Earlier today I got word that the US Department of Energy (DOE) has released an update to its Critical Materials Strategy, which was first published as a report in December 2011 2010. This document has helped to shape a fair amount of the debate on rare earths in particular, and critical & strategic materials in general, in the past 12 months.

You can download a copy of the report from here.

I’m still digesting the contents of the report; I can tell you that the DOE still considers the five rare earths dysprosium, neodymium, terbium, europium and yttrium to be critical in the short and medium term; indium is judged to now be near-critical in the near term, compared to being categorized as critical in the 2010 report.

New sections include one that covers the use of rare earths in fluid cracking catalysts, and how the petrochemical refining industry reacted to escalating prices of materials in 2011.

More to follow once we’ve had a chance to read through the report more thoroughly.

Update (01/17/12): the URLs for the report have been updated, since the original links no longer work.

I guess that there’s no need now to worry about the future supply of the rare-earth metals. Earlier today the Wall Street Journal reported, in an article entitled “Rare Earths Grow Less Rare“, that Goldman Sachs says that although supplies will remain tight in 2011 and 2012 and prices will remain high, we can be assured (by Goldman Sachs analysts) that the rare earth supply shortage situation will end in 2013 as new supplies come on stream from outside of China.

I sincerely wonder if this is even good nonsense.

With the exception of the fluid cracking catalyst manufacturing industry, which uses chemical compounds of the rare earths produced early in the rare-earth refining process, the overwhelming majority of end users of the rare earths use and require high-purity metals and alloys of the rare earths for their products.

The only three companies today producing significant quantities outside of China, of high-purity metals or alloys, or both, are:

1. Molycorp, via the recently acquired operations in Estonia (from Silmet) and Arizona (from Santoku America);
2. Great Western Mineral Group, via its wholly owned UK subsidiary, Less Common Metals, Ltd.; and
3. Japan’s Santoku, based in Kobe, Japan.

The feed stock for all of these operations, other than the Estonian one, comes from China. The high-purity-metals and -alloys capacity of all three combined, is less than 5% of the world’s total demand.

A number of junior-mining ventures have announced that they will be producing “rare earths” in 2011-15. The mining analysts do not seem to know or recognize that the production of rare earths is not a well-defined phrase. Mines produce ore concentrates. Most so-called “metal” mines then chemically extract the metal values, as chemical compounds, from the mechanically produced ore concentrates. Different metal miners then traditionally do their own thing, so to speak, with the chemical solutions containing the extracted metals.

Copper miners, for example, typically refine their ore concentrates to the metallic state. The quality (grade) of the copper metal produced is determined by the extent and capability of the processing undertaken by the miner. Even those miners of copper who produce high-purity copper “cathodes” by electro-refining are not normally the producers of the final use products, such as wire rod, sheet, and plate. These are produced, for example in the case of electrical conducting wire, by a specialized industry (for example, a ‘wire’ industry), which itself sells only fabricated copper forms to manufacturers who make such devices as electric motors and generators and wiring harnesses for motor vehicles. I can’t think of a vertically integrated manufacturer,for example, of electric motors, i.e. one that mines copper, refines and purifies it, fabricates industrial forms, and builds electric motors. If a reader knows of one please let me know.

The reason that there are no vertically integrated manufacturers of electric motors is the complexity, the engineering and management skills, and the capital costs that would be required. Traditionally end users of fabricated forms of metals want multiple suppliers to keep the costs down and also want the security of assured supply to be at a maximum.

Analogously, lead miners may smelt the ores they mine and concentrate and produce ingots but they do not make battery alloys, battery plates, or batteries.

Iron miners do not generally produce steel, and even the ones who do that, such as China’s immense Bao Steel, do not produce automobiles, dishwashers, or household tools.

The first rare-earth products that will be produced outside of China will be mechanically concentrated ores, the lowest value sellable product in the supply chain. It will then be necessary, in all cases, to chemically extract the mixed rare earths from the ore concentrates, and by chemical processing isolate the mixed rare earths from any other metals that may be present in the ore. The result will be isolated (but still mixed together) rare earths, either in chemical solution or as chemical solids, typically carbonates, These forms at this early stage of refining are also a selling point in the value chain.

The next step, historically first done commercially in the USA by Molycorp, is to treat the mixed rare earths in chemical form in a solvent exchange “separation plant.” This is an expensive facility to build, as it can easily involve hundreds of repetitive steps taking up to a month to finish a single batch of material, and although batches can be run almost continuously the size of the plant must reflect the optimum large batch size for producing enough volume to make a profit, by selling the resulting commercially pure separated chemical compounds.

Molycorp has said that it plans to ultimately produce up to 50,000 tpa of rare earths, which means, if this means rare-earth metals, its separation plant must be delivering 140 tpd of product and must be processing 4,175 t at any one time. If this is to be done in one separation plant, it will be the largest one in the world. I don’t think that Molycorp will be unable to do this; I only question the amount of time that it will take to construct, prove out, and operate a plant of this size. By the way, if Molycorp is speaking of the production of metals, then the throughput of chemicals will be some 250 tpd with a load of 7,500 t just of product in the system. That’s 15 million pounds of material being processed at any one time.

In any case, whatever the output of the Molycorp separation plant, it will need to be of very high quality (purity) in order to minimize the cost and time required for the next step, the ultra-purification of the rare earths by the method of ion-exchange. The separated, commercially pure rare-earth compounds that are the output of the separation plant are sellable at a higher price than that to be realized either from the ore concentrate or from the sale of the mixed chemically extracted rare earth compounds that were fed into the separation plant.The ultra-purified forms from the ion exchange process are of much higher value yet.

Note that at any step in the purification process, all of the rare earths have to be separated from each other in order to purify them. This means that economically, the very small amounts of the higher atomic-numbered “heavy” rare earths in any deposit, cannot be produced economically, unless as many of the other rare earths present with the “heavies”can also be sold, not just recovered.

This is the dilemma of the deposits of the rare earths that show relatively high values for the heavy rare earths. They cannot possibly be profitably produced just by producing and selling only the heavy rare earths, because their processing will be too expensive to compete for markets for their simultaneously produced light rare earths when up against lower-cost light-rare-earth-producing behemoths such as Molycorp, Lynas, or Bao.

A straightforward solution would be for an end user to buy the critical heavy rare earths, and all of its needs for the light rare earths, from the heavy-rare-earth producer. This might necessitate paying more than the market price for the light rare earths, but it would secure the supply of the critical heavy rare earths, for example, for under the hood applications of rare-earth permanent magnets by an automaker.

In any case, before we make the most important rare-earth product, magnets, we must first be able to make pure metals and pure alloys. The processes for these require tight controls of temperature and pressure and expensive equipment operated by skilled workers.

Rare-earth metals can be produced by reducing a chemical form such as a chloride with high-purity magnesium, calcium, or lithium. They can also be prepared by electrochemical reduction of molten ionic salts of the rare earths. The analyst community writes about these processes as if they are easy to do because others, such as the Chinese, have done them and are doing them, so how hard can it be? I have actually heard it said that if the Chinese can do it then anyone can do it. This is racist sentiment, and is simply not true.

The production of high-purity metals is as much an art as it is science and engineering. It requires diligent attention to operational details and mis-steps that can contaminate, and thus ruin the end product. Continuity of engineering, a practice denigrated by American capitalists, is key to any such project. One learns how to purify metals by doing it, not by reading manuals.

However, that having been said, let’s say that it is now several years from now and we have non-Chinese production of high-purity rare-earth metals. These are very sellable at significant margins over production cost, and, in my opinion, represent the best first selling point in the supply chain for a vertically integrated (from the mine onwards) rare-earth producer. It will not be easy for a miner to become a producer of high-purity rare-earth metals. This challenge will separate the men from the boys immediately.

To make rare-earth permanent magnets, which are the most profitable selling point that any rare-earth vertically integrated producer could hope to reach, requires the skills to make high-purity fabricated forms of neodymium-iron-boron and samarium-cobalt alloys. The knowledge of how to add various other enabling elements such as dysprosium will also be required. Such knowledge today requires access to proprietary information about complex physical and chemical processes that have been developed through man years of research and development and trial and error. These skills CANNOT be learned from a manual or by reading patents.

I am reluctant to believe that junior miners with only, at best, limited knowledge of the chemistry and metallurgy of the rare earths, will even be able to produce separated commercially pure chemical compounds. Yet I am told by analysts that all one has to do is find a rare-earth deposit and the end-use product, the rare-earth permanent magnet, can not only be produced but can be produced easily by the junior miner. Oh, and all of these skills, I am further informed, will be learned and mastered in just a couple of years.

What I think is that of the more than 220 listed rare-earth junior miners outside of China that my colleague Gareth is tracking as of April 2011, there will now be a cull. If rare-earth pricing requires that one must produce high-purity metals to provide a minimum return on the needed investment to develop a mine, then perhaps a dozen of these ventures will survive even until 2013. If it is necessary to produce alloys from which rare-earth permanent magnets can be formed, in order for a rare-earth miner to be profitable, then only at most half a dozen will survive and then only if they can produce the alloys in-house.

There is a caveat. A miner producing rare earths as a byproduct of a profitable operation, such as iron-ore mining or gold mining can, of course, be a profitable rare-earth-ore-concentrate seller, because his overheads are covered by the primary production. I know of one such venture, not yet listed, currently in operation, and I am looking at another two later this summer. I call these boutique metals operations, and, of course, they do not need to produce rare earths to be profitable.

Note that even the above caveat has a caveat. A rare-earth refiner who needs feedstock, such as we are hearing is the case with some of the Chinese rare-earth separation plants, needs a steady high-volume flow to “load”his plant. He cannot be changing the feed chemistry in his process arbitrarily at any time. The minimum requirement will be to load the plant for a process cycle. This means that the refiner needs to only source from fairly large operations, and this minimum size is going to be an issue of long-term capital outlays with a low probability of a competitive return on the investment. For those who will not do their own separation and further refining,  it is a horse race to see which if any of the ore concentrators/chemical extractors can be first to a very limited market.

I do not think that the world demand for high-purity rare-earth metals and alloys, for use outside of China, will be met by non-Chinese production by 2013, because until there is a high rate of production of commercially pure separated rare-earth chemical compounds, there will simply not be enough feedstock to gamble on continuous large-scale production of these high-tech materials, by those who have never before done such high volume processing of such complex materials.

The problem is thus the potential of an export reduction or total cutoff of rare earths contained in finished goods, which is not the case at the moment. This potential Chinese action is a critical issue for the Japanese rare-earth permanent-magnet and battery-alloy manufacturing industry. It is not an issue in the USA or Europe, where neither product type is produced, or has been produced, except in very limited volumes,in more than a decade. It will only be an issue in the USA and Europe, if China cuts off the export of rare earths contained in finished goods such as batteries, lasers, and rare-earth permanent magnets.

I think that Goldman Sach’s analysts are wrong, because they do not understand manufacturing, chemical, or mining engineering, and they do not understand the makeup of the “rare-earths” market; most of all, because they underestimate the power and growing technical and financial skills of China, Inc.

The survivors of the coming rare-earth junior-mining cull will be the earliest to production of commercially useful forms of the rare earths, the high-purity chemicals, metals, and alloys. There will be no large-scale sustained production of any of these forms outside of China, the metals and alloys in particular, for several years yet.

As for the production of high volumes of rare-earth permanent magnets with tightly held specifications, by those not now producing them, I think it will be more than 5 years before we see a new competitor to China and Japan in this category, if ever…

Disclosure: At the time of writing, Jack Lifton is long on Great Western Minerals Group (TSX.V:GWG).

A couple of weeks ago the US Department of Energy (DOE) announced a Request for Information (RFI) on rare-earth metals and other materials used in the energy sector. This follows on from a similar solicitation made last year, that culminated in the publication of the DOE’s Critical Materials Strategy in December 2010.

The DOE says that this second RFI will be used to update the Critical Materials Strategy, and will also cover areas not considered in the original document, such as fluid-cracking catalyst materials for the petroleum refining industry.

The DOE is soliciting information in eight categories:

1. Critical Material Content
2. Supply Chain and Market Projections
3. Financing and Purchasing Transactions
4. Research, Education and Training
5. Energy Technology Transitions and Emerging Technologies
6. Recycling Opportunities
7. Mine and Processing Plant Permitting
8. Additional Information

The deadline for RFI submissions is May 24, 2011 and submissions from the public are welcomed. You can get more information from the DOE Web site.

By Mike Ramsey – Wall Street journal – Published: January 14, 2011

Toyota Motor Corp. is striving to develop a new type of electric motor to escape a simmering trade conflict involving China’s grip on a rare mineral.

The Japanese auto maker believes it is near a breakthrough in developing electric motors for hybrid cars that eliminates the use of rare earth metals, whose prices have risen sharply in the past year as China restricted supply. The minerals are found in the magnets used in the motors.

All electric motors rely on magnets to make them work. The new motor Toyota is working on is based on the very common and inexpensive induction motor, found in such devices as kitchen mixers. Induction motors use electromagnets—magnets that only have their magnetic attraction when power is applied to them.

Most motors used in electric and hybrid cars today use a different type of motor that relies on permanent magnets. These magnets always have a magnetic field—akin to the magnets used to attach things to refrigerator doors.

But the permanent magnets found in electric-car motors, unlike those that hold up the school lunch menu, are made from neodymium, a rare-earth mineral that is almost entirely mined and refined in China.

As car companies race to improve electric and hybrid vehicles, their reliance on metals like neodymium and lithium—used in batteries found in electric and hybrid cars—is raising a host of new geopolitical issues over access to the minerals. The supply of many of these minerals is controlled by China.

Toyota has taken several steps to reduce its dependence on China for the materials, including investing in a lithium venture in Argentina and launching a joint venture in Vietnam to prospect for rare metals like neodymium.

The auto industry purchases 40% of the world’s supply of neodymium and Toyota buys more than any other company, said Jack Lifton, a rare earth materials expert and founder of Technology Metals Research in Carpentersville, Ill. There is about a kilogram (2.2 pounds) of neodymium in every Prius, he said. Toyota declined to comment on this figure.

“It would be a big change in demand for neodymium” if Toyota switched to an induction motor, said Mr. Lifton.

General Motors Co., which launched its Volt electric car last month, also is looking into alternative types of motors. “We have ongoing development in those areas and the induction motors do work,” said Pete Savagian, who leads GM’s hybrid powertrain engineering division.

Continental AG of Germany, one of the world’s largest auto parts makers, said it already has developed a rare-earth-free motor that will be used in an undisclosed electric car due out in Europe this year. This motor uses a variation of an electric motor often found in power plants.

Part of the rationale for developing this motor is to avoid rare earth metals, but it mostly is a move to lower costs, said Mike Crane, who runs Continental’s hybrid and electric vehicle programs.

“Even in the best scenario of supply, these [rare earth-based] magnets are very expensive,” Mr. Crane said.

China produces about 95% of the world’s supply of neodymium and last summer the country began restricting exports. In December, China announced a 67% increase in export tariffs on the metal and has declared new limits on exports this year.

Neodymium prices have quadrupled in the past year, according to Lynas Corp., an Australian company developing a giant mine and refinery for the material.

Rare earth minerals are a grouping of 17 chemically similar elements that are usually found together in ore and are refined and split apart. They are used in magnets and semiconductors and a host of other technologies. The U.S. and Australia have deposits of them but lack the expertise in extracting and refining the minerals.

For Toyota, getting around this barrier is crucial. The auto maker at this week’s Detroit car show announced the expansion of its hybrid-electric lineup by adding two new Prius variants and plans to spread the technology to all of its models in the next decade.

“The technology that would allow us not to use the magnets and yet to make a smaller size, high-performance motor will come soon,” said Takeshi Uchiyamada, Toyota’s global chief engineer.

“We currently have such a motor, but controlling the motor is rather difficult,” he said.

Mr. Uchiyamada wouldn’t say when the motor would be introduced.

Toyota spokesman John Hanson said the new motor could come in the “near term.” He added: “It looks like we could reduce cost, weight and mass and avoid the geopolitical issues with the rare earth metals.”

Elias Strangas, an electrical engineering professor at Michigan State University, said induction motors that serve as the basis of Toyota’s work “are cheap to make and as rugged as you can get, but they are not terribly efficient, and they are big.” Improving them “is kind of a holy grail in motors.”

Prof. Strangas said he had heard rumors of Toyota working on an advanced induction motor, but hasn’t seen a published study on the work. “I would like to see the numbers [on the motor's performance] to say they are convincing,” he said.

The permanent magnet motor took off only in the past decade as car makers tried to find more efficient and powerful motors for electric vehicles and hybrids.

“But then we discovered they are a bit expensive, and the rare-earth places where they are mined are not too many,” Prof. Strangas said. “We are now trying to revisit very old technology and remove the problems” in induction motors.

At the same time, Toyota affiliate Toyota Tsusho Corp., which imports metals, said in October it would begin working with Vietnamese companies to extract the rare earth metals from deposits there.

A year ago, the same company struck a deal with an Argentinean company to develop a lithium mine to secure a direct source for the key element in advanced electric batteries.

The vast majority of the world’s mined deposits of lithium are in China, Chile, Argentina and Bolivia.

There is pressure on the entire automotive industry to develop better supplies of these materials because of a slew of new and planned all-electric cars, including Nissan Motor Co.’s new Leaf.

Electric cars require much larger motors, with more rare earth metals, than hybrids such as the Prius.

Today I want to look at China’s dominance of critical raw materials for clean-tech. Most people think that they left graphite behind when they graduated from pencils to pens early on in their school days, but the truth is that this slippery substance remains a crucial part of our daily lives. Consider the laptop computer, which has by and large replaced pens for most of us over the past decade — did you know that there is actually 10 times more graphite than lithium inside a lithium-ion battery?

Graphite has long been a key ingredient in steel, castings, lubricants, vehicle brakes, golf clubs, tennis rackets and — no surprise — pencils. But this polymer of carbon — a chemically identical sibling of both diamonds and coal — will become increasingly important in coming years due to its chemical, electrical and thermal properties. Its ability to remain stable in ordinary corrosive environments, conduct electricity and resist heat allow it to serve as a key component in applications like the storage batteries and nuclear-electricity generation stations that will power us into the future.

Coal powered the Industrial Revolution; its chemical twin, graphite, will be of great value in constructing the components of the clean-energy economy, making graphite a true diamond in the rough!

While one may assume that it is as common as the dirt that it somewhat resembles, the supply of graphite is far from infinite. Natural graphite comes in several forms: Flake, amorphous and lump. Of the one million tons of graphite that are processed each year, just 40% is of the most desirable flake type. Only flake and synthetic graphite (made through an expensive process from petroleum coke) can be used in lithium-ion batteries. Graphite mining and processing are limited to a relatively small handful of countries, with China currently producing 70% of the total global supply.

Demand for lithium-ion batteries will increase rapidly as battery-power (electricity) supplements, and will even replace gasoline- and diesel-fueled internal-combustion engines in vehicles as ‘green energy’ expands. While hybrid automobiles such as the Toyota Prius have used nickel-metal-hydride batteries for more than a decade, newer hybrid models like the Chevy Volt, as well as battery-only electric-drive vehicles like the Tesla Roadster and the Nissan Leaf, rely upon the more-efficient lithium-ion batteries that will almost certainly be employed in all hybrid or fully electric vehicles in just a few short years. Large-flake graphite will be very much in demand to produce the hundreds of millions of lithium-ion batteries required for these automobiles.

Governmental bodies are taking notice of just how crucial secure supplies of graphite are. Graphite prices have been increasing in recent months, and investors’ interest in this industry is almost certain to climb as word spreads about the impending boom in demand and the companies that will be making moves to meet it.

A Slippery Supply

Global graphite production has held steady at approximately one million tons per year over the past decade. The weak demand in the first half of the 2000s, combined with relatively low prices, led to little investment and development of graphite mining and processing capabilities over this time span. Many graphite-producing countries saw a steady drop in annual production between 2001 and 2008, including the Czech Republic, Russia, Madagascar, Zimbabwe, Canada and Mexico. Taking up the slack over this period were the Ukraine, Brazil, India and North Korea. China saw some peaks and valleys in production during this time, but currently produces nearly four-fifths of the world’s total supply of graphite, keeping 60% of this output for its own manufacturing requirements.

Japan, the U.S., Europe, South Korea and Taiwan — each of which has an economically significant and well-developed steel industry — import significant quantities of graphite from China. While China is the dominant player in the graphite game, 70% of its production is of the amorphous and lower-value small-flake graphite that is used in industrial applications rather than in batteries.

At this point in time, the fragmented nature and seasonality of its graphite production base raise some doubts that China will be able to increase its output; in fact, China itself currently imports a significant amount of North Korea’s graphite production. Producers in other regions of the world will need to step up their efforts to meet demand, which will require significant investment.

Increasing Applications Driving Demand

Graphite has long been a key component for the aviation, automotive, steel and plastic industries, as well as in the manufacture of bearings and lubricants. High-purity large-flake graphite is essential for the production of the lithium-ion batteries that are crucial to the consumer-electronics industry. Demand for this form of graphite will rise rapidly as production of larger batteries for vehicular propulsion comes online.

Currently, the iron and steel industries are the largest consumers of graphite. But demand for graphite has been rising for other applications — researchers in the field of material science continue to find new uses for this durable, heat-resistant, electricity-conducting substance. Graphite will be used in the construction of next-generation nuclear reactors, which are expected to reach temperatures as high as 1,000 °C in their cores — triple the temperature of today’s reactors.

Graphite is one of the few substances that can resist such heat. It has already replaced asbestos as a health-risk improvement in automotive brake linings and pads. As the standard of living rises in developing nations like Brazil, Russia, India and China, many more vehicles of all types will be added to the world’s roadways, increasing demand. Few people realize that 84% of the world’s total population lives in emerging-market countries.

Of course, it is expected that a rapidly growing number of automobiles will utilize extensive lithium-ion battery systems to assist with or singlehandedly provide propulsion, which is where the single-greatest increase in graphite demand is anticipated. At present, 2% of all new vehicles sold are gas-electric hybrids, plug-in hybrids or battery-only full-electric drive — most of which still use nickel-metal hydride batteries. It is projected that by 2020, these types of automobiles will represent 5-18% of all sales and almost exclusively be powered by lithium-ion batteries, which are both lighter and more powerful than nickel-metal hydride ones. With 70 million vehicles forecast to be sold in 2020, vast amounts of graphite will be required to manufacture the lithium-ion batteries that will power many of them.

Emerging fuel cell technologies also rely heavily on graphite. One of the more promising types under development, the proton-exchange-membrane fuel cell, requires 100 pounds of graphite per vehicle. Fuel cells will also be used for stationary power generation, as utility providers seek to overcome the inherent inefficiencies around electricity transmission to remote locations.

Perhaps the single greatest testimony to graphite’s importance is the concern that governmental bodies have shown about its important role in security. A 2010 European Commission study regarding the criticality of 41 different materials to the European economy included graphite among the 14 materials high in both economic importance and supply risk. A recent WikiLeaks posting revealed that a list known as the Critical Foreign Dependencies Initiative developed by the U.S. Department of Homeland Security and the State Department included graphite mines in China among those overseas sites that could damage American interests if terrorists were to disable them. The U.S. military will also increasingly rely on graphite for battery and fuel cell applications, as the armed forces lessen their dependence on petroleum.

Intriguing Prospects

Top Stock Pick

China Carbon Graphite Group, Inc. (CHGI.OB), through its affiliate Xingyong Carbon Co. Ltd., manufactures graphite electrodes, fine-grain graphite, high-purity graphite and other carbon-derived products at its Inner Mongolia facility. The company believes that it is the largest wholesale supplier of fine-grain graphite and high-purity graphite in China. The company reported dramatically higher sales and earnings for the quarter ending September 30, 2010.

Additionally, China Carbon Graphite has started building new forming and baking plants in order to meet the growing demand for high-purity (and higher gross margin) products in the global market. Construction of the new forming plant, which will produce large-size ultra-high-graphite electrodes as well as high-purity and fine-grain graphite, is slated to be completed by June 2011. The new baking plant will have 36 furnaces and include 30,000 tons of annual capacity, making it the largest baking plant in China’s graphite industry.

The company noted in its recently-filed 10-Q that steel plants in China have been upgrading their electric-arc furnace facilities, which has boosted demand for large-size ultra-high graphite electrodes, a unique and specialized product. China’s steel industry, far and away the world’s largest, is today rapidly evolving into an industry, like that of the U.S., where electric-arc furnaces requiring graphite electrodes in huge quantities will ultimately be the dominant type of steel furnace used. This is inevitable, as the Chinese steel industry begins to utilize not only imported scrap steel and iron but, soon, domestically produced scrap as well. Shortages have developed and are expected to continue. Earnings could rise materially once these new plants are brought online.

The company’s long-term strategy is to diversify and expand its product offering by manufacturing graphite that would be used as a reflector or moderator in nuclear reactors in China — a product that would have significantly higher profit margins than its current offerings. At present, there are 11 nuclear power plants in China, with 15 more plants currently under construction — and only one other manufacturer of nuclear graphite pure enough for use in these plants. The company works with Hunan University and Qinghua University to research and develop nuclear-grade graphite.

China Carbon Graphite has approximately 550 full-time employees and a market capitalization of $24 million, and the shares trade at just over a dollar. This price could easily triple once the company begins to sell nuclear-grade graphite.

While some investors are wary of investing in Chinese companies due to the risks and volatility in China’s economy, CHGI represents a compelling speculation in the rapidly expanding global graphite industry. It is reassuring to know that internationally-recognized accounting firm BDO is the company’s auditor of record.

Lower Risk Pick

GrafTech International Limited (GTI), based in Parma, Ohio, is another strong graphite stock pick. Founded in 1886, GrafTech is one of the world’s largest manufacturers and providers of high-quality synthetic and natural graphite and carbon-based products. It has four major product categories — graphite electrodes, refractory products, advanced graphite materials and natural graphite — that it manufactures in 11 facilities on four continents, with customers in about 65 countries.

This low-cost global producer has a reputation for product quality, value and service excellence. It is one of the world’s largest manufacturers and providers of advanced graphite and carbon materials for the transportation, solar, and oil and gas industries. Approximately 70% of the graphite electrodes that it sells are consumed in the EAF steel melting process, the steelmaking technology used by “mini-mills.” According to the company’s most recent annual report, it operates “one of the world’s most technologically sophisticated advanced natural graphite production lines.”

The company’s share price has been hovering near $20 recently, and the current market capitalization is $2.4 billion. The stock is very heavily held by institutions such as The Vanguard Group, William Blair & Co. and Calamos Advisors. GrafTech appears to be very well positioned to fully capitalize on the favorable outlook for the graphite industry and the recovering global economy. Indeed, several analysts are projecting robust long-term sales and earnings growth for GrafTech.

Quality Speculation

Northern Graphite Corporation (not yet trading) is a mineral exploration and development company based in Ontario, Canada, that holds a 100% interest in mining claims for the Bissett Creek Project. The Bissett Creek Project consists of approximately 1,343 hectares near Mattawa, Ontario, that contain large crystal graphite flakes in a graphitic gneiss deposit.

The company is about to complete a multimillion-dollar public offering of common stock, and plans to use the proceeds to conduct metallurgical testing, prepare a pre-feasibility project report, and continue drilling and bulk sampling onsite. This project is unique in that almost 90% of the anticipated production is expected to be large-flake, very high-purity graphite that should command a premium price on the market.

Moreover, the company’s prospectus indicates that the mine’s assumed life should exceed 40 years, making Bissett Creek the only significant North American high-purity graphite producer. The deposit is near surface and only 10% of the property has been drilled to date. The project is ideally situated near the Trans-Canada Highway, with rail and power lines close by. Major graphite users in the steel and automotive sectors are in close proximity. These shares could quickly climb from the $0.50 IPO offering price once it begins trading in January 2011.

The Drive Is On

Graphite is one of the quintessential wonder materials of today that will only become more important moving forward. While the supply has proven adequate over the past decade, demand will increase significantly across all sectors of the industry in the years ahead. Already, prices are on the rise, with the best quality large-flake graphite rising in price from a low of $1,350/t to more than $2,000/t during the fourth quarter of 2010 alone. New supply sources will be needed to meet this uptick in demand — existing mining, processing companies and startups alike will require investment. The prudent investor will not want to miss out on this overlooked opportunity. The demand for metals and minerals is now fed by the insatiable economies of southeast Asia and Brazil. There is a lag between increasing supply and demand that leads to long-term price growth for producers of such natural resources.

Disclosure: I have no positions in any of the stocks mentioned above.

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.

by Jeremy Hsu – TECHNEWSDAILY – Published: Feb 12, 2010

Rare earth elements with exotic names such as europium and tantalum are crucial for future technologies such as hybrid cars, but their scarcity could thwart innovation.

But more common metals used in the tech industry could fare better, even if their prices rise due to worldwide demand. For example, lithium-ion batteries for hybrid cars and smart phones won’t run out anytime soon because there is an overabundance of lithium, Jack Lifton, an independent consultant for U.S. rare earths, told the Gold Report during a December interview.

Other important elements tracked by the U.S. Geological Survey (USGS):

Iron and steel make up about 95 percent of all the metal produced in the United States and worldwide, and find uses in thousands of products. These are the least expensive of the world’s metals.

Aluminum is the second most abundant metallic element in the Earth’s crust, just behind silicon. Its light weight, durability, corrosion resistance and malleability make it the most widely used metal after iron.

Copper has one of the oldest lineages of any metal, and has served as the foundation for many ancient civilizations. It still represents the third most-used industrial metal because of its thermal and electrical conductivity – characteristics that make it highly useful in power transmission, telecommunication, and many electronic products.

Gold is still coveted for its monetary value and for jewelry, but it is also an excellent electrical conductor. As an industrial metal, its applications include computers, communications equipment, spacecraft and jet aircraft engines.

Silver has been used for thousands of years to make ornaments, utensils, and coins. Of all the metals, pure silver has the highest reflectivity, and the highest thermal and electrical conductivity. As a result, silver has many industrial applications including mirrors, electrical and electronic products, and photography.

Niobium and tantalum find uses in a variety of high-tech applications. Niobium (also known as columbium) shows up in jet engine components and rocket subassemblies, while tantalum is used to make parts for cell phones, pagers, personal computers and automotive electronics. The U.S. currently imports both resources from countries such as Brazil, Canada and Australia.

Yesterday at the Seeking Alpha Web site, John Petersen published an excellent article on the new Electrification Coalition, titled “Rapid Transition to Grid Enabled Vehicles Not Possible or Desirable.” I suggest you read this article right now, if you haven’t done so already.

To paraphrase John Milton, “logical analysis is a dangerous thing, drink deep or drink naught of the logical spring.”

I want everyone to print the following paragraph by John in his article, and to read and to understand it:

“Batteries are commodities, as are all of the raw materials that are used to make the batteries, motors and other components required for a [Grid Enabled Vehicle]. The roadmap assumes away critical issues of raw materials availability by proving that the elements exist in nature and then ignoring fundamental natural resource development issues like location, economics, environmental impacts and the difference between known mineral resources and developed mineral reserves. It also assumes that recycling issues will resolve themselves despite the fact that the only class of ARRA battery manufacturing grants that went begging was battery recycling.”

As usual, John has zeroed in on the two key points of logical absurdity in this latest set of directions on how governments should spend taxpayer money for private interest:

1. This group does not understand the difference between “present in the earth’s crust” and “available for use by mankind,” and
2. There is no safe, economical, recycling method for recovering the lithium from lithium-ion batteries.

Unelected, poorly educated bureaucrats, throw money at nice presentations such as the outlined in John’s article. The money has been allocated to their use by elected, poorly educated, politicians whose advisors are agenda ridden interest groups. In government speak this process is called “investing in science and technology.”

We’re watching just another lobby being born. This will be the infrastructure spending for electrification lobby. It’s an interest group not an agenda.

by PAUL MASON – BBC WORLD NEWS / NEWSNIGHT – Published: Nov 17, 2009

LONDON – Above ground, factories in China are churning out goods to be shipped around the world, below it, lies rare earth metals which are crucial to nearly every 21st century technology.

Paul Mason reports on a rare commodity in hot demand [features an interview with Jack Lifton].

by ALISHA HIYATE – THE NORTHERN MINER – Published: Nov 6, 2009

WASHINGTON, D.C. – Jack Lifton has an urgent warning for the United States when it comes to the supply of rare earth elements (REEs) — metals that are essential to everything from cell phones and LCD screens to military applications and hybrid cars.

Addressing attendees here at the first annual Infocast Risk Management for Critical and Strategic Metals conference, Lifton cautioned that the States’ nearly total reliance on China for rare earths may jeopardize the nation’s access to the high-tech metals in the future.

“When everything is made in China, it will be a Chinese decision whether you can have these things,” the author, consultant and rare earth expert told the audience. “I think we’re reaching a serious choking point here. We must develop production of rare earths in this country right now because it takes a while (to get production online).”
Once a producer of rare earths — the 15 lanthanide metals plus yttrium — the U.S. now relies on China for 95% of its supplies.

Over the three-day conference, attendees largely representing industry, government, and explorers of rare earths and other minor metals, heard that the U.S. — which is also now dependent on foreign supply for other strategic and essential metals, including germanium, tantalum and lithium — is right to be concerned about the situation.

Although the overall market for rare earths is small by volume, demand is on the rise, from 124,000 tonnes rare earth oxides (REO) in 2008 to a projected 200,000 tonnes REO in 2016, according to Dudley Kingsnorth, executive director of Industrial Minerals Co. of Australia.

Recent developments have shown just how precarious the U.S.’s position may be.

Exports from China have been falling steadily by about 6% a year, Kingsnorth said, and while he doesn’t see exports falling more dramatically than that in future, he does predict that China’s rapid consumption of the metals could cause it to run out of heavy rare earths in 20-30 years. While China provides 95% of the world’s rare earths supply (India and Russia are minor producers), it consumes about 60%.

And that may explain why, in August, a report by China’s Ministry of Industry and Information Technology called for a complete ban on exports of some heavy rare earths — the most valuable and in demand of the REEs — terbium, dysprosium, yttrium, thulium and lutetium. A severe restriction on exports of the REEs neodymium, europium, cerium and lanthanum to a combined 35,000 tonnes a year, was also proposed.

Mark Smith, CEO of privately owned Molycorp Minerals, said that the spectre of a ban and additional restrictions have underlined the sense of urgency surrounding rare earths.

“We need to do something about it — not just look at China and hope they supply the rest of us forever,” Smith said. “China doesn’t have unlimited mining capacity.”

Molycorp’s Mountain Pass operation, which first began production in 1952 and came back online at the end of 2007 after being shut down for five years, is the sole U.S. producer of REEs.

Seeking to bolster its own manufacturing sector and create jobs, China is making the shift to new technologies, including flat-screen TVs, wind turbines and electric vehicles. To that end, it will not only consume more of its own resources in future, but also continue to reach into Africa, Australia, Canada, and other parts of the world for more.

“We’re all focusing on the fact that China is the leading producer (of rare earths),” Lifton said. “We need to focus more on the fact that China is a leading consumer.”

China’s centralized economy means that it can make the switch to new technologies quickly and efficiently. Much of its 4-trillion-yuan (US$586 billion) stimulus package is going into making that switch.

“They don’t have to spend a year in Congress to decide how that money is going to go out,” said Noah Lehrman, senior vice-president of Hudson Metals, a New York City-based company that supplies minor metals to industry.

Environmental concerns are also putting a crimp in Chinese production to the tune of about 10%, Kingsnorth said. The country is in some cases enforcing its own pollution laws. In other cases, word of chemical spills and other environmental damage spreads quickly through the Internet and other new technologies, pressuring the government to crack down on operations that are not up to code.

While many presenters and panelists sounded the alarm on rare earths, Chris Hartshorn, research director of Lux Research, a firm that provides strategic advice on emerging technologies, advocates a more measured response to a potential rare earths crunch. There may well be some REEs that will be in short supply and for which there are few or no alternatives, he says, but that’s not the bulk of them.

“It depends on where you are in the value chain,” he said in a post-conference interview. Hartshorn explains that while China may well impose further restrictions on exports of certain raw metals, “I would be surprised if the export of components (further down the value chain) would be restricted (to the same degree).”

The U.S., European Union and Mexico have taken their complaints about China’s export restrictions to the World Trade Organization. But in the meantime, the squeeze on Chinese exports has Lifton urging the U.S. to look north, rather than east. Canada, he said, is a friendly neighbour with a “treasure trove” of natural resources, small population and expertise in exploration and mining that already has China and Japan making investments.

“Why aren’t we?” Lifton asked.

And as rare earth projects take a long time to get online, it might be wise for investors to get in now — but not before they educate themselves on the many ways they differ from typical mining projects.

First, REEs occur together and must be mined and processed together, then separated. That affects the economics, because some elements, namely HREEs, are more valuable than light rare earth elements (LREEs), which are typically more abundant.

Second, the market for rare earths is small and opaque, which means pricing and production information is not readily available. The uncertainty that creates for investors means the only way a new project can make it to production is if the company has an offtake agreement with an end user.

And because each rare earths deposit is unique in terms of its mineral makeup, the metallurgical process must be tailor-made for each project. That involves a pilot plant — an expensive and lengthy step that’s also necessary to prove the end product will meet the requirements of the end user.

Finally, new applications for REEs are continually being developed, says Don Bubar, president and CEO of Avalon Rare Metals (AVL-T), which means that a deposit whose makeup is skewed toward REEs that are less valuable today, may be prized tomorrow.

“There’s no perfect deposit and if you do find one, it won’t be perfect in a few years,” Bubar said. Avalon is developing the Nechalacho REE deposit, in Canada’s Northwest Territories.

One other notable characteristic of the rare earths business is illustrated by veteran miner Molycorp.

The company is developing proprietary new technologies that use cerium, an LREE it produces that’s already in oversupply. Because you can’t leave the less valuable minerals behind, “that is a really good strategy,” says Lux Research’s Hartshorn.

While no one at the conference predicted a shortage of lithium any time soon, many commented that the domination of the market by a very few large suppliers — in Chile, Argentina, Australia and China (with minor production coming from the U.S.) — is a problem for automakers looking to bring electric vehicles to market.

While hybrid cars largely use nickel metal hydride batteries, electric cars that are due in show rooms as early as late next year, starting with the Nissan Leaf, will use still-to-be-perfected lithium ion batteries, which require high-grade lithium carbonate.

Future demand for lithium, which makes for lightweight, powerful batteries, really depends on how well-received electric vehicles are.

Jay Chmelauskas, president of Western Lithium Canada (WLC-V), said “true believers” think there will be a 10% adoption rate of electric cars, and in that scenario, the world will definitely need more lithium production.

“We will not run out of lithium, but we need to bring on more supply,” he said.

But the current hoopla around lithium could lead to oversupply, Hartshorn said.

Based on a recent electric vehicle report produced by Lux Research, he said there would be no pressure on lithium from this pivotal end user over the next 10 years.

The projections indicate a looming lithium battery oversupply will be upon us in 2015 “and easily beyond that,” Hartshorn says. Indeed, the best-case scenario for lithium producers, which assumes an oil price of US$200 per barrel, predicts an adoption rate (worldwide) of 0.3% for electric vehicles by 2020, with plug-in hybrids at 3.7%.

The study took into account different existing vehicle fleets, fuel prices and incentives in different parts of world.

Irving Mintzer, a principal of energy consulting firm MEG LLC disagreed on electric vehicle takeup, saying that changes in values, rather than economic drivers like oil, would prompt a shift to electric cars. He predicted that by 2030, as many as one-third of vehicles purchased in the U.S., or about 5 million cars, could have electric drive trains.

The amount of takeup depends not only on incentives offered by governments, but also on infrastructure, which Hartshorn noted depends on action by typically slow-moving utilities. Only a few have started to consider electric vehicles as a critical part of their future planning.

What’s certain is that all the recent hoopla around lithium and the electric car has spurred a flood of juniors to explore for the metal. Dominated as the industry is by a few giants, like Chile’s Sociedad Quimica y Minera (SQM-N) (SQM), that may be a risky place to be.

Novis Smith, vice-president technology of LithChem Energy International, had a warning for new entrants into the lithium space, reminding the audience that SQM has blown away the competition in the past by dropping prices. SQM, which produces lithium from brines in Chile as a byproduct of potash, is the world’s largest producer of the metal.

“They’re the 800-pound gorilla in the room and they’ll do what they want to do,” Smith cautioned.

Copyright © 2009 The Northern Miner.