6th International Rare Earths Conference

by Admin on November 21, 2010 · 11 comments

in Batteries, Catalytic Converters, China, Event Reviews, Permanent Magnets, Rare Earths

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The 6th International Rare Earths Conference was held earlier this month at the Shangri La Hotel in Kowloon, Hong Kong. Organized by Roskill and Metal Events, the conference was billed as “THE international event for the global rare earths industry”.

We persuaded Dr. Jon Hykawy of Byron Capital Markets, to share his thoughts and observations on the conference. The following is his report. Thank you Jon!

Report on The 6th International Rare Earths Conference, Hong Kong
By Jon Hykawy

The 6th iteration of this conference, widely regarded as the most important meeting of the rare-earths industry, was the first one I have had the pleasure of attending. In some ways, it was everything I had expected it to be, but it was also surprising for the lack of attendance of many of the major figures in the Chinese rare-earths community. Just as the previous Chinese rare-earth conference that I attended, held in Beijing, had very few Westerners present, the lack of Chinese participation at this show did little to convince me that the rare-earths world is maintaining the sort of dialog required to see it through some potentially turbulent times ahead.

The first session of the conference kicked off at 09:00 on November 10th, and was headlined by both Judith Chegwidden of Roskill and Dudley Kingsnorth of IMCOA. Dudley and Judith traded duty at the podium to outline, firstly, what has happened over the last 18 months, particularly the unofficial embargo of rare-earth products destined for Japan by China. It was made clear at the conference that, as of November 11th, that quasi-embargo had not yet been lifted. Figures given showed that, at least since 2005, total Chinese export quotas on rare earths have dropped every year, but 2010 has been the first year where estimated RoW demand is higher than the quotas by a considerable margin.

Dudley made the point that there may well be bottlenecks in supply. He presented a slide that suggested that while cerium would be in surplus in 2015, neodymium supply would be tight, but dysprosium, terbium and europium would likely see demand in excess of supply. This reconfirmed the work that Byron Capital Markets had done on the same issue in March of this year.

Lynas CEO Nick Curtis spoke next. One thing struck me most directly about this presentation; Nick suggested that we in the industry should begin to comport ourselves more responsibly, and stop pointing out and crowing about $50/kg prices for lanthanum and cerium. At the bottom of the Lynas home page, the current Mt. Weld composition price (about US$62/kg, as I write this, but obviously grossly influenced by the artificially high levels of La and Ce pricing) is highlighted. This is not exactly what I would consider an attempt to contain expectations regarding future rare-earth pricing. Nick did point out that Lynas now has six contracts and two letters of intent in place, and should be at an annual production rate of 11,000 tonnes by this same time next year.

Mark Smith from Molycorp then made a presentation that continued to accentuate the positive. While Mark mentioned the US House bill on rare earths, he did not mention its likely failure in the Senate during this lame duck session of Congress, and thus its imminent death. However, Mark did highlight that Molycorp is “on time and on budget” to complete the work on its “mine to magnets” strategy, and should complete this work in 2012. He also committed to late 2012 production of Sm, Eu, Gd, Dy and Tb, and noted that Molycorp would soon announce new technology to produce up to 4x the previously understood level of heavy rare earths.

Gary Ragan of Albemarle gave the audience an introduction to FCC catalysts. For those who did not know, FCC (fluid catalytic cracking) catalysts allow refineries to produce high-quality product at a much higher rate than would otherwise be possible, by utilizing more of each barrel of oil or even utilizing poorer feedstock.  The market is 600,000 tonnes of FCC catalyst per year, with Grace, BASF and Albemarle being the Big 3 suppliers.  Of this catalyst material, roughly 2% by weight is rare earth, mostly lanthanum (La). Gary pointed out that there has been work done for years on rare-earth substitution, but the new, very high prices for La FOB China are now providing the strongest impetus ever to eliminate or strongly curtail rare-earth use in FCC catalysts.

BASF’s Patrick Chang chose to speak specifically about FCC and mobile-emissions catalysts.  La in FCC catalysts provides thermal stability and selectivity.  REEs in mobile-emissions catalysts also increase thermal stability, thus assisting in dramatically improving emissions reductions.  Gary presented two interesting scenarios, one assuming lithium-ion batteries replacing NiMH batteries in hybrids, the other a world in which NiMH continues to dominate. We believe the first scenario is a near certainty, but both results are interesting. If the first scenario holds, then La and Ce are both in plentiful supply through 2020, with magnet materials perhaps being in tight supply.  But if NiMH batteries continue to dominate, then Ce supply is plentiful, but La, Nd and Pr are short in the longer term. A cautionary note to the industry was issued, which was that if REE supplies continue to be unstable, then substitution work will accelerate, and this substitution will, in turn, likely result in decreased demand, some REE projects being delayed and other green industries finding it more difficult to rely on new sources of REEs.  Since Chinese industry depends on products made from REEs by Western countries, this situation does not benefit China, either.

Dr. Dmitri Psaras from Neo Material Technologies spoke on the difference between commodity and differentiated products in the RE industry. He made the point that even seemingly simple products such as ceria or cerium carbonate can be differentiated by physical factors such as particle size and porosity. His point was largely that RE products are rarely commodities, but are developed in conjunction with customer needs.

Professor Zhao Zhengqi was unable to attend the conference, but his paper on magnetic refrigeration was given by Wen Yang. She pointed out that cooling accounts for 15% of human energy use, and with only three ways to cool something (gas expansion, thermoelectric, and other phase changes including magnetic) there is a defined potential energy saving of 30% or more available by switching from the use of refrigerants to magnetic cooling due to the higher Carnot efficiency available to the magnetic technology. Typically, we think of magnetic cooling as using NdFeB magnets with some Gd-based compound as the active material, but Wen pointed out that switched electromagnets could provide the varying magnetic field, and there are completely non-RE containing materials that could be used.  However, like in many industries, the use of REEs provides the best solution.

A number of junior REE companies presented in a session that lasted nearly 150 minutes.  Anton Manych from SARECo gave a talk on the 51:49 JV project in Kazakhstan being conducted by Kazatamprom and Sumitomo.  It is a two-phase project, looking to process very-high-grade monazite for LREO and tailings for HREO.  Both phases can be brought to production quickly, which is key to alleviating any shortages due to Chinese quotas. James Kenney from Frontier spoke on their work in Africa, showing a very interesting slide contrasting capex and opex for kimberlite projects in Canada with those in Africa, and showing costs down by 70-80% for projects of similar size. Stans Energy CEO Robert MacKay gave a talk on the REE deposits within the former Soviet Union. Jim Engdahl of GWG and Trevor Blench of Rareco spoke regarding Great Western Minerals and Steenkampskraal, and pointed out that the metallurgy at Steenkampskraal is well understood and that separation had previously been done in England. Damian Krebs from Greenland Minerals & Energy spoke regarding their large but low grade U/REE project in Greenland. And Avannaa Resources, a private company also with properties in Greenland, discussed their project, a 1% in situ grade with 12% HREE.

Day Two of the conference was led off by David O’Brock, the new CEO of AS Silmet in Estonia. David noted that Silmet separates RE carbonates that were mined in the Kola Peninsula and then concentrated farther east. The plant only has 2,400 tpa capacity, but has been running at only 40% of this level due to feedstock shortages. What has kept the company alive in the past few years is the processing of niobium and tantalum.

Chen Zhanheng from the Secretariat of the Chinese Society of Rare Earths spoke regarding the environment, domestic markets and resources. According to Chen, Chinese resources account for only about 32% of the world total, but the very important ionic clays are only about 300 basis points of this value. Chinese domestic consumption of rare earths is up to about 57%. With environmental and market concerns both pressing the government to consolidate the industry, Chen suggested that establishing new companies outside of China and a wider rare earth industry would be a very good thing to do.

Yasushi Watanabe from the AIST in Japan discussed Japan’s attempts to find alternative sources of REEs. He showed a very interesting slide with China’s consumption of REEs being 60% of global output, but Japan next at 20% (interestingly, with their dominance of the global LCD industry, Japan consumes 80% of global indium production, a startling statistic). Watanabe also noted that while the quantity of REE exported to Japan from China fell 47% from 2008 to 2009, so did their share of exports. While he believes that LREO can be supplied from new projects, “timely” (as he put it) HREO projects are highly desirable.

Professor Zhuang Weidong from Grirem presented on the Chinese luminescent materials market. While production of TV phosphors (for CRT, plasma and FED) have declined since 2003, phosphors for lighting have increased strongly to 6,000 tonnes in 2009. By far, most of this phosphor goes into compact and linear fluorescent lighting. China produced some 4.8 billion fluorescent lamps in 2008, about 31% of the global total. We should all be aware that the necessary dopants for lamps are Eu and Tb, those used for LEDs are Eu and occasionally Ce, and PDPs use Eu. Long-persistence phosphors, for signage and other applications, use Eu and Dy as dopants. Given Dudley’s talk earlier, we can all hope this application doesn’t take off and increase demand for Dy!

Unfortunately, I missed a presentation by Oliver Touret from Rhodia, and have been unable to obtain a copy of his slides [we’ll see what we can do to get this info – GPH].

Greg Kroll from Magnequench delivered the final talk of the conference, and perhaps one of the most interesting. In highlighting the use of bonded NdFeB magnets in new areas such as appliances and, increasingly, in cars doing such things as lifting windows or moving seats, Greg pointed out that it is possible to substitute La and Ce for Nd in these magnets. While all of flux, coercivity and Curie temperature are poorer for La2Fe14B or Ce2Fe14B, say, than Nd2Fe14B, the point is made that for many applications, the relative improvement in performance and physical characteristics over ferrite is still sufficient to warrant use, and the lower price of materials can only help.

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1 Jack Lifton November 21, 2010 at 3:27 am

Jon,
Thank you for a thorough and much more than competent report on the “meat” of the conference. You are bringing to the REE analysis sector a degree of technical proficiency and writing skill it has needed for some time. Please think of TMR anytime tou would again be able to report on a rare metal themed conference or workshop you’ve attended. I don’t know when I’ve learned more about a conference than from your report of this one. By the way your subjective comments are, I think, right on the mark.

Thanks again.
Jack Lifton

2 Bob M November 21, 2010 at 8:23 am

Great report! Fills in gaps in what is being reported elsewhere.

3 William November 21, 2010 at 11:28 am

Alternatives to using rare earths in the many applications have been going on for a number of years and as yet none have been developed. Even with the rising demand and costs of rare earths these application continue to use rare earths because of their characteristics and efficiencies. It may be decades before these alternatives are developed but in the meantime these application makers will be reliant on a stable rare earth supply to meet their demands and with all the new technologies being developed the supply chain will be put on severe pressure.

4 Kris November 21, 2010 at 1:45 pm

Thank you very much Jon. I always like your reports and while I don’t agree with every sell/buy recommendation Byron gives, I think they are very interesting to read.

From your article this part is very interesting: “Yasushi Watanabe from the AIST in Japan discussed Japan’s attempts to find alternative sources of REEs. He showed a very interesting slide with China’s consumption of REEs being 60% of global output, but Japan next at 20% (interestingly, with their dominance of the global LCD industry, Japan consumes 80% of global indium production, a startling statistic). Watanabe also noted that while the quantity of REE exported to Japan from China fell 47% from 2008 to 2009, so did their share of exports. While he believes that LREO can be supplied from new projects, “timely” (as he put it) HREO projects are highly desirable.”

Japan is looking for “timely” HREO projects? I wonder what ‘timely’ means… If those projects are in Canada or US, why not invested in them six months ago when all those TSX ventures were very cheap? Why is Japan mostly looking in Mongalia, Vietnam, Brazil, Kazachstan?

Something doesn’t make sense to me. Or does it? Is it about capex and opex? (Newsletters tell you to invest in political stable countries like Canada and Sweden…)

Black Swan.

Regards,
Kris

5 Kyle M November 21, 2010 at 2:00 pm

Thanks very much for posting this up, it’s always informative to hear about what’s happening at these conferences, and you report it in a fair, subjective way.

Thanks again

6 Gordon C November 21, 2010 at 9:27 pm

Kris, I can’t figure out Japan’s modus operandi either. What are they doing in Viet Nam and India and seemingly ignoring North America and Europe? Crazy game this investing I think!

7 chris November 21, 2010 at 10:45 pm

Re Japan,

I think it’s just a matter of time before ucore announces some kind of deal with Japanese companies given their recent talks with the U.S. about supply and Ucore’s recent pr.

” “The Bokan rare earth deposit is characterized by narrow vein hosted mineralization which can be readily extracted using classic narrow vein mining techniques,” said Ken Collison, President of Minecon. “The vein stock works at Bokan are like the branches of an immense tree, with mineable widths and substantial HREE mineralization across the entire system. The mineralization in the Dotson Zone is highly consistent and continuous along strike. Further, the mineralization is visually demarcated from the surrounding country rock, with the opportunity to systematically remove the ore while leaving much of the waste rock in place. The methodology is well proven, and will have a small footprint relative to larger or open pit operations. The potential effect is a highly efficient prospective mining and milling operation, with minimal environmental impact, and a much faster track to design and permitting.”

This pr also answered any quesitons Mr. Phelp raised about Bokan being mineable or not, which I myself thought was funny. But the recent surely answers it and plays right along the theme of what metals going forward will truly be in short supply, not to mention the piece done done here about it will take a small footprint and highly profitable to counter any Chinese dumping/flooding games.

98% Of these LREE deposits are nothing but a momemtum play and won’t be needed. Ucore and another HREE that never gets any attention, Tasman Metals, are what i’d expect to be players going forward.

8 robit November 23, 2010 at 5:51 am

Nice to get some visibility on magnetic refrigeration. Does anyone know if the phosphors for Electron Stimulated Luminescenc contain rees?
>>ESL Lighting Technology is an entirely new, energy efficient lighting technology. It uses accelerated electrons to stimulate phosphor to create light, making the surface of the bulb “glow”. ESL technology creates the same light quality as an incandescent but is up to 70% more energy efficient, lasting up to 5 times longer than incandescent and contributing to the reduction of greenhouse gas emissions. There is no use of the neurotoxin Mercury (Hg) in the lighting process.<<

http://www.vu1corporation.com/

Also, I have found a professor in the UK who has done a lot of r&d involving rare earth glasses. Just Google: Hewak + "rare earth"

The ORC development work on microspheres is particularly interesting.

9 Tek November 24, 2010 at 11:36 am

Jon,
Thanks for a most professional and informative article. I agree with Jack’s comments. There’s a great deal of investor information here as well.

10 Casual Observer November 26, 2010 at 9:35 pm

The most “timely” HREO project is obviously Alkane Resources.

11 Daniel V. December 4, 2010 at 5:38 pm

Thank you Jon, I couldn’t agree with Mr. Lifton more! This was an incredibly fact packed account of the recent conference. I have linked to your article in my post for Monday at metalnewsstream.com. I hope that’s okay. Great Work!

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