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 3/13/12
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Introduction to Rare Earths • 17 total • Rare earth Misnomer • Also Sc and Y • Light-Heavy • radioactivity typical around deposits (Thorium)
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Light Rare Earths (LRE’s)
IVEC 2010
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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IVEC 2010
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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 Crush into ~ 200 - 500 µm
Raw Materials Sm, Co, Fe,Cu, Zr (2:17) Sm, Co (1:5)
Induction Melting
Crushing
Ball milling or Jet milling to ~ 2-5 µm
Machining
Magnetizing & Testing
Sintering, Grinding, lapping, honing, Solution and Heat treatment Or wire EDM Pressing
Abundance of Rare Earths •
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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).
Source; U.S. Geological Survey Fact Sheet 087-02
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Global Metal Production 2008 - Record Year Item Raw Steel Pig Iron
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2008 Mine Prod. (Metric Tonnes) 1,360,000,000 958,000,000
Item
2008 Mine Prod. (Metric Tonnes)
Uranium (2007)
41,279
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
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-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 Courtesy: Jack Lifton 11 Â
-Increase use of periodic table of elements -Semiconductors24 plus new elements used in 2000 and beyond -11.3 Tons/year per person nonfuel minerals -Careful with stats
Cri(cality Matrix (US Na(onal Academies, 2008) 3/13/12
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
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US is very dependent of foreign supply of Rare earth and other minerals 3/13/12 Â
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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 Source -‐ US Geological Survey 3/13/12
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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 5/18/2010
IVEC 2010
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China Dominates Magnet Materials WW Total Market Size $7B 2010, $15B by 2020
NdFeB magnets 75% CHINA
Rare Earth Oxide Ore production 97% Rare Earth pure Metals nearly 100% 5/18/2010 3/13/12 IVEC 2010
Japan, US, European producers close plants, move production
Approx ½ WW Alnico & SmCo production
Hard ferrites 85+ % 16
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 3/13/12
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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 •
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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
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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 • 3/13/12 What will export quotas be for 2011? First half of 20110 indicated21 11% reduction from 2010.
Rare Earth Supply-Demand
Source: Industrial Minerals Company of Australia 3/13/12 Â
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Rare Earth Prices -Fe, Co, Tb, Ce, Au, Re price comparisons -REE price disparities ($3/ kg-$500/kg pre July 8, 2010, $10-12/kg avg.)
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Forecast Global Demand for Individual Rare Earths in 2014 (±15%) (Im)balance of Supply-Demand Rare Earth Oxide Lanthanum Cerium Praseodymium Neodymium Samarium Europium Gadolinium Terbium Dysprosium Erbium Ygrium Ho-‐Tm-‐Yb-‐Lu 3/13/12 Total
Demand REO Tonnes 51,050 65,750 7,900 34,900 1,390 840 2,300 590 2,040 940 12,100 200 180,000
Supply/Produc>on % REO Tonnes % 28.40% 54,750 26.90% 36.50% 81,750 40.20% 4.40% 10,000 4.90% 19.40% 33,000 16.30% 0.80% 4,000 2.00% 0.50% 850 0.40% 1.30% 3,000 1.50% 0.30% 350 0.20% 1.10% 1,750 0.90% 0.50% 1,000 0.50% 6.70% 11,750 5.70% 0.10% 1,300 0.50% 100% IVEC 2010 203,500 100.00%
- Air Products O2, N2 -steel -Reduce use of higher demand -Increase use of lower demand (Ce, Sm) – unsold material = cost, wildcard -Thorium?
Source: Dudley J Kingsnorth IMOCA 2009
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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
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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 3/13/12 • Open pit, surface mining
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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) 3/13/12
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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? • 3/13/12 Can capital markets fix problems alone?
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Molycorp Minerals LLC • • • • • • •
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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 30 Efficiencies, lower costs
Lynas Corporation • • • • • • • • • •
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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 3/13/12
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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 3/13/12
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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 3/13/12
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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
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US Magne(c Materials Associa(on 6 Point Plan 1. 2. 5. 6. 7. 8.
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Establish a baseline - Studies by DOE, DOD, GAO Stockpile – DLA procurements Ensure fair trade – USTR DOE led grant and loan guarantee for US mining and refining operations Defense critical components support -Defense Production Act programs 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
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Questions Electron Energy Corporation 924 Links Avenue Landisville, PA 17538 (717) 898-2294
Peter C . Dent
(717) 459-‐1001 direct (610) 349-‐5525 cell pcd@electronenergy.com
www.electronenergy.com www.usmagnetmaterials.com 3/13/12
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