Rare Earth Materials - - How Scarce Are They_100711_update(Autosave)

8/10/2019 Rare Earth Materials - - How Scarce Are They_100711_update(Autosave)

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Arnold Magnetic Technologies

1Our world touches your world every day 2010 Arnold Magnetic Technologies Corp.

Rare Earth Materials

How scarce are they?

Steve Constantinides, Director of TechnologyArnold Magnetic Technologies

A great many magnetic materials were developed during the 1900s.

Arnold Magnetic Technologies participated in the development of several of them andhas manufactured most.

It is this background, more thoroughly discussed in the following slide, that provides a

uniquely broad view of the magnet market and use of magnetic materials inapplications and that allows us to speak with authority on the subject.


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Arnolds Experience & Knowledge Base

Mfg Location 1940 1950 1960 1970 1980 1990 2000 2010 2020

FERRITE

Ferrite (ceramic) magnets Marengo, IL

Sevierville, TN

Bonded Ferrite Marietta, OH

Norfolk, NE

ALNICO

Cast & Sintered alnico Marengo, IL

RARE EARTH MAGNETS

SmCo 1:5 and 2:17 Marengo, IL

Sheffield, UK

Lupfig, Switzerland

NdFeB TBD

SOFT MAGNETICS

Si-Fe Marengo, IL

Powder Core Products Marengo, IL

(Iron, Ferrite, Sendust, Hi-Flux, MPP) Shenzhen, PRCELECTROMAGNETS

Beam focusing coils Ogallala, NE

Over the last 70 years (since 1939), Arnold has developed an extensive knowledgebase in a wide range of materials including, but not limited to those shown here.

As products and markets have changed, Arnolds product line-up and manufacturinglocations have adapted.

Today Arnold, over 100 years in business, and over 70 years in the manufacture ofmagnetic materials is:

Largest NA manufacturer of magnetic materials and systems

~1100 Employees

10 Manufacturing Facilities

2,000+ Customers

Arnold products go into a diverse set of markets and applications including the currentGreen Initiative areas of energy generation and efficient transportation drivesystems.

We also supply into the strategically important aerospace and military marketsegment.

Product and market diversification has provided Arnold a secure manufacturingenvironment during both good and bad economic times.

Rare earth materials present new challenges for the magnetics industry.

Automotive 5-10%

Energy 5-10%

Aerospace&

Defense ~15%

% of Arnolds total sales


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International Trade is Complex

IP: Patent protection

Import Tariffs

Political:

Intl Negotiations

Exchange

Rates

Strategic & Defense

Sensitivity

Political:

Job Creation or Loss Environmental needs

Technical

Leadership

CoDB:

Cost of Doing

Business

(Licenses, financial

reporting, OSHA,

EPA, etc.

Shipping:

Cost and Duration

Export Quotas

Educated Labor Force

Quality & Cost of Infrastructure:

Tooling, electric, process gases,

materials and supplies

Return on Investment

(ROE, ROA, ROI)

Education & R&D

Supply chain

dependability

Value Added Tax

The Rare Earth materials supply chain is a complex supply-demand issue that mustbe understood in order to be consistently successful at accessing rare earth oxidesand rare earth permanent magnets (REPMs) in quantities and at the time required foryour businesses.

REPMs compete with alternate magnet types but are the solution of choice wheresmall size, low weight or high performance are desired.

If or when we shift our designs to an alternate magnet material, no solution will beevidenced if our action creates a shortage of the alternate material.

A healthy industry depends upon balance between supply and demand for each andall of the key ingredient materials.

Answers to adequate supply of the various magnet materials will depend on acombination of free market activity and governmental encouragement in allgeographic locations - - rare earth material supply is a global issue.


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Improvement in Magnet Strength

0

10

20

30

40

50

60

1900 1920 1940 1960 1980 2000

YEAR

BHmax,

MGOe

0

40

80

120

160

200

240

280

320

360

400

440

480

BHmax,

kJ/m3

Nd-Fe-B

Sm-Fe-N

Aniso Bonded Nd-Fe-B

Ferrite

Alnico 5

MK SteelKS Steel

Iso Bonded Nd-Fe-B

Sm-Co

Columnar Alnico

Pt-Co

OTHER IMPORTANT CHARACTERISTICSRequired magnetizing field

Thermal stability, ResistivityCorrosion Resistance

Manufacturability, Cost, etc.

All the materials presented here are still used in selected applications where theircombination of price and performance is superior to the others.

For example, even though ferrite magnets are far weaker than the rare earths, theycontinue to dominate in sales on a weight basis representing 80% + of permanentmagnets sold in the free world.

However, the focus on low weight and small size has driven usage of rare earthmagnets so that neo magnets now represent over half all magnet sales on a dollarbasis.


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Temperature Effect: FerriteMaterial: AC-8B

0

1

2

3

4

5

6

0123456

Polarization

J

FluxDensity

B

kG

Demagnetizing Field, H

0

100

200

300

400

500

mT600

1.5

kA/m 0239 160 80398 318

kOe

0.5

0.75

1 2 3 5

0.3

8

0.1

Pc = B H

20C

80C

120C

150C

-40C

100C

180C

40200 120279358438

As an alternative magnetic material, ferrite benefits from increasing resistance todemagnetization as temperature rises, but acceptable performance is limited at lowtemperatures to about -40 C for most applications.

Ferrite is also subject to severe reduction in flux output as temperature rises withoutput dropping 25% from room temperature to 150 C.

From a practical perspective, then, its useful temperature range is only about -40 toabout 150 C and its maximum magnetic output is only about 10% of rare earthmagnets.


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Material: Alnico 6-Cast

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

00.20.40.60.811.21.41.61.82


Polarization

J

FluxDensity

B

2

3

5

7

2015 30 50

0

0.2

0.4

0.6

0.8

1.0

1.2

kG Tesla

1.4

kOe

kA/m 111 80 16 096 64 48 32127143

Pc = B H

Temperature Effect: Alnico

All Temps are tightly grouped

Temperatures from -40 to 200 C

On the other hand, alnico is a strong, corrosion resistant, high performance magnetmaterial.

Its flux output and resistance to demagnetization changes very little with temperature.(This example is Alnico 6; other grades have similar stability).

However, alnicos resistance to demagnetization is not high so it excels in applicationswhere temperature stability is required or where special design techniques can beincorporated to prevent demagnetization.

The highest energy product alnico today is alnico 5-7 with 13,500 Br and 740 oerstedsHc.

Projects are underway to enhance the coercivity of alnico which would result inimmediately raising the energy product.


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Temperature Effect: Neo

Straight Lineperformance to a very lowpermeance Coefficient

Function of Hci andReversible TemperatureCoefficients

Not specifically a functionof composition or process that is, a 100 C materialcan be used at 150 C ifthe Pc is high and themagnet is not subjected todemag stress

Material: L-30EHT

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

024681012141618202224262830


Polarization

J

FluxDensity

B

0.1

0.3

0.5 10.75 21.5 3 5

20C

100C80C 120C 180C

-40C

0

0.2

0.4

0.6

0.8

1.0

1.2

kGTesla

1.4

kOe

kA/m 1750 1275 160 01430 1115 955 795 640 475 3202070 1910 15902230

150C 200C

Pc = B H

1 kA/m = 12.566 Oe 1 kOe = 79.577 kA/m

Abovethe kneeat Pc = 1

With neo magnets, we see here how resistance to demagnetization (intrinsiccoercivity, Hcj) diminishes as temperature increases.

To compensate for the diminished coercivity, a higher starting coercivity is needed.

Higher coercivity is obtained by raising the heavy rare earth content, especially

dysprosium.


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Improvements in Neo Hci

Neo grades from China have beenidentified by a suffix

Higher Hci (a.k.a. Hcj) is the resultof Dysprosium additions with orwithout additional alloyingmodifications (e.g. Gallium, Copper,Cobalt)

Alloy and sintering techniques allowretention of the majority of Br whileincreasing Hci

AH

The difference in intrinsic coercivity is achieved through changes in composition,namely the addition of heavy rare earths (Dy and sometimes Tb).

Over time, a family of grades was developed using very low to moderately highpercentages of dysprosium and resulting in grade designations such as listed here.


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Affect of Dysprosium

HcJ and Bras a Function of Dysprosium Content

Approximate

10,000

15,000

20,000

25,000

30,000

35,000

0 2 4 6 8 10 12

Dysprosium, %

HcJ,

Oe

10

11

12

13

14

15

Br,

kG

Br

HcJ

M

SH

UH

EH

H

AH

VCMs,

Sensors

Holding,

Sensors

Genl purposemotors, wind power

generators

High performance

motors & generators

Super high performance

motors & generators

Average mine output for Dysprosium

The change in composition to achieve high temperature performance capability alsoresults in a decrease of Br.

Since energy product is proportional to the square of Br, it too declines in the highertemperature grades.

The natural occurrence in rare earth ore, of dysprosium, is about 3%. With the use of neo magnets in high temperature apparatus, the demand for

dysprosium exceeds its natural abundance.


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Affect of Temperature on Neo and SmCo

L30EHT versus SmCo 26HE

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

024681012141618202224262830

Demganetizing Field, H

B,

J

0.1

0.3

0.5 10.75 21.5 3 5

0

0.2

0.4

0.6

0.8

1.0

1.2

kG Tesla

1.4

kOe

kA/m 1750 1275 160 01430 1115 955 795 640 475 3202070 1910 15902230

Pc = B H

L30EHT, 20 C

L30EHT, 220 C

26HE, 20 C

26HE, 220 C

L30EHT

26HE

For some high temperature applications, it may make good sense to use SmCo.

Even the best Neo is not up to the performance of SmCo at elevated temperatures: inconsideration of both flux output and resistance to demagnetization.

The transition range where SmCo begins to outperform Neo is 150 to 180 degrees C.


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Price / Performance Comparison

Baseline Material Costs

0.5

1.0

1.5

2.0

2.5

3.0

0 50 100 150 200Temperature, C

Ralativecost,$/MGOe

N30AH SmCo 30S L-38UHT N40SH

Nd = $42 / kg

Sm = $25 / kg

Dy = $150 / kg

Co = $50 / kg

Zr = $60 / kg

Inflated Material Costs

0.5

1.0

1.5

2.0

2.5

3.0

0 50 100 150 200Temperature, C

Ralativecost,$/MGOe

N30AH SmCo 30S L-38UHT N40SH

Nd = $42 / kg

Sm = $25 / kg

Dy = $250 / kg

Co = $60 / kg

Zr = $70 / kg

Data is normalized on N40SH; Key material prices are shown in charts.

Baseline pricing is from summer 2009; inflated Dy is current; other inflated prices are forecast year-end.

We have known that SmCo becomes performance competitive somewhere between150 and 180 C. Historically SmCo has been more expensive than neo.

What these charts show is that now SmCo can be price competitive as well.

Very high Dy grades with low cobalt, rated to 200+ C, are more expensive than

SmCo even at room temperature. Modest cobalt / dysprosium grades rated to 180-200 C are more cost effective up to

125 to 160 C but have inferior Hci at these temperatures.

Higher energy grades such N40SH are only rated to 150 C. So while they offer aprice-performance edge at lower temperatures, they cannot compete for performanceabove about 150 C.

Note, on these charts, where the curves deviate from near linear, the low Hci isconstricting the potential maximum energy product.

In summary, with dysprosium pricing above $150/kg, SmCo is competitive on a priceperformance basis. At $250 per kg, it is a very competitive alternative and SmCo

represents some relief to the tight dysprosium market.


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Agenda

Permanent Magnets Rare Earth Usage

Material Availability

Patent Situation and New Technologies

Not all rare earth elements are used in magnets.

It is the overall demand for rare earth elements (REEs) that is causing the currentdiscussion.


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Relative Abundance of the Elements

Nd

From US Geological Survey

LREEs HREEs

To reiterate, (most) rare earths are not rare, so it is difficult to understand why theywould be in such short supply.

As shown here, neodymium is as common as Cobalt, Nickel or lead.

One reason for being called Rare Earths is that they are difficult to extract from the

ore, to concentrate and to separate.Another possible reason for calling them rare is that they are seldom present in high

concentrations or the ore contains radioactive constituents such as thorium oruranium thus discouraging mining and processing of the materials.

This problem would be mitigated should thorium nuclear power reactors becomewidely used.

A significant portion of rare earths are obtained by refining the tailings of ore mined forother metals or they might be discovered while searching for other elements. Oneexample of this is the Dubbo Zirconia Project in Australia.


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Benefits from Rare Earths

Application Rare Earths Advantages

Batteries (NiMH) La, Ce, Pr, NdHigh energy density energy storage vehicle electric batteries for EV andhybrid vehicles

Catalysts

Automotive Ce, La, Nd

Catalyzes complete combustion in exhaust gases to meet stricter

emissions standardsCatalysts Hydrocarbon Cracking

La, Ce, Pr, NdPetroleum production: hydrocarbon cracking for normal grades andimproved yields from heavy oils and tars

Ceramics Y Stabilization and strengthening

Fiber Optics Er, Y, Tb, Eu Reduction of signal loss during transmission

Glass Additives Ce, La, Nd"Decolorizes" glass, changes refractive indices, reduces transmission ofselected frequencies (UV), prevents CRT "washout"

Magnetic d isc data storage Gd, Tb Improved areal densi ty of magnet ic disc f ilms

Magneto-strictive alloys Tb, Dy Greatly enhanced sensitivity with rare earths

MagnetsNd, Pr, Dy, Tb, Sm,Gd, Y

Motors, generators, EV and hybrid vehicle drives, consumer electroniccontrols, hard disks, CD-ROM's, speakers, cordless power tools, MRI's,etc.

Metal Alloy Modifiers Ce, Er Aluminum structure refinement; high temperature creep resistance, betterimpact strength, improved iron ductility

Phosphors Eu, Y, Tb, La, CeCFL's (compact fluorescent lamps), TV's and CRT monitors, LED's,LCD's, portable electronics

Plating & Galvanizing Ce, La Ce enhances plating, La improves zinc galvanizing

Polishing Powders Ce, LaOxides used as polishing agents for TV's, LCD's mirrors, telescopelenses, silicon chips

Refrigeration Gd Magneto caloric effect

Some applications use the oxide of the rare earth elements, some use the metal andfor others, the rare earth is an additive to a metal alloy or to a glass.

Constraint in supply would have a major impact on most aspects of our lives.

Note that the only major use listed for samarium is in SmCo magnets.


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Where are RE Materials Used?Year 2008

Source: IMCOA and Roskill

REO App lications, 2008

21%20%

18%

12%

10%

7%6% 6%

0%

5%

10%

15%

20%

25%

Magnets Catalysts MetalAlloys Polishing Glass Phosphors Other Ceramics

REO,

%o

ftotal

As a rule, when the ore is processed, concentrated and separated, all of the elementspresent in the ore are extracted.

It is financially inconvenient to be unable to sell all of the materials which are refinedfrom the ore.

Demand imbalance will force price rationalization: the most utilized will bear the costof the least utilized.

According to this IMCOA/Roskill data, magnets represented only about 21% of themarket for rare earth elements in 2008 and are expected to rise to 24% by 2012.


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Razvoj i primjena Neo magneta

HDD (Globalno): postojee i rastue trite Ukupne HDD poiljke za 2008 su 593,2 milijuna jedinica,to je poveanje za 14,9% u odnosu na 2007 ...(iSuppliCorp)

IDC predvia 13,4-postotni rast isporuka diljem svijeta u 2009 i 12 posto u 2010 ...... IDC, istraivakaskupina koja se temelji na Framingham, mass; Koristite rast od 10% u 2011 i 2012

Magnet total weight consumed in 2012 is estimated = 14,200 tonnes Vjetroturbine(Globalno): generacija IV generatora s permanentnim magnetom su

sve intenzivni

Generacija 4 vjetroturbina koristiti se permanentnim magnetima Izmeu 250 i 600 kg neo magneta po MW snage: koristiti 400 kg u izraunima

- Zamjena elektrane na ugljen od 1 GW zahtijevao bi 400 tona neo magneta

- Oko 220 GW vjetroenergije e biti instalirano do 2030;

Vrhunac godinje potronje magnet urazdoblju od 2018 do 2025 procjenjuje se

na 6.400 tona / god

-Vrhunac globalne potronje se procjenjuje na 2,5 puta to iznosi16.000 tona

Hibridna vozila (Globalno): ubrzana faza rasta Procjene se izmeu 6 i i 10 milijuna hibrida e biti proizvodeno tijekom 2012 Svaki hibridni pogon koristi prosjeno 1,5 kg neo magneta

Ukupna potronje neo magneta tijekom 2012 za 6 milijuna vozilaje 9.000 tona EB (electric bicycles) (Azija): large and growing application especially in 3 rd world 300-350 grams of neo magnets per EB 20 million sold in China in 2009; forecast to 30 million per year

Annual neo magnet usage =

9 700 tonnes

The growth in demand for magnet rare earth elements will be driven by many factors,not the least of which are these existing and new uses.

In 1990 Hard Disk Drives (HDDs) represented approximately 75% of the usage ofneo magnets. Today the percentage is lower only because other applications haveincreased.

If Chinas growth of the wind power industry remains on-track, they will probablyconsume more magnets than the U.S.

Europe, India and other oil-import dependent countries are likely to expand their windpower programs as well.

400 kg/MW is an intermediate estimate. Values as low as 250 and as high as 600kg/MW have been published.

Global magnet usage for wind could easily exceed 16,000 tonnes/year by 2020.

Considering hybrid vehicles only, i.e. not full electric, 9,000 metric tons of magnets willbe required per year by 2012.

If the demand for hybrid vehicles is 10 million per year in 2012, then neo magnetconsumption for this application would be about 15,000 tonnes per year.

People in developing countries can ill afford purchasing and maintaining automobiles.Many depend upon bicycles and increasingly on motor bikes for transportation.

These four applications alone will require the separation of ~117,000 tons of REO.


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Agenda




Will there be adequate supplies to meet the growing demand?


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Rare Earth Resource Locations

Takehisa Minowa, Director R&D, Shin-Etsu Chemical Company, Magnet Department, Magnetics 2009, Chicago IL April 2009

Bastnaesite

Many of the worlds rare earth ore locations are indicated on this map.

The Monazite/Xenotime placer sand deposits are frequently found along coastlines orin rivers at low turbulence locations and may also occur inland with sand depositsfrom prehistoric geologic activity, such as at Deep Sands, in Utah.

While these sites are numerous, they contain radioactive thorium or uranium, somining and processing them has been limited. One example is a mine in India whichhas been limited to producing 2700 tons per year.

Numerous other mines sites exist and we will look at several of the more promisingones.


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Magnet Rare Earth Element OutputAs Fraction of Total REO

Current All Mines

and Imminent On List

Nd 13.6 14.4

Pr 4 4.1

Dy 3.1 3

Tb 0.5 0.5

Sm 2.1 2.5

Totals 23.3 24.5

Data is from 11 working mines. There are 20 mines listed by USGS with chemistries.

Using ore data from USGS, Magnequench, Kingsnorth and mining companies,average ore content for the 11 active and 20 identified mines is shown here.

SmCo is an excellent material for demanding and high temperature applications.

It is also apparent that Samarium, at only ~2.5% of the ores and 25-35% of the SmCo

alloy, must never be in very high demand or requirements will outstrip supply. However, It is estimated that SmCo magnet usage could increase between 3 and 5

times current levels and remain in balance with neo raw material requirements.

The ultimate ratio of Neo magnets to SmCo magnets is about 10 to 1 (by weight)based upon element availability and usage of the elements in the alloys.

Re-stated, SmCo magnet production can be about 10% of neo magnet production, byweight, keeping usage in balance with supply.


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Rare Earths Supply & Demand

Minor Metals and Rare Earths 2007, Dudley J Kingsnorth

Demandtpa-REO

This is the chart from 2007 that raised such great concern.

It clearly shows a substantial shortfall in supply starting in 2006-2008 and Chinasinternal needs consuming available REEs by 2012.


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Dudley J Kingsnorth, early 2009

The chart was updated by Dudley in early 2009 and shows a far less oneroussituation.


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Rare Earth Industry: Meeting Demand in 2014, Dudley J Kingsnorth, Oct 2009

and it has now been redone based on several factors including the economicslowdown of 2008 - 2009 and Chinas stated commitment to maintain supply to meetworld demand.

However, we continue to see evidence that China intends to move up the valuechain, where ever possible, supplying less oxide and fewer magnets but moremagnetic assemblies and completed devices.

ROW supply requirements, while less than shown on the earlier charts, are stillsubstantial.

Will the ROW quantities be met and if so, how?


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World Mine Production of Rare Earth Oxide

0

50,000

100,000

150,000

200,000

250,000

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

E

2009

E

2011

F

2013

F

2015

F

Other

Zaire

USA

USSR

Thailand

Sri Lanka

South Africa

Malaysia

Kyrgystan

India

China

Canada

Brazil

Aus tralia

REO,tons

Estimated requirement

Historic and estimated data from USGS; forecast based on company publications; no increase in China output.

Rare earths have been mined and made commercially available for over half a centurywith one of the primary sources being Molycorps Mt. Pass mine in California.

The data presented here (through 2009) has been collected and tabulated by USGS.

Between 1998 and 2001, Molycorp greatly reduced its processing output due to low

market prices and environmental issues at the mine. China now supplies 97%+ of the rare earths in the global market.

Looking at 2012 to 2015, we see a resurgence of the Molycorp production (green barat the top) and the addition of suppliers in Australia, Canada and South Africa.

Estimates of demand for REO in 2014 range from 160 to over 200 thousand tons witha consensus developing at about 180 thousand.

This chart assumes that China will continue to produce at 2009 levels though theyhave stated they will increase output, if necessary, to prevent disruption of the market.

China has also announced the establishment of a stockpile to bridge a period of

rebuilding of the concentration/separation facilities to be more environmentally friendlyand to operate at a higher yield.

This chart also assumes that new facilities will come on-stream as advertised by therespective companies. That depends in large part on permitting and on availability offinancing - - these are hugely capital intense business models.

The cost is mainly in the separation facilities and is between $12 and $25 million perthousand tons per year (tpa) output of REO.


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Potential New Suppliers

KvanefjeldNechalacho

Hoidas Lake

Bear Lodge

Mt. Pass

Steenkampskraal Mt. Weld

Dubbo

Nolans

The locations for the 9 most discussed mines are shown here.

Only three have separation facilities existing or immediately planned: Mt. Weld, Mt.Pass and Steenkampskraal.

The other locations are further behind in timing as well see.

An additional mining activity is being pursued by the Japanese in Viet Nam to produceheavy rare earths. The geology represents a continuation of the ionic clay of southernChina that is currently providing most of the supply of dysprosium.

Japan is working with Kazakhstan on re-establishing output.

Magnequench also has an activity in Brazil to evaluate refining of the tailings from thePitinga tin mine.


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Potential Rare Earth SuppliersAlkane Resources Ltd Arafura Resources Ltd Avalon Rare Metals

Inc.

Great Western

Minerals Group

Principal Mine(s) Dubbo Nolans Nechalacho Hoidas Lake

Location Aus tralia Aus tralia Thor lake, Canada Canada

Website w w w .alkane.com.au arafuraresources.com.au avalonraremetals.com w w w .gw mg.caTicker ASX: ALK ASX: ARU TSX: AVL

OTCQX:AVARF

TSXV: GWG,

OTCQX: GWMGF

Large private Investors Abbottsleigh Pty Ltd owns

28%

East China Min'l Exp &

Dev Bureau owns 24.9%

Market Cap., million$ 88 172 201 48

Production Plan

tons per year (tpa) 2,500 20,000 5,000 2,500

Est Production Start 2013 2015 2015

Ore Type Zirconium & ref metal by-

product

Apatite: Ph os pha te-ba se ;

RE secondary

Fergusonite Al lan i te , apat ite

Ore Grade 0.75% 3.20% 2.00% 2.60%

Resource, Mt 36 30 60 1.5

REO contained, Mt 0.27 0.96 1.20 0.04

Rare Earth Analysis, %

LREE's La 19.53 20.00 15.28 20.44

Ce 36.82 48.20 31.14 46.62

Pr 4.03 5.90 4.25 5.97

Nd 14.11 21.50 17.02 20.57

Sm 2.17 2.40 3.75 2.71

HREE's Eu 0.08 0.41 0.49 0.54

Gd 2.17 1.00 3.86 1.24

Tb 0.31 0.08 0.61 0.11

Dy 2.02 0.34 3.21 0.35

Y 15.81 0.00 13.64 1.17

Other 2.87 0.17 3.74 0.29

There is much detail in these charts and we wont attempt to go into detail here. Theyare for your reference and provide links to the company websites.

What they do highlight is that none offer significant amounts of heavy rare earths (e.g.dysprosium or terbium) for high temperature neo magnets.

Significant quantities of HREEs (heavy rare earth elements) will have to come fromone or more of the slower developing locations not yet on these lists, for example,Dong Pao, Vietnam, Kazakhstan or Douglas River, Canada.


27/39



Potential Rare Earth SuppliersGreat Western

Minerals Group

Greenland Minerals &

Energy Ltd.

Lyna s Molycorp Minerals LLC Rare Eleme nt

Resources Ltd.

Principal Mine(s) Steenkam pskraal Kvanefjeld Mt. Weld Mt. Pas s Bear Lodge

Location South Afr ica Greenland Minerals &

Energy Ltd.

Austra lia Uni ted Sta tes Wyom ing , Unite d State s

Website w w w .gw mg.ca w w w .ggg.gl w w w . lynascorp.com w w w .molycorp.com raree lementresources.comTicker TSXV: GWG,

OTCQX: GWMGF

ASX: GGG ASX: LYC (prep arin g an IP O) TSXV: RES

Large private Investors 61% Greenland M&E

Ltd; 39% Westrip

Holdings Ltd

Resource Capital Funds,

Pegasus Capital

Adviso rs, Tra xys NA

Market Cap., million$ 48 106 927 n/a 94

Production Plan

tons per year (tpa) 2,500 n/a

11,000 in 2011;

22,000 in 2013 20,000 n/a

Est Production Start 2012 2015 2011 2012 n/a

Ore Type Uranium & Zinc by-

product

Mo na zi te B as tn ae si te C ar bo na ti te d ep os ite

with Bastnaesite

Ore Grade 13.61% 1.07% 9.70% 9.20% 4.07%

Resource, Mt 0 .23 457 12 20 9.8

REO contained, Mt 0.03 4.89 1.16 1.84 0.40

Rare Earth Analysis, %

LREE's La 21.67 27.50 25.60 33.20 29.30

Ce 46.67 42.00 45.74 49.10 45.00

Pr 5.00 4.20 5.42 4.30 4.80

Nd 16.67 12.90 18.62 12.00 16.80

Sm 2.50 1.60 2.44 0.80 2.00

HREE's Eu 0.08 0.10 0.55 0.12 0.40

Gd 1.67 1.10 0.97 0.17 0.80

Tb 0.08 0.20 0.09 0.00 0.10

Dy 0.67 1.10 0.16 0.00 0.20

Y 5.00 7.70 0.00 0.00 0.50

Other 0.00 1.40 0.41 0.31 0.00

There are 9 properties listed from 8 companies.

Note: This list is not all-inclusive, but does represent the most publicized mine efforts.

For example, little information is currently available for additional functioning or near-functional mine locations such as that in Kazakhstan.

The Kazakhstan operation is a JV between Sumitomo Corporation andKazAtomProm, the Kazakh Atomic Company. The JV is planning to produce 15,000tons per year by 2015 utilizing an existing facility in Ulba which is owned byKazAtomProm.

In summary: there is downside risk in the output numbers due to development takinglonger than planned and there is upside potential from properties not listed.


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10 Steps to Rare Earth Production

The Challenges of Meeting Rare Earths Demand in 2015, Dudley Kingsnorth, TREM 10, Washington, D.C. March 18, 2010Updated by S. Constantinides April 28, 2010

STEP 1 STEP 2 STEP 3 STEP 4 STEP 5 STEP 6 STEP 7 STEP 8 STEP 9 STEP 10

Prove Process EIS BFS & Construction

Resource Defined Beneficiation Extraction Separation Approval Funding & Start-up

Mt Weld

(Lynas)

Mt Pass

(MolycorpExpansion)

Steenkampskraal

(GWMG)

Dubbo

(Alkane)

Nolans

(Arafura)

Nechalacho

(Avalon)

Hoidas Lake

(GWMG)

Bear Lodge

(Rare ElementResources)

Kvanefjeld(GreenlandMinerals & Energy

PILOT PLANT(S)Pre-Feasibility

Study

Lettersof Intent

(LOI)

Dudley Kingsnorth has worked with the mining industry for many years andsummarizes the mine development process into these 10 steps.

The entire process is reported to require at least ten and possibly as many as 20years.

Only Lynas (Mt Weld, Australia) and Molycorp (Mountain Pass, California) are close tosupplying rare earth oxides in substantial quantities.

Steenkampskraal will also come on line quickly, but will be limited to about 2500 tonsper year, about 6% of the combined Mt. Pass and Mt. Weld output.

Molycorp and Great Western plan to also produce RE metals and magnet alloys theadvertised Mine-to-Magnets strategy.

Dubbo refers to the Dubbo Zirconium Project (DZP) where the REOs will be a by-product of zirconium, hafnium and other refractory metal mining.

Kvanefjeld is reputed to be a huge deposit, but will take several years to bring tooperation.


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Positive Statements Regarding REE Supply

Dudley Kingsnorth: The Outlook for 2015 China will not starve the ROW of rare earths

Balance [among rare earths] will still be an issue

Cindy Hurst, US Army Foreign Military Studies Office The future of rare earth elements is not necessarily bleak. It

does, however, require careful analysis and monitoringAccording to the USGS, there are sufficient reserves of rareearth elements to sustain global consumption needs formany years. The challenge, though, is in finding these andputting into place the required infrastructure and proceduresquickly enough while also ensuring the environment is notdamaged.

There has been much negative hype about the availability of rare earths.

Here are a few comments that lean to the positive side.

Clarification: when Dudley refers to balance, we believe he means especially the useof HREEs such as dysprosium relative to the availability of neodymium.


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Positive Statements Regarding REE Supply

David Sandalow, Assistant Secretary for Policy& International Affairs, US Depart of EnergyMarch 17, 2010To proactively address the availability of rare earths and otherstrategic materials required for the clean energy economy, we musttake a three-part approach:

1) globalize supply chains for strategic materialstake steps toencourage extraction, refining and manufacturing here in theUnited States

2) develop substitutes.

3) promote recycling, re-use and more efficient use

I am today announcing that the Department of Energy will develop itsfirst ever strategic plan for addressing the role of rare earth and other

strategic materials in clean energy technologies.

Our challenge in the supply industries will be adding capacity as quickly as demandrises.

That requires access to capital and a willingness to make long-term investments.

Encouragement of government representatives in support of these activities will be

helpful.


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Raw Material Pricing: Nd, Pr, Sm

Selling Price of Rare Earth M etalsChina Market

0

10

20

30

40

50

60

Ja n-0 1 Ja n-0 2 Jan -03 Jan -04 Ja n-0 5 Jan -06 Jan -07 Ja n-0 8 Ja n-0 9 Jan -1 0

US$perkg

NdPr

Sm

The published prices for Nd and Pr track closely as they can both be used in neomagnets and will remain in supply balance.

Samarium was more expensive than neodymium prior to 2005 because availablesupplies were totally consumed.

Since 2005, mining has been scaled to supply neodymium. Samarium has been in excess and the lower price is in response to the need to sell

rather than stockpile it.

Today samarium metal is half the price of neodymium.

Moderate increases in the use of SmCo magnets can be tolerated without causing aprice spike in Sm.

We estimate between 3 and 5 times the current amount of SmCo could bemanufactured so that the magnet rare earths remain in balance.


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Raw Material Pricing: Selected Rare Earths

Selling Price of Rare Earth M etalsChina Market

0

50

100

150

200

250

300

Jan -0 1 Ja n-0 2 Ja n-0 3 Ja n-04 Ja n-05 Jan -0 6 Ja n-0 7 Jan-0 8 Jan -0 9 Ja n-10

US$perkg

DyNd

Pr

Sm

When we add dysprosium to the chart

After a brief respite due to the recession, demand and possible speculation are oncemore driving up the prices of rare earths, especially for dysprosium.

Dysprosium is less prevalent than Neo and is currently only available in quantity from

the ionic clays of southern China. Mining of these clays has been environmentally problematic.

Dysprosium is in increasing demand due to use in alloys for wind power and hybridvehicles.


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Raw Material Pricing: Cobalt

Cobalt Pricein Current USD per kg, 99.8%

0

20

40

60

80

100

120

Ja

n-

00

Ja

n-

01

Ja

n-

02

Ja

n-

03

Ja

n-

04

Ja

n-

05

Ja

n-

06

Ja

n-

07

Ja

n-

08

Ja

n-

09

Ja

n-

10

Date

$/kg

Another key ingredient is cobalt.

Cobalt is used in SmCo magnets, making up between 45 and 65% of the formulation(by weight).

It is also used in many NdFeB magnet grades at 1 to 15% to improve the high

temperature capability, improve corrosion resistance and reduce reversibletemperature coefficients of induction.

It is an important constituent of Alnico magnets representing 10 to 38% by weight ofthose materials.

It is also used in Fe-Co soft magnetic materials at close to 50%.

Cobalt is mined around the world and is often obtained from the process stream afternickel has been refined from ore.

It has many uses besides magnet materials. A wealth of information regarding cobaltcan be found at the Cobalt Development Institute website (http://www.thecdi.com).

Importantly, it is not expected to be in short supply for the foreseeable future.


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Agenda




In addition to all the other issues surrounding supply and demand is the issue ofpatent coverage and licensed suppliers of neo alloys and magnets.


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NdFeB Patent Status: Neomax

There are two remaining patents on the basic technology with the more important onebeing Hitachis 651 patent coverage for which does not end until July 2014.

While one might argue that the patent should not have issued, it has and the ITC hassupported its legitimacy.

Product manufactured in a country not covered by patents (non-PCT country) may notbe imported into a country still covered by the patent(s) unless the magnet is made bya licensed manufacturer with permission to sell into the target country.

PCT stands for Patent Cooperation Treaty. Further information on this subject can befound at: http://www.uspto.gov/web/offices/pac/mpep/documents/appxt.htm and athttp://www.wipo.int/pct/en/


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Neo Patents and Licensees

Hitachi licenses for the manufacture of neo alloy and magnets

China: 5 licensees Japan: 3 licensees Germany: 2 licensees USA: No licensed manufacturer currently in the USA

651 patent end date: July 8, 2014 Hitachi has numerous additional patents that continue past 2014 Companies licensed to Hitachi will continue to have a technological edge

As the 651 patent end date approaches we see ever increasingamounts of unlicensed product in the USA Arnold is committed to purchasing only licensed material Many companies are promoting unlicensed material as licensed Unlicensed material can come from reputable or unreliable sources:

caveat emptor

http://www.hitachi-metals.co.jp/pdf/pi20070401ec.pdf

Even after the expiration of the key patent in four years, there are numerous otherpatents representing improvements to the technology.

Hitachi alone claims over 615 patents related to neo magnets with additional patentsissuing regularly.

Companies may be well advised to retain licensing to take advantage of the additionalHitachi expertise.


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Magnet Material R&D

Past 24 years R&D Focus has been on

Gaseous (Nitrogen) interstitials, e.g. SmFeN Exchange-coupled Neo with Fe3B (Philips) or alpha-Fe (Magnequench)

Enhanced Ferrites using Co and REEs (esp. Lanthanum)

Anisotropic bonded neo powders (e.g. Mitsubishi, Magnequench, Aichi,and Ames Laboratory)

Current efforts Nano-technology to create modified properties

Nano-technology to create new phase relationships including reducedor RE-free compositions

Review of existing materials for selective improvement throughcomposition or structural modifications: Alnico, FeCrCo, MnAlC

Combinatorial (computer aided) approach to formulate promising

compositions

Every significant manufacturer has been and continues to engage in R&D forimproved magnetic materials.

This list is incomplete as many programs are confidential.

It is over ten years since CEAM (Concerted European Action on Magnets) completed

its assessment of most likely new magnet compositions & technologies and we arestill awaiting a breakthrough along any of the promising alternatives.

Because of the dissolution of the US magnet industry, the bulk of magnetics researchis now taking place in China and Japan.

Expansion of R&D efforts in the USA is another avenue for government stimulus toindustry, universities and research laboratories.


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Summary

Although rare earth materials remain in tight supply, there iscurrently no shortage being forecast

There will be increasing pressure by China to consume rareearths domestically thus supplying assemblies or finishedproduct rather than the rare earth elements or alloys

Metal and alloy pricing will continue to rise

Continued development of alternative material sources, such asMolycorp, Lynas, Avalon Ventures, Great Western and RareEarth Resources, will help stabilize the market

Ferrite magnets will continue to be an important material due towide availability and lower cost

Both SmCo and Alnico may see renewed interest for selectedapplications

In summary then

No expected shortage of rare earths - - barring a greater than forecast rapid run-up indemand or disruption of the supply chain.

China needs to add 300 million new jobs in the next 10 years. They have to manage

domestic industry in support of job creation and will be under pressure to retain rareearths within country.

The west needs to develop its own sources of key raw materials.

Timing for this development is key to avoiding short-term or sporadic shortages.

Metal price increases will reflect normal inflation plus the supply-demand balance withthe possibility of speculative trading.

Use of alternate materials should be considered both from an engineering standpointand supply chain management oversight.


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Rare Earth Materials - - How Scarce Are They_100711_update(Autosave)

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