Rare Earth Materials Supply Chain
12 January 2011
Peter C. Dent Electron Energy Corporation
924 Links Avenue, Landisville, PA 17538 www.electronenergy.com
Outline • Introduction & Applications • Context • Production Issues & Opportunities • Government Activities • Summary
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Introduction to Rare Earths
• 17 total • Rare earth
Misnomer • Also Sc and Y • Light-Heavy • radioactivity
typical around deposits (Thorium)
3 IVEC 2010 5/18/2010 Light Rare Earths (LRE’s)
Heavy Rare Earths (HRE’s)
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Rare Earths- Defense Technology Backbone
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Rare Earths - Green Technology’s Backbone
–
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Applica(ons
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….Applica(ons -‐-‐well over a 1000 in total
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Rare Earth Value Chain RE Magnets
RE Magnet Alloys
Pure RE Metals
Individual RE Separation (oxides, carbonates, etc.)
Mixed Concentrates
Mining- Rare Earth Ore Production (all RE’s)
Magnet Processing
Magnetizing & Testing
Induction Melting
Ball milling or Jet milling to ~ 2-5 µm
Sintering, Solution and
Heat treatment
~ 200 - 500 µm
Crush into
Pressing
Grinding, lapping, honing, Or wire EDM
Machining
Raw Materials Sm, Co, Fe,Cu, Zr (2:17)
Sm, Co (1:5)
Crushing
Abundance of Rare Earths • Figure 4. Abundance (atom
frac>on) of the chemical elements in Earth’s upper con>nental crust as a func>on of atomic number. Many of the elements are classified into (par>ally overlapping) categories: (1) rock-‐forming elements (major elements in green field and minor elements in light green field); (2) rare earth elements (lanthanides, La–Lu, and Y; labeled in blue); (3) major industrial metals (global produc>on >~3x107 kg/year; labeled in bold); (4) precious metals (italic); and (5) the nine rarest “metals”—the six pla>num group elements plus Au, Re, and Te (a metalloid).
10 3/13/12 Source; U.S. Geological Survey Fact Sheet 087-02 10
Item 2008 Mine Prod. (Metric Tonnes)
Item 2008 Mine Prod. (Metric Tonnes)
Raw Steel 1,360,000,000 Uranium (2007) 41,279
Pig Iron 958,000,000 Lithium 27,400
Aluminum 39,700,000 Silver 20,900
Copper 15,700,000 Cadmium 20,800
Manganese 14,000,000 Bismuth 5,800
Zinc 11,300,000 Boron 4,100
Lead 3,800,000 Gold 2,330
Nickel 1,610,000 Selenium 1,590
Magnesium 808,000 Zirconium 1,360
Strontium Materials 512,000 Tantalum 815
Molybdenum 212,000 Yttrium (2001) 600
Antimony 165,000 Indium 568
Rare Earths (mixed, oxides)
124,000 Palladium 206
Cobalt 71,800 Platinum 200
Vanadium 60,000 Rhenium 45
Niobium (Columbium) 60,000 Rhodium 30
Tungsten 54,000 Hafnium 25
Global Metal Production 2008 - Record Year
Courtesy:
Jack Lifton 3/13/12 11
-A steel world (90%)
-Recycling effectiveness of large vs. small,
mid size -expectations
-Large users volume have
mature recycling
infrastructure
-Rare metals have high price
and big incentives
Cri(cality Matrix (US Na(onal Academies, 2008) This matrix was devised by the U.S. Na(onal Academies and published in 2008 in Minerals, Cri(cal Minerals, and the U.S. Economy (2008). The matrix preceded by a detailed explana(on of the conclusions from which it was created is (free) on the Internet at hQp://books.nap.edu/openbook.php?record_id=12034&page=165#p200140369960165001
-Increase use of periodic table of elements
-Semiconductors- 24 plus new elements used in 2000 and beyond
-11.3 Tons/year per person non-fuel minerals
-Careful with stats
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US is very dependent of
foreign supply of Rare earth
and other minerals
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Global RE Production
• China overcapacity drives out all other producers • Inner Mongolia 80% • Molycorp suspended operations 2002 • China National Offshore Oil Corp 2004 bid -UNOCAL • High risk for other producers to invest on added capacity
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Source -‐ US Geological Survey
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Strategic Economic Weaponry “Improve the development
and applications of rare earth, and change the resource advantage into economic superiority.” President Jiang Zemin 1999
“There is oil in the Middle East; there are rare earths in China. We must take full advantage of this resource.” President Deng Xiaoping 1992
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China Dominates Magnet Materials
WW Total Market Size $7B 2010, $15B by 2020
NdFeB magnets 75%
Rare Earth Oxide Ore production 97%
Rare Earth pure Metals nearly 100%
Hard ferrites 85+ %
Approx ½ WW Alnico & SmCo production
Japan, US, European producers close plants, move production
CHINA
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Chinese Rare Earth Elements Actions
• Chinese Ministry of Industry & Information Technology – Media firestorm over August 2009 suggestion to stop Tb, Dy, Y
exports – RFI for RE producer standards issued May 2010 - scale,
technology, resource utilization, environment (300,000 LREO Ton/year, 3,000 Tons/year HREO)
• Export quotas of REE’s traded among producers, adding to export price $20-45/kg
• Crackdown on illegal mining & exports (up to 30% or REE total production) – jail sentences imposed
• China Planning massive environmental clean up • Consolidation of production to perhaps just 3 vertically integrated
REE producers
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Chinese Rare Earth Elements Actions
• Chinese export quota impacts on price
– Average prices of REO ranged from $10 to $13 per kg in 2008 – June 2010 to January 2011 Sm metal from $21/kg to $100/kg – In China in 2009 so much excess SmO & CeO, dumping it away as
waste – Dual price structure of Inside & outside China pricing – Prices in China still low for Sm and Ce (Sept 29, 2010 Asian Metal
Pages Sm metal inside China $16.96/kg export $41/kg, CeO $3.99 internal China price $39/kg export price)
– Reference prices, e.g. Metal pages, Asian Metal Pages, are surveys of transactions and are typically low compare to real prices paid
– No London Metals Exchange or equivalent for pricing
Chinese Rare Earth Elements Actions
• Export taxes increase to 25% from 10% in 2008 (US Import duty is 5%) • Suggest potential depletion of HRE’s in China in short term • China producers in 2005 established $100/ton fine for violations to price
minimums • Trying to increase prices • Want pricing sufficient to afford environmentally responsible Rare Earth
Element (REE) industry • Rare earth metal buybacks from Chinese customers mandated at sub
market level in 2008 • China views downstream implications of price increases having positive
effects • Rise of “Indigenous Innovation” –i.e. manufacturing in China must also bring
in related foreign IP to allow access to Chinese market and raw materials
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China RE Export Quotas • July 2010 China reduces export
quota by – 72% for H2 2010 – 40% for CY 2010
• CY 2010 quota 30,250 metric Tons • 7,979 mT H2 2010 vs. 28,419 mT
H2 2009 • Chinese exporters may sell more
HRE’s at high $/kg vs. Ce, La, Sm, Gd
• Dramatic price increases seen of 5-10X on LRE
• ROW demand 50-55 thousand mT • Short term Supply access issues
Implemented 30,250 mT 2010 & 14,500 mT H1 2011 3/13/12 20
Current China Rare Earth Trade Ques(ons
• How does China justify Export Quotas? • Why does China have export duties on rare earths? Export
duties & quotas not allowed under China’s WTO accession protocol. Currently US Trade Representative has case on bauxite, manganese, coke, etc. regarding export quotas and taxes. USTR potential action on green technology which would include rare earths.
• Japanese REE users appeared to be cut off from supply in late 2010.What happened? –for about two months Japanese firms were cut off from receipt of rare earth maybe they are s in an undeclared embargo for political reasons.
• Were US & EU REE users cut off too?- EEC believes export quotas for 2010 were essentially used up and nothing was available until January 2011 besides sporadic, politically motivated, opportunistic or black market shipments
• What will export quotas be for 2011? First half of 20110 indicated 11% reduction from 2010. 3/13/12 21
Rare Earth Supply-Demand
Source: Industrial Minerals Company of Australia
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Rare Earth Prices
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-Fe, Co, Tb, Ce, Au, Re price comparisons
-REE price disparities ($3/kg-$500/kg pre July 8, 2010, $10-12/kg avg.)
Rare Earth Oxide Demand Supply/Produc>on REO Tonnes % REO Tonnes %
Lanthanum 51,050 28.40% 54,750 26.90% Cerium 65,750 36.50% 81,750 40.20% Praseodymium 7,900 4.40% 10,000 4.90% Neodymium 34,900 19.40% 33,000 16.30% Samarium 1,390 0.80% 4,000 2.00% Europium 840 0.50% 850 0.40% Gadolinium 2,300 1.30% 3,000 1.50% Terbium 590 0.30% 350 0.20% Dysprosium 2,040 1.10% 1,750 0.90% Erbium 940 0.50% 1,000 0.50% Ygrium 12,100 6.70% 11,750 5.70% Ho-‐Tm-‐Yb-‐Lu 200 0.10% 1,300 0.50% Total 180,000 100% 203,500 100.00%
Forecast Global Demand for Individual Rare Earths in 2014 (±15%) (Im)balance of Supply-Demand
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Source: Dudley J Kingsnorth IMOCA 2009
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- Air Products O2, N2 -steel
-Reduce use of higher demand
-Increase use of lower demand (Ce, Sm) – unsold material = cost, wildcard
-Thorium?
Rare Earth Mineral Production • Expensive $100-500 million site investments • $30,000- $40,000 capital per metric ton annual output • Individual Buyer- Seller Transactions (no –exchanges,
e.g. LME) • $1.5 billion current market (at pre- July 2010 prices) • 100 plus potential mining sites for REE’s being
developed or promoted for investment worldwide • 5-6 new non-Chinese mining operations will likely need
to be developed • Lots of investment is flowing to major REE producers –
well funded 3/13/12 25 25
Rare Earth Mineral Production • Get all 17 REE's together in differing
concentrations • Balance Supply-Demand (overall- elementally) • Project site specific geology – implies site
specific processes • Processes scale up, start & shut down very
poorly • Significant technology risks in separations,
metals conversion • Art to design and operate separation systems • Open pit, surface mining 3/13/12 26
Rare Earth Mineral Production • Water, power, chemicals (HCl-NaOH) – key
operating costs • Chemically similar - difficult to separate • Very limited recycling • Shortage of RE experts • Long ROI payback times • LRE 98-99% of total REE • Large price/demand disparities (Ce vs. Tb)
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Non- Chinese Rare Earth Mineral Production
• Numerous potential sites • Various stages of development • Long development times (10 years typical from start) • LRE – HRE concentrations • Established firms, junior mining, extensions of other
mining sites (U, Th) • Mine-Market strategies • All majors adding RE metal production • All trying to compress schedules to go on line • Prices will remain high especially Tb, Dy, Y, Nd
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Core Non Chinese Production Issues • Capital acquisition challenges • “Rare Earth” sells stock– credibility issues • Small-medium mining operations • What will be impact of new RE applications
(wind power NdFeB vs. induction machines vs. superconducting, Li vs. NiMH batteries, lighting florescent vs. LED, others to be invented) ?
• Who will make it to market profitably? • What will China do? • Can capital markets fix problems alone? 3/13/12 29
Molycorp Minerals LLC • Mountain Pass, CA • Former producer • Funding, re-start • 20,000 (40,000 T potential)
capacity • 2 T/day NdO • July 2010 IPO raised more than
$350million required • Stock up 3-4X since IPO, market
cap approx $5 B • RE on-site metals • NdFeB magnets • 9.2% REO (1% HRE) • Online late 2012 • Efficiencies, lower costs 3/13/12 30
Lynas Corporation • Mt. Weld, Australia • Partially developed producer • In construction • 22,000 T annual capacity • $450million private placement
(China bid) • Well funded, stock prices high • RE metals Malaysia • 9.7% REO (3% HRE) • Online mid 2011 at 11,000T/yr • Efficiencies, low costs
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Great Western Minerals Corporation
• Hodias Lake & other Canadian properties
• Online post 2014 • Process definition • 3-5,000 T annual capacity • RE metals, alloys MI, UK • 2.6% REO (7% HRE) • Lower capital investments
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Great Western Minerals Corporation
• Steenkampskraal, South Africa • 5000 T annual capacity • Restart January 2013 • Prior mining, permitted for
nuclear materials • RE metals, alloys MI, UK • 13kg/tonne HRE –very high • Lower capital investments
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Avalon • Nachalacho Northwest
Territories, Canada • 3-5,000 T annual capacity • Process definition • RE metals locally • 2.1% REO (20% HRE) • Online post 2014
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Arafura Resources Ltd • Nolans, Alice Springs,
Australia • 2014 start? • Pilot plant, LOI • 20,000 tons annually • 2.8% REO (4%HRE) • Remote
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US Rare Earths, Inc. • Lemhi Pass Idaho,
Montana USA • Early stage, USGS • Up to 4.7% REO
(1%HRE) • Thorium presence • Production 2016-2018
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Rare Element Resources • Bear Lodge,
Wyoming, USA • Defining processes • 4.1% REO
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Other sources • Greenland Mineral & Energy, Kvanefield
– 1.0 REO (14% HRE) – Uranium issues
• Orissa India 10,000T/yr (Toyota) • Ulba Kazakhstan HREE (Sumitomo) • Dong Pao, Vietnam (Toyota, others)
– 6.9% REO 3/13/12 38
US Magne(c Materials Associa(on 6 Point Plan
1. Establish a baseline - Studies by DOE, DOD, GAO 2. Stockpile – DLA procurements 5. Ensure fair trade – USTR 6. DOE led grant and loan guarantee for US mining and
refining operations 7. Defense critical components support -Defense
Production Act programs 8. Innovation, training and workforce development
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Government Actions • Creation of an interagency
working group • “RESTART” legislation
introduced by Rep. Coffman & Sen. Murkowski for rare earth supply chain support
• H.R. 6160 passed • Studies DOE, DOD IP, others • White House OSTP
Interagency effort • Bills consolidated 2011
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Non-‐Chinese, US Produc(on -‐ Vital • Supply Chain Security = National & Technology
Security • Chinese domestic consumption of REE's to outpace
domestic supply within the next several years & perhaps become a net importer
• RE supply chain needs government help • China uncertainty, vulnerability • Critical US defense material supplier • US Needs an Industrial Policy
Can we avert a Rare Earth crisis? 3/13/12 41
Peter C . Dent (717) 459-‐1001 direct (610) 349-‐5525 cell [email protected]
Electron Energy Corporation 924 Links Avenue Landisville, PA 17538 (717) 898-2294
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www.electronenergy.com www.usmagnetmaterials.com
Questions
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