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Thread: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

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    Default World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports
    Beijing is drawing up plans to prohibit or restrict exports of rare earth metals that are produced only in China and play a vital role in cutting edge technology, from hybrid cars and catalytic converters, to superconductors, and precision-guided weapons.

    A draft report by China's Ministry of Industry and Information Technology has called for a total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium. Other metals such as neodymium, europium, cerium, and lanthanum will be restricted to a combined export quota of 35,000 tonnes a year, far below global needs.

    China mines over 95pc of the world's rare earth minerals, mostly in Inner Mongolia. The move to hoard reserves is the clearest sign to date that the global struggle for diminishing resources is shifting into a new phase. Countries may find it hard to obtain key materials at any price.

    Alistair Stephens, from Australia's rare metals group Arafura, said his contacts in China had been shown a copy of the draft -- `Rare Earths Industry Devlopment Plan 2009-2015'. Any decision will be made by China's State Council.

    "This isn't about the China holding the world to ransom. They are saying we need these resources to develop our own economy and achieve energy efficiency, so go find your own supplies", he said.

    Mr Stephens said China had put global competitors out of business in the early 1990s by flooding the market, leading to the closure of the biggest US rare earth mine at Mountain Pass in California - now being revived by Molycorp Minerals.

    New technologies have since increased the value and strategic importance of these metals, but it will take years for fresh supply to come on stream from deposits in Australia, North America, and South Africa. The rare earth family are hard to find, and harder to extract.

    Mr Stephens said Arafura's project in Western Australia produces terbium, which sells for $800,000 a tonne. It is a key ingredient in low-energy light-bulbs. China needs all the terbium it produces as the country switches wholesale from tungsten bulbs to the latest low-wattage bulbs that cut power costs by 40pc.

    No replacement has been found for neodymium that enhances the power of magnets at high heat and is crucial for hard-disk drives, wind turbines, and the electric motors of hybrid cars. Each Toyota Prius uses 25 pounds of rare earth elements. Cerium and lanthanum are used in catalytic converters for diesel engines. Europium is used in lasers.

    Blackberries, iPods, mobile phones, plams TVs, navigation systems, and air defence missiles all use a sprinkling of rare earth metals. They are used to filter viruses and bacteria from water, and cleaning up Sarin gas and VX nerve agents.

    Arafura, Mountain Pass, and Lynas Corp in Australia, will be able to produce some 50,000 tonnes of rare earth metals by the mid-decade but that is not enough to meet surging world demand.

    New uses are emerging all the time, and some promise quantum leaps in efficiency. The Tokyo Institute of Technology has made a breakthrough in superconductivity using rare earth metals that lower the friction on power lines and could slash electricity leakage.

    The Japanese government has drawn up a "Strategy for Ensuring Stable Supplies of Rare Metals". It calls for `stockpiling' and plans for "securing overseas resources'. The West has yet to stir.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    There must be more mines for this. There are lots of mountains on this planet.
    "Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the gray twilight that knows neither victory nor defeat."
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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    China's Threat Revives Race for Rare Minerals
    September 25, 2009

    A Chinese threat to halt exports of rare minerals — vital for high-performance electric motors in wind turbines, hybrid cars and missiles — appears to have backfired.

    With control of more than 99 percent of the world's production of these minerals, China could try to use a ban to force other countries to buy the crucial motors for these high-tech end products, instead of just the minerals, directly from China.

    But other governments and businesses reacted quickly as word of the proposed ban spread late this summer.

    The Chinese threat has touched off a frenzied international effort to develop alternative mines, much as the 1973-74 Arab oil embargo's repeated increases in oil prices prompted a global hunt for oil reserves.

    In Washington, the House and Senate amended their defense budget authorization bills to require the Defense Department to review the military's almost complete dependence on Chinese supplies of rare-earth minerals. In Australia, the government blocked a Chinese state-owned company on Thursday from acquiring a majority stake in a large mine being developed for these minerals, also called rare earths.

    Meanwhile, Wall Street is financing exploration as the share prices of rare-earths mining companies soar — as much as sevenfold since March.

    "Because of China's focus on maximizing the benefits of its rare-earth resources for its own industry, there is now a focus on identifying alternatives elsewhere," said Dudley J. Kingsnorth, a rare-earths production consultant in Perth, Australia.

    Unleashing funding elsewhere has undercut China's ability to take big stakes easily in new mines.

    "You couldn't borrow 10 cents from anybody in the financial community" to develop a rare-earths mine just three months ago, said James B. Engdahl, the chief executive and president of the Great Western Minerals Group, a rare-earths mining and processing company in Saskatoon, Saskatchewan. "We get inundated with calls offering financing these days."

    International pressure — including the possibility that the plan violated World Trade Organization rules — has forced the Chinese ministry drafting the ban to call for further review.

    The developer of the largest rare-earths mine in Australia, the Lynas Corporation, did not have the cash to finish its mine and processing facilities after Western investors deserted its bond offering last winter. So Lynas agreed to sell about 52 percent of the company to the state-owned China Nonferrous Metal Mining Company on May 1.

    This month, the Foreign Investment Review Board of Australia demanded that the Chinese company take a smaller stake and accept fewer seats on the board under any deal; Lynas announced on Thursday that China Nonferrous had refused and had instead withdrawn from the transaction, valued at $220 million.

    Lynas said in a statement that it was "well advanced in finalizing interim funding."

    Nicholas Curtis, the executive chairman of Lynas, said in an interview on Friday that financing opportunities had improved in recent months, declining to elaborate because of a voluntary five-day suspension in its stock trading as the company reviews its options.

    Mr. Curtis would not completely rule out the possibility of a transaction with another Chinese company.

    But recent Australian government policies "don't encourage you to go down that pathway," he said.

    Patrick Colmer, the executive member of the investment review board, said in a speech on Thursday that the government wanted foreign state-owned companies to take stakes of less than 50 percent in small or undeveloped Australian mines and less than 15 percent of large mining operations.

    Investors had indicated over the summer that the Chinese offer was too low.

    Lynas's stock closed at 25.7 cents (29.5 Australian cents) on April 28, the last trading day before China Nonferrous made its offer of 31.3 cents (36 Australian cents) for newly issued shares. Before the deal was scuttled, the stock traded much higher than the offer, closing at 78.3 cents (90 Australian cents) on Wednesday.

    Mr. Curtis defended the Chinese government's desire to limit exports of its own minerals, saying that domestic demand was rising so fast that China had a dwindling surplus to meet other countries' needs.

    Beijing officials have been silent on the collapse of the Lynas deal. But the foreign ministry on Thursday criticized the Australian defense department's decision to block a separate joint venture with a Chinese company for an iron ore mine under the path of missile tests.

    Jiang Yu, the foreign ministry spokeswoman, said that China was open to foreign investment and hoped other countries pursued similar policies, the official Xinhua news agency said.

    Still, China has not only prevented foreign investment in its mining sector, but also discouraged most private companies in China from doing so.

    In April, China's ministry of industry and information technology began circulating its plan for an export ban on rare-earth minerals, sending it to other Chinese ministries and showing it to a handful of Western industry officials. About three weeks ago, the ministry retreated and said further review was needed.

    China is likely to remain the dominant producer of rare earths for years to come because it takes up to 10 years to explore an ore discovery, obtain permits and build a mine.

    But Jack Lifton, a Detroit chemist who helped invent some of the early high-tech applications for the minerals in the 1970s, said Great Western might meet some demand by reopening a mine in South Africa. The mine supplied Britain's nuclear program with thorium, a slightly radioactive metal, until it closed in 1963. The mine has reserves of rare-earth minerals that were of little commercial value when it was in operation.

    While some of the 17 rare-earth elements are actually fairly common, the most sought-after elements for high-tech applications are indeed rare, like dysprosium and terbium.

    The South African mine may be able to supply some of these until larger mines can be developed in Canada and Australia, Mr. Lifton said.

    Mr. Engdahl said that with ample financing now available, Great Western hoped to reopen the South African mine in two years.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    Concern As China Clamps Down On Rare Earth Exports
    January 2, 2010

    Neodymium is one of 17 metals crucial to green technology. There's only one snag – China produces 97% of the world's supply. And they're not selling

    Britain and other Western countries risk running out of supplies of certain highly sought-after rare metals that are vital to a host of green technologies, amid growing evidence that China, which has a monopoly on global production, is set to choke off exports of valuable compounds.

    Failure to secure alternative long-term sources of rare earth elements (REEs) would affect the manufacturing and development of low-carbon technology, which relies on the unique properties of the 17 metals to mass-produce eco-friendly innovations such as wind turbines and low-energy lightbulbs.

    China, whose mines account for 97 per cent of global supplies, is trying to ensure that all raw REE materials are processed within its borders. During the past seven years it has reduced by 40 per cent the amount of rare earths available for export.

    Industry sources have told The Independent that China could halt shipments of at least two metals as early as next year, and that by 2012 it is likely to be producing only enough REE ore to satisfy its own booming domestic demand, creating a potential crisis as Western countries rush to find alternative supplies, and companies open new mines in locations from South Africa to Greenland to satisfy international demand.

    Amid claims that Beijing is using its rare earths monopoly as a tool of foreign policy, the British Department of Business, Industry and Skills said it was "monitoring" the supply of REEs to ensure China was observing international trade rules.

    Jack Lifton, an independent consultant and a world expert on REEs, said: "A real crunch is coming. In America, Britain and elsewhere we have not yet woken up to the fact that there is an urgent need to secure the supply of rare earths from sources outside China. China has gone from exporting 75 per cent of the raw ore it produces to shipping just 25 per cent, and it does not consider itself to be under any obligation to ensure supplies of rare earths to anyone but itself. There has been an effort in the West to set up new mines but these are five to 10 years away from significant production."

    After decades in which they were considered little more than geological oddities, rare earths have recently become a boom industry after the invention of a succession of devices, including iPhones and X-ray machines, which rely on their specific properties.

    Global demand has tripled from 40,000 tonnes to 120,000 tonnes over the past 10 years, during which time China has steadily cut annual exports from 48,500 tonnes to 31,310 tonnes.

    Worldwide, the industries reliant on REEs, which produce anything from fibre-optic cables to missile guidance systems, are estimated to be worth £3 trillion, or 5 per cent of global GDP.

    Beijing announced last month that it was setting exports at 35,000 tonnes for each of the next six years, barely enough to satisfy demand in Japan. From this year, Toyota alone will produce annually one million of its hybrid Prius cars, each of which contains 16kg of rare earths. By 2014, global demand for rare earths is predicted to reach 200,000 tonnes a year as the green revolution takes hold.

    Nearly all of China's supply of rare earths comes from a single mine near the city of Baotou, in Inner Mongolia. The remainder comes from small and sometimes illegal mines in the south of the country, leading to devastating pollution from the poisonous and sometimes radioactive ores.

    Environmentalists argue that this, coupled with widespread criticism of China's stance during the Copenhagen climate summit, adds to the need for a "plurality" of rare earth resources. One campaigner said: "There are legitimate questions over Beijing's control of these resources. Copenhagen showed they are not above putting national interest ahead of global efforts to curtail global warming."

    Once extracted and refined, the rare earth metals can be put to a dizzying range of hi-tech uses. Neodymium, one of the most common rare earths, is a key part of neodymium-iron-boron magnets used in hyper-efficient motors and generators. Around two tonnes of neodymium are needed for each wind turbine. Lanthanum, another REE, is a major ingredient for hybrid car batteries (each Prius uses up to 15kg), while terbium is vital for low-energy light bulbs and cerium is used in catalytic converters.

    In October, an internal report by China's Ministry of Industry and Information Technology disclosed proposals to ban the export of five rare earths and restrict supplies of the remaining metals. Beijing strenuously denied that the document was an accurate reflection of its strategy, saying it had no desire to reduce trade in rare earths. But The Independent understands that the level of demand in China means that supplies of at least two crucial REEs – terbium and dysprosium – are likely to be curtailed by as early as next year.

    Dr Ian Higgins, general manager of Birkenhead-based Less Common Metals, which specialises in rare earth products, said: "There is a threat that in the next 12 to 18 months, there might be some quite severe shortages of these rare earths. That is certainly going to impact those hi-tech green industries outside China."

    Both Western countries and China are already dashing to secure new sources of rare earths. Last year, Australian regulators imposed restrictions on the purchase of one of the country's richest rare earth mines, causing a Chinese company to walk away from a £400m deal to buy its operator.

    European and North American companies are meanwhile racing to open or re-open mines in Canada, South Africa and Greenland amid calls in the US for government-backed loans to secure supplies of some REEs which are used in the guidance systems of missiles and laser-guided munitions. Toyota has effectively bought its own rare earth mine in Vietnam by signing an exclusive supply deal.

    The Department for Business, Industry and Skills acknowledged the growing concern in Western capitals. A spokesman said: "We are monitoring the situation, particularly with regard to World Trade Organisation rules. We are working with UK industry to assess the long-term demand for strategically important resources, including rare earth elements."

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    Default China mineral dominance concerns U.S.

    China mineral dominance concerns U.S.

    By Laurie Ure, CNN



    The pit at CITIC Pacific Mining's Sino Iron project in the Pilbara region of Western Australia as seen on March 5

    STORY HIGHLIGHTS

    • China has secured 97 percent of the production of rare earth minerals, GAO says
    • GAO report describes China as a a "rapidly rising military and economic power"
    • United States has a rare earth mineral mine in southern California
    • GAO estimates rebuilding the U.S. rare earth industry could take up to 15 years


    Washington (CNN) -- China's dominant position in the production of rare earth minerals has long-reaching implications for the U.S. Department of Defense, according to a recent government report.

    The report from the Government Accountability Office was commissioned by Congress amid growing concerns that China's potential reduction on the supply of much-needed rare earth minerals could impact critical military uses.

    China has secured 97 percent of the production of these minerals, which are used in nearly every electronic device, cell phones, computer hard drives and guided missiles.


    "The longer we neglect this, the longer we don't take steps to counter this, the more it becomes a pressing problem," said Dean Chang, Research fellow at the Heritage Foundation's Center for Asian Studies.

    The minerals include ores, oxides, metals, alloys and semi-finished rare earth products and cannot be reproduced artificially. "It's not like the DOD can just say, 'OK, we won't use them,'" said Chang.

    There is widespread use of rare earth materials in defense systems, including precision-guided munitions, lasers, communication systems, radar systems, avionics, night vision equipment, satellites and more, according to the GAO.

    China has decreased output and increased export taxes on all its rare earth materials to a range of 15 to 25 percent, according to the report.
    It's not like the DOD can just say, 'OK, we won't use them'

    --Dean Chang, research fellow, Heritage Foundation's Center for Asian Studies

    RELATED TOPICS


    The defense industry's heavy reliance on these minerals has prompted Congress and Pentagon and to examine ways to mitigate should China continue to reduce its exports.

    House Armed Services Committee Chairman Ike Skelton, a Missouri Democrat, said he's planning a hearing to discuss the GAO report.
    Defense Department spokesman Dave Lapan said the Pentagon has been monitoring this issue for years, and is "looking at options to increase domestic availability of rare earth elements though developing new domestic sources, re-energizing previous domestic sources and transforming the national stockpile to include rare earth materials."

    The United States has a rare earth mineral mine in southern California, which is the largest non-Chinese mine in the world, but the GAO says the mine currently lacks the facilities to process the rare earth ore into finished components such as permanent magnets.

    Andrew Lubin spent 30 years importing and exporting Chinese metals and taught economics and export-import operations at the online American Military University. He said Chinese in-country demand has increased greatly in the last ten years.

    "They have a huge middle class that didn't exist 20 years ago," said Lubin. "It's not that they're trying to screw us. They need it for themselves."

    But Chang said, "The big step back for this is that the Chinese are taking a very broad-minded view of their national security and national influence. It's not just the number of their submarines or missiles, or even broad economic power. In this case China is using all of these things as tools to influence everybody, including us."

    But Chang said the GAO report is not all doom and gloom.

    "The GAO is not saying all is lost," he said. "You could re-establish a domestic industry, from mining through processing, but that's expensive and also that takes time."

    Rebuilding the U.S. rare earth industry could take up to 15 years, according to GAO estimates.

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    Default Re: China mineral dominance concerns U.S.

    It does? LOL really? Wonder why?
    Libertatem Prius!


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    Default Re: China mineral dominance concerns U.S.

    The mine in California should be opened and run as a national security imperative.

    That's one subsidy I could support.
    "Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the gray twilight that knows neither victory nor defeat."
    -- Theodore Roosevelt


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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    Went ahead and merged vector's new thread with a thread I had started a while back dealing with this same issue.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    China Is Winning the Rare Earths Race
    March 29, 2010

    What do my laptop LCD, your cell phone screen and our fiber-optic Internet feeds - the common devices through which I write, RealClearWorld publishes and you read this article - have in common? Each of them depends on minute bits of one or more of the 17 materials that collectively constitute the "rare earth" elements.

    Dysprosium, Yttrium, Europium and Neodymium are hardly household words, but it's no exaggeration to say our modern economy couldn't function without them. The CFL eco-bulb in my closet, the Prius in my neighbor's driveway, the vacuum cleaner in my - well, not sure quite where it is at the moment - all contain critical rare earth compounds.

    The same goes for our modern military: That Hellfire missile strapped to the Predator drone loitering far above the mountain passes of Af-Pak, just waiting for you-know-who to pop out of his cave entrance? Steered by magnets fashioned of rare earth elements. The Tomahawk cruise missile serving as a key sea-based element in our nuclear deterrent? Rare earths help give it its deadly accuracy. In the deep black defense world, imagine what the wizards at DARPA are working up with the help of rare earths.

    But it's new commercial uses that are driving a rapid demand spike in rare earths - a trend only temporarily suppressed by the global economic downturn: The wind turbines, solar panels and next-gen batteries that are at the core of the Green Energy movement. And there's a devilish dynamic at work: The more one set of researchers strives to decrease the amount of rare earths we need for a given function - the more another bunch thinks up new inventions that become viable with smaller traces of rare earths. Multiply those new uses across tens and hundreds of millions of cell phones, PDAs and whatever new device is destined to come off the drawing boards, and you get the picture. The world is going to need a lot more rare earth compounds than we're producing right now.

    Where will we get them? Look at a chart of rare earths production and consumption over the past 50 years, and two trends are immediately clear. The more rare earths the world has consumed, the fewer have been mined here in the United States. In 1985 - before the emergence of the public Internet and in the infancy of the laptop revolution - the U.S. produced half of the world's rare earths supply. By 2000, world production had more than doubled, while the U.S. share dropped below 10 percent.

    In 2002, U.S. rare earth production dropped to zero, with the shuttering of the lone rare earths mine in Mountain Pass, Calif. Today, 95 percent of all rare earths produced worldwide come from a single country: China.

    It's one thing when a monopolist uses its market advantage to extract a premium for its product. Consumers grumble, then pay up. But it's a different story when the sole supplier won't sell at any price, and that's where China is heading. Each year for the past half decade, China has tightened its export restrictions on rare earths, reserving production to feed its own roaring economy. In addition, China has set its sights on green energy manufacturing, using its near-monopoly on rare earths to require foreign companies seeking access to the elements to locate their factories in China.

    As if commercial considerations were not a concern enough, add a growing worry that rare earths may be a weapon in a canny game of resource-politik: In this scenario, China isn't solely interested in its own surety of supply, but is set on acquiring a resource-denial capability it could exercise - or merely threaten to - in the future. China would actively look to co-opt and control non-Chinese sources of rare earths. Case in point: Two promising rare earths projects in Australia. When the global downturn froze Western-sourced investment capital for both projects, Chinese firms came forward with ready cash. Australia's foreign investment authority allowed one investment - a minority stake - to go forward, but stopped the other sale, which would have provided the Chinese purchaser majority control.

    In some specialized corners of the U.S. national-security policy community, America's rare earths dependence is beginning to ring alarm bells. This month, The House of Representatives' Committee on Science and Technology held hearings on rare earths, listening to testimony from materials experts and the CEO of the U.S. company seeking to re-start the Mountain Pass mine. Congressman Mike Coffman has introduced a bill he calls RESTART -- the Rare Earths Supply-Chain Technology and Resources Transformation Act. It calls for $1.2 billion in funding to kick-start a U.S. rare earths resurgence - including the establishment of a U.S. Government rare earths stockpile.

    So will the U.S. fast-track domestic mine development and start stockpiling rare earths? Whether or not we will - China is. In February, the regional government in Inner Mongolia authorized the creation of a strategic reserve at the Baotou mine, source of nearly half the world's present production of rare earths.

    The clock is ticking. Some projections show China's domestic rare earths demand surpassing supply as early as 2012; optimists give us until 2015. And new mines done to modern standards take time to bring online - three to five years, in the case of rare earths projects. Given the current U.S. foreign policy agenda - already overfull with two wars, terror threats, a nuclearizing Iran, resurgent Russia and China-Google cyber-rattling - the last thing we need is a resource issue tossed onto the tinder pile. But the rare earths shortage is coming, ready or not.

    And rare earths may be only the beginning. As Congressman Bart Gordon noted during the House hearing: "According to the U.S. Geological Survey, there are 18 other minerals and materials where the United States is completely dependent on foreign sources."

    Nearly 20 years ago, Deng Xiaoping is reported to have prophesied: "There is oil in the Middle East. There are rare earths in China. We must take full advantage of this resource." We know how foreign dependence on oil affected U.S. foreign policy and economic development through the second half of the 20th Century. Do we really want to learn how dependence on foreign rare earths will affect us in the 21st?

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    Uh oh...

    China Freaks Out The World By Announcing Restrictions On Export Of Metals Crucial For National Defense
    Jun. 2, 2010

    China appears to be making moves that several folks had been fearing for some time: It is considering stricter limits on the export of so-called rare-earth metals.

    The metals, which are most abundant in China, are used in a range of high tech industries including green energy and defense, which is what most concerns the US government.


    Claiming that the mining of rare earths has been bad for the environment, the government is moving to restrict unauthorized wells, which may be exporting their goods illegally at too-low prices, according to NYT.


    This move will surely be good news for the one major domestic player, Molycorp, which is based in California, and has IPO plans. Any restrictions coming out of China can only mean an easier time with regulations, and more subsidies, especially given the defense implications.


    We've put together a presentation on what you need to know about rare earths. The first part is a presentation from Avalon Rare Metals, explaining what they're all about, and the second lists key countries to pay attention to.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    Fuuuuuuuuuu..... I didn't know it was this bad. Financial article, but some interesting info.

    http://www.energyandcapital.com/arti...tock-boom/1140

    Profit from the Rare Earth Shortage

    Three ways to play it

    By Ian Cooper
    Wednesday, May 5th, 2010

    China outguessed the world...
    And now we'll all pay for that dearly.

    You see, years ago China recognized the extreme value in rare earth metals. So the Middle Kingdom invested heavily in finding what they could and taking control of what would eventually become limited supply.
    They were smart about it.

    And now China's in a position to halt all rare earth exports — reserving them for its own economic expansion — and leaving the rest of the world scrambling to meet future rare earth needs.

    But we need those rare earths now. We don't have time to scramble. Rare earth resource demand must be met.

    Without rare earths, technological advancements are history; the world in which we have become accustomed to living in and the way in which we work, communicate, and progress will change.
    Drastically.


    And China is very well aware of that.

    The Chinese currently control 97% of the rare earth market. They know they're the monopoly... and they're about to take full advantage by sending prices skyrocketing.

    Beijing is already drawing up plans to stop or restrict the exports of rare earth metals that are produced in China.

    The Ministry of Industry and Information Technology is also calling for the total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium.

    And other metals — neodymium, europium, cerium, and lanthanum — will be restricted to a combined export quota of 35,000 tons a year, far below global needs.

    Yet, most U.S. citizens and businesses have no idea that this is even happening, nor do they grasp how this restriction could affect us.

    R.I.P. iPod, Smart Phone, MacBook?
    When you think of where your iPods, cell phones, computers, and electronic motors come from, consider this: China holds 97% of the materials that allow these products to function.

    All China has to do is follow through and halt the export of such materials... and the whole picture suddenly changes.

    Electronics would disappear from the shelves and products that depend on these materials would see prices skyrocket, possibly bankrupting the very companies that depend on these sales.

    Heck, the impact alone on electric batteries and motors — and on green technologies — would be crippling.

    Toyota's Prius alone depends on 2.2 lbs. of neodymium in the hybrid's electric motor and 22-33 lbs. of lanthanum in the car's battery pack. And there are still plans to double production of the Prius from one million to two million units.
    But they can't build these cars if they don't have access to rare earth metals. Thus, all of that product is in jeopardy.

    Why We're Trying to Become Rare Earth Independent
    Congress wants to stockpile rare earth supplies. This could do to rare earth what it did to oil back in 2007, which resulted in a 10% spike in oil prices.
    Members of Congress introduced a bill that could bolster the U.S. rare earth supply-chain and create a stockpile for military and tech industry uses — as its best-case scenario. This led Colorado Congressman Mike Coffman to introduce The Rare Earth Supply-China Technology and Resource Transformation Act of 2010.

    Coffman's no dummy. He knows that "over 95 percent of worldwide rare earth mining today is located in China. There is no rare earth element mining taking place in North America and with worldwide demand growing exponentially the situation is only going to get worse."

    The bill calls for the creation of a rare earths stockpile for national defense and encourages federal loan guarantees for companies involved in restarting rare earth supply chains.

    But it's a wait-and-see situation. We all know how quick Congress is to act...

    So How do You Profit from the Shortfall News?
    To profit from the rare earth shortage — and Congress' stockpiling announcement — buy the companies with access to supply. They'll jump on any news of discovery.

    First Gold Exploration Inc. (TSX-V: EFG), for one, skyrocketed as much as 180% after the company announced a new high-grade discovery of rare earth elements and lithium at its Éléonore Property in Northern Québec.

    Hudson Resources (HUD.V or HUDRF.PK) jumped more than 140% after Denmark relinquished its sovereign hold over Greenland's mineral rights, making the country's $273 billion rare earth resource private property.

    Avalon Rare Metals' (AVARF.PK) project at Canada's Thor Lake has access to rare earth metals. The stock could easily move higher this year.

    Lynas Corporation (LYSCF.PK) owns a rich deposit of rare earth at Mt. Weld in Western Australia. This stock could also move higher.

    Rare Element Resources (RES.V) recently completed financing and reportedly has capital of more than $12 million. And Quest Rare Minerals (QRM.V) reportedly has a big resource at Strange Lake in Quebec.

    Any positive news amid China fears could send any of these stocks higher.

    Double-Bag Your Investment
    But while these are all good buys here (especially Hudson Resources), patient investors might also consider buying into a new rare earth IPO and an ETF.

    Molycorp, owner of a California rare earth mine, just filed for an IPO with hopes of raising $350 million to restart rare earth operations. While we'll look to buy at IPO, Molycorp won't be able to meet all the needs of the United States...
    And it's for this reason that you should also buy one of the other stocks mentioned above as well.

    The other plays are coming ETFs.
    Dacha Capital reportedly has plans to start a rare earth element ETF, where they warehouse the metals and compounds and buy/sell them.

    An REE Fund which received approval from the Swiss Financial Market Authority will open on May 31, 2010. It will only trade in Switzerland, though; it will invest in companies involved with rare earth metal mining, refining, and manufacturing, according to the company's site.

    While stocks like Hudson Resources remain a buy, we'll look to pick up these ETFs and Molycorp IPO in coming months.

    Stay tuned for news on rare earths and profit opportunities in Pure Asset Trader.
    Stay Ahead of the Curve,
    Ian L. Cooper
    Energy and Capital

    P.S. Rare earth metals are about to experience hyper-growth. But this sector isn't the only one about to experience a major ramp-up... Energy and Capital's own Keith Kohl is putting the finishing touches on his latest research report on an "old" oil formation with a brand-new life. Chances are, you haven't heard of this emerging North American oil play before... And you won't want to be the last to get the full story. We'll have a full report to you Thursday.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    U.S. Military Supply of Rare Earth Elements Not Secure
    U.S. military technologies such as guided bombs and night vision rely heavily upon rare earth elements supplied by China, and rebuilding an independent U.S. supply chain to wean the country off that foreign dependency could take up to 15 years, according to a new report by the U.S. Government Accountability Office (GAO).

    Both "light" and "heavy" rare earth elements represent a family of minerals found in commercial products ranging from TV displays to cell phones, as well as green technologies such as hybrid electric motors and wind turbines. For example, the rare earth element neodymium is very magnetic and is used in everything from computer hard drives to wind turbines and Toyota's Prius hybrid car.

    The GAO report – a draft of which was obtained by TechNewsDaily – was meant to look at national security risks that could arise from dependency upon rare earth elements.

    "Defense systems will likely continue to depend on rare earth materials, based on their life cycles and lack of effective substitutes," the GAO reported.

    New rare earth mines in the U.S., Australia, Canada and South Africa won't start up until at least 2014, based on industry estimates. The GAO report listed rare earth deposits in states that include California, Idaho, Montana, Wyoming, Colorado, Missouri and Utah.

    But looking beyond the GAO report reveals that many U.S. deposits lack the "heavy" rare earth elements critical for much of today's technological innovations. Another cause for concern: Chinese corporations have also begun investing in mining companies that hold certain U.S. deposits.

    The U.S. once supplied most of the global supply of rare earth elements, and also manufactured rare earth products such as the neodymium magnets. But rare earth processing has largely shifted to China since the 1990s. Even if the U.S. resumes mining its rare earth deposits and begins converting rare earth ore into oxides, it lacks the facilities for converting rare earth oxides into refined metals.

    China has set quotas limiting rare earth exports and added on export taxes, despite supplying as much as 97 percent of the world's rare earth oxides. It even warned in an official plan for 2009-2015 that its own industrial demand might force it to stop exporting entirely.

    Staking the future

    The GAO report lists the mine at Mountain Pass, California as perhaps the largest non-Chinese rare earth deposit in the world. That same mine almost slipped out of U.S. hands unnoticed during a Chinese bid for the U.S. oil company Unocal in 2005.

    Unocal had purchased the Mountain Pass mine owner, Molycorp, back in 1978. But that fact went mostly unnoticed during the media and Congressional uproar over the possible threat to U.S. energy security, which eventually led the Chinese company to withdraw its bid.

    If the China National Offshore Oil Corporation (CNOOC) bid had succeeded, China would currently have an even bigger share of rare earth deposits, according to a recent report by the Institute for the Analysis of Global Security.

    Molycorp has since reorganized as an independent company after Chevron purchased Unocal. It expects to resume mining at Mountain Pass and plans to produce cerium, lanthanum, praseodymium and neodymium oxides by 2012, even if it must ship those oxides to China for final processing.

    The U.S. Navy once considered helping fund the Mountain Pass mining and processing facility in 2006, based on the need to secure a domestic U.S. supply of rare earth elements. That idea faded when the Navy "lost interest in the project," according to the GAO report.

    A need for heavies

    Still, a need for even rarer "heavy" rare earth elements would require the U.S. military to look beyond the Mountain Pass mine, which can only produce a little terbium and dysprosium. Light rare earths include the minerals ranging from lanthanum to gadolinium on the periodic table of elements, while heavy rare earths range from terbium to lutetium.

    The Bear Lodge deposit in Wyoming — owned by Canada's Rare Element Resources Ltd — also holds mainly light rare earth elements.

    Perhaps the likeliest source of heavy rare earth elements in the U.S. comes from the deposit at Diamond Creek, Idaho, owned by U.S. Rare Earths. The U.S. Geological Survey (USGS) also lists some heavy rare earth elements at the company's Lemhi Pass deposits on the Idaho-Montana border.

    The latest USGS update on rare earth elements described a rare earth deposit at Elk Creek, Nebraska, along with the Idaho, Montana and Wyoming sites.

    Another Canadian company, Great Western Minerals Group, Ltd., announced that it had begun exploring for rare earth elements in the mineral sands of Deep Creek, Utah in 2007, after buying a 25 percent stake from the Titan Mining Group.

    Chinese companies have begun moving in on certain mining companies, given their interest in a wide range of resources such as rare earth elements. China Minmetals Group of China previously provided financial backing for Upland Wings, Inc. and Wings Enterprises, Inc., which owns both iron and rare earth deposits at Pea Ridge, Missouri.

    In 2009, the China Investment Corp bought a 17 percent stake in Teck Resources Ltd., which represents Canada's major base metals company. Teck holds rare earth deposits at Iron Hills in Colorado.

    From battle tanks to drones

    The U.S. Department of Defense did not have details on national security risks related to a possible rare earth shortage for the GAO report. But it plans to complete its assessment of dependency upon rare earths by September 2010.

    Military officials did stress how rare earth elements form a currently irreplaceable part of devices such as lasers, radar, missile-guidance systems, satellites and aircraft electronics. And many military systems also rely upon commercial computer hard drives that use rare earth magnets.

    Even more specific examples of rare earth-driven technologies include the navigation system for the M1A2 Abrams battle tank, and a new hybrid electric drive in the works for the Navy's DDG-51 destroyers.

    Rare earth elements might eventually become part of the U.S. National Defense Stockpile, according to the GAO report.

    Yet the world's largest producer of rare earth elements may already be one step ahead: The rare earth unit of China's Baotou Iron & Steel Group gained official approval in February to begin building a strategic reserve of rare earth elements, China's official newspaper, People's Daily, recently reported.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    China To Reduce Export Quota For Rare-Earth By 72% In H2
    July 14, 2010

    China, the world's largest rare-earth producer, will cap its export quota for the minerals needed to make hybrid cars and televisions at 7,976 metric tons in the second half of this year, according to a statement released by the Ministry of Commerce.

    The quota was 72% less than the 28,417 metric tons for the same period of 2009.

    Liu Aisheng, director of the Chinese Society of Rare Earth, said that the rare earth industry officials have realized that, after many years of continued growth in exports, the industry didn't receive due profit returns.

    China Minmetals Nonferrous Metals Co was granted an export quota of 399 metric tons for the second half, accounting for 5% of the total, while Sinosteel Corp won an export quota of 392 metric tons, equivalent to 4.9% of the total.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    Hot Political Summer As China Throttles Rare Metal Supply And Claims South China Sea
    The United States and Europe have been remarkably insouciant about supplies of rare earth minerals so crucial to frontier technologies, from hybrid engines to mobile phones, superconductors, radar and smart bombs.

    Lack of strategic planning by the West has allowed China to acquire a world monopoly on this family of seventeen metals. Assumptions that Beijing would never risk its reputation as a global team player by abruptly strangling supply have proved naive.

    "One by one, US-based processing plants owned by German and Japanese firms switched operations to China"

    China's commerce ministry has cut export quotas for these metals by 72pc for the second half of this year. It is perhaps the starkest move to date in the Great Power clash over scarce resourses.

    The Pentagon and the US Energy Department are still scrambling to work out what this means for US security. An interim report from the Government Accounting Office (GAO) has laid bare just how delicate the situation has become.

    "The US previously performed all stages of the rare earth material supply chain, but now most rare earth materials processing is performed in China, giving it a dominant position. In 2009, China produced about 97 percent of rare earth oxides. Rebuilding a U.S. rare earth supply chain may take up to 15 years," it said.

    Fifteen years?

    China's rare earth blockade is becoming more piquant by the day as the country swaps threats with the US over the South China Sea. I leave it to scholars at The Hague to evaluate China's claim to "indisputable sovereignty" over waterways that carry half the world's freight shipping. One does notice that much of the sea is a long way from China, and close to Vietnam, the Philippines, and Brunei. There are no settled communities on the islands. The Falklands parallel is invalid.

    What is new is that China has chosen to press the issue by calling these waters a "core interest" like Tibet and Taiwan, and is conducting live-fire naval and air exercises.

    Equally new is that the Obama administration has chosen to resist, a change of tack after sponsoring China's fuller inclusion in world governance through the G20 and the IMF.

    "We oppose the use or threat of force by any claimant. Legitimate claims to maritime space in the South China Sea should be derived solely from legitimate claims to land features," said Secretary of State Hillary Clinton . In plain English, "back off".

    The foreign ministry called this "an attack on China" and accused Washington of trying to "coerce" smaller countries to take sides in the dispute. There is more than a whiff of "encirclement" fever in these exchanges, like German neurosis in the decade before 1914 that became self-fulfilling. A ring of states around China are indeed beefing up their military ties with the US. Why might that be?

    The GAO report said the US had been self-sufficient in rare earth minerals for most of the post-War era. The key mine at Mountain Pass in California shut down in the 1990s when China flooded the market with exports and drove Western mines out of business. One by one, US-based processing plants owned by German and Japanese firms switched operations to China. There are none left.

    Cutting-edge weapon technologies are classified, but the GAO said the M1A2 Abrams tank and the Aegis Spy-1 radar both rely on Chinese samarium. The US Navy's DDG-51 Hybrid Electric Drive Ship needs neodymium, which enhances the power of magnets at high heat. The Hellfire missile requires Chinese components, as do a host of functions in satellites, avionics, night vision equipment, and precision-guided munitions.

    Some of the metals such as terbium, dysprosium, thulium, and lutetium, europium, cerium, and lanthanum are more important that others, but crudely speaking they are the salt of life for the high-tech revolution -- sprinkled in iPads, Blackberries, plasma TVs, water filters, or lasers.

    Each Toyota Prius uses a fistful of rare earth elements, which is why Toyota has purchased the rear metals dealer Wako Bussan. Cerium is used in catalytic converters for diesel engines. Terbium is key for low-energy light-bulbs that cut power costs by 40pc. Neodymium is used in hard-disk drives, wind turbines, and the electric motors of hybrid cars. Fresh research in Tokyo shows that rare metals can cut friction on power lines, slashing leakage.

    Countries that cannot obtain these minerals --at any price - will not play much part in the technology revolution.

    Japan already has a "Strategy for Ensuring Stable Supplies of Rare Metals". Japanese companies have been stockpiling feverishly for the last five years -- which may be one reason why China decided to cut off supplies. The West has been caught off guard.

    The US Magnetic Materials Association said America has drifted into a "silent crisis" and needs to crank up its own supply chain within three to five years."Immediate action must be taken to free the US from complete foreign dominance."

    Rare metals are not in fact very rare. Large amounts exist in the US, Canada, Australia, South Africa, Russia, Sweden, Vietnam, and above all Greenland with a third of the world's known reserves. What is rare is to find them in viable concentrations. The metallurgy is complex. The frequent presence of radioactive Thorium complicates matters. Extraction is capital intensive.

    Yet the current situation is clearly intolerable. Congress is demanding action through amendments to the National Defence Authorization Act. It is fair bet that the Western powers will soon funnel large sums of money into this very small niche.

    Adventurous investors may want to look at Molycorp Inc, which is reopening the Mountain Pass mine but struggled with a share issue last week. Together with Arafura and Lynas Corp in Australia, it hopes to produce some 50,000 tonnes of rare earth metals by mid-decade. That is not enough for world needs. Avalon Rare Metals in Canada is a start-up play for the ultra brave. Greenland Minerals and Energy may tempt some.

    Beijing's export curb is understandable on one level. China's own industry will need most of its output within three or four years. The crunch will come one way or another. But as our Beijing correspondent Peter Foster has reported, the export limits seem designed to compel foreign technology companies to locate plants in China. This looks like a breach of World Trade Organization rules.

    Once again we see how China plays the globalization game, taking full advantage of WTO access to western markets without opening its own to the same degree, and all the while holding down its currency for mercantilist gain.

    My hope is that this rare earth move was as much cock-up as conspiracy. Surely the Politiburo does not really think that China can act in this arbitrary fashion without eliciting a response?

    Please tell us it was an administrative error. Then reverse it.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    Rare Earths Looking Rarer By the Minute
    July 13, 2010

    “There is Oil in the Middle East,
    …There are Rare Earths in China.” - Deng Xiaoping


    There is a big upset in the Rare Earths market right now, and with good reason.

    China has steadily positioned itself as the world’s biggest producer of rare earths in recent years. Even though it is sitting roughly a third of the world’s deposits, it is now controlling 95% of global supply. It has squeezed other producers out of the market by undercutting their prices, and now has a monopoly on the market.

    Last week China cut exports quotas by 72%. This brings down shipments from roughly 28,000 tonnes to a measly 8,000 tonnes. The Chinese Society for Rare Earths said that its producers weren’t making enough profit. Well, this move should drive rare earth prices through the roof, and give the producers all the profits they could imagine.

    So, what are rare earths, and why should you care as an investor?

    Well rare earths are as the name suggests, relatively rare. Only 75,000 tonnes are produced each year worldwide. Industries use their unique properties for technological applications like computer hard drives, cell phones, as well as green uses such as wind turbines and hybrid vehicle technology. The rare earths are needed badly for green technology in a modernising economy. Demand is rising and Chinese supply (effectively most of global supply) has just been deliberately bottle-necked.

    The names of rare earth elements are not easily dropped into conversation, and are even harder to spell. Let’s just say there are 17 of them and they have names like ytterbium, erbium, and praseodymium. I’m not sure the chemists that discovered and then named the elements back in the day were thinking long-term!

    So where do you find this stuff?

    The chart below shows how the known resources are distributed globally. It is predominantly found in just five countries: China, where most of it is produced, and Australia, Malawi, USA and Greenland.

    Rare Earths found in just five countries


    The first thing to notice is that Greenland is sitting on 36% of known deposits. This is not often talked about but could be a very important part of the story in the future.

    Greenland is home to a population of just 50,000 people. This is about the same number of people as there are in that Country Music capital of Australia, Tamworth. Yet this Scandinavian country is about the same size as Western Australia. Aussie listed Greenland Minerals (ASX:GGG) is sitting on an enormous JORC resource of over 4.5 million tonnes, but the government is currently opposed to developing it as it contains uranium as well.

    The mind boggles when you consider the wealth that the Greenland government could generate from its deposit, and then consider how far this could go across the tiny population. You wonder how long the government can sit on their hands for as the non-China world starts screaming out for their minerals.

    The Australian rare earths industry is sitting on 18% of global deposits and is far more advanced. Companies with deposits includes Alkane Resources (ASX:ALK), Navigator Resources (ASX:NAV), Lynas Corporation (ASX:LYC) and Arafura Resources (ASX:ARU). These companies are up by an average of 11% in the few days since the announcement of China’s export cut.

    Kris Sayce is in the UK this week in the middle of a ‘heatwave’. This quote from UK paper confirms that: ‘Temperatures soared to 31.7C (89.1F) in Gravesend, Kent, yesterday – the highest in the UK this year.’

    But before he went over to the sweat it out in the UK, he saw the potential for the Rare earths market to be pressured by the Chinese and made a recommendation for a Rare Earths company in Australian Small Cap Investigator. It is already sitting on 28% gain.

    It is certainly a story to follow. Even if China relaxes its export restrictions in the future as some analysts expect, the country has confirmed that stable supply from China can’t be assumed in the future.

    This is going to give other more reliable producers as great opportunity to supply the market, giving investors opportunities for gains.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    Chinese Adamant On Rare-Earth Metal Cuts
    8/30/2010

    China on Saturday rejected a request from the Japanese government not to cut exports of rare-earth metals that are vital to the production of a wide range of electrical products, such as hybrid vehicles and liquid crystal displays.

    Japanese industry minister Masayuki Naoshima asked Chinese Minister of Industry and Information Li Yizhong and Commerce Minister Chen Deming for reductions to this year's export quota to be reversed in a meeting at the "Japan-China high-level economic dialogue" of economic ministers in Beijing.

    Naoshima told the Chinese ministers: "In the second half of this year alone, the export quota is being reduced by 70 percent. The reduction is too sharp."

    The Japanese side repeated the request at the main session of the conference, with all economy-related ministers from both countries present.

    But China, which produces more than 90 percent of the world's rare-earth metals, refused to budge on its policy of limiting access.

    In July this year, it announced an export quota of the vital raw materials for the second half of this year of about 8,000 tons, considerably less than the quota for the first half of the year. The combined quota for 2010, 30,000 tons, represents a 40 percent reduction from 2009.

    According to Japanese government officials, one of the Chinese ministers at the bilateral meeting said, "It is necessary to reduce production (of rare-earth metals) from the viewpoint of environmental protection."

    Another minister said, "It is necessary to save those metals as they are likely to be exhausted."

    Chen stressed to reporters that the policy was not just about exports, "We are also limiting mining of those metals (as well as reducing exports). I want (Japan) to understand that."

    Rare-earth metals are a group of chemically similar metallic elements, including lanthanum, cerium and neodymium, many of which are used in the production of modern electrical devices, including hybrid vehicles, liquid crystal displays and energy-saving home appliances.

    Naoshima told the Chinese ministers that Japan could provide technological help to address their worries about environmental pollution, but economic as well as ecological concerns may be behind China's new course. Limiting exports will allow domestic producers privileged access to strategically important resources and increase the prices for the materials China does send abroad.

    Earlier this month, an executive of China's Ministry of Land and Resources said in an interview for a local television program, "Due to the excessive development (of rare-earth metals), their prices have been pushed down." The executive quoted a high-ranking official of a local government (in China) as complaining that their prices are like those of radishes or Chinese cabbages.

    The Chinese authorities appear to want to process the rare-earth metals in China, adding value before exporting them at much higher prices.

    According to a Chinese media organization, an executive of the land and resources bureau of the city government of Heyuan in Guangdong province in southern China said, "If we process rare-earth metals, their prices will become similar to those of gold or diamonds."

    The prices of the rare-earth metal cerium, for instance, which is used as an abrasive in liquid crystal television manufacturing, has already jumped to $40 to $50 (3,400 yen to 4,250 yen) per kilogram from $5 to $6 a year ago.

    As the amount of cerium used in production is small, the sharp rise in prices is unlikely to immediately hit consumers' purses, but companies are worried about disruption to production.

    "China had been reducing export quotas (of rare-earth metals). This reduction came just as Japan's economy is recovering and makers want to obtain them. It is likely that their prices will rise limitlessly. We are shocked," said an executive of a major alloy maker in Japan.

    China is expected to limit the overall production of rare-earth metals, not just exports.

    "At present, we have stocks. But we are concerned that rare-earth metals will not come to Japan in the future. We have to consider manufacturing our products in China or procuring rare-earth metals from other countries," the executive said.

    The first "Japan-China high-level economic dialogue" was held in December 2007 in Beijing. Six Japanese ministers took part in this year's meeting, including Naoshima and Foreign Minister Katsuya Okada. The Chinese participants included Vice Premier Wang Qishan.

    Though the ministers from the two countries could not reach agreement on rare-earth metals, they did agree on cooperation to protect bluefin tuna and to start regular vice-minister-level talks between the Japan's Ministry of Economy, Trade and Industry and the Chinese ministry of industry and information.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    Securing The Supply Of Rare Earths
    Green-energy and high-tech industries grow anxious over China's monopoly on these valuable resources

    August 30, 2010

    Clustered at the bottom of the periodic table like a chemical afterthought, the rare-earth family is a collection of tough-to-pronounce elements that tend to go largely unnoticed in most chemistry classes. But don’t misjudge the rare earths. Their low classroom popularity belies the critical role they play in many high-tech applications and their enormous commercial value.

    Likewise, their family name is misleading. Several rare-earth minerals and metals are in fact abundant. Yet due primarily to economic reasons, the supply of these important materials, which overall are not rare in nature, is becoming increasingly tough to secure in the U.S.

    “The situation is nothing short of a crisis,” says Karl A. Gschneidner Jr., a senior metallurgist at the Department of Energy's Ames Laboratory who has been studying rare-earth materials there since the 1960s. “There is nearly zero rare-earth mining, processing, and research going on now in the U.S.,” Gschneidner says. And in large part, the U.S. no longer manufactures rare-earth products, he adds. A small number of U.S. labs, however, and some research institutions outside the U.S. are working to improve industrial methods for processing and recycling rare-earth minerals, and they’re also searching for substitute materials.

    The problem with the low level of activity in this field, especially in the U.S., is that the rare-earth family, which includes 15 lanthanides plus scandium and yttrium, is central to numerous technologies in the computer, electronics, transportation, energy, and defense industries. For example, the powerful permanent magnets found in today’s computer disc drives, as well as the motors and motor generators that are crucial to the performance of hybrid automobiles, electricity-generating windmills, and other “clean” technologies, are made from a neodymium iron boron compound, Nd2Fe14B.

    Driven by an enormous number of applications, the global market for purified rare-earth starting materials is in the billion-dollar range. Dudley J. Kingsnorth, executive director of Industrial Minerals Co. of Australia, based in Mount Claremont, reports that worldwide demand for rare-earth oxides in 2007 was on the order of 124,000 metric tons and valued at $1.3 billion.

    Even more valuable are the products made from these compounds. For example, the rare-earth magnet market is estimated to be worth $9 billion. Yet the world’s supplies of neodymium and other rare-earth materials are provided almost exclusively by manufacturers in China.

    “Today, nearly 100% of the world’s rare-earth metals and more than 94% of rare-earth oxides come from China,” says Peter C. Dent, vice president for business development at Electron Energy, in Landisville, Penn. Electron Energy designs and manufactures high-performance rare-earth magnets and magnet assemblies, specializing in samarium cobalt products.

    “In 1970, we were one of the first companies in the world to produce rare-earth magnets,” Dent says. By the late 1980s and early 1990s, the American magnet industry reached its peak, with more than 20 companies manufacturing a large variety of magnets. But then the 1990s witnessed a decline and eventually a wholesale migration of this industry to China, according to Dent. “Now we find ourselves to be the last rare-earth magnet maker in the U.S.,” he says.

    According to industry watchers such as James Kennedy, owner and president of Wings Enterprises’ iron ore mine in Sullivan, Mo., China has maneuvered effectively since the mid-1980s to establish a worldwide monopoly on rare-earth resources. Aiding its effort to corner the market is China’s tremendous rare-earth mineral wealth. U.S. Geological Survey reports indicate that China possesses roughly 52% of the world’s known rare-earth reserves. By comparison, the U.S. is believed to have the second-largest share, at about 13%. Russia and Australia each have 5–6% of the known reserves. India, Canada, Greenland, and a few other countries also have appreciable quantities of rare-earth minerals.

    In the 1990s, China’s low production costs rapidly deflated rare-earth prices, driving many non-Chinese mining and processing operations out of business. Molycorp, owner of the largest U.S. rare-earth mine—Mountain Pass in southern California—mothballed its mining operations in 2002. In 2005, prices started to rise as China began limiting production and imposing export tariffs on some rare-earth products. Then China began restricting rare-earth exports in 2006 and further tightened export quotas in the first half of 2010.

    The rare-earth news from China continues. Just last month, China’s Ministry of Commerce announced plans to further cut export quotas by 72% for the second half of 2010. That move caps foreign shipments at 7,976 metric tons, down from 28,417 tons for the same period last year. And earlier this month, two of China’s largest state-owned rare-earth mining companies announced plans to launch “a new unified pricing system,” a move that will likely give China even greater control over the availability and supply of rare-earth compounds. No doubt the action will drive up prices of these valuable resources around the world.

    Not surprisingly, the news from China this summer is making Electron Energy and other U.S. companies jittery. “We’ve seen rare-earth prices increase steadily in recent years,” Dent says, “but until now, we have been able to get the supplies we need. We’re very concerned now about the long-term availability of these materials.”

    So is Molycorp CEO Mark A. Smith. “China is doing what it feels it must in order to maximize the value of its resources,” Smith says. By cutting back on exports yet again, China is securing the supplies it needs to further develop its own high-tech industries and protect Chinese manufacturing jobs. But in Smith’s view, that protection is “clearly troubling” and could lead to near-term rare-earth shortages.

    The view from China is somewhat different. “China’s new policy is beneficial to rare-earth industries across the world” in that it will force other countries to develop alternative sources of rare-earth materials, says Chun-Hua Yan, a professor of inorganic chemistry at Peking University. Yan also heads the State Key Laboratory of Rare Earth Materials Chemistry & Applications, the country’s premier research facility in the field.

    Yan describes China’s near monopoly in rare-earth production as “an unreasonable and unhealthy situation that needs to be changed.” He sees the combination of tight export caps and high world demand for rare-earth compounds as the impetus that can drive that change.

    Yan adds that beginning in the late 1980s, when China became the world’s largest producer of rare-earth materials, it almost single-handedly drove down rare-earth prices by as much as 90%. Much of that rapid price drop, according to Yan, was a result of unlicensed factories that pump toxic waste into rivers to reduce their operating costs. “It is unfair for the rest of the world to be using cheap, Chinese-made rare-earth materials at a prohibitive cost to China’s natural environment,” he says. “In the end, it’s part of the world’s environment too.”

    While Chinese officials have been considering the environmental cost of poor mining practices and drafting stringent regulations to curb those activities, industry representatives in the U.S. have been trying to draw lawmakers’ attention to China’s monopoly and the impending effects of this monopoly on U.S. science, technology, and commerce.

    “The news from China should serve as a huge red flag for U.S. government officials,” says Edward Richardson, president of U.S. Magnetic Materials Association (USMMA), a trade group representing U.S. producers of high-performance magnets. Richardson, who is also vice president of Thomas & Skinner, an Indianapolis-based manufacturer of aluminum-nickel-cobalt alloy (Alnico) magnets, adds that “if the U.S. is to become a leader in clean-energy technology, it needs a reliable domestic rare-earths supply chain.”

    Several groups have been working recently to spread the word and impress upon legislators the critical nature of the problem. According to Jeffery A. Green, president of J.A. Green & Co., an advocacy group working with USMMA, the groups’ efforts are starting to pay off. “We’re now seeing a lot of political momentum surrounding this issue,” Green says.

    For example, at a Washington, D.C., rare-earth conference in March, the Department of Energy’s David B. Sandalow, assistant secretary of energy for policy and international affairs, announced DOE’s intention to develop its first-ever strategic plan for addressing the role of rare-earth and other strategic materials in clean-energy technologies. “There’s no reason to panic,” Sandalow said, “but every reason to be smart and serious as we plan for growing global demand for products that contain rare-earth metals.” DOE later released a public request for information to help develop that plan.

    At around the same time, the Government Accountability Office, the investigative arm of Congress, prepared a report on rare-earth materials in the defense supply chain and presented it to the Armed Services Committees of the Senate and House of Representatives. The GAO report affirmed that rare-earth materials play important roles in numerous defense technologies, including radar, missile-guidance systems, lasers, and night vision equipment. The Department of Defense is now conducting an internal assessment and is expected to devise strategies to protect against rare-earth supply interruptions. The report is scheduled to be completed next month.

    In addition to the DOE and DOD activities, the House Committee on Science & Technology convened a hearing in March at which rare-earth experts including Gschneidner of Ames Lab and Smith of Molycorp testified about the threat of a rare-earth supply shortage in the U.S. After the hearing, Rep. Mike Coffman (R-Colo.) introduced the Rare Earths Supply-Chain Technology & Resource Transformation (RESTART) Act, which aims to revitalize the U.S. rare-earth industry. Sen. Lisa Murkowski (R-Alaska) later introduced similar legislation in the Senate.

    A key piece of the plan to revitalize rare-earth activities in the U.S. centers on restarting operations at Molycorp’s Mountain Pass mine. The company is now raising funds necessary to bring production at the California mine back into high gear—and to do so quickly.

    James T. Sims, Molycorp’s director of public affairs, says the company has an ambitious plan to begin producing some 20,000 metric tons of rare-earth oxides annually by 2012. But that’s not all. In addition to resuming mining and milling operations and producing high-purity oxides at the now mostly dormant mine, Molycorp aims to reduce the oxides to metals, convert the metals to rare-earth alloys, and produce high-end permanent magnets. All in all, he says, the plan is to completely shore up the “mining-to-magnets manufacturing supply chain.”

    “Mostly dormant” describes the state of affairs at Mountain Pass since 2002. Mining and processing operations were put on hold at that time, but not long thereafter, company scientists and engineers began retooling their processing techniques with an eye toward eventually reopening a new and improved mining facility. The aim was to reduce production costs, cut back on waste output, and boost the efficiency of rare-earth extractions, separations, and other processing steps.

    “Historically, Molycorp used a whole collection of acids and bases to process rare earths, which generated a complex mixture of salts in the wastewater,” says John L. Burba, Molycorp’s executive vice president and chief technology officer. Sulfuric acid, nitric acid, hydrochloric acid, ammonia, sodium hydroxide, and other reagents all played important roles in extracting purified compounds from the Mountain Pass ore—which in terms of its rare-earth content is composed of cerium (49%), lanthanum (33%), neodymium (12.5%), praseodymium (4%), samarium (1%), and heavier rare-earth elements.

    “We needed to simplify our chemistry,” Burba says, to reduce the enormous volumes of intake and wastewater. The challenge there is that the ore consists mainly of bastnasite, a rare-earth fluorocarbonate mineral, and monazite, a rare-earth phosphate. “But rare-earth fluorides and phosphates are profoundly insoluble,” he stresses.

    Nonetheless, Molycorp has developed chemical methods that depend strictly on hydrochloric acid and sodium hydroxide, Burba says. That simplification enables the company to install a chlor-alkali plant on-site to recycle the sodium chloride by-product. The well-established technology converts saltwater to NaOH, hydrogen, and chlorine, which in turn are used to produce sodium hypochlorite (which can be sold to make bleach) and hydrochloric acid, which is recycled into the mineral-processing loop.

    “We’re turning this site into a near-zero wastewater-discharge facility,” Burba says. In addition to the environmental benefits of recycling and reusing water and reagents, the new plans, he adds, significantly reduce the company’s operating expenses. Additional cost savings will come from generating electricity on-site via a highly efficient natural gas-fueled cogeneration plant.

    Precisely how Molycorp reduced the number of key reagents needed for its new processing methods is a closely guarded trade secret and has not been patented, according to Burba. The reason is that the advances depend on new technologies for which patent protection is challenging to ensure.

    A separate challenge for Molycorp and organizations such as Ames Lab that remain interested in this area of research is finding scientists with rare-earth expertise. “We need help in that regard,” Smith told Congress in March. “I have 17 engineers and scientists competing with over 6,000 scientists in China.”

    Quite a few of those Chinese scientists conduct research under Yan’s direction at Peking University and the State Key rare-earth lab. Yan’s group has focused on a number of research challenges, including refining a key solvent-extraction process. The traditional method, devised in the 1970s, used organic phosphonic acids to extract rare-earth ions before capturing them with stronger inorganic acids in a process called stripping. Yan’s team developed a simplified system that decreases the consumption of chemicals.

    Yan is keeping quiet about the details. But he estimates that the new procedure reduces the costs of acids and bases needed for processing rare earths by 30–50% relative to traditional methods. His team has also developed methods specifically directed at separating heavy rare-earth elements such as thulium, ytterbium, and lutetium.

    Back in the U.S., Gschneidner and coworkers at Ames Lab report that they have devised a way to make neodymium-iron-boron magnets less expensively and without generating the hazardous by-products formed by today’s standard manufacturing methods. They, too, are keeping the details under wraps.

    Elsewhere at Ames, senior metallurgist Iver E. Andersen heads a group searching for non-rare-earth substitutes for permanent magnets. One of his team’s focus areas is the Alnico iron-alloy family. By customizing the alloy’s composition, it may be possible to tailor-make a suitably powerful magnet, Anderson says. Other groups are focusing on iron-cobalt-based alloys and nanostructured compounds made from combinations of rare-earth elements and transition metals.

    Basic rare-earth science has not been a focus of most U.S. research centers for quite a long time, “but suddenly it has come roaring back,” Ames Lab Director Alex King says.

    From an industrial perspective, Molycorp scientists hope that rare-earth mining and processing in Mountain Pass will soon be back in full swing. At the same time, Chinese scientists are under pressure to drastically improve resource usage and environmental practices. Forthcoming regulations in China are likely to be strict. They may take two to three years to implement, Yan says. But the hope for the Chinese rare-earth industry is that those regulations will usher in an era of environmental responsibility that will help ensure that a reliable supply of rare-earth materials remains readily available for many years to come.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    Colorado's Molycorp Plans To Break China's Chokehold On Rare-Earth Metals
    November 7, 2010

    A Colorado company that once shared its secrets with Chinese miners is launching a $511 million bid to break the chokehold China subsequently gained on rare-earth metals — crucial elements of smartphones, smart bombs and the clean-energy economy.

    Greenwood Village-based Molycorp Minerals aims to return rare-earth mining to the United States, making the metals more affordable and creating jobs in Colorado and around the West.

    But the environmental ravages of mining rare-earth metals that factored into moving the mining to China present a major challenge of meeting U.S. standards today.

    China now supplies 97 percent of rare earths — 17 metals including neodymium, samarium and dysprosium — which, while obscure, are as ubiquitous in modern life as cellphones. Congressmen and military analysts have raised concerns about the heavy dependence on Chinese supplies because the country recently shut off shipments with no official explanation.

    Along Colorado's Front Range, wind-turbine maker Vestas, which employs 1,200 at three factories, and electric-motor maker UQM Technologies are among the firms that import rare earths from China.

    "We're going to put this country in a much better position," Molycorp chief executive Mark Smith said of the venture to mine the metals domestically.

    When Molycorp ramps up mining of rare earths, "there will be diversity of supply so that America can have a choice as to where they buy those minerals," Smith said.

    Environmental challenges? No problem, he said. Technological breakthroughs enable a cleaner process.

    And, he said, Molycorp will process the metals at about half the cost — $1.27 per pound versus $2.54 in China.

    At open-pit mines in China, miners extract rare-earth metals by pouring acids over ore — creating huge toxic sludge ponds.

    China for years has pursued a strategy of limiting exports, while offering steady low-cost supplies of metals to manufacturers that agree to move jobs to China.

    Chinese producers in China's state-run economy "are going to take care of themselves first, right?" Smith said in an interview at his Denver Tech Center headquarters.

    Chinese authorities couldn't be reached. China's embassy spokesman, Wang Baodong, in Washington, D.C., didn't respond.

    China's carrot-and-stick policy is unfair, an obstruction of market forces, said U.S. Rep. Mike Coffman, R-Colo. He is preparing legislation that would require U.S. officials to pursue economic sanctions against China at the World Trade Organization.

    The recent suspension of shipments ought to persuade U.S. military leaders — who need the metals for bombs, night-vision goggles and tanks — that "China will use their rare-earth metals as leverage for other things," Coffman said.

    "We shouldn't just lean back and let it happen," he said. "I don't think we can trust China."

    U.S. companies now pay a premium to import essential supplies and don't dare complain, Coffman said. "People are intimidated — to include the (Obama) administration."

    A recent Defense Department internal report asserted that the military can rely on Chinese suppliers.

    Meanwhile, the Energy Department has offered Molycorp $280 million in loan guarantees that helped raise $380 million for the U.S. mining venture. Lawmakers also are considering legislation to boost research and development. The Colorado School of Mines, which recently announced a new course in rare-earth metals, is poised to benefit.

    Molycorp would mine in the Western desert, refurbishing its Mountain Pass Mine 60 miles south of Las Vegas — a facility that was closed in 2002 after spills and a costly cleanup and conflict with regulators.

    Revamped operations will include a new mill and manufacturing of magnets using the metals.

    While still using hydrochloric acid to remove metals and radioactive thorium from ore, the process will recycle wastewater so that settling ponds aren't needed.

    Dry tailings later would be spread around Molycorp's 2,222-acre site on the California-Nevada border, molded into hillsides and covered with native vegetation, communications director Jim Sims said.

    A five-year sales contract for lanthanum used in refining petroleum, signed Thursday with W.R. Grace, could bring significant income.

    Back in the 1980s, Molycorp hosted Chinese delegations and shared know-how. Now such exchanges have ceased and new technologies are protected by patents.

    Any future cooperation, Sims said, must ensure respect for intellectual property. "We're going to be very careful about guarding these new technologies and keep them in the United States."

    If all goes as planned, the mine would reopen by the end of 2012 to produce 20,000 tons a year.

    Global demand for rare earths requires about 125,000 tons a year, 50,000 of which is used outside China. China's government allows exports of only 30,000 tons. The recent suspension forced up prices by 700 percent.

    "We've seen a price increase," said Bill Rankin, chief executive of Longmont-based UQM Technologies, where 300 workers soon could be hired to make electric motors using rare-earth magnets for vehicles — which are to be assembled in China.

    "We're extremely pleased about Molycorp's reopening of the Mountain Pass Mine," Rankin said. "If they offer rare earths at a competitive price, we'll certainly buy it from them.

    "Getting rare earths from one particular country is probably not a good thing."

    The cumbersome U.S. environmental regulatory processes "result in costs and lead time that certainly aren't helping the issue," Rankin added.

    Colorado Mining Association president Stuart Sanderson planned to help press the case for speedier approvals.

    "We're becoming increasingly import dependent, not only for rare-earth minerals but a variety of minerals, uranium one of them," Sanderson said. "It's important that we try, to the extent possible, to secure sources of minerals here. That means responsible domestic mining."

    Inside UQM's factory, workers saw no other option than to figure out how to mine metals more efficiently and cleanly at home.

    "If we don't start going down that road, we'll be completely at the mercy of China," said business-unit manager Luke Bokas, 31, a refugee from Michigan's auto-industry meltdown.

    Otherwise even existing jobs may be at risk.

    "It wouldn't be the first time my job's gone to China," said Roxanne Salazer, 36, a warehouse receiving clerk.

    She'd been laid off from a factory where she made electronic circuit boards — closer to her home in Fort Collins. Now she handles boxes of the rare-earth magnets — imported from China — that UQM needs to make motors.

    "It's terrible to lose your job," she said.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    Heavy Rare Earths Prices Double In Two Weeks
    June 16, 2011

    Prices of heavy rare earths, used in products including magnets, plasma TVs and smart phones, have more than doubled over the last two weeks after China announced plans to centralise control over its rare earth mine assets, according to U.K.-based publication Industrial Minerals.

    Dysprosium oxide, used in magnets, lasers and nuclear reactors, has risen from a price of $700-$740/kg at the start of June to $1,470/kg at present, according to data published by Industrial Minerals. Likewise, europium oxide, used for its phosphorescent properties in products including plasma TVs, smart phones and energy-saving light bulbs, has risen around 142% over the same period, from between $1,260-$1,300/kg, in early June to $3,400/kg at present.

    China's Minister of Land and Resources Xu Shaoshi in late May revealed government plans to maintain tight control over the rare earth industry and shift from surprise inspections to a regular inspection system, stepping up efforts to prevent illegal mining. According to informed sources, this involves creating a strategic reserve for heavy rare earths in what would be another step towards protecting key resources and ensuring supplies for the domestic market. China is the world's biggest producer and exporter of rare earth elements.

    Prices for rare earth elements have been rising continuously since last year but are now escalating, according to the publication.

    "Prices of heavy rare earths have surged since the start of the month as the Chinese government announced further plans to centralise control over the country's mining assets," Mark Watts, Industrial Minerals online news editor, said in a statement.

    "Heavy rare earths, which are largely mined in the southern Chinese province of Jiangxi, have been subject to tighter environmental controls and a government crackdown on historically widespread illegal mining."

    Global demand is increasing rapidly for rare earth elements, which are used in more applications than 20 years ago, said Industrial Minerals editor Mike O'Driscoll. At the same time, China is reducing exports and increasing its own consumption, he said.

    "Add to this a lack of alternative rare earth element supply outside China -- certainly in the short term as a raft of international projects struggle to come to fruition -- coupled with, and perhaps most concerning, forecast estimates of a projected 48% increase in world rare earth element demand to 185,000 tonnes as soon as 2015," O'Driscoll said.

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    Default Re: World Faces Hi-Tech Crunch As China Eyes Ban On Rare Metal Exports

    China Plans For Treasure Hunt in Pacific Ocean
    July 20, 2011

    China plans an ultra-deep dive by a manned submersible beneath the Pacific Ocean that would propel it past the US in a race to explore potentially vast mineral resources in the deepest parts of the world's oceans, The Wall Street Journal reported Wednesday.

    The Jiaolong -- named after a mythical sea dragon -- left China on board an oceanographic research ship on July 1. It arrived Saturday at its destination in the northeastern Pacific, between Hawaii and North America, where it was set to attempt a dive to 16,404 feet (5,000 meters), according to state media reports.

    The state-run Xinhua news agency Saturday quoted Liu Feng, the director of the diving trials, as saying the sea was too rough to attempt the first of its planned four dives before Wednesday. "We'll use this time to do our preparatory work down to the last detail, and as soon as sea conditions improve, we'll start sea trials," he was quoted as saying.

    The planned dive would be the latest milestone for China in a high-stakes technological race once dominated by the US, which in 1960 sent two men to the bottom of the Mariana Trench -- at 36,198 (11,033 meters) the deepest point in the world's oceans -- in the now-retired Trieste sub.

    The US led undersea exploration and mining efforts for several decades thereafter, but commercial interest waned in the 1980s and 1990s because international prices for nickel, copper and other commodities thought to be most easily mined from the deep seabed at the time were insufficiently high.

    Now, many experts said the US risks falling behind potential commercial and military competitors as rising commodity prices make undersea mining more profitable, and China and Russia apply for rights to explore newly discovered deep sea deposits thought to hold larger quantities of silver, gold, copper, zinc and lead in particular.

    The race has commercial, scientific and military implications comparable to space exploration, in which China is also now a world power as one of only four countries -- alongside the US, Russia and India -- capable of manned space flight.

    Although Chinese officials said the Jiaolong was for civilian purposes only, foreign military experts said such a craft could be used to intercept or sever undersea communications cables, to retrieve foreign weaponry on the ocean floor, or to repair or rescue naval submarines.

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