It’s no secret that there is a surplus of cerium (Ce) supply within the rare-earth-element (REE) market. More recently I’ve been hearing folks grumbling that we will soon be awash with yttrium (Y) too, with more than one junior-mining executive referring to Y as “the Ce of the heavy REE world”…

While I do not agree with this sentiment when it comes to future Y supply, I am always interested to learn about potential new applications for this element, given the greater potential for availability in coming years. So when Ryan Castilloux, author of the recent Adamas Intelligence report “Rare Earth Market Outlook: Supply, Demand and Pricing from 2014-2020” told me about an emerging application that could dramatically increase demand for Y, I was intrigued. When he started talking about another application that could also significantly increase demand for Ce as well, I naturally started to pay close attention.

As part of his recent 12-month study of the rare-earth sector, Ryan uncovered these and numerous other potential new uses for REEs that could significantly impact demand before 2020. Not all of them have the same chances of penetrating the market, and the actual impact on demand will vary, but being aware of these new uses is vital to understanding the medium- and long-term prospects for the sector.

Following our recent discussion on his new report, I got together with Ryan again recently and persuaded him to discuss some of these emerging end uses in more detail. We put together a 40-minute video of the discussion, which I think you’ll find to be very interesting.

You can access the free video by clicking here or by clicking the image above. Get in touch with us if you have any questions on the discussion.

You can also get more details on Ryan’s 573-page report by visiting http://www.REEreport.com. – if you order an electronic copy of the report by the end of December 5, 2014, TMR will send you a free printed hard copy, as well as a copy of our forthcoming report on recent global rare-earth import & export statistics, covering dozens of individual rare-earth products and product groups.

You hardly need me to point out that the rare-earth junior mining sector is in a challenging place right now. The current state of rare-earth prices and their impact on the market cap of pretty much every company in the sector, has everyone concerned.

Are things going to get better? Are future rare-earth prices going to reach the numbers predicted in recent scoping and pre-feasibility studies? What will be the effects of the ongoing crackdown on illegal mining in China? What will the demand profile for individual rare earths really be, in the not-too-distant future?

These questions and more like them, were the basis of a 12-month-long ‘deep-dive’ study of the rare-earth sector by Adamas Intelligence. Adamas recently concluded that study and has published its findings in a 573-page report, titled “Rare Earth Market Outlook: Supply, Demand and Pricing from 2014-2020“.

I recently got together with Ryan Castilloux, founder of Adamas and the lead author on the report (which also looks at the period 2008-2013), to discuss some of its major findings.

We put together a 30-minute video of the discussion, which gets into the structure and content of the report, as well as featuring key data and charts to describe top-level data.


The good news? The market and prices are set to bounce back, particularly in the face of growing demand for individual rare earths, for specific applications.

Ryan has done a masterful job with this report, which is just about the most comprehensive review of the rare-earth sector that I’ve ever seen.

You can access the free video by clicking here or by clicking the image above. Get in touch with us if you have any questions on the discussion, or the report itself; and look out for details of a second video that we’re working on, discussing some exciting emerging end-use applications for rare earths, which could have a further positive impact on rare-earth demand before 2020.

It is fuel-cell-vehicle (FCV) season again as many of the world’s premier car makers make their annual ritual announcement that they are ‘studying’ or putting into ‘limited production’ passenger-carrying vehicles for personal use (i.e. cars), propelled by electricity generated by ‘fuel cells.’

Once again, the perception of greeniosity is meant to trick us into thinking that the fundamental laws of economics have been suspended.

As far as I can determine, the electricity for FCVs will be generated when diatomic hydrogen molecules are split into hydrogen ions and free electrons, by the action of passing the hydrogen over a catalyst. This previous sentence is totally intelligible to a chemical engineer with the only undefined word in it being ‘catalyst.’

As far as I know the only such ‘practical’ catalysts known for such a reaction are the platinum-group metals (PGMs), primarily the metal palladium (Pd). There has been a lot of research over the last 20 years on trying to produce a fuel-cell chemistry based on a more readily available catalyst than a PGM but the results have not been economical. One such program backed by no less than Kleiner Perkins is for a Solid Oxide Fuel Cell (SOFC), which uses the extremely scarce rare-earth-element (REE) related metal scandium (Sc) in its catalyst.

The thing that all current fuel-cell technologies have in common, is that they rely for their operation on large amounts of very scarce materials such as PGMs or Sc, as in the discussion above.

There is another problem, the relative value to achieving the goal of reducing carbon emissions of a FCVm versus an internal combustion engine (ICE) vehicle, using a catalytic converter. This is the real issue of the most efficient use of strategic metals. Let’s say that a Pd-based fuel cell would use at least one ounce of Pd in order to be able to produce enough electricity to power a four-passenger car. That same amount of Pd could be used to manufacture 100 exhaust-emission catalytic converters, for hydrocarbon-fueled ICE-powered vehicles! Note well, that new global production of Pd is in the 200 tons per year range. This is twice what it was 10 years ago, but nearly impossible to increase as most of the world’s new Pd comes from its production as a byproduct of nickel mining in Russia and Canada, with a little more coming from South African platinum mining. North America produces some 10% in total of the world’s annual new Pd. It is difficult to see how green technologists could ask us to depend on either Russia or South Africa for an ‘assured supply’ of anything much less for an increased supply.

So, the best solution for constructing fuel cells is not to use environmentally precious Pd or any other PGM in such a horribly wasteful way. Unfortunately, the best SOFC, based on Sc, is an even worse solution. There simply is not enough Sc produced in the world. Currently just a few tons a year are produced, so it is believed, in the former Soviet Union.

So we can either rob Peter or mine an empty bank vault.

There is a real analogy here to the REE supply issue now facing the world, and even an interface, since Sc is only likely ever to be produced as a byproduct of REE production (which itself is ironically usually produced as a byproduct of iron mining).

PGMs used in automotive-exhaust emission control devices (catalytic converters) are so scarce as to be among the most recycled materials on the planet. In relative-percentage-recycled terms they are right up there with iron, copper, aluminum, lead, and gold. But it is in absolute terms that the comparison fails. An excellent example of this is the PGM rhodium (Rh), used to eliminate acid-forming nitrogen oxides from automotive ICE exhaust. The world production of new Rh as a byproduct of South African platinum production is 30 tons a year. Yet the apparent demand from the global OEM automotive industry is nearly 50 tons per year. This additional material must come from the extensive recycling of catalytic converters.

It is the same type of thing with the REEs with a notable exception geographically. In China extensive recycling of REE industrial process waste as well as of end-of-life waste, is one of three things that keeps the supply of the key heavy REEs terbium and dysprosium, nearly equal to the demand. The others are illegal production within China and purchase of heavy REE ore concentrates from outside of China. The three processes together provide a doubling of ‘official’ production of these key REEs.

Only now in 2014 is there even the beginning of a non-Chinese REE recycling industry. This is because with just one exception, there is no REE separation plant outside of China with the capability/capacity to separate the heavy REEs from ore concentrates or scrap; there are 38 such facilities in China.

What little Sc is produced in the world may be augmented by the three processes above, but officially there is no verifiable Sc production anywhere. So, if there is to be a fuel-cell-powered OEM automotive power-train revolution, it will have to be itself driven by a fuel-cell technology that as of now is unproven, and does not involve a need for large quantities of either PGMs or Sc.

At the moment, supplies of PGMs and Sc globally are either insufficient or unavailable. Thus fuel-cell-powered vehicles will be curiosities, or the toys of the elites, for the foreseeable future.

Earlier today I got word that the US Department of Energy (DOE) has released an update to its Critical Materials Strategy, which was first published as a report in December 2011 2010. This document has helped to shape a fair amount of the debate on rare earths in particular, and critical & strategic materials in general, in the past 12 months.

You can download a copy of the report from here.

I’m still digesting the contents of the report; I can tell you that the DOE still considers the five rare earths dysprosium, neodymium, terbium, europium and yttrium to be critical in the short and medium term; indium is judged to now be near-critical in the near term, compared to being categorized as critical in the 2010 report.

New sections include one that covers the use of rare earths in fluid cracking catalysts, and how the petrochemical refining industry reacted to escalating prices of materials in 2011.

More to follow once we’ve had a chance to read through the report more thoroughly.

Update (01/17/12): the URLs for the report have been updated, since the original links no longer work.

A couple of weeks ago the US Department of Energy (DOE) announced a Request for Information (RFI) on rare-earth metals and other materials used in the energy sector. This follows on from a similar solicitation made last year, that culminated in the publication of the DOE’s Critical Materials Strategy in December 2010.

The DOE says that this second RFI will be used to update the Critical Materials Strategy, and will also cover areas not considered in the original document, such as fluid-cracking catalyst materials for the petroleum refining industry.

The DOE is soliciting information in eight categories:

1. Critical Material Content
2. Supply Chain and Market Projections
3. Financing and Purchasing Transactions
4. Research, Education and Training
5. Energy Technology Transitions and Emerging Technologies
6. Recycling Opportunities
7. Mine and Processing Plant Permitting
8. Additional Information

The deadline for RFI submissions is May 24, 2011 and submissions from the public are welcomed. You can get more information from the DOE Web site.

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.

The exhaust from internal combustion engines using hydrocarbon fuels is cleaned by catalytic converters using the properties of platinum, palladium, and rhodium. China is now the largest producer of motor vehicles of any one country; it has almost certainly already surpassed the United States for that title permanently. In 2009, China produced 13.5 million motor vehicles; it is predicted that this production rate will reach 18 million per annum by 2015; and 21 million per annum in 2020.

The misconception by the political and financial classes in the West, that the era of the internal combustion engine is coming to a close, is causing a lack of interest by them in the need for increased production of platinum and rhodium, the platinum group metals critically needed to manage the exhaust emissions of internal combustion engines.

There will be no sudden conversion of the world’s growing fleet of motor vehicles – now standing at 750 million – to electrified propulsion. Even the most sanguine estimates put the total percentage of electrified vehicles produced per year at no more than 10% during the next decade and no more than 20% by 2030.

This means that of the minimum 2 billion motor vehicles produced over the next 20 years, only 400 million of them, at most, will be electrified with little or no exhaust to manage.

What of the 1.6 billion built with internal combustion engines?

The world’s 2009 production of platinum and rhodium was almost entirely from southern Africa; the global total comprised 200 metric tonnes of platinum and 30 metric tonnes of rhodium, which was produced ONLY as a byproduct of new platinum production.

The production of the platinum group metals in Africa has doubled in the last 10 years and has barely kept up with automotive demand. If it were not for intensive recycling there would now already not be sufficient platinum and rhodium for automotive use.

China is taking the long view and investing wisely in platinum group metals production in southern Africa, because there is no way that platinum group metals production can be increased enough to supply even a doubling of the world’s standing fleet of motor vehicles powered by internal combustion engines.

The increasing cost of owning and operating a motor vehicle everywhere will surely mandate a much longer service life for such vehicles. This will tie up supplies of the platinum group metals for longer periods and thus squeeze the supply of them from recycling.

There will come a time in the next decade therefore when first rhodium and then platinum go into short supply with a concomitant rise in prices; in fact this is already starting.

I have purposely left palladium out of this discussion, because I am speaking of southern Africa, and it is Russia and Canada that produce the world’s palladium.