Germany is being increasingly active in its moves to secure security of supply of rare earth elements. Berlin has been working with Australia on this, and it is known that the Foreign Affairs department in Canberra has arranged at least one local expert to go and brief German officials on the present REE scene. Now this week a delegation from Western Australia has been in Germany (they’ll also go to France and the United Kingdom) to promote Australia’s rare earth and lithium sector. The 17-member delegation has been organised by the Chamber of Minerals and Energy of Western Australia and the members are visiting automotive, electronics, batteries and specialist metals companies. The roll call of companies on the mission is interesting. Greenland Minerals & Energy, Hastings Rare Metals and Northern Minerals are the rare earth members. (For lithium, the companies represented are East Coast Minerals and Galaxy Resources.) A key part of the presentations being given is a briefing by the Australian federal government’s science agency CSIRO (formerly the Commonwealth Scientific and Industrial Research Organisation). Its recurring them: forget REE supplies out of China. This is because (1) China will need all the rare earths they can produce because their domestic market is growing and (2) China has the “wrong” rare earths. China’s output is heavily dominated by the light rare earth elements and the country is going to soon be an importer of dysprosium, yttrium and neodymium. CSIRO reckons this year China itself will consume 80,000 tonnes of rare earths and the rest of the world (ROW) 35,000 tonnes (of which Germany now consumes about 4,000 tonnes). However, ROW production will increase from between 3,000 and 5,000 tonnes this year to 80,000 tonnes a year in 2015. As the scientists comment in true Aussie style: there is an arrow on one slide with that 80,000 tonnes ROW in 2015 figure and the caption “So, no problem -OK?” For all those who like to toss the coin about who is going to get into production when, here’s CSIRO’s list of those in production or with substantial proven reserves by 2015 and their annual tonnages: Mountain Pass 2,100 soon, 20,000 by 2014 Mt Weld 10,500 next year, 20,000 by 2014 Steenskampskraal 2,700 soon Sumitomo (Kazakhstan) 3,000 in near term, 15,000 by 2015 Toyota/Sojitz, Vietnam 3,000 by 2013, 5,000 by 2014 Alkane Resources 1,300 by next year, 3,200 by 2014 Avalon, Canada 5,000 by 2015 Arafura, Australia 10,000 by 2014 Hastings, Australia Reserves of 76,000 by 2014 Great Western Minerals Reserves of 6,210,000 by 2014 Kvanefjeld, Greenland Reserves of REE, uranium, zinc 6,600,000 Northern Minerals, Aust. Xenotime - no reserve estimate Seltenerden Storkwitz, Germany Reserves by 2015 of 38,000 tonnes Tasman (Scandinavia) No stated figure. With the latter grouping, CSIRO is clearly expecting those companies to be production but cannot pin down an annual tonnage figure and its 80,000 tonnes for ROW output is also obviously a best-guess estimate. However, CSIRO looks closely at the whole recycling issue. Its best guess on the amount of REE now in actual use is 1 billion cathode ray tube TVs -- 9,000 tonnes yttrium, 500 tonnes europium 3 million Prius cars -- 1,500t neodymium, 360t dysprosium 3 billion fluorescent lights -- 1,800t yttrium, 110t terbium, 120t europium Their view is that recycling is the most sustainable supply. The conclusion: The current LREE situation is serious but short-lived, new non-Chinese LREE sources will come on line soon. However, HREE will be in short supply, along with niobium (a rare metal, not REE). CSIRO singles out dysprosium and terbium as at most risk. The solutions: Put effort into prioritising new mines that have yttrium, dysprosium, neodymium, terbium and europium. Then close the loop with efficient recycling. While on the subject of LREE, there’s a development under way at the University of Tokyo’s Nanophotonics Research Centre. According to The Nikkei Weekly, one goal is to develop a way to use near-field light to polish the glass substrates for computer hard disks. This glass for hard disks is conventionally polished using a fine powder of a cerium oxide, but cerium is a rare-earth element in short supply. They stumbled on what the newspaper describes as “an amazing discovery”: when green laser light is shined at the glass on to a mark made with a black felt pen, the glass under the mark is instantly polished to a mirror-like finish. This clearly had implications for one of the main markets for cerium. And, finally, the latest view on Lynas Corp. Foster Stockbroking in Sydney notes that Malaysia’s Science, Technology and Innovation Minister Datuk Seri Maximus Ongkili has advised he will make a decision to issue LYC’s temporary operating licence within two weeks. The parliamentary select committee which was set up by the government to collate expert opinion and consult the public also ended its last public hearing on the issue last week. Their final report will be tabled in Parliament on June 14. While the decision to issue the licence is not dependent on the committee’s report, it is expected a final decision will be made after its release. Foster says it continues to remain of the view that the outcome will be positive, especially with the Lynas Advanced Materials plant nearing completion. Once the Australian company has its temporary operating licence, it can start importing concentrate from Western Australia. “Meanwhile the fundamentals of the rare earth market continue to improve for LYC as China’s export of rare earths in the first four months of 2012 fell by 43% year-on-year to 3,046 tonnes, which could signal further tightening of supply and rising prices", Foster notes.
LYC Price at posting:
89.5¢ Sentiment: LT Buy Disclosure: Held
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