Saturday, October 23, 2010

Rare Earth Fears

There has been a recent spat of press reports buying into the story about an eminent shortage of rare earths because China is presently the main supplier.  This is rubbish of course.  First of all, the dollar component of rare earths in applications is typically minute and likely declining.  Thus a five fold jump in price will likely have little effect.

This is not true for base metals which are far more massively used and by the way, have increased in price five fold in less than a decade.

Then there is the issue of scarcity.  I have been around the mining industry for almost forty years.  This so called shortage and the attendant publicity has unleashed several hundred companies each with a suitcase of fresh money in hot pursuit of new economic deposits.

The one thing that is certain is that they will find them and threaten to bury the Chinese in fresh supply.  They will probably complete the insult portion of the exercise by using masses of Chinese money to do it.

There is no such thing as a monopoly in the resource business.  There is though a four year lead time to bring on new supply.

OCTOBER 20, 2010

Most of the world is dependent on China to supply rare earths as key raw materials used in many of the latest technologies from military hardware to electric cars, but China's Ministry of Commerce is warning that its massive supply of rare earths could be exhausted in just 15 - 20 years. Although China accounts for almost all the global production of rare earth elements, its dominance is a consequence of economics and government regulation, not geology, writes Ed Crooks in Washington. Rare earth production outside China has been curbed by higher costs and concerns about pollution from mining waste.

China's rare earths deposits dropped to 27 million metric tons by the end of 2009, or just 30 percent of the world’s total known reserves, from 43 million tons, or 43 percent of the world total, in 1996, Chao Ning, section chief of foreign trade at the ministry said at a Beijing conference.

China reduced its quota for rare-earth exports to 7,976 tons for the half, compared with 22,283 tons for the first half and 28,417 tons for second half of last year, according to data from the ministry.

“China is not the only country that has these deposits, but it has been carrying the lion’s share of the supply in more than a decade, at the cost of quickly depleting its own resources and hurting its environment,” Chao said.

Even the scarcest rare earths, lutetium and thulium, are 200 times more abundant than gold in the earth’s crust. China has about 57 per cent of the world’s known reserves, according to the USGS. The US has 9 per cent of global reserves, Australia 4 per cent and the former Soviet Union 14 per cent.

From 1965 until the mid-1980s, the US accounted for at least half of global production and was self-sufficient in rare earths, thanks to the Mountain Pass mine in the Mojave Desert, California.

Molycorp, the US company that owns the mine, has announced a plan to raise production to meet about a sixth of global demand by 2012, and said it had the potential to double that output.

World demand for rare earth elements is estimated at 134,000 tons per year, with global production around 124,000 tons annually. The difference is covered by previously mined above ground stocks. World demand is projected to rise to 180,000 tons annually by 2012, while it is unlikely that new mine output will close the gap in the short term. New mining projects could easily take 10 years to reach production. In the long run, however, the USGS expects that global reserves and undiscovered resources are large enough to meet demand.

Legislative proposals H.R. 6160 (Dahlkemper) H.R. 4866 (Coffman) and S. 3521(Murkowski) have been introduced to support domestic production of REEs, because of congressional concerns over access to rare earth raw materials and downstream products used in many national security applications and clean energy technologies. The House approved H.R. 6160 on September 29, 2010, by a vote of 325-98.

There are 17 rare earth elements (REEs), 15 within the chemical group called lanthanides, plus yttrium and scandium. The lanthanides consist of the following: lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium. Rare earths are moderately abundant in the earth’s crust, some even more abundant than copper, lead, gold, and platinum.

Spurred by economic growth and increased consumer demand, China is ramping up for increased production of wind turbines, consumer electronics, and other sectors, which would require more of its domestic rare earth elements. Safety and environmental issues may eventually increase the costs of operations in China’s rare earth industry as domestic consumption is becoming a priority for China. REE manufacturing is set to power China’s surging demand for consumer electronics—cell phones, laptops and green energy technologies. According to the report by Hurst, China is anticipating going from 12 gigawatts (GW) of wind energy in 2009 to 100 GW in 2020. Neodymium magnets are needed for this growth

So the projections of the wind industry that China could achieve 160-250 Gigawatts of wind power by 2020 would put even more strain on rare earth supplies unless there are different wind energy designs that use something other than neodymium magnets or use less of them.

Japan plan for alternatives

Japan's Ministry of Economy, Trade and Industry outlined five main areas of focus, including speeding development of rare earth alternatives, turning Japan into a major global center for rare earth recycling and helping manufacturers install equipment to reduce rare earth consumption. The government will also support Japanese companies in acquiring concession rights to rare earth mines outside of China and study the possibility of stockpiling rare earth reserves.

Rare Earth Companies

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