Late last week the US Department of Energy [DoE] awarded $9.6 million in grants for six Advanced Research Projects Agency – Energy [ARPA-E] projects as a means to “accelerate innovation in clean energy technologies, increase America’s competitiveness and create jobs”.

Notable among the grants was a $2.25 million grant to GE Global Research, of Niskayuna, NY, for a project titled ‘Transformational Nanostructured Permanent Magnets”.

According to the write up from the DoE, GE will

“develop next-generation permanent magnets that include lower content of critical rare-earth materials. GE will develop bulk nanostructured magnetic materials, resulting in a dramatic increase in performance over state-of-the-art magnets. The impact of these new magnets will be to increase the efficiency and power density of electric machines while reducing dependence on globally critical rare-earth minerals.”

GE claims that the production of such magnets will lead to growth in the hybrid vehicle and wind turbine generator markets. It is no secret that GE is involved in the latter industry, having recently acquired a business unit that produces permanent-magnet-based, direct-drive wind turbines.

According to GE’s project proposal, their project will focus on a goal of obtaining new magnet materials with a maximum energy product of at least 80 MGOe and with an 80% reduction in rare earth content. To achieve this aim, the research will focus on the development of nanostructured magnet materials, in order to “demonstrate for the first time a bulk exchange-spring nanocomposite permanent magnet”.

The maximum energy product of a magnetic material is a figure of merit used to compare the performance of one magnetic material to another. Currently, the highest such value for a commercially available permanent magnet hovers at around 55-57 MGOe, for magnets based on alloys of Nd-Fe-B. The maximum theoretical energy product for Nd-Fe-B magnet materials is 64 MGOe and so the GE research project, if successful, would be a real breakthrough. So-called exchange-spring magnets rely on finely tuned microstructures that contain special nano-sized grain mixtures of materials such as Nd-Fe-B and Fe.

What makes this award pretty interesting is that it is the first time in quite a while that GE has been publicly associated with research into permanent magnet materials. There is no mention in the news release from the DoE of any collaborating entities on the project, which raises the question of just how GE will staff and execute the project, in order to move the state of the art along, without formally collaborating with leading academic and research groups in the field.

This announcement follows on from the award earlier this year by ARPA-E, of $4.5 million to a consortium led by the University of Delaware, for a project titled, “High Energy Permanent Magnets for Hybrid Vehicles and Alternative Energy“. In addition to the similar goal of successfully producing nano-composite-based permanent magnets, the Delaware project will also look at completely new magnetic material compositions.

Unlike the apparent structure of the GE project, Delaware will be collaborating with a number of other groups including those at the University of Nebraska, Ames Lab / Iowa State University, Northeastern University, Virginia Commonwealth University and Electron Energy Corporation.

China is by far the world’s largest end user of copper, from which is constructed the nerve system of our civilization, the electric power distribution grid, as well as all of the devices that generate electricity and transform it into motive power or heat for individual or industrial end use.

China’s domestic mining produced just short of one million tons of new copper in 2009, a year in which the total global production of copper was 16 million tons. Yet China used in 2009 just short of 6 million tons of copper, nearly 40% of 2009’s total world supply of that metal. This amount used in China, 6 million tons, is one and one-half times the total annual copper production of copper by all Chilean sources. Chile is the world’s largest producer of copper at 4 million tons a year, which is 25% of global production.

China imports its copper mostly as a standard form of crude (impure) metal and then purifies it and fabricates it into forms for drawing wire and producing sheet and bar stock for manufacturing purposes. The crude – in the sense of too impure for electrical use – copper has usually already been processed at the originating mine, to remove most of its non-metallic impurities, but still very much carried in the ‘crude’ copper, as it goes into final electro-refining, are molybdenum, gold, silver, platinum, palladium, selenium, tellurium and rhenium. Some copper ores are even very significant sources of gold, but most are not. What is significant about China’s inflow and the processing to ‘purify’ it is the sheer volume of it. Even ‘impurities’ in the copper that are present only as traces, can be produced in relatively substantial quantities when the flow through produces 6 million tons of copper.

China, through this final purification step, is gifted with the world’s largest reliable supplies of the above named rare technology metals, some of which are critical to the green revolution in sustainable  alternate energy technology.

Take the example of tellurium, which in addition to being recovered from the vast volumes of copper processed in China, is also able to be recovered from the vast volumes of lead, zinc, bismuth, and antimony produced or refined in China. In addition to the low grade sources ( ie. the ‘traces’ in the base and more common other metals), a Chinese company operates the only mine in the world the primary product of which is tellurium. The mine’s avaerage grade of tellurium is an astounding 1.17%.

That company, Apollo Solar Engineering in Chengdu, Sichuan, which is listed in the USA, (ASOE.OB)  is the world’s largest producer of ultra-high purity tellurium, which it produces primarily from its mine, at a rate of 3-4 tons a month. The company is also the destination point for much of the crude tellurium recovered in China, from the refining of the ores, domestic and imported, of copper, lead, gold, silver, antimony, and bismuth.

There can be no cadmium telluride thin-film photovoltaic solar cells made without ultrahigh purity tellurium, ultrahigh purity cadmium telluride, and ultrahigh purity cadmium sulfide. The pre-eminent American producer of thin film photovoltaic solar cells, First Solar (FSLR), is already Apollo’s largest customer for its production of all of these items.

There is an International ‘New Energy’ Fair in Chengdu during September 28-30, 2010. ‘New Energy’ is the most common translation into Chinese of the term ‘Alternate Energy.’  I have been invited to speak on the future and the importance of the production of rare technology metals such as tellurium, selenium, indium, gallium, as well as of the ‘common’ technology metal, copper, to the thin-film photovoltaic solar cell industry both in China and in the world.

China is already the world’s largest producer or the largest end user or both of ALL of those metals! Those who want to invest in green technologies need to take note.  China now dominates the production and use of the specialized technology metals critical for solar. China should be the first place that anyone who wishes to invest in the future of thin film photovoltaic solar cell production looks.

Keep in mind that China is rapidly going green, even as the rest of the world just talks about it, and that if we in the West wait any longer it will be of no avail to us, because the critical raw materials production is already centered in China.

Disclosure: I am a business development consultant to Apollo Solar Engineering.

Later this week I’ll be flying out to Europe, ahead of the 21st International Workshop on Rare Earth Permanent Magnets and their Applications – also known as REPM’10 or simply “The Workshop” within the magnet industry.

This Workshop will be held on the shores of the picturesque Lake Bled in Slovenia, and is the latest in a long series of similar events stretching back to the 1970s. Karl Strnat, the co-discoverer of the first generation of permanent magnets based on rare earths, organized the first Workshop at the University of Dayton, Ohio in 1974. Dr. Strnat worked at the US Air Force Research Laboratory, part of the Wright-Patterson Air Force Base in Ohio, and it was there that he, Alden Ray and others undertook the research that led to the discovery the first RE-Cobalt magnetic compounds.

I’ve had the privilege and the pleasure of attending three prior Workshops, which are held every two years. I say without hesitation that the Workshop is the most important meeting for the permanent magnet community on the calendar. The attendees are a unique blend of folks from industry and academia, technical and non-technical, and drawn from all around the world. This year’s event is being hosted by the magnetics research group at the Josef Stefan Institute in Ljubljana, Slovenia’s capital, a group with a distinguished track record of research and development in magnetic materials.

As a slowly developing postgraduate research student in magnetic materials at the University of Birmingham, I had the somewhat dubious honor of working as part of the security detail at the Workshop held at that University in 1994. I was also part of a musical “ensemble” during that meeting that passed into Workshop legend too, but that’s about all I’ll say on that.

What I will mention though, is that it was my attendance and participation at that Workshop in Birmingham in 1994, that led to my being introduced to the leading players of the industrial and academic sectors of the rare earth magnets industry. I made contact with one particular individual at that meeting, who would eventually go on to introduce me to my first employer after graduating in 1997.

At the Workshop in Slovenia next week, I will present an invited paper titled ‘Recent Developments in the North American Permanent Magnet Industry and its Supply Chain‘. It was not without a considerable sense of satisfaction at being able to “close the circle”, that I discovered that the Chair of the session in which I’ll be presenting this paper, was none other than the gentleman I first met in 1994, who helped propel me into the commercial world of permanent magnets – Mr Reinhold Strnat, a distinguished member of the magnetics community in his own right, and a now long time friend and colleague.

The ability for young, wet-behind-the-ears postgraduate research students to present their work to crusty old professors and captains of industry alike, in a non-threatening, non-pretentious setting is a near-unique aspect of the Workshop series, and was certainly an essential part of my growth in the discipline. It is from meetings and interactions like these, that the future researchers, developers, engineers and scientists in the field of rare earths, permanent magnets and allied arts will be drawn. I am pleased to note that the attendance at the Workshop in Slovenia will be as high as ever – perhaps 150 attendees, representing all the research groups, companies and other organizations of importance to the rare earth permanent magnet industry.

Interestingly, this year will see a number of presentations from folks within the broader rare earths industry, including TMR’s very own Jack Lifton, Gary Billingsley of Great Western Minerals, and others. I’m hoping to snag some interviews and Q & As with the various leading rare earth magnet researchers while in Bled. I look forward to being able to share that info and perhaps a few photos, on my return.

The television commentator and former Jesuit, John McLaughlin, used to make me laugh when he would tell a panelist of an opposing political view: “Once again you’ve stumbled upon the truth, even though you don’t know how you got there.”

The New York Times recently reported the facts of a story entitled, “China to Invest Billions in Electric and Hybrid Cars,” but failed to stumble upon the truth. So let me do that for the Times and for your benefit, dear readers:

China, as part of its national plan, a goal centrally set by those in overall charge of its economy, announced yesterday that its motor vehicle industry will be required to build one million electric and hybrid motor vehicles in the next few years. I believe that this means that the industry will be required to reach a production rate of one million electrifed motor vehicles, the size of passenger cars, per year.

This is part of an overall plan to marshal and deploy China’s natural resources and its resources of intellectual property for the benefit of its own people, first. How much more logical can it get than that as a reason to conserve precious natural resources such as the rare earths?

The New York Times points out in the above story:

“The announcement, analysts say, is another example of how China seeks to marshal resources and tackle industries and new markets. The plan also underlines what China describes as its growing commitment to combating pollution and reducing carbon emissions.”

When I was in Beijing in the first week of August, three weeks ago, one of the other (I was a speaker at the plenary session) speakers at the Chinese Society for Rare Earths 6th Annual Rare Earths’ Summit, stated that a goal of the next two five-year plans, to be completed in 2020, was to have 330 GW of wind-turbine-generated electricity installed by that time. The speaker pointed out that this would take 59,000 metric tonnes of neodymium, calculated as 28% of the rare earth permanent magnet alloy, neodymium-iron-boron, since each 1.5 MW wind turbine generator will require one tonne of rare earth permanent magnet alloy.

The same speaker who was from the Chinese rare earth permanent magnet manufacturing industry didn’t mention how much of the heavy rare earths would be required for the project. I will estimate that at most it would be one thousand tons of terbium and three thousand tons of dysprosium.

In any case the total requirements for these new (not replacement) uses for neodymium, would be the total production for three years at the most recently achieved high production rate of neodymium, and as much as five years of terbium and two to three years of dysprosium.

If the neodymium demand is to be met, and this means that China, AS THE SPEAKER SAID, decides to use only rare earth permanent magnets for its wind turbine electric generator program, then it would require that three years’ production of the contained neodymium, at the rate it was mined in China in 2008, among all the rare earths mines there, be reserved for Chinese domestic magnet and wind equipment manufacturers and be targeted for the Chinese domestic market!

I think that it is crystal clear, that China is not reducing the production of rare earths on a long term basis and is not reducing their export on a short term basis. It is in fact pausing to:

• physically clean up the rare earth mining sector;
• eliminate illegal mining and smuggling of this precious green resource;
• consolidate the rare earth mining industry under the largest state-owned base metal producers of iron, copper, and aluminum, to prepare to ramp up the Chinese domestic production of rare earths both to meet and to guarantee the success of its long-term green strategy.

This is called long term strategic planning for those in Washington and on Wall Street who don’t understand why the Chinese are ‘depriving us’ of this vital resource. This process is also called ‘conservation of domestic resources’, by the way.

As to electric and hybrid cars, they require neodymium, dysprosium, and terbium for the magnets in the rare earth permanent magnet electric motors – both that drive them and that power their accessories. Some or all may also use lanthanum in nickel metal hydride batteries, as all hybrids made today currently do. A. In any case, whether or not the Chinese electrified cars use NiMH batteries, they are being designed to use rare earth permanent magnet electric motors. A million such vehicles will probably require just one million kg (1,000 metric tonnes) a year. Oh, did I mention that they will need also 10-20 tonnes of terbium and up to 50 tonnes of dysprosium. All of this new demand will be added demand not replacement demand, by the way.

I have no doubt that China will remain the world’s largest producer of the rare earths indefinitely. In the near term, perhaps over the next 5-10 years, China will need to import the ‘light’ rare earths lanthanum and neodymium, to make up any shortfalls created by its proposed quantum leap in demand in the face of the temporary reduction of production, for environmental and reorganization reasons. If the non-Chinese light rare earth miners get their acts together in time so that they can produce light rare earths at a lower cost than their Chinese competitors are able to do, then both Molycorp and Lynas have a good chance of success even in the long term.

The real issue for the future of rare earth utilization and therefore of mining, is the continued growth of the use and need for the heavy rare earths, terbium and dysprosium.

These ‘heavy rare earths’ are believed by the Chinese to be in short supply domestically. China today is the world’s only producer of heavy rare earths, mostly from southern Chinese deposits known as ‘ionic clays’, although significant quantities are also produced from the Bayanobo region (even though they report in Bayanobo only in small quantities) due to the overall massive amounts of rare earths mined there. Nonetheless, China believes that its own domestic supply of the heavy rare earths has between 5 and 30 years remaining at present levels of use.

This means that the real supply opportunity in the non-Chinese rare earth mining sector, is for those deposits that have above average proportions of heavy rare earths, to be brought into production as quickly as possible.

It is a horse race among those non-Chinese juniors with commercially (i.e. economically) recoverable heavy rare earths.

They are:

Canada

1. Great Western Minerals Group
2. Avalon Rare Metals
3. Quest Rare Minerals

(Note: some of my colleagues have urged me to add other Canadian juniors to this list, such as Matamec Exploration, but I know little about that company and will reserve my judgement on them for a future time, when I have had time to study Matamec Exploration and to visit its site.)

USA

1. Ucore Rare Metals
2. Rare Element Resources (a light rare earth deposit but with significant europium only)

Republic of South Africa

1. Rareco (in conjunction with Great Western Minerals Group)
2. Frontier Rare Earths (private at this time)

The success or failure of any of the above, will depend on the quality of their deposits, the efficiency of their extractive metallurgy, the ability of the global rare earth refining industry to service them, and the growth of the Chinese, Japanese, Korean, and Indian domestic markets.

Disclosure: I own shares in Great Western Minerals Group, and I am a paid consultant in business development to Ucore Rare Metals and to Frontier Rare Earths.

Many of my readers have expressed surprise at my report of the non-appearance of practically all of the non-Chinese rare-earth junior-mining ventures, at the ’6th International Conference on Rare Earth Development and Application & China Rare Earth Summit 2010′, held in Beijing this week.

I personally decided to come to the English-language ‘China Rare Earth Summit 2010′ in the Spring of this year, when the Chinese Society of Rare Earths invited me to be a guest speaker during the plenary (general introduction and overview) session. I paid my own air fare, and the Society is covering my hotel room in Beijing. When I agreed to come, I did not know who else would be attending, but I assumed that the regular contingent of junior miners and sector analysts, who I see at all of the rare earth conferences I attend, would be there.

I admit that I now only attend conferences at which I am a speaker. Since my consultancy is focused on assisting institutional investors doing due diligence on rare metals related opportunities, I even narrowly select only those speaking opportunities where I believe I can improve my knowledge of a sector, such as rare earths.

I also admit that since late last year, I have been hearing that ‘conference fatigue’ is setting in among the attending classes of the rare-earth ‘space.’ It should be noted here, by the way, that institutional investors rarely attend the typical rare-earth conferences put on by information services and other professional conference organizers who cover the ‘sector.’ Institutional investors have their own gatherings which are for (high) paying clients only, such as private equity funds. I frequently speak at those and have meetings with the clients of my clients, who usually have specific questions about particular sectors and companies in which they are interested.

I give advice only on my assessment of the probability of commercial success of rare-metals-related opportunities. I do not presume to be a stock picker, because that requires knowledge of, and interest in, market psychology, which I possess only to a limited degree.

Having said that, I agree, however, that most industry conferences put on by information services and professional conference companies, are for stock promotion and networking among industry hopefuls and public relations companies.  They usually consist of endless ‘presentations’ by junior miners saying exactly the same thing over and over again. I am indeed fatigued by most of this myself.

The trouble for the serious junior miners, seems to be that they cannot distinguish between the forest and the trees. I agree wholeheartedly that there is and should be conference fatigue with regard to the financing of rare earth mining opportunities outside of China.  These conferences are pointless if your goal is to secure either long term strategic financing, or get access to technology to move your project forward. Neither the financiers, nor the providers of such technology, attend most of the stock-promoting conferences.

Serious junior miners need financing, supply-chain knowledge and technology, and marketing assistance. The ‘China Rare Earth Summit 2010′ was certainly a source of information on supply (and value) chain technology, as well as a source of knowledge of the largest rare-earth market in the world, Southeast Asia, primarily China. Even though Western institutional investors were not at this meeting, I did ask that successful Chinese miners, refiners and mining companies look at investing and opening operations in the USA, which would make the financing of smaller rare earth mining ventures in North America more economically feasible.

I will continue this dialog with the Chinese mining and mining finance community in November of this year, when I address the ‘China Mining 2010′ meeting – Asia’s, if not the world’s largest mining congress – on US contributions to the global rare-earth market. I will also chair a mining commodities forum there on lead and zinc.

What I want to say about the non-attendance of junior non-Chinese rare-earth miners at this week’s meeting in Beijing is that I think it indicates a lack of understanding of what is required to successfully bring a rare-earth (or any other metal or metals) producer to the marketplace. It underscores for me what seems to be only too common among junior miners: a lack of management skills, particularly obvious in the areas of long term finance planning and acquisition, business model development, supply-chain awareness, value-chain awareness, and marketing.

There were 300 attendees in Beijing this week. They represented, comprehensively, China’s rare-earth miners, refiners, metal-trading companies, academic and industrial research and development, related manufacturers, and government. The conference language was English. There were attendees from Mongolia, Kazakhstan, Bulgaria, Russia, France, the UK, Australia, Canada, and the USA, but the only non-Chinese junior miner, as I have previously said, was Great Western Minerals Group (GWMG), which was doing exactly what the others should have been doing; networking with Chinese companies that have the skills and technologies for sale or joint venture, which a company like GWMG needs to bring its project to a successful conclusion.

I marvel at the nonsensical braying of US promoters, about critical shortages and national security requiring massive public subsidies, for an industry that needs honed management skills in finance, supply chain interaction, technology, and marketing. A lot of what every rare-earth junior-mining company (US or otherwise) needs to be successful, was available in Beijing, but I guess they had ‘conference fatigue.’ Their general failures to understand their need for the skills in the Chinese rare-earth industry, do not bode well for the non-Chinese industry.

I’m tired of hearing about Chinese plans and conspiracies to control the rare-earth space. By the way, I was intrigued by the number of Chinese here who asked me why the USA is against Chinese investment in US mining. “Is there a conspiracy,” one gentleman asked me, “against the Chinese businessman?”

Also, by the way, the first response I got to my call for Chinese investment in the North American mining space was, “why would we want to create a competitor?” My answer? That refiners, metal and alloy producers should build facilities in North America, so that smaller mines can be put into operation with assured markets, and without the need to each finance a separation plant and refinery and metal production operation. This is the only way to make mining, on its own, profitable at the concentrate production stage. I suggest that Chinese supply-chain-operation providers support only those mines, which can produce a high proportion of heavy rare earths. Such mines in Canada or South Africa, would be producing into a no-demand local market and would be glad to sell to Chinese customers. Even in the USA, domestic demand is small and declining, so that materials produced in the USA would be mostly for export. Thus, I pointed out, Chinese investments in the USA would create US jobs and would produce both profits and valuable metals for the Chinese markets, as well as increased US exports.

The US military demand can be met through direct stockpiling and recycling, or by encouraging its own suppliers to do the same.

I cannot think of another way to make North American rare-earth mining profitable, within the core competency of the North American mining ventures I have studied.

GWMG, for one, is doing exactly the right thing. It has found a high-grade (though small) rare-earth deposit in a low-labor-cost country. The deposit in question is disproportionately rich in heavy rare earths, it was mined before by a major miner and there was therefore a developed metallurgy for the deposit in place. GWMG is seeking third-party assistance in refining and metal production to be carried out in South Africa. GWMG will produce magnet alloys itself, in the UK, in its existing facility there, now running using Chinese metals. They will sell into the market the more than 2/3 of its production that it does not consume internally, resulting in a production of 3,000 tonnes per annum of rare-earth permanent-magnet alloy worth, at today’s rates, approximately $150 million with a margin of more than 35%.

Even better, GWMG plans to use part of its proceeds from any financing, to explore the area of its South African claims, to try and find additional ore of the type it has already verified to be there, in relatively limited quantity.

These days I am only following five rare-earth companies in any great detail. Each of them has a heavy-rare-earth-rich deposit or one that has other valuable metals associated with the rare earth deposit. I am working with two of those companies as a paid consultant, to help them to find financing and to find what I call supply-chain-synergistic relationships.

My only connection with GWMG is that I am a small shareholder. Why wouldn’t I be?

Where is everyone’s business model for profitable operation??

In fact, where is everyone who isn’t Chinese?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In discussions and presentations on rare earths and their extraction and processing, junior mining and exploration companies are frequently asked to discuss how they plan to handle and “dispose” of any thorium present in the deposit [especially if the deposit contains monazite]. The presence of thorium in such deposits is usually perceived to be at best a nuisance and at worse, a potentially costly regulatory problem, because of its slightly radioactive nature.

And yet, it wasn’t always the case that thorium was perceived to be a problem. Many of the rare earth deposits known today, were discovered by geologists and others looking for either uranium or thorium-bearing minerals. Former thorium-producing mines are now being re-examined and re-vamped as rare earth mines.

Thorium was at one time the subject of significant research as part of the development of nuclear fuel cycles. It ultimately lost out to uranium as the metal of choice for such processes, primarily because the uranium fuel cycle was particularly suited to the production of materials for use in weapons manufacture. Thus the decline in interest was a result of political, not technical reasons.

In recent years, however, there has been a resurgence of interest in the use of thorium for a modernized version of the nuclear fuel cycle. According to the Thorium Energy Amplifier Association [ThorEA], there are a number of reasons for this:

• Thorium is over three times more plentiful than uranium and the process of extracting it from minerals is relatively straightforward;
• Thorium has a higher energy density than uranium. According to ThorEA, there is enough energy in 5,000 tonnes of thorium to provide total global energy needs for one year;
• Fuel cycles that use thorium are inherently proliferation-resistant [ironically the very reason why thorium fell out of favor with the industrial-military complex decades ago], with negligible plutonium production;
• Such fuel cycles have better nuclear characteristics, better radiation stability and longer fuel cycles than uranium fuels;
• It is possible to use thorium fuel cycles to effectively destroy legacy plutonium and other nuclear waste products.

A number of systems have been proposed in order to develop a thorium fuel cycle. A couple of weeks ago, ThorEA published a report on one such concept – the Accelerator Driven Subcritical Reactor of ADSR. Without getting bogged down in the details, an ADSR system couples a nuclear reactor core with a high energy proton accelerator. While not a new concept, the ThorEA report revisits the concept and analyzes the feasibility of such a system as a means of generating electricity.

If, realistically, nuclear power generation has to remain a central plank of any future energy development program to either reduce carbon dioxide emissions or the burning of fossil fuels, it seems to me that the advantages of a thorium-based fuel cycle significantly outweigh those associated with uranium-based systems. While certainly a long term project, developing such cycles would also simultaneously provide a destination and future customers for the thorium currently discarded as a waste product of the rare earth extraction process. Surely a win-win for all concerned?

You can download a copy of the ThorEA report from here – well worth a look.

CHENGDU, China, June 23 /PR Newswire-Asia-First Call/ — Apollo Solar Energy, Inc. (OTC Bulletin Board: ASOE) (“Apollo Solar” or “the Company”), a leading vertically integrated miner, refiner and producer of high purity tellurium (Te), tellurium-based compounds and other metals for the solar photovoltaic (PV) industry and specific segments of the electronic materials market worldwide, as well as design and construction of solar PV projects and solar power stations in the People’s Republic of China, today announced that the Company has engaged Mr. Jack Lifton as Chief Technical and Business Advisor of the company.

According to the consulting agreement, Mr. Lifton will be entitled to receive a monthly base consulting fee of $2,500 commencing June 18, 2010 and has also been granted options to acquire 300,000 shares of the Company’s common stock which will vest in instalments over the thirty-six month period of his consulting agreement with an exercise price at $3.50.

Mr. Jack Lifton is an independent consultant, with more than 48 year’s experience, in the sourcing of those minor metals for which he originally coined the phrase “the Technology Metals.” Educated as a physical chemist and metallurgist, his work includes original research into the properties of most of the rare metals used in alternative energy technologies. He now covers the exploration for, and the mining, refining and recycling of a spectrum of nonferrous metals, including lithium, tellurium, selenium, indium, gallium and the rare earth metals.

Mr. Jack Lifton consults, writes, and lectures around the world. His clients include companies in the global OEM automotive, heavy equipment, electrical and electronic, mining, smelting and refining industries. He has a wealth of knowledge in locating and analyzing new and recycled supplies of technology metals. Today, Mr. Lifton primarily consults to institutional investors doing due diligence on metal-related opportunities for green technologies.

Based upon the consulting agreement, Mr. Jack Lifton will provide consulting services to Apollo, including but not limited to, the following: (i) organizing a technical and business advisory board that consist of top worldwide experts in the field of high purity metals that have strategic and critical applications in alternative energy, electronic materials and other high technologies; (ii) assisting Apollo’s marketing team with selling its high purity metals, including tellurium, in the United States and other major industrial countries; (iii) introducing Apollo to institutional investors and accredited investors.

“We are very pleased to engage Mr. Jack Lifton as Chief Technical and Business Advisor of the Company,” Mr. Renyi Hou, CEO of the Company commented. “Mr. Lifton has 48 years experience in the sourcing of ‘Technology Metals’ that play a significant role in innovation of green energy, electronic materials and other high technology industry. We expect that Mr. Lifton’s experience and network in the field will assist Apollo’s management and marketing effort to a new level.”

“I’m also very pleased to take the position of Chief Technical and Business Advisor of Apollo,” Mr. Jack Lifton commented. “Apollo’s innovative technologies and manufacturing skills in producing high and ultra-high purity technology metals in large quantities for the mass production of green technologies in particular and for electronic in general are unsurpassed. Therefore it is to Apollo that the high tech industry will now turn for the first step on the green road to the future.”

About Apollo Solar Energy, Inc.

Apollo Solar Energy, Inc., through its wholly owned subsidiary, Sichuan Apollo Solar Science and Technology Co., Ltd, is primarily engaged in mining, refining and producing high purity tellurium (Te), tellurium-based compounds and other metals for thin film solar PV industry as well as for specific segments of the electronic materials market. The Company’s products include CdTe thin-film compounds, CIGS thin-film compounds, ultra- high purity metals and commercial-purity metals. Apollo Solar also expects to be a leading constructor and operator in future government-funded solar power station projects in China, including possible 10 GW solar power stations in Anhui province, China.

Safe Harbour Statement

The statements contained in this press release that are not historical facts are “forward-looking statements” within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In particular, the statements regarding the Company’s expectation that it will supply thin film solar panels to CECS and joint construction of thin scaled solar energy power stations with CECS are examples of such forward-looking statements. The forward-looking statements include risks and uncertainties, including but not limited to, general economic conditions and regulatory developments, not within our control. The factors discussed herein and expressed from time to time in our filings with the Securities and Exchange Commission could cause actual results and developments to be materially different from those expressed or implied by such statements. The forward-looking statements are made only as of the date of this press release, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstance.

by Kira Kay – PBS Newshour / The Bureau for International Reporting – Original Air Date: June 14, 2010

Correspondent Kira Kay reports on a Canadian hunt for “rare earth” minerals, elements mined almost exclusively in China, that are key to emerging green technologies, cell phones, engines and other high-tech devices despite their short supply. Includes interview footage with Jack Lifton.

Sometimes things actually move pretty quickly in Washington. The FY2011 National Defense Authorization Act [NDAA] was passed on Friday by a vote of the US House of Representatives, with a comfortable margin. As reported earlier this week, the Act contains provisions pertaining to the rare earth supply chain, with a set of mandates directing the Department of Defense to take specific actions regarding the supply chain as a whole. Contained in Section 835, these provisions successfully made it through the process and are part of the final passed House version of the bill. The next step will be for the Senate to work on its own version of the NDAA, for the two items to then be amalgamated in conference, before being signed into law later this year.

Prior to the vote of the full House on the bill, Rep. Mike Coffman [R-CO] on behalf of himself and Rep. Brad Ellsworth [D-IN] proposed an Amendment to the bill, relating to neodymium-based [Nd-Fe-B] permanent magnets. The Amendment [#6 on the list] looked to add a new Section 839 to the bill, titled “Defense Industrial Base Priority For Rare Earth Neodymium Iron Boron Magnets”. The Amendment noted “an urgent need” to restore US-based capabilities for manufacturing sintered Nd-Fe-B magnets for defense applications and to eliminate the vulnerabilities in the US defense supply chain as they relate to these “key materials”. At present there are no manufacturers of sintered Nd-Fe-B magnets in the USA.

The Amendment mentioned the findings of the recent Government Accountability Office [GAO] report on rare earths. It further noted that the USA was technologically capable of restoring a Nd-Fe-B manufacturing capability, but that restoring such capability would take 3-5 years. Noting that worldwide supplies of rare earths “are expected to tighten significantly within the next 3-5 years” and that there is an appreciable time to get new parts qualified for defense programs, the Amendment noted that work “should begin immediately” on restoring Nd-Fe-B production capability “to avoid future weapon system delivery disruption”.

Having made these observations, the Amendment then required that:

Not later than 90 days after the date of the enactment of this Act, the Secretary shall submit to the Committees on Armed Services of the House of Representatives and the Senate a plan to establish a domestic source of sintered neodymium iron boron magnets for use in the defense supply chain.

The Amendment further clarified what constitutes a “domestic source” of Nd-Fe-B magnets by stating that:

For the purposes of subsection (b), the capability to manufacture sintered neodymium iron boron magnets includes the alloying, pressing, and sintering of magnet materials. It does not include manufacturing magnets from standard shapes or imported blocks of neodymium. The Secretary’s plan shall not allow the grinding or reprocessing of neodymium to be considered a `domestic source of sintered neodymium iron boron magnets’.

This latter comment relates to the practice of companies procuring blocks of Nd-Fe-B magnet material from China, Japan, Germany and elsewhere, and then grinding the blocks into a final shape in the USA, before magnetizing or assembling the blocks into magnetic devices.

Rep. Coffman’s Amendment was considered in concert with several other amendments ‘en bloc’, and this group of Amendments passed by a voice vote. Section 839 is therefore now a part of the final passed House version of the NDAA. I asked Jeff Green, the industry lobbyist who has been working diligently on the issue of rare earth supply chain vulnerability, what this says about the awareness of members of Congress of these issues. “There is clear bi-partisan agreement on this issue,” said Mr. Green, “as evidenced by the fact that both the Chairman and Ranking Member of the House Armed Services Committee moved to submit this and other Amendments en bloc”. It is clear that the combination of growing mainstream interest on rare earths, and events such as the March hearings in the House on rare earths, and the recent publication of the GAO report, have had an impact. “We are seeing some traction,” said Mr. Green, “on some key issues of importance to national security and defense”.

The combination of the language in Section 835 and 839 of the NDAA is pretty powerful, certainly as it related to the production of rare earth magnets in the USA. While I am not sure that it would actually take as long as 3-5 years to get Nd-Fe-B production up and running again [assuming that the appropriate capital investments were made], certainly at least a couple of years would be reasonably required to build and install equipment, to optimize processes and to get people trained. The larger headache is what to do about the creation of US or North American-based rare earth refining capabilities, the absence of which is a critical problem in the process of getting the supply chain back up and running. It remains to be seen how the Department of Defense will tackle this issue, if the language in the NDAA as it presently stands is eventually signed into law.

There is one other potential wrinkle in the Nd-Fe-B story; that of patent licensing. While the decline of North American Nd-Fe-B production was very much related to Chinese pricing issues, the restoration of such production for commercial purposes has in part been hampered by red tape associated with a suite of patents on Nd-Fe-B that Hitachi Metals of Japan presently holds. Originally owned by Sumitomo Special Metals, these patents have been licensed to specific companies over the years, some of whom did have production in the USA. However, indications are that Hitachi Metals is not keen to issue new licenses to companies in the USA for Nd-Fe-B production; this is likely to be one reason for the delay in the proposed rare earth magnet joint venture between Molycorp Minerals and Arnold Magnetic Technologies, announced last year.

Further complicating matters is the arcane legal status of some of these patents. While many of the original composition-related patents have since expired, many of the newer patents have not, with some of the more important ones not expiring until after 2014. However, some industry insiders are speculating, and not just privately, that there are fundamental flaws in the patents themselves and how they have been interpreted over the years, including the mis-translation from Japanese into English, of critical parts of the original patent claims.

All of this may, however, be moot, for defense-related Nd-Fe-B production in the USA at least, if it is formally determined that the production of Nd-Fe-B magnets in the USA, is in the national interest. It is a long-established legal convention that the US Government can legally take and make use of intellectual or other property for its own purposes, so long as appropriate compensation is given in return. Indeed, this is enshrined in the Fifth Amendment of the US Constitution which states, in part, that private property cannot be taken for “public use” without the provision of “just compensation”. So, in the event that the procurement of ‘home-grown’ Nd-Fe-B magnets by the Department of Defense is endangered by the patent situation, there is a fairly clear way out; simply taking the intellectual property associated with the magnetic material patents, and allowing manufacturers to use it to produce magnets, in return for ‘reasonable’ compensation to Hitachi Metals.

Of course, it’s unlikely that things will get to that point; a variety of interactions between Washington and Tokyo would no doubt take place before things escalated, in order to ‘encourage’ Hitachi Metals to ‘do the right thing’. Besides, with only a few years left on these patents, excessive intransigence hardly seems worth the effort…

First published at RareMetalBlog.