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I read articles from other writers who often refer to Rare Industrial or Technical Metals as Rare Earth elements. I would like to take some time and clear up the issue. I deal with RIM’s and REE´s on a daily basis. The two might both be considered metals but that is where the similarities end.
First we have REE´s or Rare Earth Elements. These metals consist of 17 metals, the Lanthanides plus Scandium and Yttrium on the periodic table of the elements. These metals are in a powder form, making them difficult to assay and store. One important factor that is often mentioned is that they are not rare. This is very true, but finding REE´s in large deposits is difficult.
In the mining sector REE mines are standalone mines, that focus on the mining and refining of REE´s exclusively. Currently around 97% of all REE´s are mined and refined in China. Historically REE mining and refining has been a dirty business, which has affected the environment around the mines. The elements Thorium and Uranium are often found along with the REE´s in the deposits causing the slurry to be slightly radioactive when processed. The use of highly toxic acids during the processing can also have serious environmental impact. Many companies are trying to open REE mines but they are meeting headwinds, as nations and people do not want these mines in their backyard.
Over the last few years China has dramatically cut its export of REE´s. This and the increased need for REE´s have caused a meteoric rise in the value of these metals. The one area that very few people talk about is the role of the media combined with speculators in raising the value of REE ETF´s in particular. For the last couple years REE´s were the rock stars of the metals. The news has calmed as of late, but the supply and demand factors that caused the metals to soar are still in place. Recently China closed it BaoTao mine until REE prices stabilize.
Rare Industrial Metals, RIM´s or Technical metals are another group entirely. The RIM´s are made up of metals used in over 80% of all products we use on a daily basis. Without these metals you would not have the world of the 21st century with our mobile phones, hybrid cars, flat screen TV´s, highly efficient solar energy and computers. Some of these metals include Indium, Tellurium, Gallium, Tantalum and Hafnium. These metals really are rare compared to the Rare Earth Metals which causes a great deal of confusion. These metals are in a metallic form, stable and easy to store and ship.
RIM´s are mined as a by-product of base or common metal mining. For example Tellurium is a by-product of Copper mining and Gallium is a by-product of Aluminum and Zinc mining. The mining of the RIM´s currently are for the most part at the mercy of the markets for the base or common metal mining. If the Copper mines of the world decide to cut production due to Copper losing value, this will have a huge impact on the amount of Tellurium that can be refined. Up until now, because of the previous small size of the RIM market, many companies do not feel the need to invest money into better technology to mine and refine these metals. The RIM´s would have to be valued much higher to gain the attention of the mining industry.
When China cut exports of REE´s they also cut exports of RIM´s. This put pressure on the value of these metals. RIM´s have increased in value, but nowhere near the meteoric rise of the REE´s. Most of the metals increased in value around 47% in 2010 and 25% so far in 2011. There is still a lot of room for growth in the value of these metals (not based on speculation like REE´s) as demand is exceeding supply now and in the future.
For Example, when REE´s and the stock market recently fell sharply the RIM´s came down slightly in value but have held their own extremely well. On a further note, according to Knut Andersen of Swiss Metal Assets, ¨Even though prices of the Rare Industrial Metals continue to go up in value, consumers will eventually only see a very small increase in the price of the end products, because there is so little of each metal used to produce these products. Also if the people can´t afford a smartphone they will still buy less expensive phones that still use the same Rare Industrial Metals¨.
The need for RIM´s has risen sharply over the years and will continue to grow at astronomical rates. China, India, South America and the whole of Africa with hundreds of millions of new consumers are now buying and using computers and mobile phones to name just a few products.
The future is bright for the technologies and the Rare Industrial Metals that make them work and for anyone who participates in stockpiling these metals now to meet future increased demand.
By: Randy Hilarski - The Rare Metals Guy
Over the last year the markets have been up and down. One sector of metals has been rising steadily for years. This is the Rare Industrial Metals and Rare Earth sector. One way or another everyone on the planet is dependent on these metals. Imagine a world without them; no cell phones, no iPads, no LCD’s, no lasers, no jet aircraft, no electric vehicles, no alternative energies and no nuclear energy. National Geographic calls the rare earth complex of elements, ¨The Secret Ingredient of Almost Everything¨.
Something is happening under the radar that is having a huge impact on the price of many of the metals. China has a 90% control of all Rare Industrial Metals. China has decided to cut its exports of metals like tungsten, cobalt, indium, tellurium, tantalum and gallium. The Chinese believe that if they make the prices of these metals out of reach for European, Japanese and American industry the industries will have to bring their jobs to China. For example, this is already having an effect on the magnets industry. These magnets are critical for electric vehicles, wind power and many other applications. The USA, UK, EU, Japan and South Korea have all put the elements needed for the magnet industry and many others on their critical lists.
Over the last year, China has had a slash fest. In 2010 they cut a whopping 72% of their RIM export quotas for the last part of the year. In December, they again whittled 35% off the quota for the first half of this year and are talking about another 30% for the fall of 2011. Some speculate that the country will completely shut out the world by 2014 in order to secure their own demand and manufacturing dominance.
Obviously this is creating somewhat of an international crisis. Nations with technology backbones are currently taking heed and hedging themselves with alternative suppliers – and they are limited.
In the US, politicians are getting involved pointing out how critical RIMs / Rare Earth Elements (REEs) are to National security. Congressman Mike Coffman (R-CO) is proposing the RESTART Act of 2011 which essentially admits the US dropped the ball while depending on China to supply these vital resources. The act proposes to jumpstart a RIM/REE supply chain in the US over the course of five years.
There is no doubt other producers will pop onto the scene due to rising values. Many organizations are now making efforts to explore and exploit in light of recent economically feasible price ranges. Despite their efforts however, there are no indications the supply will outweigh demand in the short, medium or long term. With the exploding technology sectors and a push for clean energy, industry simply won’t let it happen.
What’s interesting is that RIMs are very inelastic. Their economic presence is so small in the supply chain that they barely affect end users. Take for instance indium, critical to flat panel TV’s, smart phones and solar CIGS (copper, indium, gallium selenide) solar cells. In 2003, the metals’ price was pegged at $60/Kg. Today, in a world with an average annual output over 1.2 billion smart phones and 200 million flat screens, Indium hovers around $800/kg in China before exorbitant export taxes and other duties, which in turn increases the price by 100% or more for the Western world. Despite this increase the public hasn’t felt a significant blow. In fact, many of these gadgets are getting cheaper.
As we eventually see more of an abundant supply in years to come, it will likely be allocated immediately. With emerging powerhouses like India and China growing at alarming rates, technology and clean energy advancing into the 21st century, it’s difficult to conceive how new sources will keep up. Nations will do their best to bring mines online to produce these critical rare industrial metals, the problem is that in the west these processes take years. The technology is there to produce metals much cleaner than in the past. Nations have a choice to make, either mine and have jobs in your jurisdiction or let China do the mining and have all the industrial production jobs.
By: Randy Hilarski - The Rare Metals Guy