Tag: Dysprosium

Dysprosium the Rare Earth Metal of the Month, as Price Index Holds Steady

Here’s What Happened

  • The Rare Earths MMI held steady for the month of May at a value of 19.
  • That makes two straight months at 19 for this sub-index, which has slowly crept up over the past quarter and now stands at its highest since August 2015 — back when the Dow had its worst month in 5 years.
  • Several Chinese rare earths price points fell over the month, with increases from neodymium oxide, europium oxide and dysprosium oxide doing their part to keep the ship steady overall.

What’s Going On in the Background?

  • When was the last time you heard the term “stalking horse bidder?” Turns out someone loved Molycorp and its Mountain Pass mine in California, the only source of rare earths production in this hemisphere, enough to buy it. As MetalMiner reported, ERP Strategic Minerals, LLC, part of the ERP Group of companies, has agreed to purchase the salient assets and surface property rights.
  • As leading REE analyst Jack Lifton commented on our story, it would essentially be cheaper to build a new plant in Tanzania rather than reboot existing operations at Mountain Pass. (Check out the story and the comment thread here.)
  • As for rare earths end-use markets, the clean energy and other high-tech applications that rely on REEs aren’t going anywhere anytime soon.

What Metal Buyers Should Look Out For

  • According to this InvestorIntel article, buyers may need to keep a closer eye on dysprosium, used in high-tech industrial magnets, since Northern Minerals Ltd is well on its way to starting the largest dysprosium production operation outside China.

Key Price Movers and Shakers

Rare Earths Demand Destruction Will Continue, But Rebound by 2020

As any good rare earths buyer knows, China produces more than 85% of the global supply of rare earths and the country is also the largest consumer.
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What if China was to become a net rare earths importer? A recent report by Adamas Intelligence, a rare metal research firm says that China will, eventually, become just that.

The report reiterates how substitution and replacement have hurt demand over the last six years. It says 30,000 metric tons of annual rare earth oxide demand were lost due end-users’ growing concerns over supply security. On top of that more than 20,000 mt were lost as a result of the ongoing phase out of mature technologies such as fluorescent lamps, some nickel-based batteries, and hard disk drives used in PCs.
This isn’t news to anyone following our Rare Earths MMI. It’s been flat for the last three years and has remained steady at 17 for the seventh straight month.
However, they will eventually recover. According to Adamas, following a lengthy and painful adjustment, the rare earths market will return to strong global demand growth for a number of rare earth elements including neodymium, praseodymium, dysprosium, and lanthanum by 2020. The resulting rise in price will help “sustain the profitability and growth of today’s dominant producers, and incentivize continued investment in exploration and resource development globally”
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Rare earths demand will boom from 2020 onwards as growth rates of top end-use categories such as electric vehicles, wind turbines and other high-tech applications accelerate. One of Adamas’ key takeaways is that as China’s insatiable demand for rare earth elements continues to grow over the next decade, China’s domestic production will struggle to keep up in all scenarios, leading the nation to become a net importer of certain rare earths at the expense of the rest of the world’s supply security. In fact, by 2025 China’s domestic demand for neodymium oxide for permanent magnets alone, Adamas believes, will be poised to exceed total global production of neodymium oxide by 9,000 mt.
So, even if the market looks essentially flat for the next nine years, the promise of renewed rare earths demand is still there.

China is Cracking Down on Rare Earths Production

The Chinese government is attempting to support domestic businesses by shoring up rare earths market conditions.

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This includes stepped up enforcement of environmental rules at rare-earth metal plants and crackdowns on illegal mining and smuggling.

Rare-Earths_Chart_December-2016_FNL

Beijing carried out a series of spot inspections on environmental measures at factories last summer. Teams of experts tested wastewater and examined pollution-reduction measures at rare-earths smelting and separation plants. Operations at facilities that did not meet standards were suspended.

Those inspections covered a total of eight provinces and regions, such as Inner Mongolia, Heilongjiang and Jiangsu.

Japan is still wary of Chinese production due to a 2011 unofficial boycott of selling raw rare earths to the islands by Chinese producers. So much so that the Japanese have taken an interest in keeping Australian rare earths miner Lynas Corp. alive and helped it restructure its debts last month.

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The Rare Earths MMI did not move for the sixth consecutive month, showing just how much the market has stabilized since the last China-Japan rare earths dust up.

Correction: A previous version of this post referenced a patent expiration this month for neodymium and cobalt motors. That patent expired in 2011 and was later rejected outright. We regret the error.

Rare Earths MMI: Japanese Investors Save Lynas Corp.

Two weeks ago, Japanese lenders and a hedge fund struck a deal to save Australia’s Lynas Corp., the only major rare earths producer outside China, from collapse. In doing so, they cut its interest costs and gave Lynas nearly four years breathing room to pay off its debt.

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State-owned Japan Oil, Gas and Metals National Corp. (JOGMEC) and Sojitz Corp. did so to ensure a supply of rare earths from outside China, the world’s biggest producer of the elements. Japan’s interest is understandable. It’s the nation that Chinese producers unceremoniously boycotted in 2011 back when rare earths prices were flying high. Even though that’s not the case today, Japanese manufacturers have no interest in ever being dependent on China’s rare earths industry again. After the collapse of Molycorp, JOGMEC even agreed to slash the interest on its loan to Lynas to 2.5% from 6%.

Rare-Earths_Chart_November-2016_FNL

Lynas will not have to make any fixed repayments on the $203 million it owes to Sojitz and JOGMEC until 2020. It previously faced staged repayments up to 2018.

Our Rare Earths MMI held at 17 for the fourth straight month, the textbook example of a stagnant market with flat demand and more than enough supply.

The one bright spot in the sub-index continues to be the permanent magnets used in electric motors for wind turbines and other products. These elements include neodymium and samarium.

Research and Markets recently published its “Permanent Rare Earth Magnets Market – Drivers, Opportunities, Trends & Forecasts: 2015-2022” report. It said that the global permanent rare earth magnets market is expected to grow at a CAGR of 13.2% during the forecast period 2016-2022 to reach $41.41 billion by 2022.

For Lynas, and the companies that have invested in it, this market offers hope of salvation but we would exercise caution as always. China is attempting to consolidate its rare earths industry the same way it is attempting to do so with steel. The problem is that Beijing still exerts relatively little control over small, provincial mines that fly under the rardar of national mining standards.

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Permanent magnet demand has always been strong but it will need to grow by quite a bit to exhaust current Chinese production and, just like with steel, the consolidation process is slow and sure to be manipulated by the economic growth needs of the People’s Republic.

Rare Earths: No Buyers for Mountain Pass; Canada’s Strange Project

The sole major U.S. rare earths mine will stay safely mothballed even as its former owner, Molycorp Inc., exits chapter 11 bankruptcy freed by the process of the obligations of owning it, likely ending for some time any attempt by a U.S.-based company to locally produce the specialized battery and magnetic elements on a mass scale.

Rare-Earths_Chart_September-2016_FNL

We believe in you, Texas Mineral Resources Corp., but we’re waiting on the results like the rest of the country. Also, we love the new name.

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Molycorp failed to sell its Mountain Pass mine in San Bernardino County, Calif., as part of its bankruptcy case. Molycorp became Neo Performance Materials after it exited bankruptcy and no longer has any connection to the Mountain Pass mine and facility where it shut down production a little more than a year ago.

Paul Harner, the chapter 11 trustee in charge of the mine, warned recently there was no point in continuing a separate bankruptcy for it as there was no money to do anything with the property even if the trustees wanted to.

Zombie Mine Lease

Lexon Insurance Co. offered to lend Mountain Pass’ estate $4.2 million to maintain the mine and continue the search for a buyer. The mine still costs money to keep in a safe condition and California environmental authorities are watching. Until the maintenance fund runs out — or prices change enough to make it able to reopen and don’t take that bet (see below) — Mountain Pass will exist in a state limbo, neither fully closed nor able to be restarted.

The Lahontan Regional Water Quality Control Board, part of California’s network of water safety overseers, said that it least wants to keep the lights on, the gates locked and the pumps running.

Pumps at Mountain Pass confine groundwater contaminated with barium, nitrate, radium and uranium.

Low Prices = Closed Mines

The open-pit mine was the sole U.S. source of rare earths. When rare earths prices were high back in 2011, Molycorp plowed $1.5 billion into the Mountain Pass facility but shut it down last year as prices continued to erode for both light and heavy rare earths. Before declaring bankruptcy, Molycorp vowed to focus its production on its operations in Estonia.

Prices have stayed low for the last three years so it’s no surprise that Molycorp and the bankruptcy court couldn’t find a buyer. Our Rare Earths MMI registered another 17, charting pretty much the same flat course it’s coasted through for the last three years.

China removed export quotas on producers of the magnetic and battery metals at the end of 2014 and — while demand from cell phone, computer and defense manufacturers has remained steady to up ever since — supply of heavy rare earths from China and Australia’s Lynas Corp. has more than filled the gap.

Other nations are still interested in developing their own rare earth resources as no one wants to experience a Japan-style Chinese producer boycott, which actually happened in 2011 when Chinese producers cut off their neighbor with no official statement or explanation why. The boycott ended just as mysteriously as it began, but one thing it did do was inspire major Japanese manufactures such as Honda Motor Corp. to find substitutes for heavy rare earths so they could scale back reliance on their testy neighbor.

Why Didn’t Molycorp Fail Earlier?

Molycorp probably stayed alive longer than it should have due to such sentiment. It even got kid-glove treatment on 20/20 in a last-ditch effort to avoid bankruptcy, one that MetalMiner Co-Founder and Executive Editor Lisa Reisman poked several holes in when it happened. The concern over rare earths was actually a market distortion caused by hype and not a reflection of the actual availability and abundance of the materials.

Canada’s Rare Earth Quest

Yet, in Canada — as with TMRC’s Round Rock, Texas, deposit — exploration is continuing and there is plenty of investor interest in providing manufacturers with a source of yttria, neodymium and dysprosium oxide.

Quest Rare Earth Minerals, a Canadian company, has vision for a mine at Strange Lake, on the Labrador-Quebec border, and it inched a bit closer to reality this month after submitting environmental impact statements to the Canadian government.

The company hopes to mine rare earths there and process them in a facility they will construct very similar to the what Molycorp did at Mountain Pass. Yes, they’re planning to do the exact same thing Molycorp did only with a government that will likely place even more restrictions and market disadvantages on the project than the U.S. federal government slapped on Molycorp. There are caribou where Quest wants to mine, so hold onto your wallets, investors!

Quest President Dirk Naumann, however, acknowledged that the market environment might be a bigger hurdle than any environmental hurdle such as local caribou paths.

“The economy around the globe (as far as) mining and resources is concerned, faces lots of difficulty,” he said.

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If that’s not the understatement of the year, he should also note the difficulty the PARTICULAR rare earths market faces. Being able to produce and refine its own rare earths is a laudable goal for any nation’s government, just as supporting local manufacturing and enough farm capacity to feed all its people in case of a disaster is, but to blindly throw money into an oversupplied market in hopes of prices coming up someday in the future?

That’s just called bad economics. Check out that chart. We usually expert our price curves to, well… curve. It really does all come down to the third rule of acquisition.

Rare Earths Prices Stagnant, But Exploration Continues

In early June, the Chinese government held an auction for nine types of rare-earth metals, but bids came in below the production costs of China’s six major, consolidated suppliers.

Rare-Earths_Chart_July-2016_FNL

This year, China plans to add about 20,000 metric tons to its rare earth stockpiles. The six major suppliers are to keep 5,000 mt at government-designated warehouses and Beijing is to purchase the other 15,000 mt from those same six suppliers.

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Beijing is hoping that the stockpiles will make prices rebound as, except for a few minor increases, rare earths have fallen for the entire year.

Our Rare Earths MMI fell another 6% this month and there is little reason to expect the important metals for batteries and magnets to escape the low range they’ve fluctuated in for the last two years. Dysprosium and neodymium both lost ground this month as demand has faltered for the motors and batteries both are used in. Yet, it wasn’t an entirely lost month for rare earths.

Scandium Exploration

Texas Mineral Resources signed a memorandum of understanding with an unnamed coal company in Pennsylvania to produce scandium and other rare earth byproducts from coal ash and tailings. Initial studies on the coal ash project there suggest modest capital expenditure would be required, along with profitability.

Scandium is used in fuel cells today but its future as an additive in high-strength aluminum is bright. We’ve already written about Airbus‘ experiments with it in both 3D-printing and generative design. If TMR’s scandium from coal ash experiment is successful, its plan to establish a new subsidiary titled Scandium America Corp. with the unnamed Pennsylvania Coal Company.

This won’t affect prices anytime soon. Scandium isn’t even a part of the Rare Earths MMI yet. However, it shows that manufacturing companies are demanding more and rarer metals snd companies are devoting significant resources to providing them.

India Sets Aside Rare Earth Blocs

India is also exploring more rare earths production. The nation recently issued new policy guidelines to encourage more private-sector exploration for the minerals that demarcates a total area of 1,000 square kilometers (386 square miles) where companies can search for rare earths, and introduce auctions for the right to explore for the deposits, according to Balvinder Kumar, the top bureaucrat in the nation’s Ministry of Mines.

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India has one of the world’s bigger reserves of rare earths and Prime Minister Narendra Modi wants to cut the red tape involved with setting up new mines. The region to be earmarked for exploration includes states such as Kerala and Tamil Nadu, according to Kumar, with another 400 square kilometers set aside exclusively for state-run companies to search for uranium and thorium.

Rare Earths MMI: Chinese Producers Stockpile REs Ahead of Consolidation

Stockpiling of rare earths by China’s six largest producers has pushed up prices over the past two months.

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Following the completion of the first stage of a national inventory-filling effort in mid-April, China’s rare earths prices have seen increases almost across the board. This stockpiling comes as China prepares to finalize consolidation of its industry under six large state-owned firms — Chinalco, Northern Rare Earth, Xiamen Tungsten, China Minmetals, Southern Rare Earth and Guangdong Rare Earth — by the end of this month.

Rare-Earths_Chart_June-2016_FNL

It’s a time of both stockpiling and tightening in the People’s Republic, the world’s largest producer, as a nation, of the metals used in batteries, magnets and high-tech is trying to reform both how it mines and how it sells rare earths. As we previously reported, much of the expected consolidation in China was slowed in the first two quarters by the weak market and stimulus measures that gave producers new reasons to overproduce. Now, the Chinese industry is scrambling to consolidate and force the closure of smaller producers.

Tax Reform in China

After July 1, China will expand its reform of resource taxes across the board and base this tax on prices instead of quantity. Authorities believe that a price-based tax would reduce tax burdens on unprofitable resource sectors (such as rare earths) and boost taxes on the more profitable sectors. The expectation is that taxes will then follow the resource-cycle.

Our Rare Earths MMI was up 11% this month, but it was only a 2 point increase, belying how low the level that rare earths have traded in for the last year really is. The price boost can be attributed, almost entirely, to the aforementioned stockpiling.

China’s second quarter commercial stockpiling supposedly ended on May 31. The initiative helped boost prices, but that’s really just a temporary market effect ahead of the expected consolidation. In the long term, the market is still oversupplied and forcing out smaller producers in China really won’t have much of a practical effect.

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Companies such as Mitsubishi are also touting new methods they are researching for rare earth magnet and battery recycling, processes that would be a further threat to primary mining. We advise buyers to approach rare earths with caution as this is one market whose supply still exceeds considerable demand.

Rare Earths MMI: DoD and GAO Squabble Over RE Supply

Remember back in 2010 and 2011 when the federal government lamented that China controls nearly 100% of rare earths production in the world and said the US needs to develop its own rare earths production?

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Back then it was now-bankrupt Molycorp, Inc., that the feds were trying to prop up.

Rare-Earths_Chart_March-2016_FNL

Well, dust off your Ke$ha “Tik Tok” single because 2010 is back in the Rare Earths MMI! Just last month the Government Accountability Office scolded the Pentagon in a wide-ranging report to Congress that both faulted the Defense Department for not coming up with a better approach to RE supply chains and lamented that we’re still dependent on China and others for the critical minerals used in defense applications.

Take That, DoD!

The GAO even dispensed with bureaucrat-ese and got all snippy with DoD, saying the Pentagon had been “generally directed by law since at least 2011 to take actions concerning supply chain vulnerabilities for materials, such as rare earths” and faulting it for, well, not doing anything.

Returning fire, a Pentagon spokesman told Breaking Defense “DoD disagrees with the GAO characterization that DoD has no department-wide approach for critical materials, but in the spirit of continuous improvement, the Department agrees with the recommendations in the GAO report.”

The GAO even said that it had to take it upon itself to define what “critical minerals” are since DoD hadn’t yet done so.

It’s hard to fault DoD, though, for dragging its feet on Rare Earths as the market remains oversupplied and even the most in-demand elements are cruising along with low prices. The Rare Earths MMI fell from a 17 in February to a 16 this month, par for the course for its low price range since 2011.

Why a New Sourcing Strategy?

It’s hard to see GAO’s complaints as anything more than bureaucratic infighting unless, of course, supply becomes seriously disrupted and identified critical elements such as scandium are no longer available for bombers, radar shielding and other military uses.

The candidates who would reap a windfall from new Pentagon supply chains include Texas Rare Earths and other domestic companies that have both supply and a process to extract the tricky minerals. There’d also likely be government funding available for further research into extracting REs from existing coal mines used for energy production. Penn State researchers have said they’ve perfected a process to get dysprosium and other elements out of coal.

Free Download: Compare Prices With The February 2016 MMI Report

But, with REs still in abundant supply out of China and prices low, don’t expect any of these initiatives to take off and ramp up demand with them. REs, it seems, are still waiting for that perfect crisis moment to spur necessity and, eventually, invention and innovation. Right now prices are just too comfortable to get DoD, or other users, to make a new sourcing strategy a priority.

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