A Report From The Rare Earths Conference In Beijing

by Jack Lifton on August 4, 2010 · 14 comments

in China, Event Reviews, Permanent Magnets, Rare Earths, Wind Turbines

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I am in Beijing, where I am attending and have spoken at the 2010 China Rare Earth Summit, part of the 6th International Conference on Rare Earth Development and Application, run by the Chinese Society of Rare Earths. I was honored to be one of only three American guest speakers. The other two were America's most well known academic experts on rare earths, Professor Karl Gschneidner of the Ames Laboratory at Iowa State University and Professor William J. Evans of the University of California - Irvine.

The conference has 300 attendees who are a comprehensive group, representing the academic, business, and governmental sectors of the Chinese rare earth research (academic and business), development, mining, refining, and end use manufacturing industries.

I was asked to speak about 'The American Perspective of the Rare Earth Supply Issue.' My presentation and commentary will be posted shortly here on the Technology Metals Research web site for review.

Although most of the nearly 100 speakers in the 6 technical tracks, and most of the 222 papers listed on the program were highly technical, interspersed among them were some that were purely descriptive of mines, processes, and important sectors dependent on the rare earth metals such as permanent magnets, batteries, phosphors, wind energy generation, and other clean-tech/green-tech applications.

My colleagues Dudley Kingsnorth of IMCOA and Judith Chegwidden of Roskill Information Services, were also both invited guest speakers and Ms. Chegwidden was the moderator of the introductory session at which I spoke. Their respective presentations might be available online in the near future.

I am here in China to find out what the Chinese rare earth industry is doing and where it is going. I have a scientific background, and was once a researcher myself. I also worked with rare earths in product development for phosphors and batteries, so I was interested in and able to understand most, if not all, of many of the technical papers I heard. THe biggest surprises though, came from the survey papers on clean-tech/green-tech applications of the rare earths.

It is obvious from the vantage of the rare earths' sector in China, that China is simply racing ahead of the rest of the world in volume production, as well as development of state-of-the-art clean tech and green tech products.

For example, it was pointed out that China built and installed 13 gigawatts of wind turbine electricity generating capacity last year, using rare earth permanent magnets for efficiency and low maintenance. The astounding prediction was made that by 2020, China will install 330 gigawatts more wind power capacity, with each 1.5 megawatt generator require one metric ton of neodymium-iron-boron magnet alloys, which, if they contains 34 weight % neodymium, would mean that the Chinese wind power industry would need a further 70,000 t of neodymium, approximately 3 1/2 times the 2008 production of that metal - all as new added material - between now and 2018-19.

I plan to write much more on this topic during the next few weeks, but I believe that the trend is clear. China will be the driver for, and the home of, the most demand in the world for the rare earth metals from now on.

There wasn't much talk about Molycorp in China, other than to hope that if it gets into production, Chinese customers will have an opportunity to buy its products. The only non-Chinese rare earth mining venture present was Great Western Minerals Group. Its chairman gave a talk on his 'mine to market' strategy, and he told me he was there both because he was invited, and in order to continue negotiations for a strategic alliance with a Chinese refiner, on an African project the goal of which is to supply Great Western's UK alloy plant, Less Common Metals, with feedstock metals for its operations from GW's South African venture at Steenkampskraal.

Japanese companies and academics were well represented and there were even French and Russian miners and refiners. I was disappointed that there were so few Americans, and as for the American media I saw only public radio's Marketplace (who interviewed me) and the New York Times' Asia correspondent.

If the rare earth supply issue is so important to America's security, why then do so few Americans and almost no American media come to the world's premier rare earth informational event? It is most likely because China is the center of the world rare earth industry, in all of its aspects.

The Chinese and Japanese magnet industries both need heavy rare earths. They may even need light, imported, non-Chinese, rare earths sometime before 2015, but I think it is clear that after 2015 they will both need heavy rare earths from outside of China. Japan may actually need both types of rare earths from the outside by 2015, if Chinese demand should exceed or meet its domestic supply capability by then, which is probable, so that China no longer is willing to export rare earths.

If all roads lead to Rome then certainly the home of all metals is now China.

Disclosure: I have a LONG position in Great Western Minerals Group stock.

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{ 14 comments… read them below or add one }

1 Isaac August 4, 2010 at 12:53 pm

Why do you not have more enthusiasm for Lynas Corp (LYCSF) out of Australia? From my readings they appear have the biggest new ore package, closest to coming to market, than any other non-Chinese source. They seem to have excellent management.

2 Kris August 4, 2010 at 1:57 pm

Dear Jack,

You are long in Great Western Minerals Group. What makes it a better investment then other companies like Lynas (which stock price is going up), which I bought recently after reading your interesting articles. For which I'am greatfull.

3 Willem Duyvesteyn August 4, 2010 at 2:08 pm

Jack
Was there any discussion on scandium in Beijing? While China may have very large reserves of RE's, there are only limited scandium resources. Any comment on scandium will be much appreciated. As always I enjoy your reports.

4 Ian London August 4, 2010 at 3:06 pm

Hi Jack…Thanks for sharing your musings and insightful comments from Beijing I certainly share your thoughts on what seems to be its accelerating domestic demand as it implements many of the CleanTech applications we talk about in the West.

I do however wonder about your calculations and the 3 and a half multiplier on Neodymium… although I believe it will be significant. As I understand the general rule of thumb, the 0.6 tonne of magnet per MW of wind power relates to PMDD configuration.. that is permanent magnet generators PM(G) and direct drive (DD). I also understand that the DD (that is the gearbox displacer) requires the lion’s share of that magnet demand. PMDD implementations are just gaining acceptance, at least here in the West…

In any event, if the neo is not to be consumed just by China in its wind programs, it will certainly be screamed for elsewhere. Hence, your concern about the rest of the world not getting its act together is absolutely true.. and the sooner the better… Safe travels.. Ian

5 S. Babus August 4, 2010 at 4:24 pm

Government's commitment to this goal, as expressed in an aggressive national plan and a set of legal, regulatory, and financial incentives to stimulate domestic producers, along with mandated targets for higher reliance on renewable energy sources. Imagine what world demand for REEs would be like should other governments adopt similiarly ambitious policies! [One source for info on Chinese wind power is the website of the Global Wind Energy Council, http://www.gwec.net/index.php?id=125 ]

6 S Babus August 4, 2010 at 4:28 pm

Sorry, my comment lost its initial phrase:
The dramatic growth of wind power generation in China reflects the Chinese Government's commitment to this goal, as expressed in an aggressive national plan and a set of legal, regulatory, and financial incentives to stimulate domestic producers, along with mandated targets for higher reliance on renewable energy sources. Imagine what world demand for REEs would be like should other governments adopt similiarly ambitious policies! [One source for info on Chinese wind power is the website of the Global Wind Energy Council, http://www.gwec.net/index.php?id=125 ]

7 Jian Zhu August 4, 2010 at 4:35 pm

hi Jack,
You said that Chinese demand should exceed or meet its domestic supply capability by 2015. However, some said Chinese reserves could meet world demand for 1000 years. Do you know why is that.

8 Don Lay August 4, 2010 at 7:29 pm

Jian Zhu:
Not wanting to jump ahead of Mr. Lifton's response but:
1. the Chinese only have a large supply of lights, not heavies;
2. that 1000 year statistic is old and probably assumed static demand -- demand is only increasing.
The most important comment Jack made IMO is that the Chinese are interested in Molycorp supply ... think about that for a minute.

9 Tek August 4, 2010 at 9:38 pm

I found this stunning:
The only non-Chinese rare earth mining venture present was Great Western Minerals Group. Its chairman gave a talk on his ‘mine to market’ strategy, and he told me he was there both because he was invited, and in order to continue negotiations for a strategic alliance with a Chinese refiner, on an African project the goal of which is to supply Great Western’s UK alloy plant, Less Common Metals, with feedstock metals for its operations from GW’s South African venture at Steenkampskraal.

The only one????

10 marian letcher August 4, 2010 at 10:29 pm

Would also like to know Jack's thoughts on Lynas? ASX

11 Vladimir Seredin August 6, 2010 at 6:54 am

Dear Jack,
Yours ending phrase “If all roads lead to Rome then certainly the home of all metals is now China” is absolutely true, especially when we are talking about technological metals. I had visit to China in June and had seen it my own eyes.
Uppermost I have in view of mining and manufacture Ge at the coal deposit in Inner Mongolia. As you know this rare element is used in thin-film solar cells, LEDs and many other hi-tech applications. I happened on similar Ge-bearing coal deposits earlier, and I have absolutely shaken by picture that I have seen in China. I could not present to myself before such ideal organization of the difficult technological chain which begins with selective mining of Ge-bearing coals and comes to an obtaining superpure metal Ge (99.99999 %!). Industrial Ge Museum is constructed on means from enterprise profit at the industrial complex. This Museum is equipped by hi-tech and gives full presentation about history of this element, raw sources of Ge, technological processes, and fields of Ge-using. And all it were created for last10-12 years which have passed from finding Ge-bearing coals.
The second strong impression was finding stratabound REE-Zr-Nb-Ga ores of new type by the Chinese scientists. It is supposed, that the rare earths contained in the ores as sorbed ions. If this assumption proves to be true, China will receive one more source REE which in the long term can replace REE-deposits in the weathering crusts.
Thus, I completely support your position about necessity as more as possible widely to make use of the Chinese experience. I think that prospecting and development rare metal deposits cannot be effective now without it.
In conclusion I would like to set two questions that may be related to raised problem by you.
What the dramatically grows of REE prices last 2 weeks is connected with?
Why this event almost has not affected in share price of the REE junior companies and has not been commented neither by mass media, nor by REE-blogs, including TMR?
Thank you beforehand.
Sincerely,
Vladimir Seredin

12 reganbaha August 6, 2010 at 8:27 am

Since REE quota's were cut by China, the REE basket prices have dramatically risen as Vladimir points out. The basket prices of several companies I follow have gone from high teens to mid-thirties in the month or so since Chinese quota cuts.

Why haven't REE junior companies share prices also been affected? There are two companies who have been affected, Lynas (LYC.AX) and Arafura (ARU.AX); which have both almost double in price in the last month. They have both been working on their respective REE assets for at least five years and along with Molycorp will be the the only non-Chinese producers in the next couple of years. LYC are building their processing facilities and ARU are finishing off their BFS.

Unlike all of the other non-Chinese REE juniors, which are still getting excited about grab samples and marginal drill results; and much to the surprise of many US-centric commentators, there is a world outside of the US, and there are companies outside of North America, already well-advanced in the development of REE assets.

It takes a very long time to develop these assets; which is something that the latest batch of REE Juniors, who are internet-cum-Uranium-cum-Phosphate-cum-REE companies will learn in the near future.

So the share prices of realistic Junior REE-companies is increasing along with the rise in basket prices. The other REE-juniors johnny-come-lately's are floundering, because the only mining that they will ever do is of their share holders pockets, until there is another hot sector, and they change their guise once again.

Choice

13 Vladimir Seredin August 6, 2010 at 1:14 pm

Dear reganbaha,

Thanks for your comment. It is clear, that jump of the prices was affected by the Chinese decision on trimming of quotas. However, if I am not mistaken, between the announcement of this decision and the first jump of the prices there have passed 2 weeks.
About many juniors you apparently are right, though among those from them, whose actions have not risen in price last 2 weeks there are also quite serious companies which enjoy the governmental support. But not clearest is silence in mass media and specialized REE blogs, excepting can be metal-pages. Do you would represent what noise has risen if the prices have grown approximately twice for 2 weeks on any other raw materials? And here all easy, despite the fact that these metals were in the centre of general attention the last year.
Best,
Vladimir

14 Digger Barnes August 7, 2010 at 8:36 am

Thanks Jack.
Can you recommend a public traded HREE outfit?
Seems that is where the crunch will be.
Thanks
Digg

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