Mineral Trade War Looms In East Asia

The Senkaku/Diaoyu Islands dispute
is a continuing source of tension
between Japan and China.

NEW SOUTH WALES, AUSTRALIA (THE AUSTRALIAN)--Due to the recent flare-up of a territory dispute between China and Japan, China is reportedly planning to halt all rare earth sales to Japan. Japanese companies are scrambling to find alternate sources, which shows in recent deals with companies like Lynas Corp and Alkane Resources. Unfortunately these sources have lower concentrations of  heavy rare earths such as dysprosium and neodymium that Japanese companies require to make everything from wind turbines to handheld electronics. In light of China's recent attempts to corner the global gold market, experts are also keeping watch on gold prices. Source: Rare earths a victim of Japan-China islands spat (Reliability: Medium)

Comment: China enacted a similar rare earth embargo on Japan in 2010, causing the price of some rare metals to more than triple. Two years later but still with few alternate sources for the heavy rare earth metals, Japan again faces potential shortages. Alkane Resources' Dubbo Project does contain heavy rare earths, but since Japanese companies will be required to process the metals in Japan it will almost certainly take a few years to develop before it significantly affects global prices.

Rare Earth Recycling Activity In France

BRUSSELS (REUTERS)-Solvay an international chemical group committed to sustainable development is opening two rare earth recycling units in France. Solvay has developed a process for recovering rare earths contained in end-of-life equipment such as low-energy light bulbs, batteries and magnets.
The project was first launched in 2007, it required two years of research and development followed by two years of industrialization studies and on site selection. The investment of the project was approved in 2011. Solvay decided to focus on low-energy light bulbs because the recovery channel already existed. Light bulbs contain six different rare earths (lanthanum, cerium, terbium, yttrium, europium, and gadolinium). Solvay can recycle the light bulb while preserving 100 percent of its functional properties.

The process begins when used light bulbs are collected, sorted, and processed by specialized companies. These companies recycle their different components (glass, metals, plastics, mercury). The luminescent powders are shipped to Solvay's facility in Saint-Fons (Rhone-Alpes, France) where the rare earth concentrate is extracted. Than it is shipped to La Rochelle (Charente Maritime, France) where the rare earths are separated. Once the rare earths are separated, they are reformulated into luminescent precursors that will be reused in the manufacturing of new lamps.

Solvay has developed a large number of innovations used in flat screens, low-energy light bulbs, automotive pollution control, and high precision opticals. Solvay is headquartered in Brussels, it employs about 31,000 people in 55 countries and generates about USD 16.4 billion in net sales in 2011. Source: Solvay Launches Its Rare Earth Recycling Activity In France (Reliability: Medium)

Comment: Solvay is aiming to become a major player in the recycling of rare earths. Global demand for rare earths is growing at more than 6 percent per year. This makes the elements a strategic raw material.

China Cuts Rare Earths Mining Permits

China has about 30 percent of the world
supplies of rare earths, but accounts for
more than 90 percent of production

BEIJING (ASSOCIATE PRESS)-In a new move to tighten control over rare earths, China's Ministry of Land and Resources has decided to cut the number of mining permits by 40 percent from 113 to 67. This announcement comes amid tensions between Beijing and Tokyo over control of a group of uninhabited islands in the East China Sea. The last time tensions over the islands flared in 2010, Beijing temporarily suspended rare earths shipments to Japanese buyers.There is no indication whether Japan might be affected by the latest change. The restrictions are especially sensitive at a time when governments are trying to boost exports to reduce unemployment. China also limited the number of companies permitted to export rare earths.

Beijing has alarmed global manufactures when it restricted production exports, while it was trying to build up its own processing industry to capture profits that flow to U.S., Japanese and European companies. China's trading partners have said that quotas and taxes push up rare earths prices abroad, giving buyers in China an unfair advantage. Source: China Cuts Rare Earths Mining Permits (Reliability: High)

Comment: Beijing's restrictions have prompted producers to announce plans to reopen or develop mines in California, Canada, India, Russia, and Malaysia.

Due To China's REM Dominance, U.S. Businesses Highly LIkely To Push For Alternative Sources Of Rare Earths In The Next Three To Five Years

Robert F. Kennedy, Jr. and CRS CEO, John Yob
on Creative Recycling's E-Scrap Processing System

Executive Summary:
Due to the expanding use of rare earth minerals (REM) in U.S. industry, is highly likely that improved sustainability and availability measures need to be implemented. Because REM are 100 percent imported, it would be prudent for the United States to reopen its mining operations for use in, among other areas, manufacturing of high technology, alternative energy, and defense applications.  It is also advisable to invest in research to find substitutes and sustainability measures for REM since they are a finite resource.

Discussion:
Environmental and policy factors in the U.S. have allowed China to maintain a stranglehold on the REM mining industry. In June of 2010, the Rare Earth Supply Technology Resources Transformation (RESTART) Act was introduced to promote domestic rare earth production. However, the National Mining Association stated that although the United States has $6.2 trillion dollars of mineral resources, it has the slowest permitting processes in the world for new mines, taking from seven to ten years. Recently, the Metal Service Center Institute suggested that simplifying and reducing taxes, less strict regulations that still protect the environment, and improved energy policy would likely improve the availability of REM from domestic mining. According to Forbes, North America is finally waking up to the consequence of China’s REM monopoly and has invested money and resources to domestic mining. Additionally, a new and steady source of domestic REM mining would likely revive the U.S. manufacturing sector, adding jobs while reducing dependence on China.

Currently, REMs are used in conjunction with many other scarce elements to create everything from glass/lcd (indium and erbium; lanthanum and gallium), to light-emitting phosphors (terbium and indium; terbium and gold; terbium and niobium; terbium and lithium; lutetium and indium), to fine wire for electrical conductors (lanthanum and tungsten; lanthanum and gold), to wavelength amplifiers for fiber optics (lanthanum and gallium; terbium and tantalum; erbium and germanium; lutetium and germanium), to permanent magnets (terbium and vanadium; terbium and cobalt; samarium and cobalt). Clean energy industries employ REMs as catalysts for cleaning diesel emissions (lanthanum and thorium) and in (lanthanum, beryllium and indium).

The United States Geologic Survey (USGS) is conducting national mineral resource assessments, but these studies are time consuming and expensive. Several North American ventures have begun extracting and processing REM, including Orbite Aluminae and Molycorp. In addition to current mining operations, the need to find substitutions and sustainability measures is likely critical to short-term REM independence. Creative Recycling Systems, Inc. and GreenRock Rare Earth Recovery Corporation announced a joint venture, and will be recycling rare earth minerals found in consumer electronics, magnets and batteries. REMs are suitable for recycling because they do not degrade with use, and the elements are actually found in higher concentrations in used products than from original ores. The growth of the sustainability market will likely lessen China’s stranglehold on the REM market.

Analytic Confidence:
The analytic confidence for this estimate is medium. Source reliability is high and sources did corroborate. The analysts’ expertise is medium and the analyst worked in a team. Subject complexity is high and the time available for the task was adequate. Structured analytic methods were not used.

Methods And Processes:
Our plan for completing this assignment was to utilize Google Docs to create the SFAR and as a collaborative tool, using the comments and chat functions. In addition, we would telephone each other if further discussions were needed. We planned to use Zotero for accessing research and saving new resources. Finally, we would publish the document on the Strategic Minerals blog using Blogger.

Google Docs worked well for collaborating and compiling the document. Our initial idea for the SFAR did not hold up once research began so we had to work through how to change our focus. We were able to define a new process using Gmail and Google Docs. From there, we worked independently writing the document while collaborating on the final version.

Authors:
Karen Omniewski, email, Google+, Twitter
Leslie Guelcher, email, Google+, Twitter

Future Rare Earth Processing Plants Likely to Trigger Public Protests In Concerned Countries Due To Health And Environmental Concerns; Companies Likely To Decrease Their Dependence On China

Executive Summary:
While rare earth mining and processing companies like Australian Lynas and US Molicorp tend to decrease their dependence on Chinese resources, they are likely to face multiple challenges.  Costs are highly likely to be one of the decisive factors for the location of rare earth processing plants. However, the public opinion’s safety concerns are likely to remain a major  challenge for rare earth companies. Moreover, social media, in countries with significant Internet access and government controlled news sources, is likely to remain one of the most effective tools for public campaigns.

Discussion:
Lynas, an Australian based company, received a temporary operating license for the world’s biggest rare earth processing facility in Malaysia. Production will begin in October 2012. Molycorp recently reopened its rare earth mine in Mountain Pass, California which was closed down in 2002 because of low-cost Chinese production. It is believed that the increased activity of Lynas and Molycorp in the production of light rare-earth elements will weaken world market prices due to the growth in supply. Lynas will likely face the following challenges: health and safety concerns for locals, renewing the temporary license and activists trying to shut plant down after Malaysia’s elections.

Protesters at the Lynas’ office in Australia

While Lynas’ Mount Weld mine  is located in Western Australia, the company established its processing plant in Malaysia. According to Lynas, the main reason for this move was Malaysia’s lower costs. As the mining related costs are highly likely to be higher in Australia than in China, Lynas had to decrease its rare earth processing costs to remain competitive in the world market.
Malaysian activist are geared up to blockade the ore shipments from Australia once it has been mined and to demonstrate one of the biggest examples of civil obedience in the nation. This has been sparked by major health and safety concerns for the locals. Mitsubishi mined rare earths in the 80’s in Malaysia’s Perak State and it is thought that they were responsible for birth defects and and leukemia among residents. Malaysia’s Prime Minister, Najib Razak, has said that the plant is “factually and scientifically safe”.
It is likely that health risk related concerns about rare earth processing plants will be one of the key agendas for future plants all over the world.
The example of Malaysia shows the role of  social media where the ruling political parties have a tight grip on traditional news sources but they were unable to handle social media so average Malaysians were able to carry out a huge protest against Lynas’ rare earth processing plant.  While Lynas ultimately received the temporary operating licence from Malaysian authorities, the country’s Facebook and Twitter users were able to postpone the licence grant, causing financial damages to the company. Nevertheless, Lynas’ underestimation of the role of social media also contributed to the protesters’ success.

Analytic Confidence:
Analytic confidence for this assessment is medium. Source reliabilities range from medium to high, sources were corroborated, analysts had low expertise and worked in a team. The subject is highly complex and the time available for the task was adequate.

Methods And Processes:
Using Gmail - our group shared contact information amongst ourselves. This included e-mail address, phone numbers, twitter handles and google plus information. That way, we had multiple methods of communication. We used google docs to create, share and work on our SFAR and called each other to coordinate our next steps. We then used google hangouts whilst simultaneously working in google docs to write our SFAR. We then independently brushed up and refined our work before submitting to the Blogger platform.
The use of these collaborative tools was essential as we have very different schedules. The ability to work on things separately was useful but the ability to work simultaneously without being in the same room was essential. The combination of google docs and hangout were perfect for our needs and allowed us to work without any communication delays that we would have found with e-mail or texting. I found the screen share function of google hangouts particularly useful for sharing pictures that I thought we could insert into the final product.

Authors:
Dean Atkins - deanatkins88@gmail.com
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