The 6th International Rare Earths Conference was held earlier this month at the Shangri La Hotel in Kowloon, Hong Kong. Organized by Roskill and Metal Events, the conference was billed as “THE international event for the global rare earths industry”.
We persuaded Dr. Jon Hykawy of Byron Capital Markets, to share his thoughts and observations on the conference. The following is his report. Thank you Jon!
Report on The 6th International Rare Earths Conference, Hong Kong
By Jon Hykawy
The 6th iteration of this conference, widely regarded as the most important meeting of the rare-earths industry, was the first one I have had the pleasure of attending. In some ways, it was everything I had expected it to be, but it was also surprising for the lack of attendance of many of the major figures in the Chinese rare-earths community. Just as the previous Chinese rare-earth conference that I attended, held in Beijing, had very few Westerners present, the lack of Chinese participation at this show did little to convince me that the rare-earths world is maintaining the sort of dialog required to see it through some potentially turbulent times ahead.
The first session of the conference kicked off at 09:00 on November 10th, and was headlined by both Judith Chegwidden of Roskill and Dudley Kingsnorth of IMCOA. Dudley and Judith traded duty at the podium to outline, firstly, what has happened over the last 18 months, particularly the unofficial embargo of rare-earth products destined for Japan by China. It was made clear at the conference that, as of November 11th, that quasi-embargo had not yet been lifted. Figures given showed that, at least since 2005, total Chinese export quotas on rare earths have dropped every year, but 2010 has been the first year where estimated RoW demand is higher than the quotas by a considerable margin.
Dudley made the point that there may well be bottlenecks in supply. He presented a slide that suggested that while cerium would be in surplus in 2015, neodymium supply would be tight, but dysprosium, terbium and europium would likely see demand in excess of supply. This reconfirmed the work that Byron Capital Markets had done on the same issue in March of this year.
Lynas CEO Nick Curtis spoke next. One thing struck me most directly about this presentation; Nick suggested that we in the industry should begin to comport ourselves more responsibly, and stop pointing out and crowing about $50/kg prices for lanthanum and cerium. At the bottom of the Lynas home page, the current Mt. Weld composition price (about US$62/kg, as I write this, but obviously grossly influenced by the artificially high levels of La and Ce pricing) is highlighted. This is not exactly what I would consider an attempt to contain expectations regarding future rare-earth pricing. Nick did point out that Lynas now has six contracts and two letters of intent in place, and should be at an annual production rate of 11,000 tonnes by this same time next year.
Mark Smith from Molycorp then made a presentation that continued to accentuate the positive. While Mark mentioned the US House bill on rare earths, he did not mention its likely failure in the Senate during this lame duck session of Congress, and thus its imminent death. However, Mark did highlight that Molycorp is “on time and on budget” to complete the work on its “mine to magnets” strategy, and should complete this work in 2012. He also committed to late 2012 production of Sm, Eu, Gd, Dy and Tb, and noted that Molycorp would soon announce new technology to produce up to 4x the previously understood level of heavy rare earths.
Gary Ragan of Albemarle gave the audience an introduction to FCC catalysts. For those who did not know, FCC (fluid catalytic cracking) catalysts allow refineries to produce high-quality product at a much higher rate than would otherwise be possible, by utilizing more of each barrel of oil or even utilizing poorer feedstock. The market is 600,000 tonnes of FCC catalyst per year, with Grace, BASF and Albemarle being the Big 3 suppliers. Of this catalyst material, roughly 2% by weight is rare earth, mostly lanthanum (La). Gary pointed out that there has been work done for years on rare-earth substitution, but the new, very high prices for La FOB China are now providing the strongest impetus ever to eliminate or strongly curtail rare-earth use in FCC catalysts.
BASF’s Patrick Chang chose to speak specifically about FCC and mobile-emissions catalysts. La in FCC catalysts provides thermal stability and selectivity. REEs in mobile-emissions catalysts also increase thermal stability, thus assisting in dramatically improving emissions reductions. Gary presented two interesting scenarios, one assuming lithium-ion batteries replacing NiMH batteries in hybrids, the other a world in which NiMH continues to dominate. We believe the first scenario is a near certainty, but both results are interesting. If the first scenario holds, then La and Ce are both in plentiful supply through 2020, with magnet materials perhaps being in tight supply. But if NiMH batteries continue to dominate, then Ce supply is plentiful, but La, Nd and Pr are short in the longer term. A cautionary note to the industry was issued, which was that if REE supplies continue to be unstable, then substitution work will accelerate, and this substitution will, in turn, likely result in decreased demand, some REE projects being delayed and other green industries finding it more difficult to rely on new sources of REEs. Since Chinese industry depends on products made from REEs by Western countries, this situation does not benefit China, either.
Dr. Dmitri Psaras from Neo Material Technologies spoke on the difference between commodity and differentiated products in the RE industry. He made the point that even seemingly simple products such as ceria or cerium carbonate can be differentiated by physical factors such as particle size and porosity. His point was largely that RE products are rarely commodities, but are developed in conjunction with customer needs.
Professor Zhao Zhengqi was unable to attend the conference, but his paper on magnetic refrigeration was given by Wen Yang. She pointed out that cooling accounts for 15% of human energy use, and with only three ways to cool something (gas expansion, thermoelectric, and other phase changes including magnetic) there is a defined potential energy saving of 30% or more available by switching from the use of refrigerants to magnetic cooling due to the higher Carnot efficiency available to the magnetic technology. Typically, we think of magnetic cooling as using NdFeB magnets with some Gd-based compound as the active material, but Wen pointed out that switched electromagnets could provide the varying magnetic field, and there are completely non-RE containing materials that could be used. However, like in many industries, the use of REEs provides the best solution.
A number of junior REE companies presented in a session that lasted nearly 150 minutes. Anton Manych from SARECo gave a talk on the 51:49 JV project in Kazakhstan being conducted by Kazatamprom and Sumitomo. It is a two-phase project, looking to process very-high-grade monazite for LREO and tailings for HREO. Both phases can be brought to production quickly, which is key to alleviating any shortages due to Chinese quotas. James Kenney from Frontier spoke on their work in Africa, showing a very interesting slide contrasting capex and opex for kimberlite projects in Canada with those in Africa, and showing costs down by 70-80% for projects of similar size. Stans Energy CEO Robert MacKay gave a talk on the REE deposits within the former Soviet Union. Jim Engdahl of GWG and Trevor Blench of Rareco spoke regarding Great Western Minerals and Steenkampskraal, and pointed out that the metallurgy at Steenkampskraal is well understood and that separation had previously been done in England. Damian Krebs from Greenland Minerals & Energy spoke regarding their large but low grade U/REE project in Greenland. And Avannaa Resources, a private company also with properties in Greenland, discussed their project, a 1% in situ grade with 12% HREE.
Day Two of the conference was led off by David O’Brock, the new CEO of AS Silmet in Estonia. David noted that Silmet separates RE carbonates that were mined in the Kola Peninsula and then concentrated farther east. The plant only has 2,400 tpa capacity, but has been running at only 40% of this level due to feedstock shortages. What has kept the company alive in the past few years is the processing of niobium and tantalum.
Chen Zhanheng from the Secretariat of the Chinese Society of Rare Earths spoke regarding the environment, domestic markets and resources. According to Chen, Chinese resources account for only about 32% of the world total, but the very important ionic clays are only about 300 basis points of this value. Chinese domestic consumption of rare earths is up to about 57%. With environmental and market concerns both pressing the government to consolidate the industry, Chen suggested that establishing new companies outside of China and a wider rare earth industry would be a very good thing to do.
Yasushi Watanabe from the AIST in Japan discussed Japan’s attempts to find alternative sources of REEs. He showed a very interesting slide with China’s consumption of REEs being 60% of global output, but Japan next at 20% (interestingly, with their dominance of the global LCD industry, Japan consumes 80% of global indium production, a startling statistic). Watanabe also noted that while the quantity of REE exported to Japan from China fell 47% from 2008 to 2009, so did their share of exports. While he believes that LREO can be supplied from new projects, “timely” (as he put it) HREO projects are highly desirable.
Professor Zhuang Weidong from Grirem presented on the Chinese luminescent materials market. While production of TV phosphors (for CRT, plasma and FED) have declined since 2003, phosphors for lighting have increased strongly to 6,000 tonnes in 2009. By far, most of this phosphor goes into compact and linear fluorescent lighting. China produced some 4.8 billion fluorescent lamps in 2008, about 31% of the global total. We should all be aware that the necessary dopants for lamps are Eu and Tb, those used for LEDs are Eu and occasionally Ce, and PDPs use Eu. Long-persistence phosphors, for signage and other applications, use Eu and Dy as dopants. Given Dudley’s talk earlier, we can all hope this application doesn’t take off and increase demand for Dy!
Unfortunately, I missed a presentation by Oliver Touret from Rhodia, and have been unable to obtain a copy of his slides [we’ll see what we can do to get this info – GPH].
Greg Kroll from Magnequench delivered the final talk of the conference, and perhaps one of the most interesting. In highlighting the use of bonded NdFeB magnets in new areas such as appliances and, increasingly, in cars doing such things as lifting windows or moving seats, Greg pointed out that it is possible to substitute La and Ce for Nd in these magnets. While all of flux, coercivity and Curie temperature are poorer for La2Fe14B or Ce2Fe14B, say, than Nd2Fe14B, the point is made that for many applications, the relative improvement in performance and physical characteristics over ferrite is still sufficient to warrant use, and the lower price of materials can only help.