Implications For Investors Of The Dramatically Increasing Chinese Virtual Demand For Rare Earths

by Jack Lifton on June 15, 2011 · 35 comments

in China, News Analysis, Rare Earths

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If you’ve read beyond the title above then you are the audience that I am seeking. The Wall Street Journal (WSJ) published an article this morning with the title "China To Set Up Strategic Reserve For Heavy Rare Earths - Sources". The WSJ said that:

China plans to set up a strategic reserve for heavy rare earths in what would be another step towards protecting key resources and ensuring supplies for the domestic market, people with direct knowledge of the plan said. The plan, which hasn't yet received final government approval, would likely reduce volumes for export and boost rare earth prices.

The WSJ goes on to say that

It also would follow an approval in 2009 to build strategic reserves of light rare earths in China's Inner Mongolian Autonomous Region. That plan is supposed to be undertaken by Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co. (600111.SH), the country's largest rare-earth producer by output.

You can read the rest of the article here, and I suggest you do so before going any further.

As I have been reporting for the last two years, China is going full steam ahead with a critical-materials stockpiling program to protect Chinese domestic manufacturers, from any potential interruption of critical supplies.

Two years ago, it was reported that Baotou Rare Earth (BT) had received permission to stockpile up to 300,000 tonnes of rare earths. BT is the world’s largest producer of light rare earths; last year it produced at least 50,000 tonnes of lanthanum, cerium, neodymium, and praseodymium.

Last year it was announced that the Chinese government had decided to consolidate the rare-earths industry, geographically, under a small number of very large (world-class) Chinese metal producers and metals-trading companies.

Late last year it was announced that for environmental reasons, rare-earth production would be reduced and no new (increased) production or even exploration licenses for mining would be issued, until 2012.

So until this morning we had a total reorganization of, at least, the global (i.e., Chinese) light-rare-earth-supply industry well underway, although only just now being implemented. Today, the equation expands to encompass the heavy rare earths, which are mostly produced outside of the geographic region the rare earth production of which has been totally subsumed under BT ‘s authority and responsibility.

Thus it will now fall mostly to Jiangxi Copper to supervise the creation of a stockpile of heavy rare earths (HREEs) in the geographic region in which it has been given the mandate over the production of rare earths.

China is now committed to:

  • The rationalization (thus restructuring) of the Chinese rare-earth mining industry (its reorganization into efficient profitable units, all operating legally with state-mandated production quotas);
  • The environmental remediation (cleanup) of the industry, which operates today with a large uncontrolled segment of “cowboys’ who don’t obey any health, safety, or TAX rules, and
  • The creation of stockpiles of all of the rare earths at levels of what would now be several years of demand!

Since China is today essentially the only producer of heavy rare earths, as well as the producer of 98% of the light rare earths, and since stockpiles can be viewed as purchased inventory, then this means that the virtual demand for all of the rare earths in China will skyrocket.

China clearly fears that the necessary cleanup of the rare-earth-production industry will be disruptive, if not planned for and executed on a totally controlled grand scale. It has therefore decided to do so and has begun to do so.

This is a national industrial policy in action. America has no such policy and, even if it wanted to have such a policy, there is no possible mechanism to enable it, short of a war footing for the entire economy.

This is a command economy in operation. By contrast, America has a "free market" economy.

Unless the rest of the world now shifts its focus to the production of heavy rare earths and their stockpiling, then by 2015 at the latest, there will be virtually no HREEs available outside of Chinese control, and thus, any manufactured product requiring a HREE will by necessity have to be made within China by a manufacturer who is either Chinese or has access to quota ultimately issued by the Chinese authorities.

TMR believes that a number of the HREEs, including dysprosium and terbium, are already very much in short supply, even without the new demand from a stockpile-building regime in China. My colleague Gareth is scheduled to publish, later this month, a comprehensive report that digs into the details of the deficits, and how long they are likely to last.

If all of this occurs, then the only substantial rare-earth-product industry creating demand outside of China that can survive, will be the fluid-cracking-catalyst industry and this will be only if there are LREEs produced outside of China.

To summarize and to emend:

  • Chinese actions already underway will create a window of opportunity, for both LREE and HREE producers in the rest of the world.
  • The added virtual demand to build the massive Chinese stockpiles of rare earths will keep REE prices high and going higher for years.
  • The shortage of separation and refining facilities for HREEs outside of China is now the roadblock for HREE production outside of China.
  • China, by its actions, is creating enormous pressure on Western manufacturers, including those in Japan and Korea, to move the high-tech operations they have been safeguarding as domestic priorities, to China, in order to obtain critical raw materials.
  • In my opinion, China is building a stockpile of this magnitude, in order to insure against the possibility of a domestic supply interruption of rare earths, and has no interest in safeguarding the manufacturing world outside of China.
  • At the same time, the stockpile will drive more manufacturing to China, thus increasing Chinese wealth creation and employment.

The only way that the industrial-policy-free and resource-underdeveloped West can maintain its industrial plant that requires rare earths, is to develop the entire rare-earth supply chain outside of China.This means that going forward from now, the best investments in rare earths outside of China are:

  • Deposits that can produce HREEs as asoon as possible;
  • Rare-earth separation facilities;
  • Rare-earth conservation research;
  • Recycling

Here endeth the lesson.

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{ 35 comments… read them below or add one }

1 John Petersen June 15, 2011 at 10:37 am

Stunning piece Jack. Many thanks.

2 Johan June 15, 2011 at 10:43 am

So prices of Terbium and Dysprosium will skyrocket 2011 - 2014 and after that several heavy REE deposits will come online.

Since however the Terbium market is around 250-300 tons annually and the Dysprosium market is around is around 1300-1400 tons, the success of 2-3 juniors with large heavy REE deposits can quickly change the game. It is understandable that some in the industry calls for state guaranteed prices to facilitate the investment & loans.

Personally for me the choice is very easy, I stick to the physical metal directly through Dacha, especially since it is trading at a huge discount to even the FD NAV and since the price of the stock is clearly correlated to the price of 80% of its NAV, Terbium and Dysprosium.

I am thankful that others choose in the riskier juniors however, how would we otherwise get more metal 2014, at the earliest.

3 Randy Hilarski June 15, 2011 at 10:59 am

Great article Jack, you are required reading in our company.

4 Michail June 15, 2011 at 12:13 pm

Hi Jack.
Appreciate these posts. From my point of view though, the Chinese are shooting themselves in the foot. We sub-contract manufacture of Nd-dependent parts (designed in Europe) from Chinese factories, and supply these parts to finished goods factories also in China for export world-wide and to the domestic market. We seem to be a model of what the Chinese government is trying to achieve (end products, not raw materials), but the hike in Neo magnet prices is harming our business and putting local Chinese people out of work at our suppliers. What is the point of stock-piling so much REE if there are no longer any industries able to afford it?

Like us, everyone I know is looking for ways to move away from REE dependent products. Consumers won't buy these products at any price. Wind-turbines and hybrid cars are shifting away from economic viability unless the REEs can be designed out.

Initially I saw the export quotas as favouring industries such as ours, making sure sufficient REEs were available inside China, but they have failed to decouple export prices from internal China prices. I assume the simultaneous application of mine closure and stockpiling policies is limiting supply and causing prices to soar, thereby strangling the very industries these policies were supposed to encourage and protect.

5 Jack Lifton June 15, 2011 at 12:43 pm

Michail,

Thank you very much for your comment. It is “from the front lines.” And we need businessmen like you to speak out and make it clear to our western financiers, industrialists, and elected “representatives” that there is a limit to Wall Street fantasies of infinite demand and infinitely spiraling prices. I have already seen the OEM automotive industry make serious moves to engineer out or sharply reduce the use of REPM (rare earth permanent magnet) based devices. Chinese central planning is focused on the life style and living standards of the Chinese people, but even so the China State Council should look at the global repercussions of its actions, and, at least discuss them with the non-Chinese business world.

Jack Lifton

6 Don Ellwood June 15, 2011 at 1:10 pm

A great analysis, I only wish the implications didn't seem to continue to elude the invesring public. If I ever believed in an "efficient market", the REE sector would have long ago destroyed that belief.

Based on the TMR tables, there are only 5 juniors with 3% and higher Dy by weight. In descending order: Stans, Tasman, Ucore, Quest, and Matamce. I have personally ruled out Stans and Ucore for various reasons, and Tasman seems to be pretty early in the cycle. That leaves Quest and Matamec (by an odd coincidence, two of my holdings). Now if the rest of the market would just do a similar analysis.

7 Vladimir Karasev June 15, 2011 at 1:24 pm

Dear colleagues, the situation today with the rare earth metals has
put manufacturers of electronics and equipment for green energy,
depending on the political leadership of China. Major corporations are
forced to seek alternative suppliers. We consider all the options from
the recovery of previously closed due to non-profitability of plants
to develop new fields.
For example, such plans in Canada and the USA.
Often the content of rare earth metals in the ore of new deposits is
lower than in the industrial waste of metallurgical plants accumulated
in the first half and middle of 20 century in the mills of the former
Soviet Union. Not a perfect technology that existed in the enterprises
are not allowed to extract rare earth metals from ore, and all of them
remained in the waste. In fact, today these wastes - "concentrate"
rare earth metal. The volume of this waste - tens of millions of tons.
It is also important that:
• Wastes are readily available they do not need to extract and transport.
• Plants that would not pay huge fines for environmental damage and
not to fund work on recycling the waste transferred to the ownership
of municipalities. In the municipalities do not have funds for
disposal of these wastes and they are ready to cooperate with the
proposers of decommissioning projects. This allows you to cheap raw
materials for a long time.
Our company's specialists have developed technology that allows
processing of industrial waste and get rare metals.
We appeal to interested investors - we need venture capital financing
in the amount - $ 2.5 million. Funding necessary to complete work on
the technology and manufacturing pilot plant. Investment we are
attracting the term - 1 6 months.
All those interested in providing financing, please contact by e-mail
- vladimirkarasev1@gmail.com

GENERAL INFORMATION ABOUT OUR TECHNOLOGY - The technology incorporated
most successful in the world today the decision of the production of
ferrous, nonferrous, rare metals and preparation of nuclear fuel as
pyrometallurgical and hydrometallurgical processing, and
and our radically new method.
On our technology
extracted all the metals that are in the raw material for one cycle in the form
individual metal powders. According to the known technology today -
only one metal or more.
Even the processing of "poor" (% contents of individual metals in raw
materials), but the "rich" (in terms of different metals in the feed)
for this technology - it
to super production.
For example, aluminum production (in
Compared with the conventional technology on the principle of Faraday) in our
technology more attractive than from the salt melt.Aluminum can
receive from any aluminum-containing raw materials (including industrial waste)
with much less energy consumption, multifunctional.
On our technology cleaner production - no
fluoride emissions, degradation products of anode paste and dusting
supply of raw materials in the cell, causing severe disease.
Technology saves electrical energy and resources, all reagents are
regenerated and
reused, virtually no emissions and waste.
In some cases, depending on geological conditions of occurrence
natural resources, possibly underground leaching (extraction)
metals without excavation and rock material breach of integrity
earth's surface. After many years of accumulated research and
systematized information on reserves of ore, silica,
chemistry of natural and man-made regional raw materials
using data geolkomov Kuzbass, Khakassia, Tuva, a number of
institutions and others from the standpoint of business. Brief essence
technology - selective non-waste production of a comprehensive
kinds of metals from raw materials for one cycle in the form of individual
energy-ultrafine metal crystals with a purity
more than 99,9%. Cost not more than $ 270 per ton, regardless of the form
allocated to the metal. Possible options for the production of filamentous
crystals and so-called "small particles" with special
properties, as well as metals of high purity. Any mineral
metal-containing raw materials consist of metals and nonmetals
(Metalloids), various minerals, soluble and insoluble
various solvents. In our case, all the metals are transferred to
solution in any sequence are extracted, and from the insoluble
Conventional acids silicate residue (sand) in the form of silicon dioxide,
diopside, etc. depending on the feedstock used, after washing
Produced commercial powder. Silicate residue feedstock in the form of commodity
powder at a cost of $ 4 per ton can be used in concrete,
glass, ceramics, production of semiconductor silicon, etc.
Thus, the raw material (ore, industrial waste) can be used
non-waste.
APPLICATION - in metallurgy total and low-temperature powder with
give a strong and lightweight technical details (because
energy saturation and filamentary metals produced)
machinery, aircraft, electronics and catalysis.
Whiskers and small metal particles "(used for example in aircraft
stealth-type" Stels ") may be used in
Spetstekhnologia. This nanotechnology. Metals in high purity
alternative energy, such as environmentally safe receipt
high-purity silicon metal with a lower cost for
solar panels. For example, it is advantageous to obtain a direct separation of
metals from two commercial concentrates our neighbors Sora
Molybdenum Combine Khakassia, avoiding complex and expensive
production stages in Chelyabinsk - molybdenum, copper, tin,
rhenium, osmium, lead, silver, gold ......... etc., which are in
concentrates.
There are prerequisites for applying the method in studies on
the hydrogen motor fuel.
The technology - the project is recommended as an alternative
highly profitable model of balanced use of mineral
minerals and waste already accumulated tonnage of industrial
waste, and the key output
from the state of environmental crisis.

Respect
General director JSC URALSERVIS GROUP
(SOLARUS ENERGY Ltd)
VLADIMIR KARASEV
Email: vladimirkarasev1@gmail.com

8 CuriousCat1 June 15, 2011 at 2:15 pm

Mr. Ellwood

I believe you are mistaken. The highest Dysprosium content by weight is at Great Western Group’s Steenkampskraal at 0.078%. You can view all REE content by weight for many juniors here:

http://pmem.ws/files/users/a/535D64716E912048E040A8C0AC002D4E/TABLES%20OF%20COMBINED%20COMPARISON%20%20-%20GRADE%20-%20PERCENTAGE%20DISTRIBUTION%20-%20%20CONTENT%20PERCENTAGE%20-%20REO%20VALUE%20MAY%2024TH.%2C%202011x.pdf
The above chart was made by stockhouse member “Wwwater”.

Here are a few rankings for HREE and Dysprosium:

http://www.stockhouse.com/Bullboards/MessageDetail.aspx?s=GWG&t=list&m=29686111&l=0&pd=0&r=0

9 Robert June 15, 2011 at 2:23 pm

We can get hopeful that some of these REE mines will be developed in time to supply the market; however, unless and until some company invests in and builds the processing plant(s) for separation of the RE elements, I don't see much hope for a "mines-to-magnets" industry in the West.

MCP did buy Silmet, and a recent tour by the Mercenary Geologist of the Silmet plant verified it's capacity. That is one small plant. Is there any evidence of other processing facilities being contemplated and/or constructed?

10 Peter Vesborg June 15, 2011 at 3:52 pm

Like John said - stunning.

Given these developments I'm very happy with my position in Dacha and I might add to it, but given the parabolic rise in prices I now seriously worry about "demand destruction" in the REE space.
Example:
Four years ago the REE cost of a Prius was on the order of:
15 kg La * $ 3.5 /kg La + 1 kg Nd * $ 30 / kg Nd +0.1 kg Dy * $ 90 /kg Dy = $ 92
Today, the same calculation gives:
15 kg La * $ 140 /kg La + 1 kg Nd * $ 330 / kg Nd + 0.1 kg Dy * $ 1450 /kg Dy = $ 2575
This is starting to really impact either the retail price or the margin!

Permanent magnet generators in wind turbines are even worse. When the turbine producers started designing these in earnest the price of REE / MW was perhaps $ 10.000 /MW
(330 kg Nd/MW * $ 30 / kg Nd). Now, that figure is up more than 10x i.e. over $ 100.000 /MW.
Given that large wind turbines cost between 1 and 1.5 million/MW that means that almost 10% of the entire cost of the turbine is the Nd! To my mind that essentially kills the idea of PMs in wind turbines despite their merits.

This ties in with Michail's points. If substitution/thrifting is possible - it will happen.

Nothing ever goes straight up - something has to give. Right now the REEs are defying gravity and that is making me more than a little nervous.

11 Daniel Nantz June 15, 2011 at 5:32 pm

In reference to your investment suggestions in light of China stockpiling metals, wouldn´t it also be a good idea to have physical ownership of rare technical metals as part of a stockpiling program in Switzerland?

12 Albert in Bermuda June 15, 2011 at 7:04 pm

Please pardon my simplistic view but what happens when some Procurement Officer buys all the material that Dacha has for sale? What happens then if China is in stockpile mode?
I would very much like to know where their supply will come from.

13 ellwodo June 15, 2011 at 7:26 pm

Curious Cat1: For some reason, we seem to be having a "failure to communicate". I agree that Great Western's Steen project has less than 1% Dy by weight, as shown in the table you link to, but that same table shows Quest with 3.6% Dy by weight.

14 Joseph K. Teng June 15, 2011 at 9:51 pm

Jack:

Another clarion call to action.

Imo, the two best avenues to remedy the heavy ree shortfall lie with Ucore, (UURAF.PK), via their huge deposit at Bolkan Mountain in Alaska and Great Western, (GWMGF.PK), via their vertically integrated global model.

Keep up the great work

15 UHR1907 June 15, 2011 at 10:00 pm

Strange that Alkane Resources ALK.AX never is mentioned.

16 CuriousCat1 June 15, 2011 at 10:45 pm

Mr. Ellwood

The third column of the table is the grade. It shows a content for Quest (Strange Lake) of 0.91% for all of the 15 rare earths element combine. The first number in the Dysprosium column the “3.6%” for Quest (Strange Lake) is the percentage of Dysprosium in the 0.91% rare earth content of the ore (Distribution in the 4th column). So the Dysprosium content by weight of the Quest ore is 0.91% X 0.036= 0.033% which is the number below the 3.6 (Content % in the 4th column).

Regards

CC

17 wwwater June 16, 2011 at 12:31 am

ellwodo,
Using a $1000.00 value for One kilogram of (Dy) Dysprosium, Steenkampskraal has an insitu value for each tonne of ore of 780.55 of Dysprosium using a TREO grade of 11.65 and a distribution percentage of 0.67% and a content grade of 0.078% for dysprosium thus producing 0.7855 kilograms of Dysprosium x $1000.00 = $780.55 per tonne of ore whereas Strange Lake has a insitu value of $327.60 for each tonne of ore using a TREO grade of 0.91%, a distribution percentage of 3.60% and a content grade of 0.032760% of dysprosium thus producing 0.32760 kilograms of Dysprosium x $1000.00 = $327.60, half as much as Steenkampskraal per tonne of ore processed.

18 robit June 16, 2011 at 4:59 am

I am having trouble with posting. Maybe due to links.
Do a Google News search on "rare earth" and look for an article on Minmetals, and an article by Michael Silver, president, American Elements.

Then look at American Elements website. It is a treasure trove of info.

19 robit June 16, 2011 at 10:26 am

I will try this article alone:
Minmetals takes steps to help rare-earth industry consolidate
By Zhang Qi (China Daily) Updated: 2011-06-16 10:15

http://www.chinadaily.com.cn/bizchina/2011-06/16/content_12711329.htm

20 Don Ellwood June 16, 2011 at 12:07 pm

Curious Cat1 and WWWater: I think we have demonstrated that RE projects are like Lake Wobegone. Every project is above average, depending on how you present the data. I started out focusing on Dy as a % of total rare earth oxides (TREO) present. You prefer to focus on a more macro view of Dy as a % per ton of the total mineral resource. I'll "see" your view and raise it to an even bigger macro view: the total mineral resource present. The TMR tables show Quest's Strange Lake total measured resource to currrenty be approximately 10 times Great Western's Steen project. Applying this to your point about GW having twice the DY per ton of Quest still leaves GW on the low end of a 5 to 1 ratio for DY.

21 Albert in Bermuda June 16, 2011 at 2:08 pm

Gentlemen the only important question is when will production begin.
Great Western is due to announce its refining strategy within the next few weeks and the SA mine is scheduled to open in 5 months, not 3 or 4 years like most of the other juniors.
Manufacturers who do not wish to relocate their patented technology to China will have little or no choice but to purchase their LREE materials from Lynas ( starting this year) and HREE 's from Great Western as it appears that they will be the first to market.

22 prescient11 June 17, 2011 at 10:55 am

Jack, this truly is an excellent piece. Thank you very much for your thoughts.

I remember your article from a while back with regard to expected dysprosium demand and Chinese plans for wind power. These were echoed by an investment bank piece whose main theme was "The Emperor is Far Away."

I know it was a trial balloon as to the plans for increased wind power, but I was wondering if there was any further discussion on that, as that would require an incredible increase in dysprosium demand.

23 Eamon Keane June 17, 2011 at 12:15 pm

@ Peter Vesborg

“Four years ago the REE cost of a Prius was on the order of:
15 kg La * $ 3.5 /kg La + 1 kg Nd * $ 30 / kg Nd +0.1 kg Dy * $ 90 /kg Dy = $ 92?

The Prius battery only contains 2.9 kg of mischmetal (rechargebatteries.org/LCA_Ni-MH_in_Toyota_Prius__-_IARC2010.pdf). This mischmetal is estimated to be 50% La, 33% Ce, 3% Ce, 10% Nd and 3% Sm (tinyurl.com/44xnbd7) (pdf direct download). Using the metal-pages price for mischmetal as a proxy ($160/kg), that comes to $464.

The 2010 Prius has a 60 kW motor which contains 0.768 kg NdFeB material, and a 42 kW generator with 0.448 kg NdFeB. (autobeyours.com/gifs/TM-2010-253_2010%20Prius%20Rprt.pdf). I haven’t got the exact breakdown of the NdFeB content of the Prius, but Sigma Aldrich have magnets on sale which can withstand 200 C temperatures which have the following composition (scribd.com/doc/57451657/Rare-Earths-Crucial-Elements-for-Advanced-Technologies-Material-Matters-v6n2):

Al 0.8%, B 1.1%, Dy 3.6%, Iron 65%, Nd 29%, Nb 0.5%

Using these figures, there’s 352 g Nd and 43.8 g Dy in a Prius or 414 g Neodymium oxide and 50 g Dysprosium oxide. This is $131 Nd2O3 and $75 Dy2O3 at current prices.

So that’s a total RE content in the Prius of about $670. Still a heck of a lot, but not quite $2,500!

24 Jack Lifton June 17, 2011 at 12:28 pm

Eamon,

I think you're close to being correct. However I think that current production NiMH battery electrodes use lanthanum and nickel primarily with some neodymium and cobalt. I don't think mischmetal has been used for some time. It was the original electrode material and was used for some time, but the electrode chemistry has evolved to the use of the specific components that give the most bang for the buck. Way back when mischmetal was the cheapest format it was used. Today the separated and purified metals are readily available for a price and using mischmetal is wasteful of resources.

Price is not the issue; it is availability from a reliable supplier.

25 fran June 19, 2011 at 11:49 pm

mr. lifton--

would a long term student of chinese history expect other actions on their part? they've employed their brand of strategic action for energy[ the key driver of modern economic growth]. they steadily move on global agriculture to feed themselves. we on the other hand, fritter with terms--"shovel ready" projects, presidential political debates, "DODD/FRANK" banking legilation, while a fifth of the eligible workforce goes under employed.

we have not "free markets"; we have "government encumbered markets"

26 PONCHO 462 June 20, 2011 at 1:58 pm

Don Ellwood...GWMG is on schedule and beginning actual construction/refurbishment this week, all permits in hand, to bring Steenkampskraal to actual shipping concentrate to GWMG subsidiaries LCM and GWTI for vertically integrated value add refining, smelting, and purification in 18 months. When will Quest be accomplishing this milestone of full production at the much higher tonnage levels you quote?

27 jjl2u June 20, 2011 at 6:51 pm

Poncho, very good points indeed, imo. GWM is looking to be a serious, vertically integrated player in the LREE and HREE field in the not too distant future from what I can tell. Many, if not most of the others, are wanna'-be's, with hoped for production in the 2015/16 time frame and beyond (sounds like a lot of wishful thinking to me.) Whereas, if GWM hits a sweet spot production wise, from mine to market, I can see them adding assets, resources, expanding, and quite possibly emerging from the little engine that could, to perhaps an 800# Gorilla in the field, we'll see. Hmmm, back in the 70's and early 80's, nobody had really even heard of Microsoft, Dell, Apple, etc., but now they are significant players, if not dominating in key areas of their fields. I wouldn't be surprised if GWM went from relatively obscure, to center stage as well, within their field, only time will tell, but I like their chances.

28 Boris June 21, 2011 at 6:48 am

@Peter&Eamon
Couple of years ago chem analysis of electrode material for NiMH was 7.5 Mn, 1.2 Al, 3.2Co, 56.75Ni, 24.44 La, 4.7 Ce, 1.6 Nd and 0.5 Pr (all wt%, balance was oxygen and carbon as impurity). Assuming numbers from rechargebatteries.org - 35 kg whole battery, 8.8 kg electrode only (or 7% of RE in battery) this yields around 2.15 kg La, 0.41 kg Ce, 0.14 kg Nd,...etc, per battery. In standard procedure you have to do vacuum induction melting, heat treatement, crushing and milling (all these with some 95% efficiency). In powder form then material is sold to battery maker. Rough (!) estimation of selling price is sum of all metals prices x 2.

29 Eamon Keane June 21, 2011 at 5:01 pm

Thanks Jack and Boris, good info.

I know that the Prius uses a Sanyo battery, and one of Sanyo's MSDS sheets mention several REs (mkbattery.com/documents/4574SANYO%20NiMH%20MSDS.pdf):

"There is potential for exposure to iron, nickel, cobalt, rare earth metals (cerium, lanthanum neodymium, and praseodymium), manganese, and
aluminum fumes during fire; use self-contained breathing apparatus."

Here's Sigma Aldrich's take on it:

"Another situation is the replacement or partial substitution of La in the nickel metal hydride (Aldrich Prod. No. 685933) battery by mischmetal (a metallic mixture of the naturally occurring rare earth ore—50% Ce, 25% La, 15% Nd, 4% Pr). In both cases there is some reduction of the performance of the magnet or the battery, but the properties are still sufficient for some applications."

Boris, were these automotive batteries you were dealing with?

30 robit June 21, 2011 at 9:05 pm

Mr. Lifton
In trying to straighten out a certain fund manager and rare earth expert, I borrowed from a short history you had written on the Great Western purchase of it's Michigan facility from Energy Conversion Devices. Just out of curiosity, have you ever met Stan Ovshinsky and discussed his early involvement with Baotou and ECD's ree processing?

31 Peter Vesborg June 22, 2011 at 1:28 am

@Eamon Keane, Boris and Jack.

Thanks for the updates on the numbers. I knew I was (perhaps) oversimplifying by exchanging Mischmetal and Lanthanum, but since Ce and La cost about the same these days it makes little difference.

The big difference is comes from your usage figure: That a NiMH battery needs only 2.7-2.9 kg (Eamon-Boris figures) to make the ca. 1.5 kWh battery in the Prius. In other words about 1.9 kg "La"/kWh.
Good info.

Btw. the 15 kg La/Prius is floating around all over the net, which is why I did not double check (see e.g. wikipedia http://en.wikipedia.org/wiki/Toyota_Prius ).

---
I'd agree with Jack that supply uncertainty might be even worse than price runups - either way it doesn't change the conclusion: Demand destruction. Would you agree?

32 Boris June 22, 2011 at 3:14 am

@Eamon
If material really ended in Prius I don't know, since my "end user" was Sanyo. And Peter's reference (http://en.wikipedia.org/wiki/Toyota_Prius ) says battery comes from Panasonic. I assume Toyota would not have only one source anyway.
And another detail - I was using approx 75La15Ce5Nd1Pr "mischmetal" as RE carrier, not pure metals.

33 Eamon Keane June 22, 2011 at 5:40 pm

@ Peter Vesborg

No worries, I completely don't blame you for internalising the 10 - 15 kg, it has been repeatedly quoted in the ether and in official reports for the past two years, as has the 1 kg of neodymium in a Prius.

The DOE's recent report seems to have taken a more rigorous approach, so check out slide number 14 here (tremcenter.org/index.php?option=com_attachments&task=download&id=33), it has material intensity for wind turbines and vehicles, giving the neodymium content of a hybrid/EV as between 0.31 and 0.62 kg and the REO content of NiMH batteries (La, Ce, Nd, Pr) as between 1.5 and 2.2 kg.

34 Eamon Keane June 27, 2011 at 7:19 am

For anyone who is still interested, I emailed the guy who did the life cycle analysis in conjunction with Toyota who confirmed that the Prius-II battery uses mischmetal. There is also this extract from Rhodia and Umicore's plan to recycle REEs from Ni-MH batteries (euronext.com/fic/000/064/994/649944.pdf):

"The main use of nickel metal hydride batteries is in rechargeable AA and AAA batteries (typically used in domestic applications such as cordless phones, toys and games), power tools and hybrid electric vehicles. A typical NiMH battery will contain some 7% of rare earth
elements including cerium, lanthanum, neodymium and praseodymium. This equates to some 1 gramme of rare earth for a AAA battery, 60 grammes for a household power tool and 2 kilogrammes for a hybrid electric vehicle battery."

35 prescient11 June 28, 2011 at 11:40 am

Thanks for the heads up Eamon.

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