December 17, 2010 at 12:21 pm #2429
U.S. at risk of rare earths supply disruptions
by Reuters December 15, 2010
The United States risks major supply disruptions of rare earth metals used in clean energy products unless it diversifies its sources of the minerals, the Energy Department warns in a report released today.
The United States and other countries are worried that China, which controls 97 percent of the world trade in rare earth metals, will use those supplies as a political weapon and cut back their export when it is in a dispute with another country or to grow China’s clean energy technology sector.
“The availability of a number of these materials is at risk due to their location, vulnerability to supply disruptions and lack of suitable substitutes,” U.S. Energy Secretary Steven Chu said in the report unveiled today at a rare earth metals conference at the Center for Strategic and International Studies.
The release of the report coincides with trade talks in Washington between the United States and China. U.S. officials are expected to push Chinese officials to loosen export restraints on rare earth elements.
(Credit: U.N. Environment Program)
China, which said on Tuesday it planned to raise export taxes on some rare earth metals beginning next month, holds 37 percent of known rare metal reserves, the United States has 13 percent, and the rest is in other countries.
The 17 rare earth metals, with exotic names like lanthanum and europium, form unusually strong lightweight materials and are used in a wide range of applications including high-tech and defense products, car engines, and clean energy.
China has vowed that it would not use its dominance of rare earth supplies as a bargaining tool with foreign economies but it has cut its exports of the materials on environmental grounds.
U.S. Secretary of State Hillary Clinton raised U.S. concerns over Beijing’s export policy with Chinese Foreign Minister Yang Jiechi during a visit to Asia at the end of October.
The Energy Department said in its report that it looked at the use of rare earths in wind turbines, electric vehicles, solar cells, and energy-efficient lighting because these clean technologies are expected to be deployed substantially on a global basis over the next 15 years, increasing demand for rare earth metals.
It said that in order to manage the risk of rare earth supply disruptions, the United States must increase its domestic extraction and processing of the materials.
There is only one U.S. rare earths producer, Molycorp. It is the largest non-Chinese rare earths firm and the only rare earth oxide producer in the Western Hemisphere.
The report said the United States must work closely with its international partners, including Europe and Japan, to boost their production of the materials.
“Diversified global supply chains are essential,” the report said.
However, mining rare earth metals can be very expensive and the lead times for new mining operations are long, ranging from two to 10 years. “Whether a deposit can be mined economically will depend on a number of factors, including rare earth prices, regulatory requirements and improvements in extraction and separation technologies,” the report said.
Recycling and reusing the rare earth metals could also significantly lower world demand for the materials.
Traditional energy sectors are also at risk from rare earth supply problems, the report said.
Rare earth ores are used in the fluid cracking catalysts that convert heavy oils in the refining process into more valuable gasoline, distillates and lighter products. Rare earth elements are used in catalysts to produce higher yields of more valuable products such as gasoline.
A disruption in rare earth supplies could have a noticeable impact on refinery yields and require oil refinery owners to make investments so the fluid cracking process will work without the rare earth materials, the department said.
The department said it will develop an updated strategy by the end of next year for increasing supplies of critical rare earth metals.
December 17, 2010 at 12:21 pm #5362
Here is report on the high level of US risk on Rare earths as result of China’s dominance (97% trade) in them.
The Environmentalist push to reduce US dependence on Foreign crude as major ralling point for anti-oil industry cripling legislation from oil production to processing in favor of clean energy pursiuts.
Never mind that majority of US oil actually comes from neighbors Canada & Mexico or South American Brazil & Venzuela ….. not Mid East. And never mind whatever painful economic environmental reductions are extracted from an efficient US emission system, are complety overwhelmed by the Kyoto exempted emissions from China who is now worlds largest polluter.
And now we see that China has been allowed to achieve dominance in one of the key Clean Energy (& Traditional as well) dependent sectors – Rare Earth metals. The lone supplier in US/Western World – Molycorp probably isn’t being watched for foreign takeover either (similar to US lone Titanium metal producer TiMet who is now foreign owned despite exposure for US air & space industries).
Instead of allowing China to use its dominant Rare Earth position as US negotiating point – it should become a major issue on China’s lack of adherence to any WTO free trade regulations that rest of developed world is held to and another reason for pulling / resending full WTO status to China.
January 23, 2011 at 12:28 pm #5323
Prudence in the Rare Earths Market
The Daily Reckoning | Jan. 19, 2011
“What is going on with rare earths?” reads the email from a slightly panicked reader. “They are just plunging to death, and I am afraid they are taking me with them.” We don’t usually start with reader mail, but this is a timely issue, as evidenced by this chart. It’s of the sector’s darling stocks, Molycorp.
Molycorp is one of three rare earth stocks this reader says he owns.and is mighty worried about. “The fundamentals are there (or at least I thought so) to support a continued uptrend, but this bear market since they topped on Jan. 3 is killing me. What gives?”
It’s true, the fundamentals are there. Just today, as China’s president Hu meets with President Obama in Washington, Chinese statistics revealed a 9.3% drop in rare earth exports between 2009 and 2010.
That’s a big deal, since China produces 97% of world supply. And without rare earths, a lot of things we take for granted just wouldn’t exist – everything from your mobile phone.to your car’s catalytic converter.to the Pentagon’s precision-guided missiles.
“You could make a lot of money investing in rare earths,” says Byron King editor of Energy and Scarcity Investor. And here comes the caveat. “if you can handle a lot of risk. And I mean a LOT of risk.” Byron knows rare earths as well as anyone. He first alerted readers of The 5 Minute Forecast to their potential on March 31, 2008 – years before the Chinese made headlines by clamping down on rare earth exports. Last October, he spoke at a conference in Washington, DC, that gathered rare earth specialists from around the world.
He keenly follows the companies trying to bring mines into production outside of China. And the potential is immense. But just because “the fundamentals are there,” in our reader’s words, investing in the space is not a slam-dunk. “Right now, there are about 200 distinct rare earths investment ‘ideas’ out there,” says Byron. “The promoters will all tell you about their great acreage, their drill program, the core results, the processing research they’re doing.
“But are there really 200 sets of great managers in a sector that’s been dead as a doornail in the West for two decades? How many of these guys can succeed in a short time, in a tight investment space, with immense capital requirements (many billions!) and with ultra-complex engineering challenges?”
There’s still no publicly traded Western company that has a mine or a refinery up and running, much less product to sell. “All of the publicly traded investment ideas – even the best of them, and some are quite good – are speculative ventures on future output.” Which gets us back to Molycorp.
“I recommended Molycorp in Energy & Scarcity Investor last September, when it was selling at $18.90 per share,” says Byron. “Molycorp has enjoyed a serious run-up and a huge gain. Indeed, that’s the problem. Too far, too fast, too much. It was a Molycorp melt-up.”
Byron told readers to sell a week ago today, for a gain of 178%. “I like the company. I like the ore deposit at Mountain Pass, California. I’ve met the CEO and the chairman of the board and I like them and respect them. I like the other members of management whom I’ve met. There’s nothing not to like about Molycorp, except its current share price.”
Getting to the core of our reader’s concern, “Molycorp shares have outrun the fundamentals of whatever it can accomplish,” Byron concludes, “even under the VERY best assumptions. The market is valuing Molycorp – just one company – at nearly the revenue for the entire rare earths industry.” Thus, he sees MCP falling to $25-30 over the next two or three months.
So is this the end of the rare earths story? Hardly. But the reality is inescapable here in early 2011: The rare earth game has changed. Investors have to get smarter about rare earths.and choosier about where to put their money.
Dave Gonigamfor The Daily Reckoning
June 4, 2011 at 11:57 am #5055
Rare Earths are About to Be a Lot More Rare
Mad Hedge Fund Trader / Published 6/2/2011
<source this article in case charts & graphs don’t post – http://www.resourceinvestor.com/News/2011/6/Pages/Rare-Earths-are-About-to-Become-a-Lot-More-Rare-.aspx ) >
Interest in rare earths is starting to heat up once again, and it is something you should keep on your radar. China’s Baotou Steel has announced its intention to start up the world’s first rare earths exchange. The move is expected to increase the liquidity and visibility of these valuable elements while reducing their trading costs.
So named because they were hard to get in the 18th and 19th century, these once obscure elements have suddenly become the focus of several converging trends in the global economy, as they are the key ingredient of magnets. There are 17 in all, divided into light (cerium, Ce, lanthanum, La, and neodymium, Nd) and heavy (dysprosium, Dy, terbium, Tb, and europium, Eu). Since the beginning of the year, the price of 99% pure cerium oxide has rocketed by 650% to $11.50 a pound.
It turns out that you can’t build a hybrid or electric car, a wind turbine, thin film solar, LED’s, high performance batteries, or a cell phone without these elements. One Prius uses 25 kilograms of the stuff. You also can’t fight a modern war without rare earths, being essential for radar, missile guidance systems, navigation, and night vision goggles.
That’s where things get interesting. China now produces 97% of the world’s rare earth supplies, much of it coming from small mines operating by criminal gangs where it is safe to say, concerns about environmental damage are nil. In 2009, China announced that would start restricting rare earth exports, possibly banning several, it is thought, in order to force foreigners to buy more of their downstream electronic products.
Such a ban was temporarily enforced against Japan last fall, when they arrested a hapless Chinese fisherman (spy) who drifted into disputed territorial waters. The ban was lifted when the man was released. Thus, rare earths made their debut at a Chinese political weapon. Similar restrictions could be enforced against the rest of us as early as 2012.
The world market for rare earths is tiny now, amounting to only $4 billion a year. But Toyota intends on doubling its production of Priuses from 1 million to 2 million units in the near future, while China and South Korea want to boost their combined electric and hybrid production by 1 million units by the end of next year. Nissan is ramping up global manufacturing of its all electric Leaf to 500,000 by next year.
America was once the world’s largest producer of these elements, until it was undercut on prices by China (see chart below), and all US production ceased. The threatened Chinese supply squeeze has prompted a group of investors to reopen Molycorp’s (MCP) Mountain Pass California mine, a jackrabbit ridden, rattlesnake infested pit an hour southwest of Las Vegas. The mine was the world’s largest producer of cerium and neodymium, and provided the europium that was used to produce the first color televisions.
Last August, Molycorp raised $500 million through an IPO to reopen the mine and a nearby refinery at $15 a share. It briefly dipped to $12.50 where I got everybody in, and then soared to $79, making it the top performing IPO for 2010. Further fuel was added to the fire with the launch of the first rare earth ETF, Market Vectors Rare Earths/Strategic Metals (REMX) in November.
Now congress wants to get involved, proposing a rare earths strategic stockpile for the military, and offering subsidized loans to fund it. Remember what that did for oil? The price has already started with cerium doubling to $4/pound since 2007, and neodymium up 500% to $23/pound during the same period.
So it might be wise to use the next generalized equity sell off to dip your toe back into the rare earths pool. The best way to get involved is through the miners themselves, which involves an added element of risk. Take a look at the established players, which include Molycorp (MCP), Avalon Rare Metals (AVL), Rare Element Resources (REE), and Lynas Corp (LYSCF).
June 4, 2011 at 12:00 pm #5054
This article on Rare Earths touches on lot facts / details that expose the stupidity of the environmental / liberal rush to “Green Energy” to avoid use Oil imports from countries hostile to US who exploit price! Like everything environmental it is more hype & hyperbole than factual.
As article mentions 97% Rare Earths now come from China who isnt afraid to use it as political weapon (case Japan & Chinese fisherman spy fall 2010). US at one time was worlds leader but our Government allowed it to be undercut by China’s advantages like its pegged currencies/no requirement environmental investment or regulation – major deal here where China criminal gans operate mines/China government subsidy for Refineries-Fuel-many sectors.
If you don’t recognize the “Rare Earths” name or their link to “Green Energy” – article spells out several of 17 elements for you like: Lithium/Lanthanum/Cerium/Neodymium which are required to make batteries/fuel cells/catalysts for the hybrid & electric cars that are to free us from “Evil Oil and Opec imports” – given 100% now comes from China & Russia to this sector think I will stay with OPEC thank you because even Oil at $147/Bbl hasn’t risen +650% that Cerium Oxide has!
The same goes for all other “Green Applications” – Wind Turbines, thin film Solar, LED’s and high performance batteries all tie back into these Rare Earths …… not to mention most like Wind Turbines are ~mfg in China because of its edge on cost with Rare Earths on-top of all other advantages perviously mentioned (which by the way violates China WTO requirements to be member).
And then there is still the Cell Phone & all military applications for modern day war (radar/missile guidance/navigation & night vision goggles/drone technology) – and these are 97% controlled by China & Russia?
Anyone remember how outsourced producer Finland compromised Persian and/or Iraq war because it wouldn’t release US chips needed for SCUD’s / Cruise Missiles (See article on US Strategic Myopia)?
Nothing should move in the “Green Energy” sector until mines like Molycorp’s Colorado mine gets cranked back up & our supply Rare Earths get back to parity with demand – what conditions & demands these Green/NIMBY/Environmental/Liberal idiots have for Oil should apply DOUBLE for any new unproven/costly replacement. We at least have 50% Oil demand from domestic production & nearly 2/3 imports from neighbors like Canada, Mexico & Venezuela.
And BTW – beware of a Molycorp stock investment until its capability rises to current speculated over-value, because fundamentals / finance sheets don’t match up.
October 4, 2011 at 7:59 pm #4905
Molycorp Set to Announce a Rare Earth Rediscovery
By KEITH BRADSHER Published: October 3, 2011
Jacob Kepler/Bloomberg News – Molycorp is preparing to replace
an aging refinery near the site where it rediscovered rare earths.
An all-but-forgotten rocky outcropping in Southern California contains ore that could help break the country’s dependence on China for certain types of rare earth metals, according to the only American producer of rare earths.
The deposit contains so-called heavy rare earths, according to the company, Molycorp, which plans to announce its finding Tuesday at a conference in Washington sponsored by the Energy Department, the European Commission and Japan’s trade ministry.
Rare earths – both the “light” and “heavy” varieties – are vital to a range of green-energy technologies, including compact fluorescent light bulbs, hybrid-electric vehicles and wind-power turbines.
An Energy Department report released in December 2010 warned that disruptions in imports of crucial minerals, particularly heavy rare earths, could damage the American economy.
Despite their name, rare earths are fairly abundant in the earth’s crust. But heavy rare earths – which have more protons in their atomic nuclei than light rare earths – are far less common, and now sell for up to $2,600 a pound. Many industrial uses of light rare earths require them to be mixed with tiny quantities of heavy ones, like dysprosium or terbium, so that the light rare earths do not lose their magnetism at higher temperatures.
China, which currently mines most of the world’s rare earths of both types, has a chokehold on heavy rare earths, producing 99 percent of the global supply.
In its report last December, the Energy Department said it could take up to 15 years for the United States to break dependence on China, based on how long it might take to obtain federal permission to open new mines and processing plants. Winning such permission can be arduous because rare earth refineries produce thousands of tons a year of low-level radioactive waste.
But Molycorp’s chief executive, Mark Smith, said in a telephone interview Monday that the company might be able to begin producing heavy rare earths in a little over a year from now. That is because the ore deposit is on land near Mountain Pass, Calif., near the Nevada border, where the company has been mining since the early 1950s and has regulatory approval to continue mining and refining for decades.
Mr. Smith said that the ore is near the surface and would require very little strip mining.
Molycorp, moreover, has already started building an enormous new rare earth refinery at Mountain Pass to replace its aging refinery. The new plant, to be opened in stages between late next year and the end of 2014, is intended to process either light or heavy rare earths.
The company still needs to do extensive test drilling to determine the quality and quantity of the rare earth ore. But rather than wait for the test results, Mr. Smith acknowledged that Molycorp was announcing the deposit now partly to reassure manufacturers that adequate supplies of heavy rare earths would be available in the near future – in hopes of discouraging manufacturers from seeking alternative materials, as some have already begun to do.
Molycorp’s stock price has fallen by more than 60 percent since early May, to a close of $30.16 on Monday, as analysts have lowered their forecasts for manufacturers’ use of rare earths because of China’s virtual monopoly on supplies.
Geologists first noted the outcropping in 1950 while mapping the area around what is now the Mountain Pass mine. But back then, Unocal, the oil company that acquired the mine, was mainly interested in light rare earths used in either oil refining or color televisions.
So the company began mining a nearby lanthanum-rich deposit instead. Information on the heavy-ore outcropping eventually became buried in Unocal’s vast archive of maps and mineral analyses from rare earth deposits around the world, said John L. Burba, Molycorp’s executive vice president and chief technology officer.
Through the 1980s, Unocal employed more than 40 full-time geologists to scour the world for rare earth deposits and analyze them. After Chevron acquired Unocal in 2005, it spun off the rare earth division as Molycorp, which now has geologists sifting through the archives. Their work eventually prompted a new look at Mountain Pass.
Molycorp has watched as automakers like General Motors and Toyota and a variety of chemical companies have said in the past month that they were looking at ways to reduce sharply their rare earth usage. Lightweight electric motors for hybrid cars can be designed without rare earths, for example, although with some sacrifice of power and efficiency.
Dudley Kingsnorth, a consultant and retired top industry executive whose rare earth supply and demand models are widely used, last month reduced his forecast of demand in 2015 to 170,000 tons, from 190,000 to 195,000 tons.
That reduction, combined with a shift of factories using rare earths to China from the West and Japan, has contributed to a steep decline in prices for the 17 rare earth elements – even the heavy types. Prices have fallen by about one-fourth since July, after rising several fold in the first half of this year, according to Metal-Pages, an industry data firm in London.
Molycorp has ambitious plans to become the world’s largest single producer of light rare earths by the end of 2014, overtaking Lynas of Australia, which hopes to open a large refinery in Malaysia later this year.
<Source article: http://www.nytimes.com/2011/10/04/business/molycorp-to-announce-rare-earth-deposit-at-california-site.html?src=mv&ref=business
October 4, 2011 at 8:31 pm #4904
Here is update on new breaking announcement by MCP of re-discovery/nearly forgotten 1950’s ore out-cropping (which as article states has geologist diving back into old archive files).
Molycorp is lone US hope against Virtual Monopoly/chokehold by China with 99% global supply for rare earths & many technical, clean & green energy applications.
Molycorp (MCP) shares have been near 10 month low recently suffering from over-hype & 500% increase and MCP insiders have been selling million $ worth shares in 2011 which have ranged from $26.02 to $79.16 last 52 weeks (200 day moving average was ~$54.57) ….. so obviously it is still multiples of 100’s % increased in value. MCP rose $1.8/share to $32.00 today with the DJ 400 point rally – but still down nearly 60% compared to May 2011 values.
March 13, 2012 at 7:25 pm #4690
EU, U.S., Japan launch rare earth WTO case against China
By Doug Palmer and Sebastian Moffett | 03/13/2012
WASHINGTON/BRUSSELS (Reuters) – The United States, Europe and Japan joined forces on Tuesday against China’s restrictions on exports of rare earth minerals that are critical to production of advanced technology and clean energy goods expected to provide the jobs of the future.“We want our companies building those products right here in America. But to do that, American manufacturers need to have access to rare earth materials which China supplies,” President Barack Obama said at the White House.
“Now, if China would simply let the market work on its own, we’d have no objections. But their policies currently are preventing that from happening and they go against the very rules that China agreed to follow,” Obama said.
He cast the decision to take action with the European Union and Japan at the World Trade Organization as part of stepped-up U.S. effort to make sure countries play by global trade rules.“Our competitors should be on notice. They will not get away with skirting the rules,” Obama said.
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