It was stated at the Technology and Rare Earth Metals for National Security and Clean Energy (TREM) Conference in Washington DC on March 17-18, that there are two modes of energy policy in Washington:

1. Complacency
2. Panic!!!

This may prove true for the rare earths as well. Please don’t misunderstand, the Conference was filled with intelligent and fantastic conversations, but the mood has changed and it is now clear that this issue is beginning to gain some favor in Washington DC.

Now for some highlights!

Dudley Kingsnorth of IMCOA had plenty of insight to share with the audience. At one point, he spoke about the importance of the pilot plant phase for rare earth exploration companies. Pilot plants are built in order to establish the flow sheet and according to Kingsnorth are required to:

• Generate samples for customer approval as basis for sales contracts
• Demonstrate technical viability
• Provide data for bankable feasibility study
• Generate data for environmental impact statement

The real shocker that Kingsnorth revealed didn’t seem to garner much fanfare, but is critical to this discussion and should change the tenor of discussion: Rest of world (ROW) demand has been lower than exports since 2005. In other words, all the hype about China shutting off the rest of the world isn’t necessarily backed by the facts. At this point, the Chinese export quotas have easily accommodated the demand by the rest of the world for material outside of China. This opens up other discussions, but may change the character of some of the arguments being made.

Constantine Karayannopoulos of Neo Material Technologies Inc. offered some great perspective as president and CEO of a company that operates facilities within China. He pointed out that China has one strategy in the rare earth business – employment growth. Provincial governments are judged on job growth.

His final points for the audience were:

• Reduce red tape
• Research & development (R&D) are indispensable

Paul Werbos, the Research Program Director of the National Science Foundation, reinforced Karayannopoulos’ last point. Werbos emphasized that R&D can have a dramatic effect, and he pointed out that new cross-disciplinary research might maximize the probability of breakthrough designs.

Gareth Hatch of Dexter Magnetic Technologies explained some of the issues surrounding new wind turbine capacity and its demand for neodymium (Nd) oxide moving forward. For instance, he pointed out that demand for Nd in wind turbines might reach 2,950 tonnes by 2013.

Peter Dent of Electron Energy Corporation stated that samarium-cobalt is a $300 million industry and that ferrites (magnets based on iron technology) still retain a 90% share of the entire market.

Sheeraz Haji of Cleantech Group LLC spoke of the revolution in financing for green technologies, as the percentage of venture capital that goes into green tech has risen from less than 2% in 2003 to a predicted 27% in 2010. Wow! That is significant. He pointed out that 72% of global cleantech investment is happening in Asia / China. This is very startling.

Haji also stated that Walmart is demanding energy usage, water usage, and waste data from suppliers.

Steven Duclos of General Electric Global Research had some fantastic perspective on REEs and strategic materials. He showed a criticality diagram which displayed the supply and price risk associated with individual elements and their potential impact on General Electric.

He is very aware of the effect of supply issues, and suggested that parallel paths must always be taken because you don’t know which path will be successful.

One of the great charts that he used showed the elements used to make incandescent lamps, fluorescent lamps, white LEDs, and White OLEDs. The surprise? No rare earths at all in the white OLEDs.

David Sandalow, the US Assistant Energy Secretary for Policy and International Affairs, had much to say regarding rare earths.

“It goes without saying that diversified sources of supply are important for any strategic material. So too are substitutes and strategies for re-use and recycling. If rare earth metals are going to play an increasing role in our economy, we need to pursue those strategies. And there’s every reason to believe that rare earth metals could play an increasing role in the global economy as the world transitions to clean energy.”

To address the availability of REEs and other strategic materials, Sandalow suggested a three-part approach:

1. Globalize supply chains for strategic materials
2. Develop substitutes
3. Promote recycling, re-use and more efficient use

He also announced the proposed development of a strategic plan:

“To help address these concerns, I am today announcing that the Department of Energy will develop its first-ever strategic plan for addressing the role of rare earth and other strategic materials in clean energy technologies. The plan will apply the approaches described above and draw on the strengths of the Department in technology innovation. We will build on work on these topics already underway, including in DOE’s national labs, and work closely with colleagues from other agencies throughout the U.S. government. We will solicit broad public input, including from the stakeholders and experts here in this room.”

Sandalow mentioned that there was lots of work underway already, and that there were no firm timelines yet in place.

His talk was well received by the audience, and we look forward to hearing more.

Full Metal Jacket, a panel discussing rare earths from the Pentagon’s perspective, addressed the complexity of assessing the both the Big Picture and specific needs. Some of the issues raised during the panel were:

• Looking at both civilian and military uses for REEs
• The DOD doesn’t buy rare earths – it buys tanks, ships, guns, etc.
• There is no national strategy on REEs thus far
• They are looking at cradle to grave issues with materials

Mark Smith of Molycorp Minerals pointed out on the producer’s panel that it is hard to find qualified people with REE skills.

Congressman Mike Coffman spoke about HR4866 – a new rare earth bill that he had just introduced the day before. From the bill:

A bill to reestablish a competitive domestic rare earths minerals production industry; a domestic rare earth processing, refining, purification, and metals production industry; a domestic rare earth metals alloying industry; and a domestic rare earth based magnet production industry and supply chain in the United States.

Many people in the audience have been watching this closely, so it was great to have Congressman Coffman talk about this with us in person.

Cindy Hurst gave a good talk on the history of China and the rare earth industry. She has written a paper entitled “China’s Rare Earth Elements Industry: What Can the West Learn?”.

We spent the afternoon of the second day in breakout sessions that were both fascinating and illuminating, as this diverse group of participants was able to discuss and debate these issues together.

Special thanks to Dr. Gal Luft and Yaron Vorona for putting together one of the best rare earths conferences I’ve been to!

My first rare earth conference of the year was an investment bank conference in Australia in Early February – since then it has been an endless barrage of rare earth conference mania!

The SME, Phoenix, February 28-March 3

The Society for Mining, Metallurgy & Exploration (SME) had three technical sessions that included the REEs—one session on March 1, and two on March 3.  At the conference, there were almost 5000 attendees and over 600 booths. The sessions were well attended, and there was also a cocktail party for the rare earth community.

Here is a brief look at the three sessions:

Geology VI: Strategic Minerals and Materials: Harder, Better, Faster, Stronger.

James Hedrick’s talk was entitled “Rare Earths in Defense Applications”.

Cheryl Seeger gave a talk about REEs Missouri called “Mineralogy and Geology of the Southeast Missouri Iron Metallogenic Province“.

Geology IV: Rare Earths: Extraction, Application and the Market.

Ed McNew presented an excellent talk on processing named, “Mineralogical Considerations in the Processing of Rare Earths Ores to Concentrates“.  This talk was chock full of images that showed quite clearly some of the issues surrounding the processing of the REEs. He also discussed many of the instruments used in identifying minerals and their critical properties for processing.

Les Heymann gave one of the best talks I have ever heard on evaluating rare earth deposits in “The Valuation of Rare Earth Deposits”.  He described the difference between Light Rare Earth Element (LREE) projects and Heavy Rare Earth Element (HREE) projects, and the issues of balance that pertain to both. He concluded that NPV is a good way to evaluate REE deposits.

Stan Trout gave a really informative talk entitled “Rare Earth Permanent Magnets: Raw Materials, Magnets and Opportunities”. Trout is one of the leading experts in the field,  but he is also a professor so he has gotten very good at communicating the complexities of the subject in a fun and very informative fashion.

Dudley Kingsnorth was unable to attend the conference, but he graciously allowed me to give his talk, “Rare Earths: Facing New Challenges in the New Decade”, in his absence.  As usual, Kingsnorth’s presentation was replete with fantastic charts—including an update of the legendary “Dudley Chart”. He also had several slides explaining the 10 steps to commercial rare earths production.

Geology V: Rare Earths: Geology & Exploration

Don Ranta presented “Exploration and Evaluation of the Bear Lodge Rare-Earth Project, Wyoming”, giving the audience a useful update on progress being made at Bear Lodge in Wyoming.

Harmen Keyser did an excellent job detailing the rare earth project at Bokan Mountain in his talk, “The Bokan Mountain REE-U Deposit, Prince of Wales Island, Alaska”.

Dr. Anthony N. Mariano gave an illuminating two-part presentation entitled “REE Deposits on a World Level – Real and Potential: Parts 1 & 2”.  In this talk he touched briefly on historic resources and minerals, as well as potential for future deposits around the world.

In addition to these sessions on REEs, there were also several other talks given on rare earths in other sessions, including two by Mark Smith of Molycorp Minerals LLC, and one by Jim Kennedy of Wings Enterprises.

A link to some of the presentations is found here:

http://www.smenet.org/rareEarthsProject/

PDAC, Toronto, March 7-10

For the first time I have been to the PDAC, the weather in Toronto was actually quite nice in March!  There were about 22,000 attendees and about 1000 exhibitors.  The size of this conference is staggering.

Two years ago I wandered the exhibit halls trying to find anyone who cared about rare earths.  I didn’t find many.  This year “rare earth” was the watchword.  What a difference!

Rare earths arrived at the PDAC in style with two cocktail parties (each attended by over 100 people), one power breakfast (standing room only), one exchange forum session, and one technical session (jam-packed, with folks waiting outside).

The number of junior exploration companies looking at this space has exploded.  Boom.  Seriously — there are now hundreds of hopefuls, but very few who know what they are doing.  Rare earth geologists (the very few that there are) are now experiencing celebrity status.

The hooplah is overshadowed by hype, but the hype is most certainly bypassed by the ballyhoo!

How long this will last is anybody’s guess, but it’s fairly entertaining for now.

More to come on the TREM in Washington—lots happened here, so I want to spend a little more time on it.

Metal Events Ltd’s “5th International Rare Earths Conference” was held in Hong Kong in November 17-19, and was attended by about 170 delegates – a new record for the event.

While the delegates engaged in lively discussion over many topics, most seemed to agree on one thing – 2009 was “the year of Rare Earths”.

It was revealed that the conference organizers had contemplated canceling the event earlier because of the questionable economy. What a difference a year makes! Rare earths are now basking in the gleaming shine of the world media, and the REE sector has become an investment darling.

The delegates were a mix of end-users, producers, processors, analysts, researchers, media, junior exploration companies, financiers, and consultants. There were people from all over the world – a testament that this conference is truly a draw for the industry.

The Excelsior Hotel, home of the 2009 Conference

Let’s get right to the luscious content:

Nicholas Curtis of Lynas Corporation threw down the gauntlet in the first talk with several dandy quotes:

“The marginal cost of production has been reached in China”

“The light rare earths are actually the ones in shortage”

“Illegal production from the south – that’s what the industry is relying on”

“Grade is king”

“You’re not looking for a rare earth project, but a bastnaesite project”

This last quote about bastnaesite begs for some context. Curtis was talking about the environmental liability of thorium and uranium (he referred to them as the “actinides” – but these are the actinides typically found with REEs). He stated that only bastnaesite had very little of the actinides, implying that this made it the premier target mineral. This is a fascinating statement, as Lynas has a supergene monazite project at Mt. Weld and a monazite project at Kangunkunde. Curtis is a compelling speaker and provides fantastic sound bites though!

Both Curtis as well as Mark Smith of Molycorp Minerals LLC (see below) emphasized the importance of environmentally sound mining practices.

Ms. Huang Xiawei of Grirem Advanced Materials Company Ltd. gave a technical, yet absorbing talk regarding processing in China entitled: “Progress of the High-Efficiency RE Extraction & Separation Technology in China”.

Mark Smith of Molycorp stated that his company’s goal was “to be the low cost producer in the world”. He gave an eloquent presentation updating the crowd on the present status and future possibilities of Mountain Pass. Two quotes from Smith:

“Ore grade is king”

“The ability to process is very, very critical and very, very complex”

Dudley Kingsnorth of IMCOA presented “Meeting demand in 2014: the critical issues”. Kingsnorth walked us through the road to commercial rare earths production, including the following steps:

1. Prove Resource/Reserve
2. Define Process – Bench Scale
3. Pre-Feasibility Study
4. Beneficiation
5. Extraction of Rare Earths
6. Separation of Individual Rare Earths
7. Obtain Project Environmental Approval(s)
8. Letters of Intent
9. Complete Bankable Feasibility Study
10. Construction and Start-up

He went into greater detail on each of these steps, and it was very informative. Two quotes from Kingsnorth:

“Each ore body is unique”

“There is a looming shortage of dysprosium, terbium, and yttrium”

Kingsnorth also pointed out that the coming climate conference in Copenhagen could have a dramatic impact on the future of the rare earth market, depending on if/what policies are decided upon.

An excellent review of the Chinese REE industry was written by Ms. Song Honghang and presented by Wang Yan of the Baotou Research Institute of Rare Earths, and was entitled “A review of the Chinese rare earths industry – the past 60 years”.  Ms. Wang gave the production tonnage of separated rare earth products from China starting in 1978 at 1000t and finishing in 2008 with 130,000t. That’s a serious increase in production!

Mick Muir of Arafura Resources gave an update on the Nolans Bore project in Australia. Muir indicated that they are targeting a 2012 production date and are seeking strategic partners.

Keith Delaney of the Rare Earth Industry & Technology Association (REITA) described how REITA wants to play a role in the juncture between government, industry, and academia. Delaney spoke about the importance of global supply chains.

Donald Ranta of Rare Element Resources gave an update of the Bear Lodge REE/gold property in Wyoming. Ranta focused on the bastnaesite-group minerals found in the oxide zone at Bear Lodge.

Don Bubar of Avalon Rare Metals gave an update on the Nechalacho (formerly known as the Lake Zone at Thor Lake). Bubar said he expects a new 43-101 resource estimate in January 2010.

Matthew James of Lynas Corporation provided a nice walk through of progress at Mt. Weld and the plant in Malaysia – including a fancy (and informative) fly through video presentation of the plant.

In a new format, five junior exploration companies were each given 10 minutes to detail their projects. Companies that presented were

• Alkane Resources (Dubbo Zirconia Project, Australia)
• Frontier Minerals Ltd. (Zandkopsdrift, South Africa)
• Greenland Minerals & Energy Ltd. (Ilimaussaq, Greenland)
• Mongol Gazar LLC (Mushgai Khugad, Mongolia)
• Rare Earth Extraction Co. Ltd. (Steenkampskraal, South Africa)

The most memorable quote (and most refreshing) from these presentations came from Trevor Blench of the Rare Earth Extraction Co.:

“We are the smallest rare earth project in the world”

Ian Chalmers of Alkane reveals actual rare earth concentrate!

Geoff Bedford of Neo Material Technologies Inc. gave an excellent description of the current status of both the rare earth market and his company. He provided fresh information regarding Neo’s purchase of Recapture Metals and their Pitinga Project in South America. He prefaced the Pitinga update by stating, “We are not miners”, and then went on to describe their collaborative efforts on the project.

In “A review of rare earth applications and innovations”, Olivier Touret of Rhodia Electronics & Catalysis furnished one of the best slides of the conference. He used an exceptional graphic to show the various kinds of hybrid vehicles, their CO2 emissions, and the additional manufacturing costs associated with each type. Touret also illustrated REE polishers. Riveting work!

Hidetaka Honyro of Iwatani Corporation gave “An overview of the Japanese rare earths industry”.  He catalogued Japanese REE demand for specific elements (especially Eu, Tb, Dy, Y, Nd, and Pr), and shared some excellent data.

Takehisa Minowa of Shin-Etsu Chemical Co. Ltd. presented a talk about neodymium (Nd) magnets. He used compelling graphics to explain the difference in strength of various types of permanent magnets – ferrite, alnico, SmCo, and NdFeB. The bottom line here was that NdFeB magnets are about 10x the strength of ferrite, but also about 10x the cost! However, if you want to save weight (which is the primary goal in many technology developments), you’ve got to go with NdFeB!

David Kennedy of Great Western Minerals Group also spoke about rare earth magnets. My favorite phrase of the day was revealed here: “residual flux density”.  Kennedy delivered superb information on the composition of magnets, as well as a description of the ability of how individual rare earth elements enhance performance.

The final talk was given by Judith Chegwidden (co-written with Robert Baylis) of Roskill Information Services Ltd.  Chegwidden addressed NiMH versus Li-ion batteries for the electrification of cars.  This is currently a hot topic, and she proved her thorough grasp of both technologies.

This conference was a great way to finish a great year in the REE market.

Please feel free to contact me through the “Contact” page if you have any questions or comments.

Special thanks to Jill Fitzgibbon and Rachel Carnac for putting together a marvelous conference!

I apologize for the delay in getting this story posted!

Let me start by saying that Infocast’s Conference held October 20-22 in Washington DC entitled “Managing Supply Chain Risks for Critical & Strategic Metals: Rare Earth Metals, Minor Metals, Platinum Group Metals, Lithium” had quite a mix of attendees — end users, government, exploration companies, media, consultants, and first nations participants. Here are some pics of the signage and venue:

Holiday Inn, Georgetown

Conference Title and Sponsors

Conference Room, it was standing room only on DAY ONE

The Conference was wide-ranging and was split into separate subject matter for each day. Rare earths were definitely a focus for the Conference, and I heard a number of perspectives that I had not heard from the podium before.

DAY ONE

There was plenty of talk regarding the stockpiling of strategic elements — both pro and con. Anthony Lipmann provided an in-depth look at the history of stockpiles, beginning with the Biblical Joseph and bringing us up to present day. Mr. Lipmann provided the following as the purpose of stockpiles:

1. Fear of resource exhaustion
2. Fear of price distortion
3. Fear of resource wars

From the above, it is clear that fear seems to be the driving force behind stockpiling. Mr. Lipmann also gave evidence that the market can negate the need for stockpiling by recycling or utilizing new mining methods, but the essence of his talk was really, “Do stockpiles work?”

Dudley Kingsnorth made an excellent point that REEs are not commodities, but that they are customer specific. He also showed a slide of the major rare earth projects of the world and when they hoped to be in production.

We also heard from Gary Billingsley (Great Western Minerals), David Kennedy (Less Common Metals — owned by Great Western), Don Bubar (Avalon Rare Metals), and Dave Hodge (Commerce Resources).

Jim Hedrick of the USGS spoke about lower cost rare earths within China because of faster permitting, no export tariffs, cheaper labor costs, and subsidized fuel. He also listed alternate sources for REEs outside of China.

Chris Hartshorn of Lux Research gave a very different view of the markets for strategic metals. One of the most interesting things he said was that there will be no pressure on lithium as a result of hybrid or electric vehicle markets. In contrast, Yaron Vorona of the International Lithium Alliance stated, “If the future is electric then the future is lithium.”

DAY TWO

Gregg Brandyberry of Wildfire Commerce (and former VP of Procurement in Global Systems and Operations, GlazoSmithKline) got us started on day two.  He spoke about supply and demand and they “take care of themselves in the long term”.  He highlighted four key issues influencing supply risk:

1. Scarcity
2. Disaster
3. Politics
4. Financial

His statement that, “There’s never been a riskier time since we’ve been alive,” was striking and seemed to resonate with the audience.  He went on to give some details regarding supply disruption, financial market collapse, corporate reputation, and  brand image.

One of his most engrossing thoughts had to do with the newfound power of NGOs (Non-Government Organizations). As NGOs focus on human rights and sustainability issues, the mining industry needs to be very aware of trends in this regard and be prepared to proactively address them.

Ed Richardson of Thomas & Skinner had my favorite risk quote of the day: “If you manage risk you are typically successful, if you don’t — you typically fail.”

Darrell Rishel of Corning spoke about engineering around rare metals if they can’t guarantee supply.  Rishel also emphasized the importance of understanding the entire supply chain for all materials used in production.

Stuart Burns of Aptium Global explained some of the evolving technologies for recycling REEs — including Prius batteries.

Jeff Green of J.A. Green & Company had an abundance of information regarding the government’s approach to the strategic metals.  He stated that, “We need a secure supply chain”, and explained this in terms of four steps:

1. Mining
2. Refining
3. Alloying
4. Manufacturing

Green also stated that the government likes to talk with groups of companies that have come together with a common cause.

Ivan Herring, former procurement expert at General Motors, said that it was 5-10 times as risky to rely on by-product production for supply.  I find this very interesting, as it shows that end-users view the market differently than exploration companies that tout by-product production on occasion.

DAY THREE

Stephen Freiman of Freiman Consulting provided a fascinating slide showing the history of the use of elements from the periodic table in computer chips.  In the 1980s, just 11 elements were used to make the delicious chips that serve our technological society.  By the 2000s the number of elements had grown to 45 — of these, 15 are rare earths!

The last panel of the morning session was about investment opportunities within the sector. Dudley Kingsnorth moderated the panel with John Kaiser, Tracy Weslosky, and Dr. Philippa Malmgren participating.

Kaiser spoke about the difficulty in evaluating REEs, and that typical mining analysts have trouble applying the discounted cash flow method to get good, relyable numbers for REE companies.  He also discussed the need to understand the difference between economic versus strategic logic.

Kingsnorth walked us through a timeline of steps that need to be undertaken for an REE exploration company.  The basic steps included proving the resource, defining the process (to get the rare earths out of the ore and into the market), and pre-feasibility.

Weslosky highlighted the need for an effective valuation method for companies pursuing the REEs.

Dr. Malmgren spoke about the broader landscape of macro economics and its possible affect on the tangible assets and the rare earth sector. Is deflation or inflation coming next? Many larger funds are looking for inflation on the horizon, she argued (quite persuasively, I might add!). They will move from paper money to hard assets. She said to get ready for increased volatility — its coming.

The afternoon session on Day Three was sparsely attended, but interesting, nonetheless.  John Kaiser and Ivan Herring each spoke at length about “Virtual Hedging”. Kaiser walked us through his 9 steps in Getting to a Mine:

1. Grassroots
2. Target Generation & Drilling
3. Discovery Delineation
4. Infill Drilling
5. Bulk Sample & Metallurgy
6. Pre-feasibility
7. Permitting, Marketing, & Feasibility
8. Construction
9. Production

Herring explained the differences between “Virtual Hedging” and “Synthetic Hedging”.  He had a number of approaches that I hadn’t heard, and some common solutions such as offtake agreements.

All-in-all, very worthwhile.  Here is my parting shot:

Tuscaloosa, AL On June 22-26, more than 150 researchers from seventeen countries met at the University of Alabama’s Shelby Hall to share and discuss the latest developments in lanthanide science and technology at the 25th Rare Earth Research Conference. The triennial event is marked by the presentation of the Frank H. Spedding Award for Outstanding Contributions to the Science and Technology of the Rare Earths. This year’s recipient, William J. Evans of the University of California, Irvine, is a pioneer in the area of lanthanide-based reduction chemistry. His groundbreaking suite of reduction reactions involves not just europium, ytterbium and samarium, but all the metals in the lanthanide series. Previously considered impossible, the development of these new types of reduction reactions has carved a new niche for the rare earths and may have significant implications for energy research.

William J. Evans of UC Irvine, received the Spedding Award for his work in lanthanide reduction chemistry

Fullerene chemist Luis Echegoyen of Clemson University reported breakthroughs in his “trapped buckyballs.” The conformation of these molecular cages changes depending on the trimetallic rare earth nitrides trapped inside – namely gadolinium, neodymium, promethium and cerium – allowing for their isolation and determination of their electrochemical behavior.

In the area of materials science, James H. Dickerson of Vanderbilt University has assembled europium oxide nanocrystals into both translucent and opaque thin films, which can be employed in photoactive coatings and dielectric devices. His research group has produced stable, monodisperse (i.e. not aggregated), sub-3 nanometer europium, terbium and gadolinium oxide nanocrystals with the robust optical properties desirable for use in high-resolution video displays and luminescent probes in immunoassay applications. Possibly the most interesting aspect of Dickerson’s research is the discovery of unexpected magnetization reversal in the smallest europium sulfide nanocrystals, which have a diameter less than 2.0 nanometers.

James H. Dickerson of Vanderbilt University

In the area of solid state cooling, work has been done by T. Takabatake of Hiroshima University in Japan which shows promise for cerium, ytterbium, and europium-based thermoelectric materials.

Biomedical applications such as lanthanide-based nanoprobes for MRI applications are also a prevalent area of research. Highly sensitive, nanoscale probes have many advantages, including the potential to detect changes occurring at cellular and sub-cellular levels. The lanthanides are of particular interest because their unique paramagnetic properties may provide magnetic resonance multi-contrast imaging probes, as investigated by Enzo Terreno at the Molecular Imaging Center at the University of Torino, Italy.

Also on the horizon are cleaner, more efficient methods of extraction and separation of lanthanides and their chemical cousins, the actinides. This is good news for both the rare earth mining industry and the environment. Highlights from the conference include dithiophosphinic acids (DPAH) and phosphonium ionic liquids such as Cyphos®. The DPAHs have been recently developed by Dean R. Peterman et al at the Idaho National Laboratory and can separate americium and europium with a separation factor of ~100,000 at low pH, resulting in a derivative that is stable for long periods when exposed to ambient atmospheric conditions.

As the field of rare earth research grows, so does our understanding of the fascinating electronic, magnetic and optical properties of the once obscure lanthanides. Consequently, the scientific community will come to use these chemically coherent elements as a “17 position dial,” as described by Paul C. Canfield, of the Ames Laboratory and Department of Physics at Iowa State University. With increasing precision, properties such as the size of the unit cell, anisotropy, and band filling can be tuned to suit a wide range of applications.

The World Resource Conference was held in Vancouver on June 15-16. Cambridge House International put on another great show, with a well-attended show. People commented that it may have been a little smaller than past shows, but there was good attendance on Monday (the second day of the show). There was a pretty good “Potash! Get some potash!” buzz in the hallways, but I tried to stay focussed on what was happening in the REE business. New during this conference was the very prominent presence of a Toyota Prius hybrid sitting between two Rare Earth companies (Great Western Minerals and Avalon Ventures):

The great thing about the visual aid was the posters listing how the REEs were used throughout the vehicle. It will be interesting to see if this type of display can help the investing public understand how REEs will affect us all moving forward.

Even if the investing public has not yet caught on — many junior exploration companies have decided that REEs are a hot topic and worth pursuing. There are an increasing number of companies taking a closer look at their projects for Rare Earths, and many are now assaying for the REEs. Undoubtedly, some interesting projects will come out of this, and we look forward to looking at new data as it becomes available!

Next week we will have a person on the ground at the 25th Rare Earth Research Conference in Alabama.

On February 26th, the rare earth community gathered for an entire morning of REE talks during a special session at the annual SME conference in beautiful Salt Lake City (the Great Salt Lake pictured below).

The session was titled “Rare Earths – Mining, Geology, and Metals” and was chaired by James Hedrick of the US Geological Survey. It was well attended. The schedule is listed below (my comments follow each):

Magnetic Refrigeration/Heat Engines
K. Gschneidner and V. Pecharsky; Ames Laboratory and Department of
Materials Science and Engineering, Iowa State University, Ames, IA

Karl Gschneidner gave excellent insight as to what the future may hold in magnetic refrigeration. Gadolinium is the chief rare earth element used in the technology, but he also made it clear that there are lots of materials being researched for this application. On 20 February 1997, magnetic refrigeration was proven to be viable, but we may still be years away from mainstream magnetic refrigeration. At this point 29 machines have been built (that we know of).

Significance of REE-, BA-, and F-RICH Primitive, Ultrapotassic Dikes
in the Southern Mountain Pass District, Mojave Desert, California
G. Haxel; U.S. Geological Survey, Flagstaff, AZ

Gordon Haxel gave a fascinating — and highly technical — presentation on the shonkinites at Mountain Pass. He gave great insight about the different rock types and essential elements of the Mountain Pass geological structures.

Criteria for the Evaluation of REE Deposits on a World Level
A. Mariano1, J. Hedrick2 and C. Cox3; 1Consultant, Carlisle, MA; 2Minerals
Information Team, U.S. Geological Survey, Reston, VA and 3The Anchor
House, Inc.

Anthony N. Mariano spoke about evaluating REE deposits around the world. The key slide he presented discussed the criteria for evaluating REE deposits:

Dr. Mariano went on to give specific examples of critical REE minerals and their deposits.

Thorium and rare earths in the Lemhi Pass region
R. Reed1 and V. Gillerman2; 1Idaho Engineering & Geology, Inc., Boise, ID and Idaho Geological Survey, Boise, ID

Reed and Gillerman provided a fresh look at the Lemhi Pass region of Idaho using new and updated data. They have established that the project has a large amount of thorium and 0.52% REO.

Ion-Absorption Type Lanthanide Deposits
R. Grauch1 and A. Mariano2; 1Mineral Resources Team, US Geological Survey, Denver, CO and 2consultant, Carlisle, MA

Grauch gave the best presentation I have ever heard on the South China ion-absorption clays. He stressed the importance of the clays to the REE industry. He showed a detailed map of the five provinces that have the deposits and explained that there were more than 100 such sites known in China.

Rare Earths Supply: the Alternatives to China
D. Kingsnorth; Industrial Minerals Company of Australia, Perth, WA, Australia

Kingsnorth furnished great statistics for the standing-room only crowd. He predicted a 9-11% growth rate for the industry, and displayed charts showing that China may absorb the entirety of its own production by 2012. He discussed the shortage of dysprosium (Dy), neodymium (Nd), europium (Eu), and terbium (Tb). He also explained that provinces that produce rare earth want to encourage the growth of local manufacturing by having companies come in and build plants there rather than exporting the rare earths.

Geology, Setting and Development of the Hoidas Lake Rare Earth Element Deposit
G. Billingsley, J. Pearson and K. Halpin; Great Western Minerals Group Ltd., Saskatoon, SK, Canada

Billingsley gave an update on progress at the Hoidas Lake project. He detailed some of the new developments in sorting and processing the ore, and updated the value of the oxides at Hoidas. During my trip to Salt Lake I was able to go with Great Western to their new Deep Sands project — I will have more on that soon.

Rare-Earth Operations at Chevron’s Mountain Pass Mine, California
J. Benfield; Chevron Mining Inc., Mountain Pass, CA

Benfield gave a thorough update on recent plans for Mountain Pass. Chevron Mining has been training new managers and is gearing up for a three phase start-up. They hope to be in full operation by 2012. They are also actively researching new technologies to use rare earths.

It was a wide-ranging conference covering distinctly different aspects of the REE industry. The crowd was a good mix of REE legends, new-comers, geologists, engineers, and financiers. I certainly hope that they decide to do this again next year, as it was an excellent forum to learn many aspects of the business and get to mingle with some very knowledgeable people.

Over 100 delegates enjoyed two days of presentations and networking in Hong Kong on November 4-6. Representatives hailed from all corners of the globe and there were presentations from the UK, China, Japan, Australia, Canada, the US, and Russia.

Roskill opened the conference with an excellent description of the history of the Rare Earth market (Roskill has just released a 310-page document detailing the REE industry which is now available for purchase). They provided much in the way of perspective — even with today’s high prices, we are not yet approaching some stratospheric highs from the past. Also, it was made clear that the REE ratios in the ground do not reflect what the current market needs — described as “The poor hand that nature has dealt REE”. The question of whether current reserves are economic was also entertained. In addition, Roskill provided the most up-to-date projections in the industry, with demand projected to be at 185,000t by 2012. There will a significant shortfall in supply (approximately 50,000t) that will most likely have to come from markets outside China.

Balance was a key concept that was emphasized throughout the conference. There is the possibility that 250,000t of REE may have to be produced in order to provide the 185,000t of elements needed by the market by 2012. This is a reflection of the distribution of Rare Earths coming out of the ground. Also key is that China is becoming the key consumer as well as producer in the business. We were reminded that the REE market was flat from 2001-2004. If there is an economic downturn, how will the REE industry fare?

The view from the Shangri-La Hotel, where the Conference was held:

The environment also played a role in the conference. Although mining issues were certainly discussed, most environmental discussions revolved around the eco-solutions that REE provide. Hybrid cars, auto catalysts, motors used in wind power generation, compact fluorescent bulbs, and lighter materials all use REEs in one form or another.

Several Russian projects were put forward as possibilities for future supply. But, as many of the world projects, they are often in isolated locations that will require significant infrastructure and investment. However, Russia does seem to have some projects with very high REO percentages.

A South African project (which came as a surprise to many conference participants) was also mentioned.

Molycorp presented the details of “Project Phoenix”, which entails the restarting of the Mountain Pass mine in California. The separation plant at Mountain Pass was previously closed in 1998, and the mine placed on standby in 2002. There is hope that this past giant of the industry will take up part of the impending REE supply gap by 2012. Apparently all of the critical permits are in place, and they intend to resume mining in 2010/2011, with full operation in 2012. When fully operational, Molycorp may generate 17,500-20,000t per year from Mountain Pass.

Other mining companies that presented were Lynas Corporation, Great Western Minerals, and Arafura Resources. Lynas spoke briefly about Kangankunde as well as their Crown Polymetallic deposit, Great Western gave some information about their new Utah project, and Arafura explained the current status of Nolans Bore.

Hong Kong Harbor panorama:

There were several presenters of interest from China. We were made aware that Sichuan province (a significant REE mining area in China) is making efforts in three areas of its mining operations: environmental protection, safety, and consolidating mining rights (such as shutting down small secret mining operations). Also, they informed the attendees that they have been told to recommence mining operations immediately by Beijing — as they had ceased production for months. They now have until the remainder of the year (!) to make their quota of 21,000t or risk having their quota for 2008 reduced. Those picks and shovels better start shredding some rock in Sichuan!

Presenters from China also made it clear that Bayan Obo, the largest Rare Earth mine in the world (providing around 50% of world REE), is primarily an iron mine. The operators of the mine are much more concerned with the iron output, and because of this may shift production to a different (lower REE) location within the mining operation. Also, it was pointed out that only 10% of REEs are recovered from the current mining process — because of this the tailings are being researched as a secondary supply of REEs for the future.

As presented by Rhodia, the main drivers of the REE industry are auto catalysis, phosphors, magnets and glass polishing.

As a whole, the Conference was extremely worthwhile, and many of the industry’s most significant players were there. Kudos to Roskill and Metal Events for a fine Conference!

The Cambridge House Toronto Resource Investment show was held October 21-22. Rare earths were mentioned in at least two different speeches, and were represented by two companies: Avalon Ventures and Great Western Minerals. I was able to spend time with both companies, and it is clear that activity is picking up in the sector.

Don Bubar of Avalon Ventures holding a piece of fergusonite from drill core on the Lake Zone at Thor Lake:

Ron Malashewski, Jim Engdahl, Gary Billingsley, and Gord Dent of Great Western Minerals:

Overall, the conference had good attendance, but perhaps not as much buzz as would be expected with the recent high prices in many of the commodities represented.

Several properties have been purchased by public REE companies in the past few months, and we will be watching closely to monitor and report progress.

I hope to have an extensive update posted on November 9th.

I am just finishing up my short stay here in Hong Kong for Metal-Pages Conference on the Minor Metals and Rare Earths. The setting provided wonderful contrast — the five star Langham Place Hotel set in Mongkok, the most densely populated place on earth:

160 delegates attended the Conference, and there was much to learn from specialists in each the metals represented, including:  rhenium, cobalt, cadmium, selenium, bismuth, antimony, germanium, gallium, indium, tantalum, lithium, silicon, arsenic, magnesium, niobium, tungsten, and the rare earths

It was especially compelling to see how many of these minor metals are used in applications side by side with the rare earth elements (REE). Indeed, several slides by the indium expert helped me to understand for the first time how REE phosphors work in LCD displays — after hearing the LCD structures described by several world experts, it was great to see it in a graphic form.

There were a variety of speakers covering REE — from China, Australia, Canada, and Japan — and the content was excellent. It was intriguing that even the experts can have widely differing views on the marketplace.

One of the key issues for the REE marketplace is the search for supply sources outside of China. Even the Chinese seem to welcome other producers as it will offer them an opportunity to slow the depletion of their resources, reduce environmental impact, and gain greater control of their REE industry. Hope is being placed on new potential sources of material. Mentioned in various presentations were Mountain Pass, Mount Weld, Hoidas Lake, Thor Lake, and Nolans Bore. Also discussed briefly in Q&A sessions was Lynas Corporation’s recent purchase of the Kangankunde rare earth project in Malawi.

Dudley Kingsnorth, of Industrial Minerals Company of Australia, provided an exceptional presentation of the current REE market and forecasts for the year 2012. He stated that the REE market may reach $2 billion and that total demand for REEs may reach 180,000-190,000 tonnes by 2012. Also included in his assessment of the market was the fact that there would need to be at least 40,000 tonnes of new production to meet demand. The entire industry is looking to the projects mentioned above to achieve stability of supply.

One easy conclusion to take away from this Conference is that many of what are considered “minor” metals play major roles throughout high technology. For many of the metals, one or two applications may drive the entire market, leaving them open to violent swings in pricing based on small shifts in usage or speculation. However, demand for highly specialized technologies has increased exponentially, and the demand for the metals that deliver those capabilities will continue to intensify.

Special thanks to Metal-Pages (www.metal-pages.com) for hosting a brilliant Conference, and to Mr. Kingsnorth, who allowed me to quote him on the above statistics.