, and how much, the state should be involved in the sector.

While what the Australians are doing appears to be attractive to some, of the 13 different country models that have been studied, it seems that Chile’s mixed private/public example in the mining sector is a favorite. On the other hand, nationalization cannot yet be fully ruled out.

For example, in Namibia, at the end of March, again in a move to try to ensure that its people share in its natural resource wealth, the country’s cabinet backed a proposal that only the state-owned mining company — Epangelo — should be issued mineral exploration and mining permits.

Unfortunately, the government’s announcement was not accompanied by an explanation as to how those foreign mining companies already on the ground were to be treated, leading to significant consternation and confusion among such companies and prospective investors in the mining sector in Namibia.

Then, in the middle of May, the country’s minister for mines and energy minister, Isak Katali, announced that the government was seeking to introduce a minerals-windfall tax. This was followed in July by the announcement of proposed Draconian taxes on the mining sector by the country’s finance minister, Saara Kuugongelwa-Amadhila. However, so adverse was the fallout of the announcement, especially amongst investors, that on Aug. 17, the government was forced to back-pedal, with Calle Schlettwein, the deputy finance minister, announcing a scaled-down tax plan, not least in an effort to allay investors’ fears.

These are just two examples among many. In its report, Business Risks Facing Mining & Metals 2011-2012, published in August 2011, Ernst & Young reported that, over the prior 12-18 months, at least 25 countries had announced their “intentions to increase their government take of the mining industry’s profits via taxes or royalties.”

The Search For Substitutes

The search for substitutes, both for members of the rare earths elements (REE) clan and other strategic metals, continued apace this year. And it was particularly busy vis-a-vis REEs. The search, however, has not just been for effective substitutes, or reduced usage, within certain applications, but also for substitute technologies that may not necessarily include the metal(s) at all.

In the area of catalysts for oil refining, W.R. Grace & Co. started to sell equally efficient catalysts, but containing considerably less lanthanum than before. The German firm Cofermin Chemicals GmbH & Co. KG of Essen developed its product Coferpol UG, a substitute for cerium oxide used in the polishing of glass.

In the world of permanent magnet electric motors, the likes of Toyota Motor Corp. General Motors and GE are looking at using magnets with less REE content than before, or just smaller magnets. And some companies are even exploring the use of ferrite magnets as suitable substitutes.

What has also become apparent is that, in certain instances, the use of REEs has been perhaps somewhat profligate, so much so that their use now, in reduced volumes, has not made a significant difference in performance.

Earlier in 2011, as part of its policy of encouraging (and funding) renewable energy projects, the Advanced Research Projects Agency – Energy (ARPA-E), made up to $30 million available for its REACT (Rare Earth Alternatives in Critical Technologies) project that will look at either reducing or eliminating, through the development of substitutes, a dependence on rare earth materials in both wind generators and electric vehicle motors.

In terms of substitute technologies, perhaps the most ironic has been the espousal, not least by the likes of Toyota and General Motors, of the induction motor, which does not use any rare earths metals. Such a motor is already used in the Tesla Roadster and BMW’s Mini-E.

The A/C induction motor has been around for a long time, having been patented back in 1888 by the American inventor and, some would say, eccentric Nikola Tesla. In addition to being both durable and simple, such motors have the considerable added advantage of being able to operate efficiently over a wide range of temperatures. They also comport themselves very respectably on the torque front!

Were he around to see what they are being used for now, Tesla would likely be spinning asynchronously in his grave — with amusement!

Away from the realm of REEs, other interesting areas of substitution include the increasing use of gallium nitride, as a more energy-efficient alternative, in the likes of the high-voltages switches associated with the grid. Such switches, and efficient switching, will become especially important as wind and solar energy increasingly needs to be “fed in” to the grid.

ARPA-E is also making some $30 million available for research in this area through its GENI (Green Electricity Network Integration) project and, in Europe, in November, the Ferdinand-Braun-Institute in Berlin announced the launch of the EU project HiPoSwitch, which will receive significant funding from the European community and will focus on “novel gallium nitride-based transistors” as “key switching devices” in power conversion and high-voltage environments.

Finally, also on the substitute technologies front, around the middle of November, a few quite interesting news items mentioned the use of that staple in steel production, vanadium, in a different context — electric batteries. While such batteries have been around since at least the ’80s, the technology has not yet been developed commercially with any degree of success.

With the advent of and interest in electric vehicles, this may all change. There’s still a long way to go, but vanadium batteries do offer some interesting (and, potentially, very important) advantages, not least their longevity (decades) and the fact they can be charged in a jiffy.

Deals To Address Dearth

This past year saw a number of deals, including strategic alliances, out of which various countries have secured much needed supplies of critical minerals. Among those that have either been consummated, or are still in the works, the following, going forward, will be worth remembering:

  • Three Chinese companies — Taiyuan Iron and Steel (Group) Co. Ltd., CITIC Group and Baoshan Iron and Steel Group (Baosteel) — purchased 15 percent of CBMM of Brazil, the world’s largest supplier of niobium. (China is the world’s largest consumer of niobium.)
  • Continuing negotiations between Namibia’s Epangelo and China’s CGNPC Uranium Resources Co. over a strategic ownership stake in the Husab uranium project.
  • Japan’s agreements with both India (end-October) and Vietnam (Nov. 1) to help each develop its rare earth deposits, with Japan, thereby seeking to secure supplies for itself.
  • The agreement reached in early October by Germany with Mongolia (a first such deal for the Germany government), to secure REEs at a fair price for Germany.
  • The signature by Kazakhstan’s Kazatomprom of a rare earths joint venture agreement with Toshiba (end-September). (The state-owned company had already signed one with Sumitomo back in March 2010.)

On the other hand, one deal to have fallen significantly apart this year was between China and Zimbabwe over chrome. Unfortunately for Zimbabwe, it failed to beat China at its own game, the “value added” game.

Hoping to add value by having a group of seven Chinese chrome mining companies set up a smelter in the country, and despite two reprieves, the Chinese never came up with the smelter. They just continued to export the raw material before the government imposed a ban on chrome exports in April. Hauled up in front of the Parliamentary Portfolio Committee on Mines and Energy at the end of September, it appears that representatives of the companies had the temerity to request “a grace period of five more years to mobilize resources to establish the plant through exporting the mineral.” Quite understandably, “Their request caused an uproar among members of the committee, who felt that if they were allowed to export, the chrome resources would be finished in five years before any plant was set up.”

Finally, at a corporate level, two particular deals caught my eye.

The first was the closing, on May 26, of the deal in which the Canadian company Stans Energy Corp. acquired 100 percent ownership of the Kyrgyz Chemical Metallurgical Plant (KCMP) Rare Earth Processing Complex and Private Rail Terminal. For some three decades, the plant, in Stans’ words “produced 80 percent of the former Soviet Union’s RE products.” Since May, the company has continued further to consolidate its position in Kyrgyzstan.

The second deal, about which not much was seen in the press, was the announcement of the formation in June of a 50/50 joint venture between France’s ERAMET (with a market cap at the time of around €5.8 billion and currently employing around 15,000 people in 20 countries) and Australia’s Mineral Deposits (with a market cap of considerably less and employing just 90 at the end of June) to “combine Mineral Deposit’s 90 percent interest in the Grande Cote Mineral Sands Project (“Grande Cote”) [in Senegal] and Eramet’s Tyssedal titanium slag and iron plant in Norway.” The deal was finally closed on Oct. 25.


If nothing else, during 2011 there has developed, albeit slowly, a realization that REEs alone are not the name of the game. And that countries and corporations alike need to look across the spectrum of the materials — particularly minerals — they use to determine which are critical, which are not and how to secure the relevant supply chains.

While some larger concerns — for example GE — have been doing this for some time now, as a continuing and constantly evolving process, it is something that all organizations using REEs and/or other strategic metals need to undertake. It is perhaps salutary that even now, the U.S. Department of Defense has, as far as I am aware, yet to report on REE use in its weapon and technology systems, although they were asked to do so some time ago.

Henceforth, there will be no plausible excuse of “We didn’t realize how important they were!”

By: Ton Vulcan
Source: http://www.hardassetsinvestor.com/features/3339-rare-earths-and-strategic-metals-a-lateral-look-at-2011.html

Rare earth crisis: Innovate, or be crushed by China

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

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

(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.


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.”


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-


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


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/

Lowman: Reliant on rare earth

Toyota Prius

Science … tells us that nothing in nature, not even the tiniest particle, can disappear without a trace. Nature does not know extinction. All it knows is transformation … and everything science has taught me … strengthens my belief in the continuity of our spiritual existence after death. Nothing disappears without a trace.

— Werner von Braun

What do Yttrium, Promethium, Europium and Luterium have in common? Although they may sound like a foreign language, these rare earth elements comprise the backbone of new technologies for the 21st century. Seventeen chemical elements, also called rare earths, are appended to the existing periodic table of elements, and their relatively new discoveries have advanced the electronics industry. Yttrium, when alloyed with other elements, forms part of aircraft engines; Promethium is an essential component of long-lived nuclear batteries; Europium powers images in flat-screen televisions; and Luterium detects radiation in PET scanners (positron emission tomography) used for medical research. Many new technologies — hybrid cars, televisions, cellphones, computer hard drives, camera lenses, and self-cleaning ovens — owe their success to rare earth elements.

The Prius alone contains rare earth elements for its LCD screens, electric motor and generator, headlight glass, catalytic converter, UV windows and mirrors; other cars require similar components to provide competitive features for buyers. The magnets under the hood of a Prius are some of the most powerful on the planet. Different from older technologies, they use rare earth elements to charge the battery and turn the wheels.

Without rare earth elements, your iPod earbuds would still be large, old-fashioned and unwieldy headphones.

As the world’s technologies become increasingly dependent on rare earth metals, their reserves become more valuable. Half the world’s rare earth deposits are in China, which mines almost 100 percent of global supply. Because China recognizes its own increasing needs for new technologies, the country recently reduced rare earth element export quotas by almost 40 percent in 2010.

So what will other countries do to remain competitive in the high-technology market? The answer: Train the emerging generation in STEM education — science, technology, engineering and math — to develop new technologies.

In North Carolina, hubs like Research Triangle Park and Raleigh’s new Nature Research Center are ideal incubators for the next generation of scientists and engineers. Researchers are working around the clock to design products that do not require rare earth elements. At Ames Laboratory in Iowa, scientists are trying to create magnets devoid of any rare earth metals. General Electric is applying nanotechnology to wind turbines as part of its clean-energy portfolio. Nanocomposite magnets will reduce the need for two rare earth metals: neodymium and dysprosium, which function to line up the magnetic field in wind turbines or hybrid cars.

Another strategy for minimizing the reliance on China’s rare earth deposits is to locate reserves closer to home. On California’s Mojave Desert, several rare earth mining operations are reopening. Another option involves improved recycling of cellphones and other products that contain rare earth elements.

The most economical solution is to reduce our reliance on rare earth elements altogether. Toyota is scrambling to develop technologies that do not require magnets utilizing rare earth elements in hybrid cars, and the television industry hopes to someday eliminate the need for Europium and Terbium in its screen imagery.

Training the next generation of scientists and engineers to inspire creative solutions is critical; otherwise, iPods, PET scans and plasma televisions may become increasingly limited in their production. After all, where will America be without scandium, a rare earth element alloyed with aluminum in baseball bats?

By: Meg Lowman
Source: http://www.heraldtribune.com/article/20111114/columnist/111119877?tc=ar

Meg Lowman, longtime Florida scientist/educator, is establishing the Nature Research Center at the North Carolina Museum of Natural Sciences, with a mission to engage the public. Her column appears monthly on these pages.

Proposed German industrial alliance aims to secure critical metals supply

With the German federal government’s blessing, conglomerates are forming the Alliance for Commodity Hedging to secure supplies of critical raw materials.


Germany’s BDI Federation of German Industries is helping at least 12 major German conglomerates form an alliance to secure raw materials, such as base and rare earth metals, to overcome fears of supply shortages.

In an interview with Bloomberg, BDI spokesman Alexander Mihm said the Allianz zur Rohstoffsicherung (Alliance for Commodity Hedging) will be founded at the beginning of the new year. Among the companies who will join the alliance are BASF SE, the world’s largest chemical maker, steel company Thyssen Krupp AG, and specialty chemical company Evonik.

Trade restrictions by major commodity exporters such as China and rapidly rising commodity prices apparently prompted these companies to form the alliance, based on a concept created by the Boston Consulting Group. The goal is to establish a global, for-profit resource company that allows the German industry to have independent access to critical materials, such as copper and rare earths.

Access to REE deposits is crucial to the development of high technology industries in Germany, including the renewable energy sector, which is viewed as a driving force of the German economy.

The Dusseldorf-based business newspaper Handelsblatt reported that the alliance has the support of Germany’s federal government including the Chancellor’s Office, Ministry of Economy, Foreign Office, and Department of International Development.

In October, German Chancellor Angela Merkel signed an intergovernmental agreement on resources, industry and technology partnership with Mongolian Prime Minister Sukhbaataryn Batbold. The signing of the resource partnership was a consequence of the German government’s strategy to support German companies in getting access to iron, silicon and rare earth metals.

German companies want access to Mongolia’s deposits of coal and rare earths in exchange for providing the machines to extract resources. However, the German government has not yet succeeded in concluding a contract for the mining of rare earths in Mongolia, due to intense competition for REEs from Chinese and Russian companies.

A similar alliance with the government of Kazakhstan is also being sought by the German federal government.

However, the member companies of Alliance for Commodity Hedging have made it clear to the German government that they want political, not financial support, Handelsblatt said.

Mihm told Bloomberg that the alliance will cost participants several hundred thousand Euros, and once project begin, other contributions will be required.

By: Dorothy Kosich
Source: http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=140136&sn=Detail&pid=102055

Prices of Rare Earth Metals Declining Sharply

HONG KONG — After nearly three years of soaring prices for rare earth metals, with the cost of some rising nearly thirtyfold, the market is rapidly coming back down.

International prices for some light rare earths, like cerium and lanthanum, used in the polishing of flat-screen televisions and the refining of oil, respectively, have fallen as much as two-thirds since August and are still dropping. Prices have declined by roughly one-third since then for highly magnetic rare earths, like neodymium, needed for products like smartphones, computers and large wind turbines.

Big companies in the United States, Europe and Japan that use rare earths in their manufacturing have been moving operations to China, drawing down inventories, switching to alternative materials or even curtailing production to avoid paying the extremely high prices that prevailed outside China over the summer, executives said at an annual conference in Hong Kong on Wednesday.

As demand for rare earths wilted outside China, speculators dumped inventories, feeding the downward plunge. Cerium peaked at $170 a kilogram, or $77 a pound, in August but now sells for $45 to $60 a kilogram. Prices are negotiated by buyers and sellers directly with one another and reported by market information companies like Asian Metal, based in Pittsburgh.

That is still far above cerium’s price of $6 a pound three years ago, before China, the world’s dominant producer, sharply cut its export quotas.

“We all learned a hard lesson in July and August, how high these prices can go before customers begin yelling,” said Mark Smith, the chief executive and president of Molycorp, the only American producer of rare earths.

He added that rare earth mining outside China remained very profitable even with the price decline, which has brought the market back to the level of last spring.

The sharp decline in demand and prices outside China could create yet another shortage next year, said Constantine Karayannopoulos, the chief executive of Neo Material Technologies, a Canadian company that has its factories in China.

That is because Chinese exporters are unlikely to use all of their export quotas this year — since demand is down — and the Chinese Commerce Ministry has historically penalized exporters that do not use all of their quotas by giving them smaller quotas the next year.

China mines 94 percent of the rare earth metals in the world. Through 2008, it supplied almost all of the global annual demand outside of China of 50,000 to 55,000 tons. But it cut export quotas to a little more than 30,000 tons last year and again this year and imposed steep export taxes, producing a shortage in the rest of the world.

Together with a two-month Chinese embargo on shipments to Japan during a territorial dispute a year ago, the trade restrictions and shortage resulted in prices outside China reaching as much as 15 times the level within China last winter. That created a big incentive for companies that use rare earths in their products to move factories to China or find alternatives.

Executives spoke at a conference in Hong Kong sponsored by two London companies, Roskill Information Services and Metal Events, that have aimed to stay neutral on the trade and geopolitical issues roiling the industry.

Many Chinese companies have halted production this autumn in a bid to stem the decline in prices, several executives said. The Chinese Commerce Ministry has also blocked companies from exporting at prices that it deems too low, setting a minimum price for cerium exports, for example, of $70 a kilogram.

Chinese exporters are on track to use only 20,000 to 25,000 tons of their quotas this year, setting the stage for lower quotas next year, Mr. Karayannopoulos said.

By comparison, industry estimates now put annual demand outside China at a little under 40,000 tons, in part because of conservation efforts regarding rare earths.

Automakers are finding ways to use less neodymium in the magnets of many cars’ small electric motors. Oil companies are finding ways to use less lanthanum in refining, and industries like electronics and wind turbine manufacturing are finding ways to use less dysprosium.

Source: http://www.nytimes.com/2011/11/17/business/global/prices-of-rare-earth-metals-declining-sharply.html?_r=1

Chasing Rare Earths, Foreign Companies Expand in China

CHANGSHU, China — China has long used access to its giant customer base and cheap labor as bargaining chips to persuade foreign companies to open factories within the nation’s borders.

Now, corporate executives say, it is using its near monopoly on certain raw materials — in particular, scarce metals vital to products like hybrid cars, cellphones and energy-efficient light bulbs — to make it difficult for foreign high-tech manufacturers to relocate or expand factories in China. Companies that continue making their products outside the country must contend with tighter supplies and much higher prices for the materials because of steep taxes and other export controls imposed by China over the last two years.

Companies like Showa Denko and Santoku of Japan and Intematix of the United States are adding new factory capacity in China this year instead of elsewhere because they need access to the raw materials, known as rare earth metals.

“We saw the writing on the wall — we simply bought the equipment and ramped up in China to begin with,” said Mike Pugh, director of worldwide operations for Intematix, who noted that the company would have preferred to build its new factory near its Fremont, Calif., headquarters.

While seemingly obscure, China’s policy on rare earths appears to be directed by Prime Minister Wen Jiabao himself, according to Chinese officials and documents. Mr. Wen, a geologist who studied rare earths at graduate school in Beijing in the 1960s, has led at least two in-depth reviews of rare earths this year at the State Council, China’s cabinet. And during a visit to Europe last autumn, he said that little happened on rare earth policy without him.

China’s tactics on rare earths probably violate global trade rules, according to governments and business groups around the world.

A panel of the World Trade Organization, the main arbiter of international trade disputes, found last month that China broke the rules when it used virtually identical tactics to restrict access to other important industrial minerals. China’s commerce ministry announced on Wednesday that it would appeal the ruling.

No formal case has yet been brought concerning rare earths because officials from affected countries are waiting to see the final resolution of the other case, which has already lasted more than two years.

Karel De Gucht, the European Union’s trade commissioner, cited the industrial minerals decision in declaring last month that, “in the light of this result, China should ensure free and fair access to rare earth supplies.”

Shen Danyang, a spokesman for the commerce ministry, reiterated at a news conference on Wednesday in Beijing that China believed its mineral export policies complied with W.T.O. rules. China’s legal position, outlined in recent W.T.O. filings, is that its policies qualify for an exception to international trade rules that allows countries to limit exports for environmental protection and to conserve scarce supplies.

But the W.T.O. panel has already rejected this argument for the other industrial minerals, on the grounds that China was only curbing exports and not limiting supplies available for use inside the country.

China mines more than 90 percent of the world’s rare earths, and accounted for 60 percent of the world’s consumption by tonnage early this year.

But if factories continue to move to China at their current rate, China will represent 70 percent of global consumption by early next year, 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.

For the last two years, China has imposed quotas to limit exports of rare earths to about 30,000 tons a year. Before then, factories outside the country had been consuming nearly 60,000 tons a year.

China has also raised export taxes on rare earths to as much as 25 percent, on top of value-added taxes of 17 percent.

Rare earth prices have soared outside China as users have bid frantically for limited supplies. Cerium oxide, a rare earth compound used in catalysts and glass manufacturing, now costs $110,000 per metric ton outside China. That is more than four times the price inside China, and up from $3,100 two years ago, according to Asian Metal, an industry data company based in Pittsburgh.

For most industrial products that are manufactured in China using rare earths and then exported, China imposes no quotas or export taxes, and frequently no value-added taxes either.

Companies do that math, and many decide it is more cost-effective to move to China to get cheaper access to the crucial metals.

“When we export materials such as neodymium from China, we have to pay high tariffs,” said Junichi Tagaki, a spokesman for Showa Denko, which announced last month that it would sharply expand its production of neodymium-based magnetic alloys, used in everything from hybrid cars to computers, in southern China.

The company saves money by manufacturing in China instead of Japan because the alloys are not subject to any Chinese export taxes or value-added taxes, he said.

Big chemical companies are also shifting to China the first stage in their production of rare earth catalysts used by the oil industry to refine oil into gasoline, diesel and other products. They are moving after Chinese state-controlled companies grabbed one-sixth of the global market by offering sharply lower prices, mainly because of cheaper access to rare earths. Chemical companies are also working on ways to reduce the percentage of rare earths in catalysts while preserving the catalysts’ effectiveness.

Production of top-quality glass for touch-screen computers and professional-quality camera lenses, currently done mostly in Japan, is also shifting to China.

Factories are moving despite worries about the theft of trade secrets. Intematix takes elaborate precautions at a factory completed last month here in Changshu, 60 miles northwest of Shanghai, where the company manufactures the rare earth-based phosphors that make liquid-crystal displays and light-emitting diodes work. While Intematix hired Chinese scientists to perfect the industrial processes here, only three know the complete chemical formulas.

China’s timing is excellent, said Dudley Kingsnorth, a longtime rare earth industry executive and consultant in Australia. Mines being developed in the United States, Australia and elsewhere will start producing sizable quantities of rare earths in the next several years, so China seems to be using its leverage now to force companies to relocate.

“They’re making the most of it, and they’re obviously having some success,” he said.

Until Western governments and business groups and media began pointing out the W.T.O. issues, Chinese ministries and officials had repeatedly stated that the purpose of the rules was to encourage companies to move production to China. They switched to emphasizing environmental protection as the trade issues became salient.

China has stepped up enforcement this summer of mining limits and pollution standards for the rare earth industry, which has reduced supplies and pushed up prices within China, although not as much as for overseas buyers. The crackdown might help the country argue to the W.T.O. that it is limiting output for its own industries.

But other countries are likely to argue that the crackdown is temporary, and that previous crackdowns have been short-lived.

Charlene Barshefsky, the former United States trade representative who set many of the terms of China’s entry to the W.T.O. in 2001, wrote in an e-mail that one problem with the W.T.O. was that its panels did not have the power to issue injunctions,. So countries can maintain policies that may violate trade rules until a panel rules against them and any appeal has failed.

Even then, the W.T.O. can order a halt to the offending practice, but it usually cannot require restitution for past practices except in cases involving subsidies, which are not directly involved in the rare earth dispute.

To be sure, China is offering some carrots as well as sticks to persuade foreign companies to move factories to China.

Under China’s green industry policies, the municipal government of Changshu let Intematix move into a newly built, 124,000-square-foot industrial complex near a highway and pay no rent for the first three years.

Intematix pays $400 to $500 a month (2,500 to 3,000 renminbi) for skilled factory workers like Wang Yiping, the 33-year-old foreman on duty on a recent morning here. It pays $500 to $600 a month (3,000 to 3,500 renminbi) for young, college-educated chemical engineers like Yang Lidan, a 26-year-old woman who examined rare earth powders under an electron scanning microscope in a nearby lab.

It was also relatively cheap to buy the factory’s 52-foot-long blue furnaces, through which rare earth powders move on extremely slow conveyor belts while superheated to 2,800 degrees Fahrenheit. With many Chinese suppliers competing, Intematix paid one-tenth to one-fifth of American equipment prices, said Han Jiaping, the factory’s vice president of engineering.

Still, Mr. Pugh said that the company’s decision to build the factory in China was based not on costs but on reliable access to rare earths, without having to worry about quotas or export taxes.

“I think this is what the Chinese government wanted to happen,” he said.

Source: http://www.heraldtribune.com/article/20110824/ZNYT01/108243014?p=1&tc=pg&tc=ar

EU Feels Pressure of China’s Rare Earths Supply Pinch

The pressure to use low-carbon technologies less damaging to the environment is hitting hard on industries using rare earths in the European Union.

European Commission’s Vice President Antonio Tajani raised the concern regarding the steady supply of rare earths, which are primary components to solar panels and energy-efficient light bulbs.

Rare earth metals are also used in common electronic gadgets like iPhones and iPads.

The site www.theengineer.co.uk cited a report by Tajani’s early this week that a separate plan must be conceived to secure the supply of rare earths and allow the smooth execution of the EC’s Strategic Energy Technology Plan.

“European companies need to have a secure, affordable and undistorted access to raw materials. This is essential for industrial competitiveness, innovation and jobs in Europe,” Tajani’s report said.

The EC has been conducting a study of the rare earths metals in pursuing the low-carbon technology indicated in the plan, which includes nuclear, solar, wind, bio-energy, carbon capture and storage and updating electricity grids.

The study, “Critical Metals in Strategic Energy Technologies,” reveals that five metals commonly used in these technologies (neodymium, dysprosium, indium, tellurium and gallium) show a high risk of shortage, according to www.rareearthassociation.org.

China’s clamping down on rare earth production has led other nations to consider their options in securing their steady supply of the metals.

The United States has been considering building its own stockpile, which some industry specialists said could also distort world prices and the supplies.

China currently holds close to 95 percent of current supply and commanded a premium price raging from 100,000 to 300,000 renminbi early this month.

To be less reliant on China for rare earths, companies like Molycorp, Lynas Corp., Alkane Resources, Globe Metals Mining, among other mining firms have embarked on mineral exploration projects to uncover more of the coveted rare earths.

Recently, the U.S. Congress considered a strategic stock pile of rare earths as they are used in a variety of applications including global positioning and guidance and control systems, according to a Congressional Research Service report.

By Christine Gaylican
Source: http://au.ibtimes.com/articles/249401/20111115/eu-feels-pressure-rare-earths-supply-pinch.htm

What Are Technology Metals?

So, just what are “technology metals’? As a relatively new term, coined by Jack Lifton in 2007 and now widely used in the industry, there are probably a number of alternative definitions out there. Here at TMR, we say that the technology metals are those generally-rare metals that are essential for the production of ‘high tech’ devices and engineered systems, such as:

  • The mass production of miniaturized electronics and associated devices;
  • Advanced weapons systems and platforms for national defense;
  • The generation of electricity using ‘alternative’ sources such as solar panels and wind turbines;
  • The storage of electricity using cells and batteries.

There are of course numerous other uses and applications of these metals.

Almost all technology metals are byproducts of the production of base metals, with the exception of the rare earth metals, as a group, and lithium.

Prior to World War II, there were many metals for which there were no practical uses. They were literally laboratory curiosities available only in small quantities, obtained at high costs in both time and money.  For this reason, they were called the ‘minor metals’; they simply had no major uses in contrast to the base metals and even to the precious metals.  It didn’t matter how abundant a metal actually was in nature; if it had no practical uses it simply wouldn’t be produced. Nickel, for example, was a ‘minor metal’ before the commercial development of stainless steel in 1919, when economical methods of mass producing and using stainless steel were undertaken in earnest. Nickel after that rapidly became a high volume production metal.

In the first few years of the 20th Century, malleable tungsten was developed at General Electric and it rapidly displaced all other materials for use as filaments in incandescent light bulbs. Tungsten production increased, and shortly thereafter tungsten steels were developed and used, at first for military armor and armor piercing projectiles. Tungsten carbide for cutting tools soon after that revolutionized precision machining, just in time to make mass produced engines a reality. Tungsten, a minor metal in 1900, became by 1918 an important industrial metal, and had the designation ‘technology metal’ existed in 1918, tungsten would surely have been recognized as such at that point.

As an example of a more well-known metal transitioning from ‘minor’ to ‘major’ status, look at the late 19th Century  minor metal aluminum, which was used to cap the Washington Monument in 1886, as a symbol of America’s wealth. Aluminum was then more expensive than gold. Keep in mind that only a lunatic or a visionary would have predicted in 1886, that common people would cook with aluminum pots and pans less than a century later, and that even in 1919 the idea of nickel stainless steel kitchen appliances for the masses would have been considered fantasy nonsense.

World War II transformed a sleepy academic discipline, the study of the physical properties of all of the metals, into modern metallurgy with its emphasis on developing end uses for metals based not just on their properties as structural materials but even more important, on their newly categorized electrical, electronic, and magnetic properties for use in technology.

Fifty years ago, it was unclear which, if any of the then minor metals would be most useful for practical mass producible technologies.  We were then only just discovering and, actually, determining which of the electronic and magnetic properties of the chemical elements were important to our civilization’s needs and desires.  Prior to World War I, only the structural, decorative, simple electrical transmission and storage, and monetary metals were well known even to the metallurgists of the day. The last naturally occurring metal to be discovered was rhenium and that was only in 1924. What no one knew between the wars was that it would be important to know which, if any, of the little used minor metals could in fact be produced in significant volume at a significant yearly rate of production. There was no need for any such information, certainly not in academia, where most of these studies would be then undertaken. The equation was simple; no use equals no demand and therefore no attempt to supply in quantity.

World War II was the single most important driver for the transformation of the minor metals into the technology metals. Economics as a limitation to innovation was put aside and national security became the only driver for the development of the technologies for jet and rocket engines, radio and radar, electronic computing, and super weapons.

A glittering galaxy of physicists and innovative engineers, perhaps a once in a thousand years gathering of intellects, told the chemical engineers who specialized in metallurgy, which metals they critically needed in abundance and the world’s governments told all of them not to consider economics in their quest to produce them. The chemical engineers then began systematically to learn how to find, refine, and mass produce the formerly minor metals, now desperately needed for war technology. Among others this lead to the production for the first time, in every case, of large quantities of previously never-before-seen ultra pure silicon and germanium, as well as high purity gallium and indium, uranium and thorium, and mixed, and some individually separated,  rare earth metals and, just after the war, of lithium.

After the hot part of World War II ended, a 50 year long Cold War immediately ensued, during which the postwar uneconomic overproduction of minor metals for the new technologies continued, and the increasingly surplus production was diverted to high volume civilian consumer uses, spun off from technologies developed for the military on a cost plus basis. This was the seeding of our modern ‘Age of Technology.’ Its original economics were synthetic; the critical materials for modern technologies were being produced from operations and sources the development of which had been fully subsidized, in an unprecedented open-ended hand out by the war economy, both cold and hot.

So, at the same time, today, that we have become totally dependent on the technology metals for the mass production of necessary consumer goods such as miniaturized electronics, large scale television and cinema displays, electronic data processing, and personal communications,. i.e., our way of life, we are also critically dependent on technology metals for our national security in the form of secure communications, weapons guidance, surveillance, and battlefield superiority. The problem is that the bulk of the technology metals is now used for civilian production and the military instead of catalyzing the supply and taking a priority position, is now simply another customer.

In the table below we list those metals that we define as ‘rare’, by defining rare as ‘produced annually in a quantity of 25,000 metric tonnes or less.’ Only the most obscure of these rare metals, such as the rare earths holmium, ytterbium, and lutetium, can still be defined as minor metals, because even today they only have minor uses since they are and will remain too rare ever to be available in sufficient quantity for mass production of a technology.

Estimated global production of various metals in 2009
[technology metals are in red: rare metals are in bold]
Sources: US Geological Survey, British Geological Survey
Metal Production [tonnes]
Cobalt 62,000
Uranium 35,332
Lanthanum 32,860
Silver 21,332
Neodymium 19,096
Cadmium 18,000
Lithium 18,000
Yttrium 8,900
Bismuth 7,300
Praseodymium 6,150
Gold 2,350
Dysprosium 2,000
Selenium 1,500
Samarium 1,364
Zirconium 1,230
Gadolinium 744
Indium 600
Terbium 450
Europium 272
Palladium 195
Platinum 178
Germanium 140
Gallium 78
Rhenium 52
Rhodium 30
Hafnium 25
Tantalum 0
Lutetium UNKNOWN
Scandium UNKNOWN
Tellurium UNKNOWN
Ytterbium UNKNOWN

The technology metals are almost all rare metals, and they are almost all produced as byproducts of base or common metals.

The problem with the technology metals is that our supply of them, or more specifically our maximum rates of production of them, is critically dependent mostly upon our production of base metals. In the case of the rare earth metals, mined as a group, the key supply issue is the complex metallurgy of the separation of the individual rare earths from each other; for the case of lithium, a key issue is the length of time that primary concentration takes. The rare earths as a group are actually not rare, based on the admittedly arbitrary definition above, though individual rare earths certainly are.

The rare earths and lithium are today the subject of much discussion, because they have become the most visible technology metals.  The definition of a rare metal is somewhat fluid; a few of today’s rare metals may not always be so. Lithium, for example, is on the cusp of being struck from the list of rare metals, because of its use in electrical storage. But it has turned out that once a minor metal becomes a technology metal, it will never again be a minor metal.

Source: http://www.techmetalsresearch.com/what-are-technology-metals/

Chromium, are Nations Hoarding Natural Resources?

Chromium is a topic that you rarely hear about, but in today´s environment of uncertainty and the, ¨Great Worldwide Resource Grab¨, chromium gets more attention. Recently we have the EU and USA going into Libya (oil, lithium), Iraq (oil), Afghanistan (oil pipeline, rare earths), West Africa (cobalt, tungsten, oil, gold, timber and many more). Let us not forget China and the contracts that they are signing all over the world for their natural resource needs. This all makes for some very interesting times for nations and investors alike. Rare industrial metals are no different. Chromium has been in the news so it is time to explain its uses and background.

Chromium was discovered by Louis Vauqelin in 1797. Chromium is a blue-white metal with great corrosion resistance. It has the symbol Cr with an atomic number of 24. Chromium can be polished to form a very shiny surface and is used to plate other metals to form a protective layer.

The main use of chromium is in the production of steel where it is used as a hardener, corrosion resister and helps fight decolorization. Iron and chromium form Stainless Steel which is strong and has a high resistance to heat and decomposition. The two form one of the most versatile and durable metals known in the world. Stainless steel contains approximately 10% chromium. Chromium is also used in paints, coloring in glass, and as a plating agent.

According to the USGS the top producers are South Africa, Kazakhstan and India. South Africa produces almost 50% of all chrome ore. The three countries account for 80% of all chrome ore mined. Approximately 95% of all known reserves are located in Kazakhstan and the southern tip of Africa to include Zimbabwe and South Africa.

The background of chromium is interesting, but today we have a hot topic. India is thinking about a ban on exportation of chrome ore. This is after news out of South Africa that the, ¨National Union of Mineworkers¨, called for restrictions of chrome ore exports to China. It has been speculated that China has been stockpiling chrome ore in order to control future prices. Does this sound familiar? We currently have to deal with the manipulation of the rare earths and rare industrial metals by China. As of October 2011 India and South Africa have not followed through with the plans. The next few weeks and months will be quite interesting, we are seeing an increase in the need for chromium, with a possible decrease in available supply.

Today our world is full of uncertainty. Every day brings us news of something amazing. Governments are under pressure, people are suffering, companies are folding, wonderful inventions, worldwide internet connectivity, and resources are becoming scarce. I have learned that in times like this you can either complain or build a grand future. Many fortunes were made during the US Great Depression. We are living through a worldwide recession, when we come out on the other side natural resources will be needed like never before. Where are you putting your money and future?

By: Randy Hilarski - The Rare Metals Guy

LED Applications Growing, Will Only Lead to More REE Demand

An end product’s supply chain can be far reaching, with parts or all of the upstream and downstream producers sometimes getting hit at different times by economic forces.

This appears to be happening in China’s domestic LED market, which has seen a marked fall-off in demand, according to the China Strategic Monitor. That’s hit pricing during the second half of this year.

“Investment plans are being curtailed both in the upstream and downstream compared to those presented last year,” according to the report. “Despite this there are many companies still attracted to the market and many pharmaceutical companies and even wineries in South China are moving into LED lighting products. Based on this trend the industry is likely to realize large-scale production capacity over the next 2 or 3 years and pricing for products should fall a further 20-30%.”

Industry watchers reckon 10% of LED-driven businesses in China could go bankrupt this year. And one chief executive, speaking at the recent China Industrial Development Forum for the Low Carbon Economy, said 90% of all China’s LED businesses are running at a loss.

Interesting. The country’s Guangdong province said earlier this month that it had exported US$3.81 billion worth of lighting products between January and August – that’s a 21% increase over the same time period last year.

“Customs authorities indicated that the main export market is still Europe and America with the two taking up 63.2% of the total,” a report said. “Though exports to Hong Kong, Japan and other ASEAN countries are up 60% on last year.”

The massive rise in LED exports is ascribed to the increasing trend of upgrading to energy-efficient lighting combined with the higher production values and quality in China, according to the report.

Still, various companies producing LED products complain that the industry is hit with high selling, raw material and R&D costs. So, while a company reports a 32% jump in LED sales in the third quarter of 2011when compared to 2Q10, the senior executives also talk about the need to implement structural changes, improve execution, reduce overhead costs and initiate job cuts.

Now, the LED industry uses a wide range of phosphor materials to convert light emission from LED chips into a different wavelength. So, combining a blue LED with one or more phosphors can create a white LED. Many of the phosphors used in LEDs contain rare-earth elements, the most common one being the yttrium aluminum garnet, which is doped with cerium.  Another phosphor, called TAG, contains terbium, while silicate and nitride phosphors are commonly doped with cerium or europium.

 Here’s a small example of how LED products are being used: Kingsun Optoelectronic Co has just installed more than 10,000 street lights containing one million high-efficiency white LEDs along 75 miles of roads in Shenzhen. Kingsun anticipates a 60-percent reduction in energy consumption compared to the high-pressure sodium fixtures that have been replaced in the upgrade.

And while LEDs are now widely recognized as emerging light sources for general illumination, it turns out that LED lighting can also be used in a broad range of life-science applications such as skin-related therapies, blood irradiation, pain management, hypertension reduction and photodynamic therapy, which, when combined with drugs, is finding its way into cancer research.

In other words, the LED industry is only now just starting to be exploited, meaning demand will grow across all sectors. Translation – more rare earths will be needed in producing these products as research advances are made and commercial producers become more lean and efficient.

Source: http://www.raremetalblog.com/
By: Brian Truscott

How to Invest in Rare Earths

Exchange-traded funds are jumping on the bandwagon to invest in rare earths and other strategic metals, mainly by investing in companies that mine and use the materials. There are risks for ETF investors to weigh.

Oil, Gold…Rare Earths?
As ETFs focus on some less-known materials, there are risks to weigh

The raw-materials rally that has driven investors to load up on gold, crude and wheat is also sparking interest in funds tied to relatively obscure commodities such as lithium, uranium and rare earths.

Investors have poured hundreds of millions of dollars into a handful of exchange-traded funds linked to those materials over the past year or so. But betting on these kinds of industrial building blocks presents some unusual challenges and risks.

Trying to replicate the price swings in underlying materials through an ETF is challenging because there are typically no futures markets for these substances, as there are for more commonplace materials. Holding the physical goods is often impractical as well. As a result, many funds instead concentrate rare-earth and other exotic-metals plays on related stocks, which can rise or fall independently of the commodities.

The fortunes of some of these materials—and the companies that work with them—can change suddenly. After Japan’s nuclear disaster in March, two ETFs that hold uranium-related stocks plunged amid a clouded outlook for nuclear energy and haven’t recovered to date. In addition, uncertainty about the global economy has caused prices of some rare earths to fall by double-digits in percentage terms in recent months, according to market participants.

Investors who accept the risks are generally buying into a thesis that’s been applied to a broad range of commodities in recent years—that rapid economic growth in emerging markets is pushing up demand and suppliers are struggling to keep up. Indeed, some basic commodities have leaped in price, but some of the biggest increases are related to lesser-known materials.

While oil costs a little more than twice what it did at the low point in 2009, for instance, the price of neodymium—one of a group of rare-earth elements used in high-tech products and advanced weaponry—was recently up 23-fold over a similar period, according to American Elements, a Los Angeles manufacturer that uses rare earths.

A Step Removed

Van Eck Global last year launched Market Vectors Rare Earth/Strategic Metals. What qualifies as a “strategic” metal is “a little subjective,” says marketing director Edward Lopez. But instead of buying the metals, the fund buys shares in companies that get at least half their revenues—or have that potential—from rare earths or materials such as titanium and tungsten.

Despite their name, rare earths are common in the Earth’s crust. But about 90% of rare-earth supplies currently comes from China, which has started to limit exports, saying it needs the materials at home. Likewise, foreign investors face restrictions on holding shares of major Chinese rare-earth producers, Mr. Lopez says.

Mining companies in the U.S. and elsewhere are trying to ramp up production to replace lost supplies. Investing in such companies carries distinct risks, Mr. Lopez says, including the hurdles of moving from planning to production and the possibility that the market for the materials may shift in the meantime. But the Van Eck fund includes among its top holdings Molycorp Inc., in Greenwood Village, Colo., and Australia-based Lynas Corp., companies that are developing rare-earth mines in the U.S. and Australia, respectively.

Shares of the Van Eck fund are down 21% since it was launched last October, and down 36% this year through Sept. 30. The fund at the end of August had $346 million in assets, according to National Stock Exchange, a data provider and stock exchange.

Liking Lithium

Lithium is another metal that has attracted widespread interest, because of the vital role it plays in powering a proliferating array of consumer electronics, including cellphones and laptops. But, as with other such elements, it’s impractical to invest in lithium directly. It’s an often volatile material and insuring a large stock could “take so much away from the return that it wouldn’t be practical,” says Bruno del Ama, chief executive of Global X, an ETF provider.

The company’s Global X Lithium, launched in July 2010, invests in shares of companies that mine lithium and in makers of products that use lithium, such as lithium-ion batteries.

The fund’s largest single holding is Sociedad Quimica & Minera de Chile SA, a Chilean company that produces plant nutrients and iodine as well as lithium. Shares in the company made up 23% of the fund’s holdings as of Sept. 30.

The fund had $128 million in assets at the end of August, including inflows this year of $24 million, according to National Stock Exchange.

Mr. del Ama says buying stocks can give investors a boost because miners can make money even if prices for the material stay flat. “If on top of that, the price of the commodity goes up…you get a leveraged impact on the return,” he says.

Shares in the lithium fund have fallen 16.2% since the 2010 launch, and are down 41% this year through Sept. 30. Average lithium prices in 2011 through July were 2% below average prices last year, according to TRU Group Inc., a consultancy that specializes in lithium.

Uranium Plays

The recent fate of two uranium-linked funds—Global X Uranium and Market Vectors Uranium+Nuclear Energy—shows that the “leveraged play works both ways,” as Mr. del Ama puts it.

After the March 11 earthquake and tsunami in Japan crippled the Fukushima Daiichi nuclear plant, uranium prices plunged amid concern the incident would undercut support for nuclear power. In early September, weekly prices for the thinly traded fuel were 23% lower than they were on March 7, before the disaster, according to Ux Consulting Co. LLC.

But shares in Global X’s uranium fund, which focuses on uranium mining, have fallen even harder, losing more than half their value since March 10, the day before the Japanese disaster. The Market Vectors fund, which invests in both miners and other firms that work on nuclear energy, has fared somewhat better over that same period, falling 33% through Sept. 30.

Mr. Pleven is a reporter for The Wall Street Journal in New York. Email him at liam.pleven@wsj.com

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

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