Just posted on the Lynas thread, many thanx to the poster for the info
Rare Metals Investment News Updates, Today's Edition (RareMINUTES) 050709 NEODYMIUM May 7, 2009 Is he ramp'n this or is the world realy going to need more RARE EARTHS? PrintEmail to a FriendAnalysis by: Jack Lifton Analysis of: Windpower to overtake nuclear in China by 2020 Published at: www.proactiveinvestors.com.hk Implications If China commits to producing 100 gigawatts of wind generated electricity by 2020 it will place this goal in its next two five-year plans as part of the official statement of the goals for the Chinese utility industry. If this happens then China's recent takeover of the Australian rare earth mining industry makes perfect sense. \ The Chinese, you see, like to make long term plans not only for economic goals but also for implementing the necessary steps in the value chain to achieve them.
Analysis To make the most efficient, lightest weight, lowest service wind turbine generator of electricity takes one ton of the rare earth metal, neodymium, per megawatt of generating capacity. This to to build the neodymium-iron-boron permanent magnet necessary for the generator to function.
The current production of neodymium is around 20,000 metric tons a year, and all of it is produced in China.
The world's demand for neodymium for current uses is now in balance with production.
If none of the world's current demand becomes obsolete, and in fact, if it grows then where is 100,000 metric tons of neodymium going to come from for China's projected 100 gigawatts of new wind generated electricity, if China opts for 100% neodymium-iron-boron permanent magnet type electric generators??
The answer is simple: Australia.
The two large rare earth mining operations now in the process of being acquired by Chinese companies, Lynas and Arafura, are said to be capable each of producing 20,000 metric tons of total rare earths per year; it is also said that one of them, Lynas, has higher than to be expected neodymium content in its ore body element distribution.
One problem that had dogged investors in Lynas recently was that if it were brought into full production there might be a surplus of neodymium thus paradoxically driving its price and the value of Lynas future production down.
That problem may now be solved. The new Chinese wind power plan would be able to take 100% of the Australian production of Lynas of neodymium for ten years of full production. Thus the current neodymium market would not be impacted.
Is this why the bank of China is so eager to extend a 250 million dollar guarantee to ensure that Lynas rare earth refinery gets built? Probably it is.
Based on current and projected Chinese domestic production and current and projected use of neodymium for non Chinese wind power, batteries, and electric motors and generators for vehicles, vehicle accessories, and military use I predict that the price of neodymium will rise sharp;y throughout the second decade of the twenty-first century.
The only possible non Chinese, or non Chinese owned, sources for neodymium for the open market now are the Americans, privately owned MolyCorp and privately owned Thorium Energy, Inc., and the Canadians, publicly traded Great western Minerals Group and publicly traded Avalon Rare Metals.
For now it is still possible to buy shares of Australia's Arafura and Lynas. There is no indication of any immediate plan by their new Chinese owners to take them private, but they might just do that not too far down the road, and if the run up of neodymium has then begun those who were long term investors at that point will be in very good shape.
Don't say I didn't tell you about this early on.
ARU Price at posting:
67.0¢ Sentiment: LT Buy Disclosure: Held
(20min delay)