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post #16 of 19 (permalink) Old 05-03-2010, 12:43 PM Thread Starter
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An update on the "rare-earth metals from China" aspects of this issue:

Chinese Control of Rare-Earth Metals Could Stall Hybrid Growth
By Christie Schweinsberg - WardsAuto.com

China’s control of most of the world’s supply of lanthanides at the same time demand is increasing for the rare-earth metals could hurt the growth of hybrid-electric vehicles, author Robert Bryce says.

Lanthanum is a key ingredient in nickel-metal-hydride batteries that power many HEVs worldwide, and experts say new sources for the rare-earth metals have yet to be found.

Increasing U.S. corporate average fuel economy to a 35.5 mpg (6.6 L/100 km) fleet average by 2016 is “an ambitious goal, and it may well be laudable,” Bryce, author of the new book “Power Hungry: The Myths of ‘Green’ Energy and the Real Fuels of the Future,” tells attendees here during a recent Toyota Motor Sales U.S.A. Inc. Sustainability Seminar.

The key question, he says, is whether there will be sufficient quantities of lanthanides to produce the quantity of hybrids needed to meet the mileage standards set by President Obama.

Using data provided by Toyota, Bryce says each Prius HEV contains about 25 lbs. (11 kg) of rare-earth metals, more than twice the amount in a standard vehicle, likely making it the most lanthanide-intensive consumer product ever made. Other HEVs also contain large amounts of rare-earth metals.

Lanthanides also are in demand for consumer electronics, such as computer hard-drives, cell phones and televisions; as well as in wind turbines, X-ray machines and precision-guided munitions.

China controls somewhere between “95% and 100% of the world’s supply of this entire row of the periodic table,” Bryce says, flashing a chart showing 15 elements such as lanthanum, neodymium and samarium.

The Prius’ NiMH battery pack contains 22 lbs. (10 kg) of lanthanides. Some 2.2 lbs. (1 kg) of neodymium is used in each Prius’ iron-boron magnets found in the motor-generator and batteries.

“There are no significant supplies (of lanthanides) that can come on stream in anything close to the time span the market needs,” Bryce says, noting studies show demand for lanthanides could outstrip supply as early as 2013.

Today’s market for lanthanides is about 100,000 tons (90,718 t) per year, he says. “Estimates are that within two-three years the market demand will be 120,000-130,000 tons (108,862-117,932 t) per year.”

The U.S. Geological Survey shows worldwide rare-earth reserves at 99 million tons (89.8 million t) but 2009 production at just 124,000 tons (112,490 t), with 120,000 tons of lanthanides mined in China and none in the U.S.

China, exemplified by the quote from former Communist Party leader Deng Xiaoping – “There is oil in the Middle East, there are rare-earths in China; we must take full advantage of this resource” – is well aware of its position of power on lanthanides, Bryce says.

“In this headlong rush to go ‘green,’ we are essentially trading one type of import reliance for another,” he warns of China.

Unlike the number of countries the U.S. relies on for oil imports and exports, the movement to produce more HEVs means “we are going to be more dependent on a single market, where there’s no transparency and one dominant market player who happens to own most of our debt already,” Bryce says.

China is cutting back on exports of rare-earth elements, while increasing export fees on lanthanides and encouraging companies using such metals to locate in China.

“This makes perfect sense from a strategic standpoint, an employment standpoint, from a balance and trade standpoint,” he says. “The Chinese don’t want to sell you the rare-earth elements that are needed to make a television. They want to sell you the television.”

Earlier this month, the U.S. Government Accountability Office released a report showing deposits of rare-earth ore are “geographically diverse,” with locations in the U.S., Australia, Canada and Greenland. However, the report found China is dominant in the ability to process rare-earth oxides into metals.

A U.S. mine in Mountain Pass, CA, operated by Molycorp Minerals LLC, was shuttered in 2002 partly after pollution concerns arose. Plans are to bring it back online later this year, but Molycorp is lacking in its ability to refine oxides into finished metals, the GAO says.

Molycorp reportedly hopes to raise $350 million-$500 million through an initial public offering to modernize and expand Mountain Pass, as well as fund new processes and technologies.

But the GAO report says it may take up to 15 years for the U.S. to rebuild its rare-earth supply chain, a scenario dependent on investments in processing infrastructure being made, new-technology development and acquiring patents.

Other U.S. rare-earth deposits have been found in Idaho, Colorado, Missouri, Montana, Utah and Wyoming, but they only are in the exploratory stages and could take seven to 15 years to come fully online after complying with state and federal regulations, the GAO says.

But Bryce warns U.S. sourcing of rare earths could backfire if the Chinese decide they are “not really crazy about competition” and undercut the price of U.S. lanthanides.

Reducing the need for rare-earth metals in HEVs is a noble goal, he says. But for some rare metals, there’s “just no replacements.”

Chinese Control of Rare-Earth Metals Could Stall Hybrid Growth

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post #17 of 19 (permalink) Old 06-15-2010, 09:12 AM Thread Starter
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Another informative update

Material costs threaten affordable green cars

Talk with any executive involved with hybrid- or pure-electric vehicles, and the conversation inevitably comes back to cost. The hope is that economies of scale will save the day, bringing down component costs and making green vehicles affordable and profitable for all.

Except that prices might not fall.

Several recent studies indicate that the cost of batteries may not decline as much as hoped over the next decade. What's more, some researchers think the cost of rare-earth elements--essential to key components in an electric drivetrain--actually may increase.

Rare-earth elements and lithium for batteries are at the heart of the new technology. Far more than any consumer product, hybrid vehicles such as the Toyota Prius are the world's biggest users of rare-earth elements. And for electric vehicles--burdened by high battery costs--price reductions are essential to selling to mainstream buyers.

Yet a report from Roskill Consulting says demand for rare-earth elements will exceed supply within four years. That would make the elements known as lanthanides--crucial for the magnets installed in motor-generators--very pricey.

"It would suggest prices will gyrate upward, adding cost to any automaker building hybrids," said Robert Bryce, author of the book Power Hungry. "And that's assuming automakers can be assured of a reliable supply."

For example, the per-kilogram price of neodymium -- a crucial element sourced from China and used in high-end magnets -- has doubled in the past year, according to metal-pages.com.

"The mandated higher fuel economy standards mean the auto industry will have to embrace hybrids to meet standards," Bryce said. "The increased volume of hybrid production will increase the demand for rare-earth elements. We are trading one type of foreign dependence--on foreign oil--for another."

'Go big, go volume'
Although Toyota Motor Corp. has been the leader in hybrid vehicles, Renault-Nissan is placing the biggest bet on pure-electric vehicles.

Renault-Nissan CEO Carlos Ghosn is betting 4 billion euros ($4.92 billion) to create eight electric-vehicle models and 500,000 units of global capacity within the next few years. He may be the firmest believer that economies of scale will make EVs affordable and profitable.

"Go big, go volume, that's the big driver," said Simon Sproule, communications director for the Renault-Nissan alliance. "We're not going to claim profit from Day One, but we're not in the EV business to lose money."

But Sproule admitted that EVs entail a changed mind-set from traditional internal combustion vehicles: "We are ensuring we have stability of suppliers. It's a different set of raw materials at play."

The two leading alternative-fuel vehicle companies, Fisker Automotive and Tesla Motors, must base their entire business case on the idea that a plug-in hybrid or electric sedan can be made profitably.

Their strength is that they don't have the overhead of large automakers. The downside is that they cannot spread costs among many platforms and divisions. Both also are planning to fill out their product lineups with higher-volume--and lower-priced--vehicles than their high-end initial offerings.

Tesla CEO Elon Musk, whose company may be most reliant on lithium ion batteries, hopes that scale will reduce purchasing costs.

"It definitely affects the cost of battery cells. To really get the cell cost much lower than where it is today--and we think we have a very good cell cost for our volumes--you really want the battery pack requirements of the car business to far exceed that of the laptop business," Musk said in a recent interview.

Similarly, Fisker Automotive CEO Henrik Fisker said: "We all want the price to go down -- not just of batteries; it's the inverters and cabling. Right now those parts are not manufactured in the millions, like every other component in cars.

"In the next three, four, five years, all those component costs will go down."

Price decline?
Future supply and demand for both rare-earth elements and lithium spur intense debate.

"Batteries are commodities, as are all of the raw materials that are used to make the batteries, motors and other components required," said John Petersen, a lawyer specializing in alternative-energy clients for Fefer Petersen & Cie in Barbereche, Switzerland.

In a report written for the Seeking Alpha Web site, Petersen noted that backers of hybrids and electric vehicles ignore "fundamental natural resource development issues like location, economics, environmental impacts and the difference between known mineral resources and developed mineral reserves."

Said Petersen: "Battery costs are commodity materials that are not going to decline in price as demand increases. We've all gotten used to the IT business, where price falls and performance soars with each new generation. That cannot happen in the battery business because we are dealing with chemistry instead of physics."

In a January report, Boston Consulting Group said that in the future, "actual battery costs will likely be higher than what carmakers predict."

While automakers such as General Motors Co. are heartened by Boston Consulting Group's prediction of a 60 to 65 percent drop in battery prices by 2020, that won't be as advantageous as automakers need, the report said.

"The adoption of fully electric vehicles in 2020 may be limited to specific applications, such as commercial fleets, commuter cars and cars that are confined to a prescribed range of use," the report states.

Still, GM isn't panicking.

"We see no issues with the supply or reserves of lithium," said Micky Bly, GM executive director of electrical systems and hybrid vehicles. "Even with something like 100 million Volts [or similar hybrids], each using 16 kilowatt-hours of energy capacity, there is no issue with supply."

Bly thinks the Boston Consulting Group report was "conservative."

Oil for lanthanides?
While lithium is still selling for less than $1 per pound, a deeper concern is access to the rare-earth elements used in many hybrid powertrain components. Those elements are sourced mostly from China.

Bryce worries that the West is trading reliance on Middle Eastern oil for Chinese rare-earth elements. Not a good deal, he said.

So far, only Toyota has signed corporate deals to secure rights to search for these elements, specifically in Argentina, Vietnam and Canada.

Bill Reinert, Toyota's national manager of advanced technology vehicles, worries that predictions of rapid price deflation may be overstated.

GM's Bly said access to lanthanides is not a zero-sum issue.

"There are other materials available, but you might lose a couple percent of efficiency," Bly said. "It's not as though if you don't get this, you get nothing. A couple points of efficiency are measurable, but it will not hamper the ability of electric machines or motors to propagate very rapidly."

Material costs threaten affordable green cars

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post #18 of 19 (permalink) Old 06-15-2010, 12:54 PM Thread Starter
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Bolivia, China and... Afghanistan?!?!

Some excerpts from a lengthy The New York Times article by James Risen titled U.S. Identifies Vast Mineral Riches in Afghanistan:

The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe.

An internal Pentagon memo, for example, states that Afghanistan could become the “Saudi Arabia of lithium,” a key raw material in the manufacture of batteries for laptops and BlackBerrys.

The vast scale of Afghanistan’s mineral wealth was discovered by a small team of Pentagon officials and American geologists. The Afghan government and President Hamid Karzai were recently briefed, American officials said.

While it could take many years to develop a mining industry, the potential is so great that officials and executives in the industry believe it could attract heavy investment even before mines are profitable, providing the possibility of jobs that could distract from generations of war.

The value of the newly discovered mineral deposits dwarfs the size of Afghanistan’s existing war-bedraggled economy, which is based largely on opium production and narcotics trafficking as well as aid from the United States and other industrialized countries. Afghanistan’s gross domestic product is only about $12 billion.

“This will become the backbone of the Afghan economy,” said Jalil Jumriany, an adviser to the Afghan minister of mines.

American and Afghan officials agreed to discuss the mineral discoveries at a difficult moment in the war in Afghanistan. The American-led offensive in Marja in southern Afghanistan has achieved only limited gains. Meanwhile, charges of corruption and favoritism continue to plague the Karzai government, and Mr. Karzai seems increasingly embittered toward the White House.

So the Obama administration is hungry for some positive news to come out of Afghanistan. Yet the American officials also recognize that the mineral discoveries will almost certainly have a double-edged impact.

Instead of bringing peace, the newfound mineral wealth could lead the Taliban to battle even more fiercely to regain control of the country.

The corruption that is already rampant in the Karzai government could also be amplified by the new wealth, particularly if a handful of well-connected oligarchs, some with personal ties to the president, gain control of the resources. Just last year, Afghanistan’s minister of mines was accused by American officials of accepting a $30 million bribe to award China the rights to develop its copper mine. The minister has since been replaced.

Endless fights could erupt between the central government in Kabul and provincial and tribal leaders in mineral-rich districts. Afghanistan has a national mining law, written with the help of advisers from the World Bank, but it has never faced a serious challenge.

At the same time, American officials fear resource-hungry China will try to dominate the development of Afghanistan’s mineral wealth, which could upset the United States, given its heavy investment in the region. After winning the bid for its Aynak copper mine in Logar Province, China clearly wants more, American officials said.

With virtually no mining industry or infrastructure in place today, it will take decades for Afghanistan to exploit its mineral wealth fully. “This is a country that has no mining culture,” said Jack Medlin, a geologist in the United States Geological Survey’s international affairs program. “They’ve had some small artisanal mines, but now there could be some very, very large mines that will require more than just a gold pan.”

In 2004, American geologists, sent to Afghanistan as part of a broader reconstruction effort, stumbled across an intriguing series of old charts and data at the library of the Afghan Geological Survey in Kabul that hinted at major mineral deposits in the country. They soon learned that the data had been collected by Soviet mining experts during the Soviet occupation of Afghanistan in the 1980s, but cast aside when the Soviets withdrew in 1989.

So far, the biggest mineral deposits discovered are of iron and copper, and the quantities are large enough to make Afghanistan a major world producer of both, United States officials said. Other finds include large deposits of niobium, a soft metal used in producing superconducting steel, rare earth elements and large gold deposits in Pashtun areas of southern Afghanistan.

Just this month, American geologists working with the Pentagon team have been conducting ground surveys on dry salt lakes in western Afghanistan where they believe there are large deposits of lithium. Pentagon officials said that their initial analysis at one location in Ghazni Province showed the potential for lithium deposits as large of those of Bolivia, which now has the world’s largest known lithium reserves.

U.S. Identifies Vast Mineral Riches in Afghanistan - NYTimes.com

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post #19 of 19 (permalink) Old 10-03-2011, 06:56 AM Thread Starter
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Over a year later, perhaps some of these fears are overblown

Rare Earths Fall as Toyota Develops Alternatives: Commodities
By Sonja Elmquist - Bloomberg

Rare-earth prices are set to extend their decline from records this year as buyers including Toyota Motor Corp. (7203) and General Electric Co. (GE) scale back using the materials in their cars and windmills.

Prices for cerium and lanthanum, the most abundant rare- earth elements, will drop by 50 percent in 12 months, Christopher Ecclestone, an analyst at Hallgarten & Co. in New York, has forecast. Neodymium and praseodymium, metals used in permanent rare-earth magnets, may fall as much as 15 percent, he said.

Makers of electric cars, wind turbines and oil-refining catalysts have sought to reduce use of the metals after China, which supplies more than 90 percent of the market, said in July 2010 that it would cut exports and clamp down on the industry. That boosted prices, encouraging mining companies to develop new prospects and buyers to find alternatives.

“If you think you can keep raising the prices for those materials and still keep your customers, you’re crazy,” Jack Lifton, co-founder of Technology Metals Research, said in a telephone interview. “The principal customer for rare-earth metals is a global automotive industry using rare-earth permanent magnets. That industry will engineer this stuff out.”

Declines in August and September pared a five-month, fourfold surge that brought the average price for eight of the most widely used rare-earth oxides to a record 396,850 yuan ($62,025) a metric ton in July, data from consultant Shanghai Steelhome Information show. The average price declined 13 percent from its July peak as of Sept. 27.

Share Performance
The Bloomberg Rare Earth Mineral Resources Index dropped 43 percent in the past three months, led by a 61 percent decline in Montreal-based Quest Rare Minerals Ltd. (QRM) Great Western Minerals Group Ltd., which explores in North America, climbed 3.1 percent in the period and is the only gainer on the 17-member benchmark.

Rare earths have been pushed lower because of selling by speculators, Michael Gambardella, a New York-based analyst at JPMorgan Chase & Co., said in a report last week. Tsunami- related disruptions in Japan and dumping of unpermitted material in China have undercut prices, while industrial substitution has driven “demand destruction,” said Sam Berridge, a Sydney-based analyst at Royal Bank of Scotland Group Plc.

“A greater focus on recycling and substitution, particularly by Japanese consumers, has resulted in tightness of demand easing somewhat for the lighter rare earths,” Berridge said by phone.

‘Huge Savings’
Rising prices for the so-called light metals, such as neodymium and lanthanum, have prompted automakers including Toyota, Asia’s biggest automaker, to look at reducing the use of relatively powerful and expensive rare-earth magnets in their vehicles. Some Toyota vehicles will be built with an induction motor, which doesn’t use rare-earth magnets, said John Hanson, a Toyota spokesman in Torrance, California.

“Moving from a fixed-magnet motor to an induction motor is a huge savings with regard to rare-earth metals,” Hanson said by phone.

“The Japanese are leading the push to replace, reduce and recycle their rare-earths consumption,” said Dudley Kingsnorth, chief executive officer of Perth-based advisory Industrial Minerals Co. of Australia. “Users are recycling rare earths wherever they can, using them more efficiently, particularly in the magnet industry where they are producing powerful magnets with smaller volumes.”

GM’s Plans
General Motors Co. (GM), the largest U.S. automaker, plans to sell a Chevrolet Malibu Eco next year that uses an induction motor, and otherwise cut down on magnets that use a lot of rare earths.

“The magnets are like God’s gift to electric motors,” Pete Savagian, GM’s chief engineer for electric motors, said in a telephone interview. “But we don’t always need that level of magnet. Even at prices we saw three and four years ago, there’s a more economic alternative, albeit at slightly less efficient outcome.”

The largest portion of demand for rare earths, one third, comes from generating electricity, according to Bloomberg Industries.

In August, GE announced the development of wind-turbine generators that will reduce dependence on the rare-earth materials prevalent in so-called permanent-magnet machines. Some current offshore wind turbines may contain as much as half a ton of the metals, according to Bloomberg Industries analysis.

‘Demand Destruction’
“Everybody is going back to the drawing board and trying to redesign their generators to minimize the usage of permanent magnets,” said Steve Duclos, chief scientist and manager of material sustainability for GE Global Research. “In all of our businesses we’re looking to reduce our usage.”

Companies that use cerium to polish glass, such as manufacturers of liquid crystal displays, will reduce their reliance on the element by as much as 70 percent this year by installing new polishing machines, said Jonathan Hykawy, an analyst with Byron Capital Markets in Toronto.

“They made the decision to substitute operational expenditure with capital expenditure,” Hykawy said. “Even if the price of cerium goes back to $5 a kilo, they will continue to buy less cerium because the machines are there and they’ll save a little bit of money. That’s a quasi-permanent demand destruction for cerium.”

Gasoline Refining
W.R. Grace & Co. this year began selling an oil-refining catalyst with reduced lanthanum, a rare earth that has increased in price more than fourfold in the past year. Lanthanum improves the amount of gasoline refiners can extract from crude oil and is also used in hybrid-car batteries.

Half of the company’s customers had switched to the new formula, which offers the same performance and gives them “double-digit type percent decreases in their cost,” Grace Chief Financial Officer Hudson La Force III said on a conference call this month.

The development doesn’t worry Mark Smith, CEO of Molycorp Inc. (MCP), owner of the largest rare-earth deposit outside China.

Fluid-cracking catalysts have “always been one of the largest single markets for any of the individual rare earths,” Smith said in an interview at Bloomberg headquarters in New York. “We don’t see that deteriorating in any significant form.”

While rare-earth prices have fallen, demand will outpace supplies even with new mines in California and Australia expected to come online in 2014, Smith said.

‘Short Supply’
“Like any market, you’re going to see up and down in the course of a month or two,” Smith said. “But the overall trend remains short supply, heavy demand.”

The ability to substitute many rare-earth applications will be limited, said Constantine Karayannopoulos, CEO of Neo Material Technologies Inc. (NEM), a Toronto-based producer of rare- earths, magnetic powders and rare metals.

“All kinds of folks are trying to use alternative technologies,” he said by phone. “Longer-term, don’t expect these technologies to be in place this quarter or the next.”

Molycorp fell $1.22, or 3.5 percent to $34.06 as of 4:15 p.m. in New York Stock Exchange composite trading, extending its decline this year to 32 percent. Neo Material Technologies dropped 63 cents, or 8.9 percent, to C$6.47 on the Toronto Stock Exchange. Its shares have tumbled 17 percent this year.

GE’s Duclos says he has little doubt companies will find substitutes, sooner or later.

“It will depend on the element, it will depend on the usage, but getting 10-20 percent efficiencies out of the usage of an element is not that terribly difficult,” Duclos said. “What I don’t subscribe to is this idea that there’s nothing we can do.”

Rare Earths Fall as Toyota Develops Alternatives: Commodities - Bloomberg

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