Rare earth elements: Global market overview JAMES SEAN DICKSON FGS
Rare earth elements:
Global market overviewJAMES SEAN DICKSON FGS
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Industrial Minerals
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Rare earth elements
= Industrial Minerals pricing
LREE vs HREE
Light rare earths (LREE)* Scandium (Sc)
Yttrium (Y)
Lanthanum (La)
Cerium (Ce)
Praseodymium (Pr)
Neodymium (Nd)
Promethium (Pm)
Samarium (Sm)
Heavy rare earths (HREE)* Europium (Eu)
Gadolinium (Gd)
Terbium (Tb)
Dysprosium (Dy)
Holmium (Ho)
Erbium (Er)
Thulium (Tm)
Ytterbium (Yb)
Lutetium (Lu)
Bold = decreed “critical” by the US Department of Energy in the “Critical Materials Strategy 2010” report. This designation is given by policy makers and commercially minded developers and is not a chemical subgroup.
*As referred to by
industry. The sciences
focus on electron
configuration as the
light-heavy defining
characteristic.
Uses
High-technology applications
Polishing powders
Fluorescent lighting
Lighter flints
Arc lighting
Data storage devices
Lantern mantles
Catalytic converters
Magnets
Ferrofluid on glass, resting on a high-strength rare earth magnet (Gregory F Maxwell, Wikimedia)
Source rocks
Major sources
Carbonatites
Ion adsorption clays
Monazite hosted in heavy mineral
sand deposits
Smaller or potential sources By-product of phosphate fertiliser
production
By-product of uranium processing
By-product of alumina red mud processing
Peralkaline igneous rocks
Pegmatites
Monazite ± apatite veins
Reserves vs production
Reserves, tonnes (USGS)Mine production, tonnes (USGS)
Proportion of REE, less Y, contributed by producing countries
in 2015 (Gambogi, 2015a).
Global distribution of REE resources in 2014, excluding Y(Gambogi, 2015a).
Chinese dominance
Rare earth production during the last half of the 20th century and early 21st
century (BMacZero, Wikimedia).
China has dominated production
since the 1990s
Mountain Pass the majority supplier
until that period
Low labour costs and lax
environmental standards allowed
dominance
Not thought to be related to
resource abundance or particularly
advantageous deposit properties
Boom and bust
Boom Diplomatic dispute between China and
Japan results in temporary export ban to major consumer
In addition, export quota were reduced
Inexperienced investors enter sector
Prices rose in some cases by multiple thousands of percent
Cerium, for example, rose in price by 2400% between June 2010 and August 2011 from $6/kg to $149.5/kg
Bust Consumers substitute rare earth
alternatives
New production comes online in the US and Australia
Illegal miners ramp up production in China
WTO rules against Chinese “protectionism”
Prices fell back by up to 98%
Power of language
Totemic language used by
inexperienced investors
US defence industry often said to be
at China’s mercy concerning rare
earth supply
Others (e.g. Tim Worstall) argue that
the monopoly was broken as soon as it
became a concern to the world,
therefore it is not a problem
“The Middle East has oil.
China has rare earths.”
– Deng Xiaoping, 1992
Prices
1
10
100
1,000
10,000
Pric
es
in $
/kg
(Lo
g(1
0))
Rare earth oxide prices, minimum 99%, FOB, China, $/kg, bulk
Cerium Low
Cerium High
Dysprosium Low
Dysprosium High
Europium Low
Europium High
Lanthanum Low
Lanthanum High
Neodymium Low
Neodymium High
Praseodymium Low
Praseodymium High
Samarium Low
Samarium High
Oversupply
Deposits typically biased towards LREE
Illegal mining
Molycorp and Lynas Corp. enter
production
High prices increase output
High prices cause demand
destruction
WTO ruling removes export restrictions
The grade of in situ REO at Lynas’s Mount Weld Duncan and Lanthanide deposits, and Molycorp’s Mountain Pass mine. From Technology Metals Research (2015).
Element specific issues
Europium phosphors traditionally used
to add warmth to fluorescent lighting
tubes and for red in CRT televisions
Europium phosphors likely to be
phased out by LED lighting
LCD/OLED/plasma televisions
Substantial demand destruction could
see prices soften further in the future
Other metals face potential
headwinds (cerium, dysprosium)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
03/01/2011 03/01/2012 03/01/2013 03/01/2014 03/01/2015
$/k
g
Europium oxide, minimum 99%, FOB, China, $/kg, Bulk
Low High
Case for development
HREE market conditions more positive
than LREE market conditions
Rare earth permanent magnet
demand projected to increase
(electric vehicles, wind power etc.)
Chinese reforms starting to have an
effect(?)
Electric vehicle companies like Tesla are driving interest in permanent magnets (raneko, Flickr).
Chinese reforms
Positive for development
Consolidation will result in six approved
rare earths miners in China
Illegal mining crackdown
Export taxes and quota replaced with
resource taxes and production quota
(partially WTO mandated)
More stringent environmental
standards (raising costs)
Negative for development
Industry may become more opaque
via professionalisation of Chinese
interests, yielding less data and
information
Large grants given to Baotou and
Ganzhou to develop high-technology,
high-return products
The West
Molycorp
Declared bankruptcy in June 2015
Mountain Pass rare earths mine held in
“care and maintenance” mode as of
late October
Debts stand at $1.9bn as of early
November
Plans to write-down debts or split into
saleable business units
Lynas Corp.
Marginally more favourable rare earth
distribution in Mount Weld than
Mountain Pass
Smaller (but still substantial) debts
Starting to generate positive free cash
flow
Recently met requirements to reduce
lending interest rates
Barriers to entry
Low prices
Processing complexity and costs
Supply chain complexity
Investor wariness
Demand destruction
Chinese reforms
There is a metaphorical wall lining off rare earths juniors from the production side of the sector (Jakub Halun, Wikimedia).
Looking ahead
LREE production-based market entry no longer viable
HREE markets are stronger with a greater ability to absorb fresh supply
Interest in deposits with high proportions of magnet-utilised rare earths is
increasing
Innovative processing technologies are largely unproven but could
change industry dynamics substantially
HREE approach
Wolverine deposit (Browns Range) rare
earth distribution
Praseodymium Lanthanum Neodymium
Cerium Europium Lutecium
Thulium Terbium Holmium
Samarium Ytterbium Erbium
Gadolinium Dysprosium Yttrium
Mount Weld Central Lanthanide Deposit
rare earth distribution
Praseodymium Lanthanum Neodymium
Cerium Europium Lutecium
Thulium Terbium Holmium
Samarium Ytterbium Erbium
Gadolinium Dysprosium Yttrium
Rare earth distributions at the Wolverine deposit of Northern Minerals’ Browns Range project (Northern Minerals).
Rare earth distributions at the Central Lanthanide
Deposit of Lynas Corp’s Mount Weld mine (Technology Metals Research).
Magnet approach
“Everybody talks about 'lights’ and
'heavies’ - but what really matters when
it comes to rare earths is magnetics.”
- Ian Bamborough, Spectrum Rare Earths
“It’s all about the magnet metals.”
- Peak Resources
The proportional value of REO consumed by various industries from 2011-2014 (Industrial Minerals Company of Australia, 2015). The permanent magnet sector is, proportionally, increasing in importance on a total consumption value basis.
Processing approach
Early removal of cerium and lanthanum
Molecular recognition technology (Ucore Rare Metals)
Continuous ion exchange/chromatography improvements (Texas Rare Earth Resources)
Heap leaching (Texas Rare Earth Resources)
Free flow electrophoresis (GeomegaResources)
Offtake with chemical companies (e.g. Tantalus Rare Earths, Rare Earth Salts)
Rare earths separation is complex and costly (Arafura Resources).