In recent years we’ve noticed just how difficult it has become to obtain high-quailty, technical information about the rare earths, without running into a bunch of half-baked BS being put around by hype merchants and over-stimulated promoters.

Tracking down and being able to spend time with true industry experts, to learn about important technical matters, is no easy matter.

We are therefore very pleased to invite our you to a free, online webinar with not one but FOUR such experts. You can find out exactly who will be joining us by clicking here:

https://www.techmetalsresearch.net/webinar

Here are just a few of the topics that we’ll learn about on this webinar:

• Which specific REE minerals are the most important for future production, and why;
• The critical difference between mineral reserves and mineral resources – and why it matters;
• The criteria for selecting underground versus open-pit mining for rare-earth projects;
• The key steps for processing rare earths and why flotation can be a real challenge for these minerals; and
• The radioactive impurities that no-one seems to talk about (hint: we’re not talking about uranium or thorium).

and much more.

This is the first time that we’ve done a webinar of this type, so it’s sure to be popular – sign up now as places will be limited.

Click here to reserve your spot:

https://www.techmetalsresearch.net/webinar

On Wednesday of this week, the National Center for Policy Analysis (NCPA) hosted its Rare Earths, Critical Metals, Energy & National Security Conference, close to Capitol Hill in Washington, DC. Very much aimed at the DC crowd, the event was billed as an attempt to “raise awareness of how current public policies lead to dependence on China for the U.S. supply of rare earths, and thus undermine our national security.” The announcement from the NCPA on the event went on to say that “[a]s key policy makers, executive branch analysts and think tanks experts, conference participants will play a key role in shaping U.S. resource policies.”

I was a participant in the first panel of the day titled “The Rare Earths: Supply, Shortfall, Strategy“, moderated by NCPA’s Sterling Burnett. Joining me on the panel were Jeff Green, President of J A Green & Company, a DC-based government relations firm, and Thomas Tanon of T² & Associates, an energy and technology industry consulting services firm.  We each gave an overview of our perspectives on the rare earths, with my own presentation focused primarily on defining the rare earths, and reviewing the sources of current and potential future supply. There were some good questions from the audience.

The second panel, titled “Specialty Metals: Assessing Strategic Need” was moderated by Dan McGroarty, President of the American Resources Policy Network. Joining him were Kent Hughes Butts, Professor of Political Military Strategy at the US Army War College, Dan Cordier, the rare-earths specialist at the US Geological Survey (USGS), and Michael Steuer from the US Defense Logistics Agency. This panel covered the topics of stockpiling for national defense needs, and assessments of those needs by various government agencies.

There were some lively questions during this panel session. One note of interest that came out of it, was that the recently passed law that governs the National Defense Stockpile (which does not as yet include rare earths), requires that the President of the United States, and only the President, be authorized to release materials from the Stockpile. This effectively means that once materials go into the Stockpile, it is very difficult to get them out again. Doesn’t exactly seem like a practical approach to me…

I raised the point with this panel, of the relative ease of “solving” the so-called rare-earths problem, compared to other metals, by virtue of the fact that most of the potential new sources of supply of rare earths are primary sources – i.e. they will not necessarily rely on the economics of other metals in order to be produced. Even if they are contained in polymetallic deposits, generally (though not always), the economics of the rare earths will dominate. This is not the case with many of the other rare metals that are critical to hi-tech applications; most if not all of these are actually by-products of base-metals production, such as indium from tin and zinc production, gallium from aluminum production, and so on.

There is a danger that people (especially of the type with short attention spans, such as politicians in Washington, DC) will come to believe that solving the rare-earths supply problem is the same as solving the rare-metals supply problem, when this is clearly not the case. It will be much more difficult to resolve issues for the co-produced rare metals, given the dominance of base-metal economics in such cases. I don’t get the sense that this is really being addressed by the various agencies in Washington.

We then had a presentation from David Diamond, a policy analyst with the US Department of Energy (DOE), and a co-author of the Critical Materials Strategy Report that was published at the end of last year. Dr. Diamond presented a summary of the report’s findings, which we’ve discussed elsewhere on the TMR Web site before, and part of which was incorporated into the Critical Rare Earths Report that TMR published in the summer. He mentioned that the DOE was in the final stages of updating that report, and that the next version would be published in the near future. I look forward to seeing the results of that work.

The conference then adjourned for lunch, where we were later joined by three members of Congress (click on the photos above), who each spoke in turn on a variety of issues concerning rare earths. First up was Senator Lisa Murkowski (R-AK), who focused on the importance of mining to the US economy, and the problem of dependence on foreign sources of minerals. She also took the opportunity to criticize the Environmental Protection Agency (EPA) on a number of issues. Senator Murkowski discussed her Critical Minerals Policy Act, which she introduced earlier this year along 9 Democratic and 10 Republican co-sponsors. She said that

“The legislation requires that USGS generate a list of minerals critical to the U.S. economy, outlines a comprehensive set of policies that will bolster the production of those critical minerals, expands manufacturing, and promotes recycling and alternatives – all while maintaining strong environmental standards.”

Once she concluded her remarks, Senator Murkowski took quite a number of questions on the topics she had covered, before leaving.

Next up was Congressman Doug Lamborn (R-CO), who discussed the legislation that he introduced earlier this year, titled the National Strategic and Critical Minerals Policy Act of 2011, touting it as a “common-sense solution that will provide for our common defense”. Among other things, this bill would require that the Secretary of the Interior evaluate factors impacting domestic mineral development; it also directs the Department of the Interior to

“assemble a report within six months and require[s] them to include a specific inventory of the rare earth element potential on federal lands, and identify impediments or restrictions on the exploration or development of rare earth elements, and provide recommendations to lift the impediments or restrictions while maintaining environmental safeguards.”

Rep. Lamborn was then followed by Congressman Mike Coffman (R-CO), who is well-known for having introduced the Rare Earths Supply-Chain Technology and Resources Transformation Act of 2011 earlier this year – also known as the RESTART Act. Rep. Coffman discussed his perspective that China’s stated industrial policy was mercantilist in nature, with the goal of expanding China’s industrial base at the expense of other countries, including the USA. Rep. Coffman said that he saw rare earths as being a part of the overall issue, and that his main concern was that China was an unreliable trading partner, which was prepared to leverage rare earths for political goals.

I asked Rep. Coffman if he would agree with me that a root cause of our current dependence on China was a major disconnect in the supply chain between end-user companies who pursued a “lowest cost at any cost” profit motive, at the expense of the upstream part of the supply chain and all the while ignoring any potential national security concerns. Rep. Coffman did not acknowledge this point; instead he chose to blame the situation solely on China’s non-free market policies. I suppose in retrospective, that it was perhaps a little much to expect a Republican Congressman to criticize the virtues of American capitalism, at an event hosted by a conservative think tank…

Rep. Coffman was asked if non-US companies could fill the gap in the supply chain. He responded by saying that his key issue was the reliability of trading partners; if companies in friendly countries brought rare-earth production online, this, he said, would “lower the temperature on the issue in Congress” and would “lessen the need for invasive policies from Congress”. This shouldn’t be surprising; even the specialty-metals clauses of the defense-procurement regulations, have exemptions from some strict sourcing requirements, for companies based in a number of countries friendly to the USA.

Both Congressmen commented further on the issues of permitting in the USA, and how overly restrictive permitting practices, and environmental regulations, were reducing the ability of the country to get projects up and running.

The final session of the day was another panel chaired by Dr. Burnett, this time titled “The Value Chain: Industry’s View on Critical Metals Supply“. On the panel were Peter Dent, with Electron Energy Corporation, a US rare-earth magnet manufacturer, Michael Berry of Discovery Investments and publisher of Morning Notes, and Anthony Young, an analyst at Dahlman Rose. Mr. Dent and Dr. Berry gave presentations on their respective viewpoints on this issue at hand. Mr. Dent noted that companies are beginning to switch production to China in order to access materials. Mr. Berry made the interesting comment that the USA should not be relying on Canada to get them through the current issues; China was more than a little interested in investing in Canadian companies, and so the US should be prepared to put its own infrastructure in place. He said that China’s policies on rare earths were just the tip of the iceberg of a much larger strategy.

Mr. Young made a comment on the volatility of share prices, and how news such as the announcement that the DOE would not be giving Molycorp a loan guarantee, caused prices to swing dramatically. I put it to the panel, and Mr. Young in particular, that the bigger issue for this market was the sometimes outlandish valuations made by analysts of the stocks in this sector, with those valuations seeming to have little connection with reality. Mr. Young responded by saying that this was a relatively new sector, with it being difficult to predict production costs and potential product prices, and that his own valuations reflected this. He commented that he had valued Molycorp, for example, at something like $70 / share, before revising it down to $40 / share. Note that this is in contrast to the actual valuation that Dahlman Rose set in May 2011, of $125 / share for Molycorp. Needless to say, I was not exactly convinced by the response. If analysts have such unreliable data, as Mr. Young suggested, then perhaps they shouldn’t be publishing valuations at all…

The panel session closed, and the meeting was brought to a conclusion by NCPA’s Richard Walker. Overall, it was useful to meet new Washington, DC types, and to re-connect with other contacts in the strategic-materials sector and US government at the event.

Earlier today I had the pleasure of attending a luncheon in New York, given by the Foreign Policy Association (FPA). The FPA hosted the event to honor Jean Charest, the Premier of Quebec, with the Association’s Statesman Award. Premier Charest gave a fascinating keynote address titled “Plan Nord: Building Northern Quebec Together – the Project of a Generation“, in which he laid out his vision for Plan Nord, the recently launched strategic, sustainable development plan for the province.

Plan Nord will unfold over the next 25 years, and when completed will have invested an estimated $80 billion and created an average of 20,000 new jobs per year. As Premier Charest stated, “Plan Nord will be to the coming decades, what the development of La Mancicougan and James Bay were to the 1960s and 1970s”. It could also have a major positive impact on the development of technology metals in Canada, and rare-earth metals in particular.

Premier Charest made the point that Quebec has long recognized that having access to markets around the world is a key to the future success of the province. This was made clear in the significant support from Quebec and Quebecers for the free trade agreement with the US that was put into place in 1988 (before being superseded by the North American Free Trade Agreement (NAFTA). In recent years Quebec has realized just how dependent it has become on the USA for trade, and has made efforts to work with Europe and elsewhere to build new trade opportunities.

Premier Charest said that a few years ago, the province recognized the need to develop the province above the 49th parallel, and north of the St. Lawrence River and the Gulf of St. Lawrence. This is a region that is almost twice the size of France, and 10 times the size of the state of New York. It is a region that accounts for over 75% of Quebec’s installed hydroelectricity generation capacity but accounts for less than 2% of Quebec’s total population (around 120,000 people live in this region, including 33,000 First Nations and Inuit people).

The team behind Plan Nord believe that there will be strong demand for the natural resources in Quebec for many years to come – and this includes rare-earth elements, which are very much on the radar for the province. Not many people know that of the approximately 360 different rare-earth exploration and development projects that TMR tracks outside of China, almost 20% of those projects are located in the province of Quebec alone, making it the single-most important jurisdiction for ongoing rare-earths exploration and development in the world. Premier Charest acknowledged that the development of these and other resources in northern Quebec will require the development of infrastructure to enable these projects to happen. The development of roads and related infrastructure would be part of Plan Nord.

Premier Charest insisted that this development will be conducted with the environment in mind. He stated that 50% of the area covered by Plan Nord will be reserved for non-industrial uses, such as the promotion of biodiversity. A network of specifically protected areas will be developed by the Quebec government, covering at least 12% of the Plan Nord area by 2015.

Of the $80 billion slated for investment in the 25 years that the plan will run, $47 billion will be used to invest in new energy projects, with a view to adding 3.5 GW of renewable power capacity, including 3GW of hydro, 300 MW of wind energy and 200 MW of other energy production. Premier Charest commented that the production of this energy will be a key element of the sustainable development of the territory, but that the ability to produce energy was a critical component in the trade relationship between Quebec and the USA – Quebec could be a significant partner for its southern neighbor in this regard. Premier Charest gave the example of a recent 26-year agreement with the state of Vermont – Quebec provides 30% of Vermont’s energy needs, and it is no coincidence that Quebec and Vermont have the lowest carbon footprint of any jurisdictions in their respective countries.

Most interesting to me, was the Premier’s pragmatic comment that in the next 20-30 years, all indications are that a new maritime route will open up above the northern shore of Quebec, as a result of the lack of sea ice because of climate change. If such a route comes into existence it could shave three days off the time that it takes to ship goods by sea from Europe to Asia, and would rival the new canal being built in parallel to the existing Panama Canal, to accommodate ever-larger vessels. Premier Charest pointedly noted that Canada’s claim over the seas through which such a route would pass, is not presently recognized by the USA and Europe, and so the coming years will see significant political and strategic discussions among various nations, as the issues are resolved. A key concern of the Federal government of Canada, and the provincial government of Quebec, is the fragile nature of the environment in the north of Quebec, and how future shipping routes and the associated infrastructure with that, could affect the province in the North.

Plan Nord could have a significantly positive effect on the development of rare-earth and other rare-metal projects in Quebec, and indirectly in Labrador as well, since Labrador shares a border with Quebec to the latter province’s east. It’s an interesting example of a jurisdiction putting together an integrated, coordinated effort to develop its resources, one that could have far-reaching consequences for Canada, North America and the rest of the developed world.

My thanks go to Investissement Quebec, for the invitation to today’s event. We’ll keep an eye on the Plan Nord story, as it relates to rare metals and rare earths in particular, and will let you know what unfolds. In the meantime, you can find out more about Plan Nord, at its Web site at: www.plannord.gouv.qc.ca.

As I mentioned in my article posted earlier this week, I had the opportunity to attend Mining Indaba 2011 in Cape Town, South Africa last month. With a record 5,700 attendees this year, this is the premier annual mining event in Africa.

I’ve already mentioned the presence of Great Western Minerals Group (GWMG) (TSX.V:GWG) in an earlier article. They were about the only recognizable exploration & development company with an advanced rare-earth project, officially exhibiting at the event – though there were representatives from other well-known companies present. There were also exhibitors present with projects on the 300+ long TMR Rare-Earths Project List, with names that might not be as familiar to folks watching the rare-earths sector as others.

Avonlea Minerals (ASX:AVZ) has the Hoarusib project in Namibia that is prospective for rare earths, but their main focus appears to be on the Abenab project, a historical vanadium mine which they’re looking to develop for base metals. I spoke with folks from Montero Mining & Exploration (TSX.V:MON), who have the Wigu Hill project in Tanzania. Since Indaba they have listed on the TSX Venture Exchange and now that they’re through that process, they’ll be focusing back on development work. The company has taken over a couple hundred grab samples from the property, and claims to have seen significantly high grades of rare earths in some of them.

Also present was Peak Resources (ASX:PEK), who has the Ngualla project in Tanzania. They had recently completed a drilling campaign at Ngualla, and the company felt that initial drill results appear to be encouraging. They will follow this program up with more drilling before the summer. I also spoke with the guys at African Consolidated Resources (AIM:AFCR), who have the Nkombwa Hill project in Zambia, a joint venture with Rare Earth International, and, if I recall correctly, one other entity called Ferrex. They commented that the project was “highly prospective” for rare earths.

Also present during Mining Indaba 2011 were representatives of Namibia Rare Earths, who have the Lofdal property in Namibia, and who are in the process of getting ready to roll out an IPO for their company.

James Kenny, CEO of Frontier Rare Earths

I then had the opportunity to spend some time with James Kenny, CEO of Frontier Rare Earths (TSX.FRO), which not too long ago went public on the main TSX exchange and which has the Zandkopsdrift project in the Northern Cape of South Africa. This project is a member of the TMR Advanced Rare-Earth Projects Index and has both inferred and indicated rare-earth resource estimates per NI 43-101. It is not too far away from GWMG’s Steenkampskraal project. Mr. Kenny reviewed the recent presentation that Frontier put together on the project. We discussed the (at the time) new numbers for supply and demand that Dr. Chen of the Chinese Society of Rare Earths had included in the Vancouver presentation given just a couple of weeks prior to our meeting. If a production cap of 110 kept of rare earths really is put in place in China,this could mean shortfalls of supply for both China and the rest of the world, at levels greater than previously expected.

Mr. Kenny pointed out the proximity of the Zandkopsdrift to the Saldanha deep water port on South Africa’s West coast. He commented that they saw the Zandkopsdrift deposit as being a solid peer of other 200 kt+ rare-earth mineral-resource projects. The project would consist of extracting materials from a 50 m high hill on the property, before drilling down a further 30 m. The rare earths are present via supergene enrichment, in the form of fine-grained monazite, similar to the Mount Weld deposit in Australia. Mr. Kenny said that the initial mining campaign would focus on high-grading the deposit, in phases. Frontier is looking to do further drilling over the next six months, including in-fill drilling at intervals of 40 m.

Mr. Kenny said that the goal was to get a significant fraction of the deposit’s mineral resource estimated into the measured category. When I asked him about the challenge of processing fine-grained monazite such as that at Zandkopsdrift, he said that the company was working with SGS to get a flow sheet for the project following the completion of metallurgical studies, and he was (naturally) confident that an effective flow sheet would be produced. Mr. Kenny said that Frontier planned to complete their Pre-Feasibility Study by Q1 2012 and a Bankable Feasibility Study by the end of 2012.

We then discussed the novel approach to presenting value estimates that Frontier adopted in recent presentations. The company has focused on the use of a neodymium (Nd)-equivalent value for its project; this type of approach is used quite often for base metal and other projects, to attempt to determine the equivalent value of auxiliary metals and minerals, in terms of the primary material of interest. To my knowledge though, this is the first time that it’s been used in the rare-earths sector in this way. In the case of Zandkopsdrift, Frontier used Nd as the basis for the metric, it typically being the overall most-valuable rare earth present in many deposits. As an example of how this works, let’s assume that Nd oxide is currently trading at $100 / kg, and that La oxide is trading at $50 / kg. At this ratio of prices, every 1% of La oxide present in the material grade is equivalent to 0.5% Nd oxide – from the potential value point of view. This of course assumes similar recovery rates for either rare earth.

A couple of other observations from Mining Indaba 2011: I saw fewer Chinese delegates present than I was perhaps expecting; and I found it slightly odd to see pavilions / booths from the Czech Republic and the Afghanistan Ministry of Mines here… still – it was a very interesting experience, and I want to thank the folks at Resource Investor for facilitating my attendance at the meeting.

Disclosure: at the time of writing, Gareth Hatch is not a shareholder of any of the companies listed above, or of any other publicly traded junior-mining company. He did not receive compensation from any of the companies listed above, in return for writing this article.

In March of last year, the Technology & Rare Earth Metals Center, based in Washington DC, hosted TREM’10, its first policy event on the subject of rare earths and other technology metals. The meeting featured keynote addresses from Congressman Mike Coffman, Assistant Secretary of Energy David Sandalow, and Dr. Marcia McNutt, Director of the US Geological Survey. TREM’10 was a great success, attended by delegates from industry, academia, government, the world of finance and all areas in between.

This year’s event once again takes place in Washington DC, during March 22-23, 2011. Scheduled to give keynote addresses are US Senator Lisa Murkowski, Dr. Cyrus Wadia, Senior Policy Advisor within the White House Office of Science and Technology Policy, and Laurence Golborne, Minister of Mining & Energy within the Government of Chile.

TREM’11 is going to be the best event of the year for sinking your teeth into the policy issues that presently drive the rare earths and technology metals sector, and to network with industry stakeholders and influencers alike.

Jack will be speaking at the event, giving a presentation titled “Beyond the Rare Earths and Lithium, the Other Critical Technology Metals“, and I will be attending too.

You can now download a copy of the conference brochure and registration is now open. If you do decide to come along, be sure to find Jack and I to say hello!

In the meantime feel free to add a comment below if you have any questions about TREM’11 or its agenda – and we’ll see you in Washington D.C.

In November 2010, the Science and Technology Select Committee of the House of Commons (the lower chamber of the UK Parliament) announced an inquiry into the importance of strategic metals to the UK. The Chair of the Committee, Andrew Miller MP, said

“This inquiry has the potential to be wide-ranging, from concerns about the availability of rare earth elements to how metals are recycled from discarded technological devices, some unfortunately through the use of exploited child labour in developing countries.”

The impetus for the inquiry was the growing speculation in the UK and elsewhere, concerning the future availability of strategically important metals, including rare earths. The Committee sort to answer five key questions:

1. Is there a global shortfall in the supply and availability of strategically important metals essential to the production of advanced technology in the UK?
2. How vulnerable is the UK to a potential decline or restriction in the supply of strategically important metals? What should the Government be doing to safeguard against this and to ensure supplies are produced ethically?
3. How desirable, easy and cost-effective is it to recover and recycle metals from discarded products? How can this be encouraged? Where recycling currently takes place, what arrangements need to be in place to ensure it is done cost-effectively, safely and ethically?
4. Are there substitutes for those metals that are in decline in technological products manufactured in the UK? How can these substitutes be more widely applied?
5. What opportunities are there to work internationally on the challenge of recovering, recycling and substituting strategically important metals?

Written submissions in response to these questions were received by the Committee and published earlier this month. Evidence was received from a variety of sources, including professional societies, universities, government agencies and companies (including TMR).

Earlier today, the Committee completed a first round of hearings at Portcullis House in London. Witnesses included:

• Louis Brimacombe – Tata Steel
• Tony Hartwell – Environmental Sustainability Knowledge Transfer Network
• Ian Hetherington – British Metals Recycling Association
• Professor David Manning – Geological Society of London
• Dr Mike Pitts – Royal Society of Chemistry
• Dr Bernie Rickinson – Institute of Materials, Minerals and Mining
• Sophie Thomas – The Design Council

The hearings lasted for two hours, and were conducted in two parts. You can see complete coverage of the event here (if you have any problems running this video – visit the UK Parliament archive page instead):

A transcript of the hearings will likely be available shortly, and once published we’ll add a link to them here.

A few very quick ‘takeaways’ from the hearings:

• There was general consensus that the European Community Directive on Waste Electrical and Electronic Equipment (WEEE), which currently requires that consumer goods manufacturers take responsibility for the disposal of devices at the end of their useful lives, should be expanded to cover industrial and commercial goods and appliances too.

• Product designers need to work with materials scientists and engineers to design hi-tech products that can be easily dismantled, to enable rare-metal-rich components to be recovered, re-used or recycled.

• In the few cases were product components are recovered, the processes used to dismantle and to acquire these components from the waste stream, are far less sophisticated than the processes used to create the products in the first place.

• Product designers need incentives to design their products with recovery and reusability in mind.

• Local expertise in materials science and engineering is required wherever manufacturing is going to occur, in order to support the supply chain properly.

• Much of the work in Europe on product end-of-life issues has focused almost entirely on environmental issues; more work needs to be done to expand the discussion to sustainability and economic considerations – and the social value of all such activities.

• When discussing where rare-earth projects were underway outside of the UK, no-one on the panel of witnesses or committee of MPs, appeared to be aware of the advanced rare-earth projects currently underway in Europe – specifically Sweden (and Greenland, if you consider it to be part of Europe). This was despite at least one written submission giving details on such projects (that from TMR!).

• One witness said that in his research prior to coming to the hearings, he had tried to ascertain what  the market might be for recycled rare earths such as neodymium, but was unable to find any information on this. He then commented that without such markets, there was no incentive to recycle rare earths, or other materials. I’m not sure that I’d agree with this. If one assumes a reasonable level of purity in any such recycled materials, then the material is surely fungible i.e. is no different from “primary” neodymium-based materials.

• The general consensus was that the answers to the questions originally posed by the Committee, had to be answered in the wider European context at least, since these were issues that went way beyond the UK’s borders, and since very few strategic metals are actually mined or produced in the UK.

We’ll keep an eye on any further developments on this story, and update you as and when we can.

I am on the way home from Vancouver where I attended and presented at the first Critical Metals Investment Symposium, produced by Cambridge House International Inc. It was time very well spent. The moderators, who also spoke, were John Kaiser and Dr. Michael Berry.

Something is critical if without it, a technology cannot be done, or cannot be done economically or efficiently. When such a definition is applied to the space of all metals, it narrows the list. It allows investors to focus on what’s necessary to the continuation and growth of our technological society, not just on what’s nice.

More important, such winnowing down exposes the fact that there are critical mines as well as critical materials.

For example, for the USA to be self-sufficient in critical rare-earth metals, it will be necessary for the Alaskan Bokan Mountain deposits of Ucore Rare Metals to be developed as quickly as possible, along with either Molycorp’s Mountain Pass mine and/or Rare Element Resources’ Bear Lodge property in Wyoming. Only in this way can the USA become self-sufficient in the critical rare earths in the near term.

Canada has little internal domestic demand for the rare earths, but it has or controls not only more deposits of rare earths than any other country, but also significant operational expertise in processing rare-earth ores to high-purity metals. Canada is now turning to the idea of becoming a supplier to the world of rare-earth metals. This would occur via supply-chain development and perhaps the vertical integration of some existing companies, already doing various aspects of the rare-earth supply chain, not necessarily in Canada but owned and/or operated by Canadian businesses.

Canadian companies furthest along, or already in operation in the rare-earth supply chain, include Avalon Rare Metals, Great Western Minerals Group (GWMG) and Neo Material Technologies. Companies that own rich deposits with good heavy REE values, include Matamec Explorations, Quest Rare Minerals and Stans Energy.

Markets trade on momentum and fads, as well as on fundamentals. Let the herd pass on over the cliff with regard to the general run of REE ventures out there. Stick with the above owners of the critical mines, because your lifestyle and quality of life depend on your doing so. China wants not a piece of the pie, but a whole new supply of baked goods. Natural resources take a long tome to discover and to bring into production. Demand for the REEs is increasing and may well be larger than supply shortly. At the Vancouver conference, a paper read on behalf of Dr.  Zhanheng Chen, Academic Director of the Chinese Society for Rare Earths , noted that China may well be a net buyer of rare earths by 2015.

I apologize for not mentioning all of the companies also presenting at the Vancouver conference, but I wanted today to focus on critical mines for rare earths, because I think there isn’t enough awareness of this and there has to be. The REE supply chain has to be geographically diversified. If not, Chinese demand and Chinese control of the processing will simply send all of the newly produced material in North America and elsewhere to China, thus baptizing North America as a third-world raw-materials supplier. Wasn’t that how China started out, by the way?

Don’t send me any mail about Molycorp’s separation plant or Lynas’ processing facility to be built in Malaysia. Those are company-specific operations, and are a good start, but neither company has ever produced high-purity rare-earth metals in the type of commercial quantities required today, nor have they made battery or magnet alloys and compounds, nor made finished goods such as NiMH batteries and rare-earth permanent magnets before. The first consumer-product mass producer, to be vertically integrated in rare-earth-based end-use products, will in all likelihood be Toyota in 2013-14. I still believe that the first vertically integrated producer of rare-earth permanent-magnet alloys and forms, will be GWMG. Exactly like China, I think that GWMG will allocate its internal production of REEs to its own operations, so that it will be able to realize the highest value-added from the rare earths. If and when there’s a surplus, then GWMG will sell into the market. Note that if this happens for China, the “demand exceeds the supply” conspiracy theorists will say it’s a plan. GWMG’s plan is just good business, but, apparently, the same plan followed by China, Inc., will be a plot to control the sector.

In any case some REEs are going to be in more critical short supply than others, if this is not already the case, so some mines will be more critical than others.

Don’t say I didn’t warn you.

Disclosure: At the time of writing, Jack Lifton holds long stock positions in Ucore Rare Metals Inc. (TSX.V:UCU) and Great Western Minerals Group Ltd. (TSX.V:GWG). Jack also does ongoing paid consulting for Ucore.

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.

FinancialWire (Investrend Forums Syndicate) – Published September 24, 2010

The A-Fund Emerging Hi-Growth Sectors Conference was held yesterday. Presenting public companies included rare earth/special alloy exploration and development company Great Western Minerals Group Ltd. (GWG.V), rare earth element and uranium exploration company Ucore Rare Metals, Inc. (UCU.V) (UURAF.PK), mineral exploration company Alexco Resource Corp. (AXU), and gold and silver exploration company Orko Silver Corp. (OK.V) (OKOFF.OB).

The conference also included a DuPasquier “best ideas” panel with Brian Brogan, Herve Van Caloen, Charles Kaplan, Lloyd Khaner and Charles Lemonides, as well as talks on why the heavy rare earths are important by Dr. Gareth Hatch, and what’s next in heavy rare earths by Jack Lifton.

In addition, the conference included a precious metals panel discussion, as well as talks on the fundamentals of gold and silver by Eliot Glaser, the new trading dynamics of gold and silver by George Gero, and valuations of gold and silver stocks by Christopher Ecclestone.

Orko Silver engages in the acquisition and exploration of gold and silver resource properties in Mexico. The company was formerly known as Orko Gold Corporation and changed its name to Orko Silver Corp. in March 2006. Orko Silver Corp. was incorporated in 1983 and is based in Vancouver, Canada.

Alexco Resource Corp. engages in the exploration and development of mineral properties in Canada, primarily in Yukon Territory. The company was incorporated in 2004 and is headquartered in Vancouver, Canada.

Ucore Rare Metals engages in the exploration and development of rare earth element and uranium properties. The company was formerly known as Ucore Uranium Inc. and changed its name to Ucore Rare Metals Inc. in June 2010. Ucore Rare Metals Inc. is based in Halifax, Canada.

Great Western Minerals engages in the acquisition, exploration, and development of metal properties in the United States, Canada, and South Africa. The company was incorporated in 1983 and is based in Saskatoon, Canada.

Later this week I’ll be flying out to Europe, ahead of the 21st International Workshop on Rare Earth Permanent Magnets and their Applications – also known as REPM’10 or simply “The Workshop” within the magnet industry.

This Workshop will be held on the shores of the picturesque Lake Bled in Slovenia, and is the latest in a long series of similar events stretching back to the 1970s. Karl Strnat, the co-discoverer of the first generation of permanent magnets based on rare earths, organized the first Workshop at the University of Dayton, Ohio in 1974. Dr. Strnat worked at the US Air Force Research Laboratory, part of the Wright-Patterson Air Force Base in Ohio, and it was there that he, Alden Ray and others undertook the research that led to the discovery the first RE-Cobalt magnetic compounds.

I’ve had the privilege and the pleasure of attending three prior Workshops, which are held every two years. I say without hesitation that the Workshop is the most important meeting for the permanent magnet community on the calendar. The attendees are a unique blend of folks from industry and academia, technical and non-technical, and drawn from all around the world. This year’s event is being hosted by the magnetics research group at the Josef Stefan Institute in Ljubljana, Slovenia’s capital, a group with a distinguished track record of research and development in magnetic materials.

As a slowly developing postgraduate research student in magnetic materials at the University of Birmingham, I had the somewhat dubious honor of working as part of the security detail at the Workshop held at that University in 1994. I was also part of a musical “ensemble” during that meeting that passed into Workshop legend too, but that’s about all I’ll say on that.

What I will mention though, is that it was my attendance and participation at that Workshop in Birmingham in 1994, that led to my being introduced to the leading players of the industrial and academic sectors of the rare earth magnets industry. I made contact with one particular individual at that meeting, who would eventually go on to introduce me to my first employer after graduating in 1997.

At the Workshop in Slovenia next week, I will present an invited paper titled ‘Recent Developments in the North American Permanent Magnet Industry and its Supply Chain‘. It was not without a considerable sense of satisfaction at being able to “close the circle”, that I discovered that the Chair of the session in which I’ll be presenting this paper, was none other than the gentleman I first met in 1994, who helped propel me into the commercial world of permanent magnets – Mr Reinhold Strnat, a distinguished member of the magnetics community in his own right, and a now long time friend and colleague.

The ability for young, wet-behind-the-ears postgraduate research students to present their work to crusty old professors and captains of industry alike, in a non-threatening, non-pretentious setting is a near-unique aspect of the Workshop series, and was certainly an essential part of my growth in the discipline. It is from meetings and interactions like these, that the future researchers, developers, engineers and scientists in the field of rare earths, permanent magnets and allied arts will be drawn. I am pleased to note that the attendance at the Workshop in Slovenia will be as high as ever – perhaps 150 attendees, representing all the research groups, companies and other organizations of importance to the rare earth permanent magnet industry.

Interestingly, this year will see a number of presentations from folks within the broader rare earths industry, including TMR’s very own Jack Lifton, Gary Billingsley of Great Western Minerals, and others. I’m hoping to snag some interviews and Q & As with the various leading rare earth magnet researchers while in Bled. I look forward to being able to share that info and perhaps a few photos, on my return.