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.

by Brian Sylvester – The Critical Metals Report – published: Nov 22, 2011

Brian Sylvester: Gareth Hatch, co-founder of Technology Metals Research LLC, gives us the lay of the land in the rare earth sector. Many variables are shaping this developing market, and from calculating global demand to anticipating individual project costs, data makes the difference in determining viable investments. Gareth Hatch gets down to the nitty gritty in this Critical Metals exclusive, and comes up with some promising projects in the works.

The Critical Metals Report: Gareth, Greenland’s natural resource minister said that beginning in 2012, his country will take bids to develop its rare earth element (REE) deposits. What do you make of that?

Gareth Hatch: It was a little surprising, frankly. Of course it very much depends on the existing relationships in place between the private-sector companies and the government there, and how they intend to exploit those resources, but I might be a little concerned if I were one of the private companies and the government had not approached me first, before making this announcement.

TCMR: Are you talking about companies like Hudson Resources Inc. (HUD:TSX.V)?

GH: Possibly, yes. Of course we don’t know who has talked with whom. Hudson has its Sarfartoq project in the southwest. Greenland Minerals & Energy Ltd. (GGG:ASX) has its large Kvanefjeld deposit in the south, and a handful of others have projects, too. They have invested a lot of time, effort and money into their projects.

TCMR: Molycorp Inc.’s (NYSE:MCP) CEO, Mark Smith, asserts that the 30 thousand ton (kt) REE export quota issued by Chinese authorities for 2011 is equivalent to only 21 kt rare earth oxides (REOs). Considering that ferroalloys are included in the list of compounds covered by the quota, it seems like an even tighter quota than was expected.

GH: Including this new category of materials likely does reduce the equivalent REO to 21–22 kt, but in 2010, without ferroalloys, the equivalent was 22–24 kt. We have to compare the right sets of numbers. I agree that there has been a decline, even if it is not as dramatic as going from 30–21 kt. Whichever way you look at it, it is still less than the demand for rare earth oxides, although of course there are significant quantities of rare earths being exported out of China illegally.

TCMR: Electric vehicles are a key end-use for rare earths, particularly in permanent magnets. Is the recent, highly publicized combustion of Chevrolet’s Volt a threat to the sector?

GH: I don’t think so. If there were systemic safety issues that threatened the rollout of these vehicles, and subsequent market penetration, then there might be some concern about demand. But I think it’s unlikely. On the other hand, from a material usage point of view, if there really is a problem caused by Li-ion batteries, then this could be an opportunity: Prius-class hybrid vehicles use nickel-metal hydride batteries, which contain fair quantities of rare earths. Either way, I don’t see the industry being derailed.

TCMR: In Critical Rare Earths, you say that the world will break even on supply and demand for neodymium oxide by 2013, but not until 2015 for europium oxide. Meanwhile, Byron Capital says there will be 5 kt of annual oversupply of neodymium oxide by 2013, and 309 tons of extra europium oxide by 2015. Whom do investors believe?

GH: There are several differences between our numbers. Byron is predicting lower demand than the U.S. Department of Energy (DOE), whose projection numbers I used in my report. With respect to europium specifically, Byron includes some potential ionic-clay deposits outside of China in its projections. I suppose that one or two of these might exist. Byron assumes that they do and that they can be brought online faster than other sources of supply, which will generally come from hard-rock deposits; I did not factor hypothetical ionic-clay deposits into my calculations.

TCMR: Byron assumes there will be less demand for neodymium and europium because, if they are too expensive, end users find alternatives. In some cases, that has already happened.

GH: The DOE numbers were based on projections completed in the latter half of last year, and prices didn’t peak until this past summer. When the DOE updates its data, it will likely factor in current prices and potential effects on demand. If we look at downstream end uses, the price of raw materials directly affects the price of permanent magnets, for example, and motor engineers are already starting to choose designs that use fewer magnets, because the cost savings outweigh the additional manufacturing challenges of such designs. Thus, I can see current demand projections being quite different from where they were a year ago. Byron likely has a more up-to-date set of assumptions. We are waiting to see what updated figures the DOE puts out before the end of this year, and based on that, I would imagine that in the first half of next year we would revise our surplus/deficit projections accordingly.

TCMR: What numbers are rare earth companies using to project supply and demand?

GH: Most junior mining companies use the data that Dudley Kingsnorth puts out from Industrial Minerals Company of Australia (IMCOA). He typically updates his information two or three times a year. Mr. Kingsnorth recently reduced his demand projection for 2015 from about 190–170 kt of total rare earths. Other companies, most notably Lynas Corp. (PINK:LYSCF) and Molycorp, combine IMCOA’s numbers with their own research, but get roughly similar projections.

TCMR: You also said the grade and distribution of the critical REE (CREE) neodymium has the greatest influence on the rankings by grade, of CREEs present within specific mineral resources. Does that mean the higher the grade of neodymium present, the more likely a deposit is to be developed?

GH: Not necessarily. By mass, you would expect to see more neodymium than any of the other rare earths (i.e. europium, terbium, dysprosium and yttrium) simply because it is a light REE (LREE) and LREEs are more abundant; the other four are heavy REEs (HREEs) and generally occur in much lower quantities than neodymium. That said, there is increasing demand for neodymium-based permanent magnets, and thus neodymium (and praseodymium) and its usage in magnets will be a key factor in the potential development of early-stage projects. However, other factors must be considered, such as first-mover advantage and infrastructure. Some would argue that these are more important than the grade present of a particular element. You don’t have to have a top-five CREE distribution or grade to have a potentially successful project.

TCMR: In terms of the in-situ quantity of individual CREEs, what are the top-five deposits?

GH: If you look at the breakdown of in-situ tonnage of each of the five CREEs, for neodymium, the Kvanefjeld project in Greenland and the Nechalacho project at Thor Lake, owned by Avalon Rare Metals Inc. (AMEX:AVL), ranks highest. They both have well over an estimated 800 kt of neodymium within their respective mineral resources. You’ve also got the relatively new resource estimates for the Montviel project in Quebec from GéoMégA Resources Inc. (GMA:TSX.V) and the Eldor Project owned by Commerce Resources Corp. (CCE:TSX.V; D7H:Fkft; CMRZF:OTCQX). The fifth-ranked deposit by quantity of neodymium would be Strange Lake, owned by Quest Rare Minerals Ltd. (AMEX:QRM).

It’s important to bear in mind the maturity levels for each of the projects in this sector in terms of their mineral-resource estimates. Many of the early-stage exploration projects have Inferred resource estimates only, in contrast to, for example, Avalon’s Nechalacho deposit, which in addition to having a portion of its mineral resources at the Indicated level (which gives a higher degree of confidence in that part of the estimate than data at the Inferred level), is also one of the very few projects out there with an actual mineral-reserve estimate (i.e. a portion of the mineral resource has been independently determined to be economically viable). That gives you a particularly high level of confidence in the overall in-situ quantity data for a development project like that, versus those at a much earlier stage. If you look at europium, terbium and dysprosium, Nechalacho has the most of each in the ground, based on those resource estimates. You have Montviel and Eldor for europium, too. Mount Weld in Australia, owned by Lynas, has quite a bit of europium and terbium and Kvanefjeld again shows up on the list, for europium.

Other names that show up as you go down the line: the Norra Karr project from Tasman Metals Ltd. (TSM:TSX.V; TASXF:OTCPK; T61:Fkft) in Sweden would be one. Norra Karr features quite a bit of terbium and dysprosium, as does Alkane Resources Ltd.’s (ALK:ASX) Dubbo Zirconia Project in Australia. They make the top five for quantity of in-situ dysprosium and yttrium. Some of the same names show up repeatedly, reflecting the overall size and maturity of their rare earth estimates.

TCMR: What were your impressions when you recently visited Tasman Metals’ Norra Karr project? Can it supply European manufacturers with the rare earths that they need?

GH: Well, one has to remember that these materials are fungible, so you can use them anywhere, not just in one geographic region, but certainly, shipping costs do apply. What struck me about Norra Karr was that it’s maybe 400 meters from a major highway that comes southwest from Stockholm. From an infrastructure and accessibility point of view, it doesn’t get much better than that.

TCMR: Is the company planning to produce oxides or concentrate?

GH: The current plans go as far as the concentrate stage. Like a number of other rare-earth projects currently under exploration and development, Norra Karr contains zirconium silicate minerals, so Tasman will have to demonstrate that it can handle what are thought of by some, to be difficult minerals to process.

HREE concentrates are typically going to be separated via different processing circuits than the other concentrates potentially produced at such deposits; so the company may go elsewhere to get its concentrates separated; Tasman is keeping its options open. The company may not necessarily do the separation in-house.

TCMR: Isn’t that where the most value is?

GH: It is. Tasman won’t necessarily sell its concentrates; there are potential opportunities to do tolling or to maintain value and ownership in other ways. The key concept behind Innovation Metals Corp., the company that I recently co-founded with Patrick Wong, is the creation of centralized separation facilities for just this type of scenario—to provide services to companies that have concentrates, particularly HREE concentrates. The companies could toll those materials for a nominal fee, while retaining ownership of the separated materials afterward, all without having to invest extensive capital in big and expensive separation facilities of their own.

TCMR: Like a base-metal smelter.

GH: Yes; this tolling concept is a fairly well known concept in other industries. The key technical challenge of course, is whether you can take in concentrate feedstock from multiple sources. We think we can do that.

TCMR: What struck you when you visited Quest’s Strange Lake deposit in northern Quebec?

GH: Quest has a really nice deposit up there; a number of knowledgeable geologists walked us through the details on our visit. Quest also has a very professional organization and is well resourced. The challenge of course, is that Strange Lake is tucked away in a part of Canada that would require significant new infrastructure, to be able to properly service it and to get materials in and out.

When we were there, the company was just finishing up exploration and was starting the process of “handing over the reins” to the engineering people. Quest is now finishing up its prefeasibility study. The company has also recently added a director to its board with mining project experience. Quest is looking to expand and looking to put the right people in place to make this project a reality, if it can get the next stage funded.

TCMR: Quest President and CEO Peter Cashin has been talking about not only shipping concentrate, but separating the rare earths into oxides. What are your thoughts on the probability of that?

GH: These companies have to make a decision: at what point should they sell: at the concentrate stage or after producing oxides? If they can find the capital to build separation facilities and produce oxides and they have workable processes, then they will of course consider separating concentrates into oxides. Currently there aren’t many alternatives; no one processes commercially significant quantities of heavy rare earths outside of China, which is where a company like Innovation Metals comes in. If Quest doesn’t get into separating oxides, it has to figure out how to maximize its revenues from its concentrates.

TCMR: What other projects have you visited?

GH: I have visited Avalon’s Nechalacho project in the Northwest Territories, which is in the advanced stages of development. The company is currently looking to hire a number of additional production and engineering folks. I have always been impressed with the Avalon management team’s handling of technical development, especially its interactions with the First Nations people who live in that area.

TCMR: Nechalacho has some impact benefit agreements worked out with the local First Nations. However, there could be some issues as people learn about the environmental risks associated with rare earth mining. Do you think that Avalon’s exceptional relationship with First Nations will mitigate that?

GH: The plan for Nechalacho is to mine underground. Visually and physically, underground mining has less impact on the surface, though of course every project has supporting facilities above ground.

TCMR: But there will be tailings, right? And often these deposits have elements like uranium or thorium, which are radioactive. I’m not sure if Nechalacho has these, but it’s common.

GH: Certainly some groups are likely to be concerned about the effects, sure, but that’s not unique to Nechalacho. As I said, I have always been impressed with Avalon’s corporate and social responsibility initiatives; I think that the company has a genuine desire to do the right thing, and yes—it has very good relations with the local people—exemplary, in fact.

We need education on this. Environmental protection is extremely important, but some companies are actually prepared to invest in the technology and careful planning that can be used to reduce and to mitigate environmental impact. The industry as a whole needs to get that story out there. It is also important that consumers realize where the magnets in their cars and hard drives, the phosphors in their computer screens come from— ultimately from minerals that you have to get out of the ground. That is not an excuse to rape and pillage the land, and some companies in the industry are better than others in doing their bit. But this is not just a rare earth issue; it’s a mining issue in general.

TCMR: Among the projects you named, what’s a rough estimate of the average cost of development?

GH: At a minimum you’re talking in the low hundreds of millions of dollars. Larger projects with higher production rates or HREE-rich deposits tend to run from half a billion to over a billion. Projections for the Kvanefjeld project in Greenland, for example, are over $2.3 billion (B). There is quite a range for different types of projects in different stages of development. Of course, if a project has already completed a prefeasibility study, the current cost estimates should be closer to the actual final costs, than those in a scoping study or other earlier-stage estimates.

TCMR: Are any projects going to be developed for under $200 million (M)?

GH: The Tasman folks have said that Norra Karr is looking at $200M for getting to the concentrate stage. Its relatively low number for a HREE project is influenced by the presence of existing infrastructure. Smaller projects, like the Bokan-Dotson deposit in Alaska owned by Ucore Rare Metals Inc. (PINK:UURAF), and the Zeus/Kipawa project in Quebec owned by Matamec Explorations Inc. (MAT:TSX.V; MRHEF:OTCQX ), are fairly modest from a production rate point of view. Assuming these companies can sort their metallurgy and flow sheets out, my understanding is that current estimates for Bokan-Dotson are around $175M for development, and for Zeus / Kipawa, probably closer to $300-350M.

TCMR: Much like Tasman Metals, Matamec is also close to infrastructure and located in a mining-friendly area.

GH: I had the chance to take a trip out to Matamec, and it was pretty close to power lines and logging roads and not far from paved ones. It was a short hop from North Bay, and Quebec is by all accounts a mining-friendly jurisdiction.

TCMR: What are some promising projects in Africa?

GH: One is the Steenkampskraal mine in South Africa, which I visited earlier this year, and is owned by Great Western Minerals Group Ltd. (GWG:TSX.V; GWMGF:OTCQX). It is a former thorium mine with historical estimates of very rich REE grades. It is currently being refurbished. Also in South Africa is Zandkopsdrift, the project owned by Frontier Rare Earths Ltd. (FRO:TSX), which has Indicated and Inferred mineral-resource estimates. It is going through the scoping study for Zandkopsdrift right now, more usually known these days as the preliminary economic assessment (PEA). Montero Mining and Exploration Ltd. (MON:TSX.V) recently published an Inferred mineral-resource estimate for its Wigu Hill project in Tanzania. The other project that some folks will be familiar with is Kangankunde, in Malawi, currently owned by Lynas. Those four have the most public-domain data available on their exploration activities, out of all of the REE exploration projects currently underway in Africa.

TCMR: Frontier and Montero both have deals with Korea Resources Corp. (KORES). Do you think that that gives them an advantage?

GH: It depends on the scope and scale of KORES’ involvement, but in terms of financing and support, there is a potential distinction in the investor’s mind between them and other companies at similar stages of development. Some see it as offering increased confidence that the company will have access to funds and other resources. On the other hand, there is potential concern from the supply chain that once such resources are developed, they won’t be available on the market, so the deals would have little direct benefit to non-Korean end users. I think it’s too early to say, but it is clear that non-private-sector actors are looking to establish long-term relationships with the owners of potential sources of supply, on behalf of end-user companies in their respective countries.

TCMR: Why do you think KORES chose those two deposits?

GH: Their mineral-resource estimates show that they have good grades (over 2%) of LREE materials, contained in minerals that should be fairly straightforward to process. Do remember that LREEs are still required for a wide range of applications; I think that this simple fact gets lost in the stampede of interest in HREE projects sometimes.

TCMR: What is the production timeline for Frontier’s and Montero’s projects?

GH: Montero has just recently defined its resource, so I would be surprised if the company was throwing around production dates yet. Frontier is estimating that its Zandkopsdrift project will enter production in about 2014. Some investors would probably stick their neck out and use such dates, but for me, the scoping study/PEA stages are perhaps a little early for decent estimates.

TCMR: Is there anything you’d like to leave our readers with?

GH: They need to realize that the investor’s point of view is very different from that of the supply chain. Investors are looking to grow their investments through dividends and increased share prices, while supply-chain folks are looking for production—they need metals and other finished goods. They really don’t care which projects succeed in the stock market, so long as some do. They are also not going to wait forever for projects to come onstream, in the face of escalating prices; they will do what they need to, whether that is engineering re-design work, or reducing the per-unit quantities of materials that they need. Therefore, investors need to keep a close eye on demand estimates. The conversation about Byron’s numbers versus mine was a good illustration of that. The supply chain ultimately dictates demand, and understanding the individual rare earths, each with their own demand profiles, will give some clues about where the supply chain is going, and thus the potential future market as a whole.

TCMR: Are you saying there isn’t room for all of these projects to be developed?

GH: TMR is tracking well over 390 different rare earth projects at present; I can’t see more than 8-10 coming onstream in the next 5-7 years. My colleague Jack Lifton recently got some heat for saying something similar recently, but it should be pretty obvious that that’s the nature of the beast. Projects already well past exploration and into the development and engineering stage, and beyond, clearly have first-mover advantage. As demand grows, other projects might become viable.

TCMR: Thank you, Gareth; it’s been a pleasure.

DISCLOSURE:
1) Brian Sylvester of The Critical Metals Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Critical Metals Report: Quest Rare Minerals, Matamec Explorations Inc., Ucore Rare Metals Inc., Commerce Resources Corp., Tasman Metals Inc., Montero Mining and Exploration Inc. and Frontier Rare Earths Ltd.
3) Gareth Hatch: I personally and/or my family own shares of the following companies mentioned in this interview: Innovation Metals Corp. I personally and/or my family am paid by the following companies mentioned in this interview: Innovation Metals Corp.

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 ABR Staff Writer – Automotive Business Review – Published: January 17, 2011

Toyota is expected to be on the verge of developing an induction electric-car motor which does not require rare earth metals for its electromagnets.

Toyota’s effort on this would allow the company to become less dependent on China, as the country is the main supplier of these metals, and might also defeat the last year’s price rise of these metals due China’s restricted supply.

Toyota global chief engineer Takeshi Uchiyamada was quoted by the Wall Street Journal as saying the technology that would allow the company not to use the magnets and yet to make a high-performance smaller size motor will come soon.

The permanent magnets used in existing electric-car motors are made from a rare-earth mineral called neodymium.

Toyota has taken many steps to decrease its dependence on China for these metals including the launch of a joint venture to explore rare metals in Vietnam.

Technology Metals Research Illinois founder Jack Lifton said the auto industry purchases 40% of the world’s supply of neodymium and Toyota buys more than any other company.

“There is about a kilogram of neodymium in every Prius,” Lifton said.

Earlier today CNBC ran a series of segments throughout the day on rare-earth metals and associated companies. One such segment featured a very short clip of Gareth, shown during the “Squawk On The Street” program. You can see the video by clicking below:

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.

By Robert Bryce – RealClearScience – Published: October 29, 2010

During her trip to China this week, Secretary of State Hillary Clinton will talk to Chinese officials about the world’s hottest commodities: rare earth elements.

Over the past few months, industry and government officials in the U.S. and Japan have been increasingly alarmed as China, which has a near-monopoly on rare earths, has reduced its exports of those elements by some 40 percent.  Adding yet more anxiety to the situation are projections about a possible shortfall in the supply of these elements. London-based Roskill Consulting Group, a research firm that specializes in metals and minerals, recently predicted that demand for rare earths could outstrip supply as soon as 2014.  Rare earths are important because they have special features at the quantum mechanics level that allow them to have unique magnetic interactions with other elements. A myriad of “green” technologies —  from electric and hybrid-electric cars to wind turbines and compact fluorescent light bulbs – depend on rare earths. And there are no cost-effective substitutes for them.

Clinton’s willingness to question China about rare earths is indicative of just how seriously the U.S. is taking the rare earths issue. But it also underscores a fundamental miscalculation by the U.S. and other countries when it comes the reconfiguration of their automotive fleets.

Over the last few years, a growing number of environmentalists and national security hawks have teamed up to denounce America’s dependence on foreign oil. Their solution: all-electric and hybrid-electric vehicles. Those vehicles, they insist, will help the environment while reducing oil imports from countries in the Persian Gulf and elsewhere.

While that vision appeals to certain segments of the political class and to a myriad of subsidy-seeking corporations, the push to build more electric and hybrid cars will simply result in the U.S. trading one type of import dependence for another.

Those vehicles might cut oil consumption but they will dramatically increase America’s thirst for rare earth elements. And therein lies a crucial choice: We can continue to rely on the liquidity, price transparency, and diversity of the global oil market, the biggest market in human history. Or we can choose the “green” route. And in doing so, we will have no choice but to rely on the market for lanthanides, which is rife with smuggling, has no price transparency, and depends almost wholly on a single producer, China.

The Chinese control about 95 percent of the global market in rare earths, a group of 17 elements that includes scandium, yttrium, and the 15 lanthanides, the elements that occupy the second-to-last row of the Periodic Table. The most famous of the lanthanides is probably neodymium, a critical ingredient in the high-strength magnets used in motor-generators in hybrid cars and wind turbines.

The possibility of a shortage of rare earths provides a critical lesson about the slow pace of energy transitions as well as the inherent limits of any major move to “green” technologies. Bill Reinert, the manager of Toyota’s advanced technology group, told me that China’s export cuts should force American  policymakers to unplug their support for electric vehicles because the all-electric machines are “far more lanthanide-intensive than hybrid vehicles. We should be thinking about the material inputs for these types of cars in the same way that we do any other type of energy security.”

The diversity and size of the global oil market provides the U.S. with real energy security. The numbers tell the tale. In 2009, the U.S. imported an average of 11.7 million barrels per day of crude or refined oil products from 82 different countries  while it exported – yes, exported — an average of 2 million barrels per day to customers in 83 countries.

And here’s even better news for energy security: domestic oil production is increasing. In 2009, America produced an average of 5.3 million barrels per day, the highest level since 2004. Although that’s a big drop when compared to the production levels of the early 1970s, the perfection of techniques like multi-stage fracturing of long-length horizontal wells has led some industry analysts to conclude that domestic oil production is due for a substantial increase in the next few years.

While the U.S. will slowly begin increasing production of lanthanides over the next few years, primarily from a mine in California owned by Molycorp Inc., the relative shortage of lanthanides and relative abundance of oil has left Jack Lifton, a longtime metals analyst, shaking his head. Lifton asks the  obvious question “Why convert our economy so that we are dependent on a set of commodities over which we have no control?”

That’s a painful question to answer particularly given that President Barack Obama wants 1 million electric and hybrid-electric vehicles on U.S.  roads by 2015. By that time, the U.S. government will have provided about $31 billion in subsidies to companies that are developing and producing electric cars. In other words, American taxpayers are paying to increase U.S. reliance on Chinese exports of lanthanides at the very same time that China is reducing those exports.

If you’ll pardon the mixed metaphor, it’s apparent that governmental efforts to designate winners in the automotive sector is creating a very expensive train wreck. And while Clinton may try to slow down the train wreck, rest assured, that train wreck is coming.

Robert Bryce is a senior fellow at the Manhattan Institute. His latest book is Power Hungry: The Myths of “Green” Energy and the Real Fuels of the Future.

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.

by Tom Heap – BBC – Published: May 19, 2010

From electric cars to wind turbines, environmentally-friendly technology around the world needs rare earth metals. But China – where over 90% of these minerals are mined – is saying it now wants to keep more for its own industry.

The leafy banks of the Birmingham and Worcester canal may be an unlikely place to discuss a looming industrial crisis but it was here that Professor Rex Harris of Birmingham University took me on his hydrogen-powered electric barge.

The super efficient motor, like most electric vehicle motors, uses rare earth magnets.

Rex gave me two matchbox sized neodymium-boron magnets, offering me £50 to push them together.

His money was safe, the magnetic field was too strong. Such power is vital to green technology, so much of which is based on the efficient generation, use and storage of electricity.

So we need to be sure of good supply of rare earth magnets.

“We worry about peak oil,” he says, “we should worry about peak magnets as well.”

Dangers of dependence

Most came form the United States in the 1960s but tightening environmental regulations and a price war closed the last Californian mine, handing China a virtual monopoly.

American strategic metal consultant, Jack Lifton has been warning the US government of the dangers of dependence.

“Last year the Chinese announced their regular five year plan, looking ahead to 2010 to 2015.

“They said they would continue to reduce the export of these materials to the West and that they were considering stopping the export of certain of them.”

The Chinese motives are pretty clear. They want Western users to do their manufacturing in China and they need supplies for their own ambitious wind energy programme.

They plan to build 120 GW of wind generated electricity by 2020, more than Britain’s entire electricity production.

That alone demands a full year’s supply of rare earth metals.

The former Chinese leader Deng Xiaoping once remarked “There is oil in the Middle East, there is rare earth in China.”

Environmental concerns

Japan has already woken up to the implications of this by building up stockpiles.

Toyota, who make the rare earth guzzling Prius hybrid car, is considering opening its own mine in Vietnam.

The United States is worried about supplies for the military while the UK government has examined the risks for our own plans for more electric cars.

The search is now on for alternative sources of rare earths, with mines planned for California, Australia, Arctic Canada and even Greenland.

But they are delayed by environmental concerns stoked by the Chinese experience.

Their principal source is Baotou in Chinese Inner Mongolia where enormous open-cast mines scar the landscape whilst refineries leak vast quantities of polluted water into the landscape.

Independent expert, Jack Lifton says we can’t demand zero impact. If we want green technology then we need to mine, he says. “The green road always starts with black earth.”

Cleaner alternative

However, Professor Animesh Jha at Leeds University thinks he may have a cleaner alternative.

He has discovered that titanium dioxide ore could be an important source.

The purification of this chemical, commonly used in paints, leaves a residue of rare earths. He believes this could by-pass the Chinese and the environmental problems of mining.

“There are very nice deposits of titanium oxide all over the world… Norway, India, Brazil, US. They all have rare earths in them.”

Combine Professor Jha’s technique with the fruits of new mines and the careful recycling of rare earth metals currently in use in our laptops and mobile phones and we may be able to provide sufficient supplies in the future.

But new processes take time to perfect and new mines take years to come on-stream.

That still leaves a long gap when the green revolution will rely on the economic and political judgement of China’s exporters.

[ The BBC Radio 4 audio program on which the above article is based, part of the Costing the Earth series, can be heard here].