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REE

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

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

Running out of rare earth minerals

Rare Earth Elements

Rare earth minerals (REEs) news does not generally capture headline news of major newspapers or broadcast media. That is not to say that the 17 or so extremely rare minerals are not important. In fact, they are critical to many products, both industrial and consumer. The use of REE varies from commercial to military applications and hence the overwhelming concentration (97 per cent) of these minerals in the People’s Republic of China has prompted American policymakers to treat the subject as a matter of national security.

In many respects, the matter of REE hit world headlines when The Independent of the UK revealed in late 2010 that China could be cutting back on supply of two metals in 2012, primarily to meet its domestic demand. This has precipitated a mad rush by some of the world’s largest economies in Western Europe to look for alternative sources as far and wide as South Africa to Greenland. What makes REEs so precious is that they are used to produce many components and products we have come to take for granted. These include: Dysprosium – helps make electric motor magnets 90 per cent lighter; Terbium – makes electric lights 80 per cent more efficient; Praseodymium – used to make lasers and ceramic materials; Gadolinium – used to manufacture computer memory (RAM). Industrial minerals such as Ytterbium (used to make infrared lasers) and Erbium (essential to the manufacture of vanadium steel), whilst other metals help produce wind turbines, solar panels, hybrid car batteries and fibre-optics, all play a vital role in churning out products that are crucial to one industry or another.

According to a United States (US) Congressional report on REE published in late 2011, the global demand for REEs stood at 136,100 tons in 2010 with annual global production standing at 133,600 tons. It was estimated that by 2015, global demand could reach 210,000 tons per annum. While the Industrial Minerals Company of Australia (IMCOA) puts that demand at a more conservative 185,000 tons in the year 2015, the fact remains that China’s output is estimated at no more than 140,000 tons. What is evident from the data presented above is that the balance of 45,000 – 70,000 metric tons of REEs will have to be sourced from elsewhere to feed the world’s voracious demand. At this juncture, it remains unclear as to where such material can be found, in sufficient quantities to feed demand, especially in light of the fact that mining rare metals have proved ecologically disastrous for China. Hence, whilst it may be ‘politically’ and ‘economically’ acceptable for China to go ahead and extract these metals at whatever cost to the environment, it may be a whole different issue for countries like South Africa which have significant untapped deposits.

The adverse effects of overdependence on a single source for such vital resources are already evident in the global geopolitical scene. When the Obama administration announced in early 2010 of arms sales to Taiwan worth US$6.4 billion, an article in Shanghai Dongfang Zaobao, a pro-Chinese Communist Party paper, proposed the banning the sale of REEs to American companies as retribution. Although the threat did not ultimately materialise, it did help wake up Western capitals to the dire prospects of a potential clampdown on exports by China. Although China controls about 97 per cent of the world’s current output of REEs, it certainly does not have all the deposits. According to the United States Geological Survey (USGS), China’s share of reserves stands at 55 million metric tons out of 110 million metric tons. The US has around 13 per cent followed by South Africa and Canada. Other potential players include Australia, India, Russia, South Africa, Brazil, Malaysia, and Malawi.

Unlike China, the US has not sufficiently developed this industry. The supply chain for REEs includes mining, separation, refining, alloying and manufacturing (devices and component parts). The Achilles heel for the US is its lack of refining, alloying, and fabricating capacity to handle any type of rare earth production. The end result of this lack of investment and interest in such a crucial sector translates into the US (and indeed almost all other nations) is that it must source practically its entire need for REEs from China. This gloomy scenario has forced the Congress into action. A number of legislations have been brought forth in the 112th Congress that range from ‘H.R. 1388, the Rare Earths Supply Chain Technology and Resources Transformation Act of 2011′ which hopes to re-establish a competitive domestic rare earths supply chain with the Department of Defence’s Logistics Agency, to the ‘H.R. 1314, the Resource Assessment of Rare Earths (RARE) Act of 2011′ that directs the USGS to “examine the need for future geological research on rare earth elements and other minerals and determine the criticality and impact of a potential supply restriction or vulnerability”.

Indeed, capitals across the industrialised world have now been sufficiently alarmed and the search for new sources of REEs is on in full swing. As stated above, sources of known deposits are already known. The tricky question of extracting the rare metals under acceptable terms to the environment remains, till date, a major challenge. One can only hope that alternative sources of supply can be found so that we can move away from mono-sourcing of such metals. For a disruption in the supply chain of REEs could spell disaster for the global economy, already reeling under sustained recession that is looking more and more like the ‘great depression’ of the 21st century.

By: Syed Mansur Hashim
Source: http://www.thefinancialexpress-bd.com/more.php?news_id=121779&date=2012-03-01

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

Endangered Elements: Tungsten Among China’s Potential Embargo List

Tungsten /ˈtʌŋstən/, also known as wolfram is a chemical element with the chemical symbol W and atomic number 74.

Rare Industrial Metal - Tungsten / Wolfram

It didn’t take long for the panic to set in, last year, when the Chinese government flexed its muscle by threatening the world’s Rare Earth Element (REE) supply. With 95% of REE supplies coming from China, that scare was indeed legitimate. But REEs aren’t the only elements with which China has the potential to choke off. On American Elements’ 2011 Top 5 US Endangered Elements List, three elements (tungsten, indium and neodymium) have over 50% of world supply coming from Chinese mines.

To refresh the memory of those who followed the rare earth surge from last year, and the subsequent piquing of interest in rare earth companies, it began with Japan. As the summer of 2010 was coming to a close, reports of an embargo of shipments to Japan for REEs raised concern for manufacturers who depend upon the elements for production primarily in the tech industry. Within a month, that embargo spread to North America and Europe, and concern over Chinese monopolization rose, along with REE prices, and those of the companies devoted to them. When the embargo ended, relief came to the sector, while the pace of development outside of China received only a minor increase. The threat of supply shortages still lingers, especially with tungsten, indium and neodymium.

The example of tungsten is not to be ignored, as 85% of global production comes from China, which has already indicated it might end all exports altogether due to domestic demand increases. With the highest melting point and greatest tensile strength of all elements, tungsten’s importance is unquestionable. Used in all situations that call for high temperature thresholds or hardness and strength, tungsten is imperative to many modern living standards that depend upon it. From a US perspective, the element’s use in the aerospace program, electronics and military (including in bullets and armor) is critical. To the mining industry as a whole, tungsten is a savior with many uses within the assembly of mining equipment itself, including drills in need of durability. Strangely enough, the United States dismantled domestic production of tungsten ore in 1994 with the last tungsten mine, the Pine Creek Mine in Inoyo, California, going down as a historical footnote en route to Chinese dependence.

Today, tungsten production remains primarily within China, but awareness of a need to develop outside of the PRC is becoming clearer. Options in the western hemisphere are appearing, and may soon be getting the attention they need to aid this drive for domestic independence. Juniors such as North American Tungsten [NTC – TSX.V] and Playfair Mining [PLY – TSX.V] may provide answers that mitigate a possible future supply breakdown. For North American Tungsten, the title of being the western world’s leader in tungsten production doesn’t come lightly. Through developing its Cantung Mine, it provides tungsten concentrate production within the borders of Canada’s Northwest Territories, which from an international standpoint is a much more secure mining investment environment to work within. At a much earlier stage, Playfair Mining is not yet a producer, but is heavily leveraged to the price of tungsten, which today sits around $440/MTU (“metric tonne unit”) or over $20/lb. With a goal in mind to partner with an end user of tungsten metal in order to finance its Grey River deposit into production, Playfair is well aware of the potential impact a tungsten shortage would carry.

Due to its high level of use in the manufacturing sector, a significant number of Fortune 500 companies are dependant upon tungsten’s availability. General Electric and its Tungsten Products Division, along with others like Kennametal and ATI Firth Sterling are among those that would most likely benefit from securing a long term tungsten supply, and are among potential targets should Playfair seek a high-worth partner to put its nearest term tungsten property into production. The company has 4 high-grade deposits with two located in the Yukon, one in the Northwest Territories and another on the southern coast of Newfoundland. Each of the properties was acquired strategically during a period of massively deflated tungsten prices, prior to this latest surge over the $440/MTU mark. This increase represents a 70% rise from the recent low prices that graced Playfair’s entry period. While the commodity’s price has risen, the company’s stock has yet to follow suit.

While the current price of the stock seems to have languished, the team is making strides to be better prepared for when the bigger end-users in need of tungsten come knocking. The board includes experienced individuals who have taken deals into production before, as well as Director James Robertson who took the last big tungsten company outside of China to successful acquisition. In both combined 43-101 compliant and non-compliant resource categories, Playfair’s tungsten properties contain more than an estimated 5.5 million MTUs of WO3. It’s to be expected, though, that since Playfair is an exploration company, these resources have room for expansion. As economic uncertainty lingers in all global markets, crucial and endangered elements such as REEs, tungsten, indium and neodymium will be within the watchful eye of western manufacturers in need of these ingredients for their operations. Whether another anticipated panic is inflicted by possible impending embargo actions by China doesn’t change the dependence we have on endangered elements. And like last year’s REE crisis, a price surge on those companies were set to move prior complications is entirely a likely scenario. G. Joel ChuryProspectingJournal.com

– Disclaimer: The author does not currently hold any shares of any of the companies mentioned in the article. However, some members of Cordova Media Inc., which owns the ProspectingJournal.com, may or may not have interests in one or more of the companies mentioned at the time of publication. Staff members from the Prospecting Journal reserve the right to acquire interests in any of the companies mentioned after 36 hours have elapsed upon initial publication of this article. Playfair Mining is a sponsor of ProspectingJournal.com.

Rare Earths and Strategic Metals: A Lateral Look at 2011

Rare Earth Elements

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.

Afterword

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

Critical Reading for Rare Earth Metals Investors

Yttrium is a chemical element with symbol Y and atomic number 39.

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/

Endangered Elements: Tungsten Among China’s Potential Embargo List

China Tungsten Carbide Rods

ANALYSIS – ProspectingJournal.com – It didn’t take long for the panic to set in, last year, when the Chinese government flexed its muscle by threatening the world’s Rare Earth Element (REE) supply. With 95% of REE supplies coming from China, that scare was indeed legitimate. But REEs aren’t the only elements with which China has the potential to choke off. On American Elements’ 2011 Top 5 US Endangered Elements List, three elements (tungsten, indium and neodymium) have over 50% of world supply coming from Chinese mines.

To refresh the memory of those who followed the rare earth surge from last year, and the subsequent piquing of interest in rare earth companies, it began with Japan. As the summer of 2010 was coming to a close, reports of an embargo of shipments to Japan for REEs raised concern for manufacturers who depend upon the elements for production primarily in the tech industry. Within a month, that embargo spread to North America and Europe, and concern over Chinese monopolization rose, along with REE prices, and those of the companies devoted to them.

When the embargo ended, relief came to the sector, while the pace of development outside of China received only a minor increase. The threat of supply shortages still lingers, especially with tungsten, indium and neodymium.

The example of tungsten is not to be ignored, as 85% of global production comes from China, which has already indicated it might end all exports altogether due to domestic demand increases.

With the highest melting point and greatest tensile strength of all elements, tungsten’s importance is unquestionable. Used in all situations that call for high temperature thresholds or hardness and strength, tungsten is imperative to many modern living standards that depend upon it. From a US perspective, the element’s use in the aerospace program, electronics and military (including in bullets and armor) is critical. To the mining industry as a whole, tungsten is a savior with many uses within the assembly of mining equipment itself, including drills in need of durability.

Strangely enough, the United States dismantled domestic production of tungsten ore in 1994 with the last tungsten mine, the Pine Creek Mine in Inoyo, California, going down as a historical footnote en route to Chinese dependence.

Today, tungsten production remains primarily within China, but awareness of a need to develop outside of the PRC is becoming clearer. Options in the western hemisphere are appearing, and may soon be getting the attention they need to aid this drive for domestic independence. Juniors such as North American Tungsten [NTC – TSX.V] and Playfair Mining [PLY – TSX.V] may provide answers that mitigate a possible future supply breakdown.

For North American Tungsten, the title of being the western world’s leader in tungsten production doesn’t come lightly. Through developing its Cantung Mine, it provides tungsten concentrate production within the borders of Canada’s Northwest Territories, which from an international standpoint is a much more secure mining investment environment to work within.

At a much earlier stage, Playfair Mining is not yet a producer, but is heavily leveraged to the price of tungsten, which today sits around $440/MTU (“metric tonne unit”) or over $20/lb. With a goal in mind to partner with an end user of tungsten metal in order to finance its Grey River deposit into production, Playfair is well aware of the potential impact a tungsten shortage would carry.

Due to its high level of use in the manufacturing sector, a significant number of Fortune 500 companies are dependant upon tungsten’s availability. General Electric and its Tungsten Products Division, along with others like Kennametal and ATI Firth Sterling are among those that would most likely benefit from securing a long term tungsten supply, and are among potential targets should Playfair seek a high-worth partner to put its nearest term tungsten property into production.

The company has 4 high-grade deposits with two located in the Yukon, one in the Northwest Territories and another on the southern coast of Newfoundland. Each of the properties was acquired strategically during a period of massively deflated tungsten prices, prior to this latest surge over the $440/MTU mark. This increase represents a 70% rise from the recent low prices that graced Playfair’s entry period. While the commodity’s price has risen, the company’s stock has yet to follow suit.

While the current price of the stock seems to have languished, the team is making strides to be better prepared for when the bigger end-users in need of tungsten come knocking. The board includes experienced individuals who have taken deals into production before, as well as Director James Robertson who took the last big tungsten company outside of China to successful acquisition.

In both combined 43-101 compliant and non-compliant resource categories, Playfair’s tungsten properties contain more than an estimated 5.5 million MTUs of WO3. It’s to be expected, though, that since Playfair is an exploration company, these resources have room for expansion.

As economic uncertainty lingers in all global markets, crucial and endangered elements such as REEs, tungsten, indium and neodymium will be within the watchful eye of western manufacturers in need of these ingredients for their operations. Whether another anticipated panic is inflicted by possible impending embargo actions by China doesn’t change the dependence we have on endangered elements. And like last year’s REE crisis, a price surge on those companies were set to move prior complications is entirely a likely scenario.

By: G. Joel Chury
Source: http://www.prospectingjournal.com/endangered-elements-tungsten-among-chinas-potential-embargo-list_12_21_2012/

The Age of Rare Earth Metals: Luisa Moreno

Rare Earth Elements

The Critical Metals Report: Luisa, in a recent interview, you called the rare earth space “the modern Bronze Age played in the capital markets.” Could you expand on that?

Luisa Moreno: The Bronze Age was the first period of human civilization in which metal was used. This rare earth period is similar in that investors are learning about new elements and their applications, which are fairly critical for our modern lifestyle. At the same time, investors have the opportunity to create profits in the space. The analogy is an exaggeration, but we are discovering these new elements.

TCMR: You published a report called “Rare Earths Economic War.” Is there really a war in the rare earth space? If so, who’s winning?

LM: 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.

However, the capital and equity markets have been depressed for various global economic reasons. If the global economy recovers, stocks should go up—and hopefully investors will gain from that as well, because rare earths are still needed and we need to develop these projects.

TCMR: You have said that China may gradually phase out rare earth elements (REE) exportation and keep them for itself, to attract businesses and because mining them is a toxic business. So why doesn’t China get behind some REE projects, to get one into production and get the world off its back?

LM: China is concerned with its own demand, and my forecast indicates it will likely become a net importer. But to answer your question, China tried to buy Molycorp Inc.’s (MCP:NYSE) Mountain Pass project as well as the Lynas Corp. (LYC:ASX) project. It wasn’t able to, due to lack of support from local governments. China (and by China, I mean some individual companies and perhaps its government) would like to control most of the REEs and be able to supply the rest of the world, but the rest of the world is not ready to be dependent on the nation for such critical elements.

TCMR: A post on raremetalblog.com talks about China’s growing relationship with Wal-Mart, the world’s biggest retail company, and how it is trying to get Wal-Mart suppliers to be more sustainable. Another post talks about growing demand for LED light bulbs. They are expensive, but they more than pay for themselves in the long run. These items mean a greatly increased demand for REEs —so are we underestimating future demand?

LM: We may be. Chinese demand is better defined because China has the REEs and it can produce and consume them internally. It is different, however, in Japan, which has to decide now if it is going to develop and build production lines that are dependent on REEs. If it doesn’t feel comfortable with that, it might decide to use different elements instead of making products using these elements; it might choose to produce hybrid cars with fewer REEs.

At this point, there is great potential for REEs —but at the same time, if the supply is uncertain, some industrial nations might come up with a plan B. Assuming the global economy does well, there is great potential usage and demand growth, not just in China, but also in other nations’ energy strategies. So many risks are attached to supply that it is hard to accurately predict what the real demand will be.

TCMR: Does Japan have any leverage with China that can stabilize the flow of rare earths to its manufacturers?

LM: Japan might have some leverage, but not enough to change Chinese policies. You might remember the fishing dispute a few months ago; China stopped exporting to Japan until it felt comfortable the dispute was resolved. You could say Japan has almost no leverage—and that is true of the U.S. and EU as well. Japan has been talking to China for a long time, and the World Trade Organization is aware of the struggles, but no one has been able to persuade China to change its policies.

TCMR: China has attempted to curb illegal and small-scale rare earths mining. Are the Japanese sourcing the REEs through these kinds of means now? Do you think Japan will resort to the gray market?

LM: That is not something its government would disclose or announce, but I think Japan is trying to purchase the REEs through other nations— and it is possible that Vietnam, Thailand and neighboring countries are buying illegal rare earths. But based on its culture and what I have been told by Japanese traders and businessmen, Japan will avoid buying illegal rare earths directly from China. It would rather do business with the surrounding nations.

TCMR: Your report says the biggest obstacle to developing deposits is metallurgy, or the ability to recover and process the REEs. Is it true that no two REE deposits are identical, and therefore there is no standard process for extracting and refining REE-bearing minerals?

LM: Yes; no two deposits are identical, so the process will differ from project to project. The refining process of each element is performed using solvent extraction or ion exchange processes that are well known, but the balance of chemicals used and the design of the processes depend on the composition of the feedstock REE concentrates. It is definitely not one size fits all, so companies have to determine how to economically extract their REEs, which is complicated and expensive. My understanding is that solvent extraction is commonly used for the lights, while companies with high percentages of heavies may have to use the ion exchange process as well, and that tends to be equally expensive. So it is an expensive endeavor for a company that wants to extract anywhere from six to 10 elements. That is a lot of elements.

TCMR: We should also consider production of concentrates versus oxides. It is easier to produce concentrates, but concentrates reap only about 20% of the value oxides offer, correct?

LM: Potentially, yes. It depends on the percentage of the most expensive elements. For example, if the REE distribution in a company’s concentrate has high percentages of dysprosium and terbium and other expensive elements, then that could be a motivation for them to separate and refine the elements and realize the individual values. Those with more of the lights will realize less value for the individual refined elements. Some concentrates have more of the high-priced elements than others, but I’m not sure if a company can realize that price; the market for the concentrate is not very well known outside of China.

TCMR: Many companies are talking about producing oxides instead of concentrates, in hopes the market will attribute greater value to their projects, share prices having dropped from where they were in summer. Do you have any comments on that

LM: Either way, companies will always realize less of a price if they sell it as a concentrate instead of as individual elements. And yet, from concentrate to the individual elements, a lot of capex is needed—in some cases, it is justified, depending on the prices, but in others, it might not be. Meanwhile, time will tell where the prices of these elements will end up, and that will give a much better picture of these projects’ economics.

TCMR: What are the top four or five projects that are most advanced in terms of being able to economically recover and process the REEs and their respective deposits?

LM: Molycorp is well positioned. Another one is Rare Element Resources Ltd. (RES:TSX; REE:NYSE.A). Some say it is similar to Molycorp because it has high percentages of bastnaesite minerals, but the deposit is somewhat different. Again, no two deposits are identical. I had a chance to visit the lab that is performing its pilot study, and it seems Rare Elements Resources is the most advanced project at Hazen Research Labs. It’s the one that is in pilot scale, so it may be fair to say that is closer to production.

Another project making significant progress is Matamec Explorations Inc. (MAT:TSX.V; MRHEF:OTCQX ), which is working with SGS Canada on its Kipawa deposit, and in the last few months the company has disclosed detailed information about the metallurgy. It is very confident about the results, and a pilot study should happen next year. Matamec should be disclosing details of its PEA in the next couple of days; relatively speaking, it has made significant progress in communicating its project advancement to the market. Hopefully the PEA will show some positive economics.

TCMR: That is primarily because of eudialyte, the mineralization hosting the REEs?

LM: Correct.

TCMR: Is that easier to process?

LM: Not historically. Eudialyte has always been problematic because silica gel formation was an issue in the processing and recovery of REEs. But working with SGS and other private consultants, Matamec has solved that problem, according to what the company has disclosed.

TCMR: Is there news regarding a possible offtake agreement there?

LM: It has not officially been disclosed, but Matamec has attended different conferences and it appears that Japanese and other Asian interest parties have approached the company numerous times. So, my perception is that there is significant interest in the Kipawa deposit, and that could materialize in an offtake or a memorandum of understanding or something like that.

TCMR: And you have a Speculative Buy rating on Matamec with a 12-month target of $1.50? It’s currently trading at about $0.26.

LM: Correct.

TCMR: Do you expect that will go lower before it goes higher?

LM: It depends on how the overall market performs. I wouldn’t expect it to go much further down, especially when the company is just days away from a PEA. Between that and the potential for an offtake agreement, things look positive for the stock.

TCMR: Another company you have a spec buy on is Frontier Rare Earths Ltd. (FRO:TSX). You had a 12-month target of $9.83 in July, but now that is down to $5.90. Why the 40% drop?

LM: Right after I did my first forecast, I was surprised to see the prices growing in increments of 300% and higher, and then it all collapsed. I did not predict that behavior at all, so I had to go back and adjust. I was also expecting to hear more details about the metallurgy, but I didn’t have access to those. At the same time, I continually try to understand the mineralogy and its potential challenges. All this led me to lower the recovery rates and prices, which reflected that decline.

TCMR: How does Frontier Rare Earths Ltd., with 532 thousand tons (Kt) of contained total rare earth oxides (TREO) in the indicated category and 415 Kt contained TREO in the inferred category, compare to other deposits in the space.

LM: Compared to other light deposits, it is a good size. Frontier plans to produce 20 Kt per year, and just based on the indicated resource of 22.9 million tons (Mt), it should be able to do that for 20 years. According to the company, it also has the potential to extend it further.

TCMR: The prospecting rights for Zandkopsdrift, Frontier’s main project in South Africa, are held by a subsidiary called Sedex Minerals. Frontier owns 74% of that project, and a black empowerment group owns the other 26%, according to the South African ownership laws. Does that hurt Frontier, not owning the project outright?

LM: A few investors are not comfortable with that, and those are investors who just don’t invest in South Africa because of that policy —they don’t know what the South African government’s next move will be. Thus, it may hurt Frontier a little. But since that is South Africa’s law, it also affects other companies operating there. For example, most platinum comes from South Africa and Russia, and there are still good investment opportunities there. So, it doesn’t make a project less relevant or important. I have met James Kenny, Frontier’s president and CEO. He is competent, very passionate about the project and very active. He is working hard to bring value to the project and bring partners to the table—and he has managed to bring Korea Resources Corp. (KORES) and a consortium of Korean companies in. He has been successful so far.

TCMR: Last time you spoke with The Critical Metals Report, you introduced our readers to Montero Mining and Exploration Ltd. (MON:TSX.V). Any updates on it?

LM: Montero has an established resource for the rare earths of about 5 Mt, and the company is working on expanding that. But Montero tells me that bastnaesite is the main mineral in the deposit, which is similar to the Molycorp deposit, Mountain Pass. Montero has been able to produce a mineral concentrate, and it has been really aggressive in terms of being able to get to the market first. There is hope that, by the end of next year, it will be able to sell either a concentrate or even individual oxides. That is very positive.

TCMR: Montero also increased its interest in Wigu Hill, its REEs project in Tanzania, by 10%, to 70%. Do you think the company will eventually buy it outright?

LM: If it becomes successful. That is probably the company’s plan.

TCMR: One other major issue right now is financing. Investors are becoming increasingly skeptical about companies’ abilities to produce returns. What companies have enough money to continue with their development plans for at least a year, and that don’t need further dilution any time soon?

LM: Molycorp has been very successful in raising money. Frontier has about $50 million (M), and it only needs about $20M to finish its feasibility study by next year. Rare Element Resources is also in a very good cash position. It has about $74M in cash, and it needs a fraction of that to complete its feasibility study by the end of next year as well; it can even extend it. Hypothetically, even if there were a recession for the next two years, I think these companies would have enough cash to complete their studies. Other companies that probably have sufficient cash for a year: Tasman Metals Ltd. (TSM:TSX.V; TAS:NYSE.A; TASXF:OTCPK; T61:FSE), Ucore Rare Metals Inc. (UCU:TSX.V; UURAF:OTCQX) and even Matamec. More than 12 months would probably not be possible for those three, however.

TCMR: What about the opposite? What are some companies that are looking to finance in a market that’s hostile to small-cap REE companies?

LM: I did hear that Great Western Minerals Group Ltd. (GWG:TSX.V; GWMGF:OTCQX) just raised $15M recently. The company has plans to build a concentration facility and is trying to produce as early as 2013. It will need more money as it moves from exploration into construction and to production of oxides and metals. It will be interesting to know how far the $15M will take the company and when it will need to come back to the market.

TCMR: In your report you write, “The Swedish government has declared Tasman Metals’ Norra Karr deposit as a strategic resource of national interest, and a consortium of rare earth end-users in Europe are closely monitoring the progress of the project. The project has the potential to generate significant volumes of all the key major rare earths.” With some of those key European players behind Norra Karr, is there any way that project can be fast-tracked?

LM: Only if there is a significant direct interest from the local government and perhaps even the Swedish government. The Europeans are generally conservative in terms of their mining policies, so they will want to ensure all the environmental studies are in place and that a mine development in the region will be done properly. So, while Sweden is eager to have the project going forward, they will probably stay cautious, avoiding extreme fast tracking because of the risk of pollution or other troubles. I hear that the European Union is interested in seeing this project develop, but I don’t think the European Union has enough influence over Sweden’s local government; those governments still operate independently. I think Sweden will take its time and make sure the work is done properly.

TCMR: Is metallurgy the main hurdle for fast tracking project development?

LM: Yes. Environmental studies are important and they take time, but not usually five years. The metallurgy is very important, making sure all the tests are done—and many of the tests are done by the same labs, which are testing or analyzing multiple deposits from multiple companies, and that causes delays. So metallurgy is definitely an important aspect in the timing to market.

TCMR: Any advice for investors in this space?

LM: Examine the same factors you would for any mining company: the exploration, the potential success, potential resource growth, infrastructure and exploration results—pay attention to the project’s minerals, and any radioactive elements. They might have bastnaesites or monazites, or some other minerals that have been processed commercially. Understanding different minerals, the metallurgy and how they are processed is key. Management and the team are also important: experience, delivery, starting and finishing projects. These are all important aspects for consideration.

TCMR: Thank you, Luisa. It’s been a pleasure.

Luisa Moreno is a senior mining and metals analyst at Jacob Securities Inc. in Toronto. She covers industry metals with a major focus on electric and energy metal companies. She has been a guest speaker on television and at international conferences. Moreno has published reports on rare earths and other critical metals and has been quoted in newspapers and industry blogs. She holds a bachelor’s and master’s in physics engineering as well as a Ph.D. in materials and mechanics from Imperial College, London.

Want to read more exclusive Critical Metals Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators and learn more about critical metals companies, visit our Critical Metals Report page.

DISCLOSURE:
1) Brian Sylvester of The Critical Metals Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Critical Metals Report: Ucore Rare Metals Inc., Tasman Metals Ltd., Rare Element Resources Ltd., Matamec Explorations Inc., Frontier Rare Earths Ltd. and Montero Mining and Exploration Inc.
3) Luisa Moreno: I personally and/or my family own shares of the following companies mentioned in this interview: None. I personally and/or my family am paid by the following companies mentioned in this interview: None.

Source: http://www.businessinsider.com/the-age-of-rare-earth-metals-luisa-moreno-2011-12

 

Proposed German industrial alliance aims to secure critical metals supply

German Flag

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

RENO, NV -

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

LED Applications Growing, Will Only Lead to More REE Demand

LEDs

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

The Most At Risk Metals

Rare Earth Elements critical to 80% of Modern Industry.

Rare Earth Elements critical to 80% of Modern Industry

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

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

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

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

Low-Risk Metals

The lowest scores are (from the bottom up):

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

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

Higher-Risk Metals

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

Extract from BGS Risk List 2011:

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

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

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

By Stuart Burns
September 15th, 2011
www.agmetalminer.com

Rare Earth Q4 Outlook

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Robert Sullivan
Rare Earth Investing News
09/07/2011

China’s robotics revolution may boost rare earths, precious metals

Taiwanese technology giant, Foxconn has announced that it will deploy one million robots in three years time to do a variety of routine functions including assembling, spraying and welding. The company has an employee strength of 1.2 mn of which one million is employed in Chinese Mainland.

Foxconn has already announced major expansion plans for China and nineteen new projects are in the pipeline including factories that will produce cameral lenses,LED lighting rigs and recently it opened a facility in Chengdu, provincial capital of Sichuan to manufacture laptop computers.

The impact of increased robotics usage in creating unemployment has often been discussed while the goal is to reduce labour costs and improve efficiency.

 However, the impact of increased robotics deployment will be see in commodities- both precious metals and rare earth elements stand to gain if China robotics revolution were to become a world-wide phenomenon. Already China restrictions on export of rare earth elements (REE) very critical for electronics, industrial, automobile and renewable energy applications has led to miners re-opening closed rare earth facilities around the world especially in USA and Canada. Recycling of rare earths has also intensified

Electronics industry also utilises precious metals including Gold and Silver in varying quantities in integrated circuits and assemblies.

The Silver Institute estimates that industrial demand for silver will jump to 666 million ounces by 2015, or a 36% increase from 2010. A report said the forecast growth will come from established applications, such as silver’s use in electrical contacts and in the photo-voltaic market. The technical proficiency of silver limits the ability to switch in favor of lower-cost alternatives, making the metal largely price inelastic. Emerging end-uses that benefit from silver’€™s antibacterial properties or incorporate silver’€™s electrical and thermal conductivity are expected to boost silver consumption through 2015.

According to World Gold Council technology demand for gold remained steady in the first quarter of 2011 at 113.8 tonnes ($5.1bn). A revision to the fourth quarter figures now means that 2010 was the highest year on record for gold demand in electronics at 326.8 tonnes or $12.9bn.

Meanwhile, rare earth mining stocks are seeing a flurry of activity in recent weeks due to general industry movements and short covering, according to an article in Seeking Alpha. Among the stocks to watch are Molycorp (NYSE: MCP) which is now trading at $54 levels. Molycorp shares gained on announcement ofits major supply agreements while Rare Element Resources (AMEX:REE) also rallied recently, to a lesser extent Avalaon Rare Metals (AMEX:AVL) and Rare Earth Stock index at NYSE rose following positive developments in the industry.

By Sreekumar Raghavan
04 August 2011
www.commodityonline.com

Critical Minerals, Elements, Metals, Materials

In this article I am going to take a look at three reports covering what the US and Europe consider critical or strategic minerals and materials.

In its first Critical Materials Strategy, the U.S. Department of Energy (DOE) focused on materials used in four clean energy technologies:

  • wind turbines: permanent magnets
  • electric vehicles:€“ permanent magnets & advanced batteries
  • solar cells: thin film semi conductors
  • energy efficient lighting: phosphors

The DOE says they selected these particular components for two reasons:

  1. Deployment of the clean energy technologies that use them is projected to increase, perhaps significantly, in the short, medium and long term
  2. Each uses significant quantities of rare earth metals or other key materials

In its report the DOE provided data for nine rare earth elements: yttrium, lanthanum, cerium, praseodymium, neodymium, samarium, europium, terbium and dysprosium as well as indium, gallium, tellurium, cobalt and lithium.

Five of the rare earth metals, dysprosium, neodymium, terbium, europium and yttrium€“ as well as indium, were assessed as most critical in the short term. The DOE defines “€œcriticality”€ as a measure that combines importance to the clean energy economy and risk of supply disruption.

Securing Materials for Emerging Technologies

A Report by the APS Panel on Public Affairs and the Materials Research Society coined the term “€œenergy-critical element”€ (ECE) to describe a class of chemical elements that currently appear critical to one or more new, energy related technologies.

“Energy-related systems are typically materials intensive. As new technologies are widely deployed, significant quantities of the elements required to manufacture them will be needed. However, many of these unfamiliar elements are not presently mined, refined, or traded in large quantities, and, as a result, their availability might be constrained by many complex factors. A shortage of these energy-critical elements (ECEs) could significantly inhibit the adoption of otherwise game-changing energy technologies. This, in turn, would limit the competitiveness of U.S. industries and the domestic scientific enterprise and, eventually, diminish the quality of life in the United States.”

According to the APS and MRS report several factors can contribute to limiting the domestic availability of an ECE:

The element may not be abundant in the earth’€™s crust or might not be concentrated by geological processes

An element might only occur in a few economic deposits worldwide, production might be dominated by and, therefore, subject to manipulation by one or more countries – the United States already relies on other countries for more than 90% of most of the ECEs identified in the report

Many ECEs have, up to this point, been produced in relatively small quantities as by-products of primary metals mining and refining. Joint production complicates attempts to ramp up output by a large factor.

Because they are relatively scarce, extraction of ECEs often involves processing large amounts of material, sometimes in ways that do unacceptable environmental damage

The time required for production and utilization to adapt to fluctuations in price and availability of ECEs is long, making planning and investment difficult

This report was limited to elements that have the potential for major impact on energy systems and for which a significantly increased demand might strain supply, causing price increases or unavailability, thereby discouraging the use of some new technologies.

The focus of the report was on energy technologies with the potential for large-scale deployment so the elements they listed are energy critical:

  • Gallium, germanium, indium, selenium, silver, and tellurium employed in advanced photovoltaic solar cells, especially thin film photovoltaics.
  • Dysprosium, neodymium, praseodymium, samarium and cobalt€“ used in high-strength permanent magnets for many energy related applications, such as wind turbines and hybrid automobiles.
  • Gadolinium (most REEs made this list) for its unusual paramagnetic qualities and europium and terbium for their role in managing the color of fluorescent lighting. Yttrium, another REE, is an important ingredient in energy-efficient solid-state lighting.
  • Lithium and lanthanum, used in high performance batteries.
  • Helium, required in cryogenics, energy research, advanced nuclear reactor designs, and manufacturing in the energy sector.
  •  Platinum, palladium, and other PGEs, used as catalysts in fuel cells that may find wide applications in transportation. Cerium, a REE, is also used as an auto-emissions catalyst.
  • Rhenium, used in high performance alloys for advanced turbines.

 The third report I looked at, “Critical Raw Materials for the EU” listed 14 raw materials which are deemed critical to the European Union (EU): antimony, beryllium, cobalt, fluorspar, gallium, germanium, graphite, indium, magnesium, niobium, platinum group metals, rare earths, tantalum and tungsten.

€œRaw materials are an essential part of both high tech products and every-day consumer products, such as mobile phones, thin layer photovoltaics, Lithium-ion batteries, fibre optic cable, synthetic fuels, among others. But their availability is increasingly under pressure according to a report published today by an expert group chaired by the European Commission. In this first ever overview on the state of access to raw materials in the EU, the experts label a selection of 14 raw materials as “€œcritical”€ out of 41 minerals and metals analyzed. The growing demand for raw materials is driven by the growth of developing economies and new emerging technologies.

For the critical raw materials, their high supply risk is mainly due to the fact that a high share of the worldwide production mainly comes from a handful of countries, for example:

China: €“ Rare Earths Elements (REE)

Russia, South Africa:€“ Platinum Group Elements (PGE)

Democratic Republic of Congo:€“ Cobalt

All four of the following critical materials appear on each list:

  • Rare Earth Elements (REE)
  • Cobalt
  • Platinum Group Elements (PGE)
  • Lithium

The key issues in regards to critical metals are:

  • Finite resources
  • Chinese market dominance in many sectors
  • Long lead times for mine development
  • Resource nationalism/country risk
  • High project development cost
  • Relentless demand for high tech consumer products
  • Ongoing material use research
  • Low substitutability
  • Environmental crackdowns
  • Low recycling rates
  • Lack of intellectual knowledge and operational expertise in the west

 Certainly the rare earth elements, the platinum group of elements and lithium are going to continue receiving investor attention,€“ they are absolutely vital to the continuance of our modern lifestyle. But there are two metals increasingly on my radar screen, one is on all three above critical metals lists and the other soon will be when/if production increases, and in this authors opinion, that’€™s very possible.

Cobalt

A critical or strategic material is a commodity whose lack of availability during a national emergency would seriously affect the economic, industrial, and defensive capability of a country.

The French Bureau de Recherches Géologiques et Minires rates high tech metals as critical, or not, based on three criteria:

  • Possibility (or not) of substitution
  • Irreplaceable functionality
  • Potential supply risks

Many countries classify cobalt as a critical or a strategic metal.

 The US is the world’€™s largest consumer of cobalt and the US also considers cobalt a strategic metal. The US has no domestic production, the United States is 100% dependent on imports for its supply of primary cobalt,€“ currently about 15% of U.S. cobalt consumption is from recycled scrap, resulting in a net import reliance of 85%.

Although cobalt is one of the 30 most abundant elements within the earth’s crust it’s low concentration (.002%) means it’s usually produced as a by-product – cobalt is mainly obtained as a by-product of copper and nickel mining activities.

Scandium

Scandium is a soft, light metal that might have applications in the aerospace industry. With a cost approaching $300 per gram scandium is too expensive for widespread use. Scandium is a byproduct from the extraction of other elements, uranium mining, nickel and cobalt laterite mines and is sold as scandium oxide.

The absence of reliable, secure, stable and long term production has limited commercial applications of scandium in most countries. This is despite a comprehensive body of research and a large number of patents which identify significant benefits for the use of scandium over other elements.

Particularly promising are the properties of :

  • Stabilizing zirconia: Scandia stabilized zirconia has a growing market demand for use as a high efficiency electrolyte in solid oxide fuel cells
  • Scandium-aluminum alloys will be important in the manufacture of fuel cells
  • Strengthening aluminum alloys (0.5% scandium) that could replace entire fleets with much cheaper, lighter and stronger aircraft
  • Alloys of scandium and aluminum are used in some kinds of athletic equipment, such as aluminum baseball bats, bicycle frames and lacrosse sticks
  • Scandium iodide (ScI3) is added to mercury vapor lamps so that they will emit light that closely resembles sunlight

Conclusion

The REEs, PGEs, Lithium and Cobalt are all truly critical to the functioning of our modern society. It’€™s easy to see why they are classified as critical or strategic. Scandium will increasingly find its way into our everyday lives and undoubtedly take its place on the various critical metal lists.

Access to raw materials at competitive prices has become essential to the functioning of all industrialized economies. Cobalt is one of those raw materials, so too will be Scandium.

Are these two critical metals on your radar screen?

If not, maybe they should be.

Richard Mills – Ahead of the Herd | July 14, 2011