Steve Gorman, Reuters 30 Aug 09;
LOS ANGELES (Reuters) - The Prius hybrid automobile is popular for its fuel efficiency, but its electric motor and battery guzzle rare earth metals, a little-known class of elements found in a wide range of gadgets and consumer goods.
That makes Toyota's market-leading gasoline-electric hybrid car and other similar vehicles vulnerable to a supply crunch predicted by experts as China, the world's dominant rare earths producer, limits exports while global demand swells.
Worldwide demand for rare earths, covering 15 entries on the periodic table of elements, is expected to exceed supply by some 40,000 tonnes annually in several years unless major new production sources are developed. One promising U.S. source is a rare earths mine slated to reopen in California by 2012.
Among the rare earths that would be most affected in a shortage is neodymium, the key component of an alloy used to make the high-power, lightweight magnets for electric motors of hybrid cars, such as the Prius, Honda Insight and Ford Focus, as well as in generators for wind turbines.
Close cousins terbium and dysprosium are added in smaller amounts to the alloy to preserve neodymium's magnetic properties at high temperatures. Yet another rare earth metal, lanthanum, is a major ingredient for hybrid car batteries.
Production of both hybrids cars and wind turbines is expected to climb sharply amid the clamor for cleaner transportation and energy alternatives that reduce dependence on fossil fuels blamed for global climate change.
Toyota has 70 percent of the U.S. market for vehicles powered by a combination of an internal-combustion engine and electric motor. The Prius is its No. 1 hybrid seller.
Jack Lifton, an independent commodities consultant and strategic metals expert, calls the Prius "the biggest user of rare earths of any object in the world."
Each electric Prius motor requires 1 kilogram (2.2 lb) of neodymium, and each battery uses 10 to 15 kg (22-33 lb) of lanthanum. That number will nearly double under Toyota's plans to boost the car's fuel economy, he said.
Toyota plans to sell 100,000 Prius cars in the United States alone for 2009, and 180,000 next year. The company forecasts sales of 1 million units per year starting in 2010.
As China's industries begin to consume most of its own rare earth production, Toyota and other companies are seeking to secure reliable reserves for themselves.
Reuters reported last year that Japanese firms are showing strong interest in a Canadian rare earth site under development at Thor Lake in the Northwest Territories.
A Toyota spokeswoman in Los Angeles said the automaker would not comment on its resource development plans. But media accounts and industry blogs have reported recently that Toyota has looked at rare earth possibilities in Canada and Vietnam.
(Editing by Alan Elsner and Mary Milliken)
California mine digs in for "green" gold rush
Steve Gorman, Reuters 31 Aug 09;
LOS ANGELES (Reuters) - The future of wind farms and hybrid cars may well hinge on what happens to a 55-acre (22.3-hectare) hole in the ground at the edge of California's high desert.
The open-pit mine at Mountain Pass, California, holds the world's richest proven reserve of "rare earth" metals, a family of minerals vital to producing the powerful, lightweight magnets used in the engines of Toyota Motor Corp's Prius and other hybrid vehicles as well as generators in wind turbines.
Seeking to replace China as the leading supplier of these scarce materials, Colorado-based Molycorp Minerals LLC plans to reopen its long-idled quarry to resume extracting and refining thousands of tons of rare earth ore in the next few years.
Last month, Molycorp reached a joint venture deal with Arnold Magnetic Technologies Corp. of Rochester, New York, to make "permanent" magnets from rare metals at Mountain Pass.
Backed by hundreds of millions of dollars from equity investors, including Goldman Sachs, Molycorp aims to avert a looming rare-earths supply crunch that threatens to muffle the green-technology boom.
"The world has been looking for an alternative to these rare-earth permanent magnets for over 20 years, and one has not been found," Molycorp chief executive Mark Smith said. "What Molycorp is proposing as a business strategy is to fill that supply chain and go all the way from mining to magnets."
Success hinges on Molycorp's ability to operate the mine and its processing facilities much more efficiently than in the past.
At the peak of its operations two decades ago, the mine produced 20,000 tonnes of rare earth oxides a year, accounting for the entire U.S. supply and about a third of the world's total. Most of the rest came from China.
CHINA FACTOR
But as Chinese production and exports grew through the 1990s, rare earth prices worldwide plunged, undercutting business for Molycorp, then owned by oil company Unocal.
Mountain Pass operations came under further pressure after a 1996 wastewater spill. Mining there ceased in 2002 when Molycorp's old permit expired.
"Most companies that were in the business stopped producing because it wasn't profitable anymore," said James Hedrick, a rare earths specialist for the U.S. Geological Survey.
Refinement of previously extracted ore at Mountain Pass resumed on a small scale in 2007, two years after Unocal was acquired by Chevron Corp. Last year, Molycorp was sold to a group of private investors.
Chinese rare earth production, meanwhile, has swelled to about 97 percent of global supplies, or 139,000 tonnes of refined material in 2008, experts say. Output is expected to reach 160,000 tonnes a year by the middle of the next decade.
But global demand is climbing faster, driven by the clamor for clean energy and clean cars, leading to projections of a 40,000-tonne annual shortfall by 2015.
"We're reaching a crunch point," said Jack Lifton, a commodities analyst and leading authority on rare metals.
Rare earths go into hundreds of gadgets and consumer goods, usually in minuscule amounts. Some products use more.
The electric motor in Toyota's market-leading hybrid car, the Prius, requires 1 kilogram (2.2 lb) of neodymium, the key component in the alloy for permanent magnets. And each Prius battery uses 10 to 15 kg (22-33 lb) of another rare earth, lanthanum, according to Lifton.
"The Prius automobile is the biggest user of rare earths of any object in the world," he said.
CRUNCH POINT
With China seen sharply curtailing its rare earth exports to feed rapid expansion of its own industries, the projected global shortage will only grow more acute.
Looking to meet the challenge is Molycorp, with a new 30-year mining plan given final approval in the summer of 2004 following a 15-year regulatory review.
Smith said his company has since been perfecting an advanced extraction process that will allow Molycorp to nearly double the amount of rare earth metals it can pull from the bastnaesite ore it mines.
"It means I don't have to extract as much ore from the surface pit to have the equivalent amount of material for sale to a customer," he said. "It lowers our costs tremendously."
Plans call for mining to resume at Mountain Pass by 2012, at the rate of about 1,000 tons of ore a day, enough to produce 20,000 tonnes of rare earth oxides for sale each year. Smith said the mine has approval to double that volume in time.
"If we put our facilities into the fully permitted production rates, we could come very close to meeting the needs of most of the rest of the world," he said.
But Molycorp first needs to drain some 95 million gallons (360 million litres) of water that has filled the pit's bottom and remove surface rock covering the ore, a two-year process.
Mountain Pass is considered the world's richest reserve of its kind, with ore deposits averaging a concentration of rare earths above 9 percent. Most deposits around the world outside China report ore grades under 5 percent, Smith said.
It's also the largest outside of China, estimated to hold 20 million to 47 million tonnes of ore. The mine is further blessed with negligible traces of uranium and thorium -- two radioactive elements often found together with rare earths that can make recovery of them more costly.
Mountain Pass, not far from Las Vegas, first opened in the 1940s, when rare earths were mined for use in tracer ammunition for the military and the flints of cigarette lighters.
With the advent of color television in the 1960s, Mountain Pass became the world's only supplier of europium, used to produce red picture tones. By the 1980s, lanthanum, neodymium and other rare earths were being mined for new discoveries in batteries and magnets.
Molycorp is ahead of the game but not alone. A number of companies are seeking to develop rare earth deposits elsewhere, including two promising sites in western Canada and two more in Australia that have attracted Chinese interest.
(Editing by Alan Elsner and Mary Milliken)
China tries to calm unease over rare earths curbs
Reuters 3 Sep 09;
BEIJING – A Chinese official tried to calm unease about curbs on exports of rare earths used in clean energy products and superconductors, saying Thursday that sales will continue but must be limited to reduce damage to China's environment.
China produces nearly all the rare earths used in batteries for hybrid cars, mobile phones, superconductors, lightweight magnets and other high-tech products. Reports of a plan to reduce exports sparked concern about the impact on industry abroad.
Beijing will encourage sales of finished rare earths products but will limit exports of semi-finished goods, said Wang Caifeng, deputy director-general of the materials department of the Ministry of Industry and Information Technology.
Exports of raw ores already is banned, and said that will continue, Wang said at an industry conference.
Wang refused to confirm Chinese news reports that this year's exports will be cut to about 8 percent below 2008 levels and future exports will be capped at similar levels. She said a plan will be be issued later this year.
"China, as a responsible big country, will not go back and will not take the road of closing the door," Wang said.
But she said China has to limit output to protect its environment. She said production of one ton of rare earths produces 2,000 tons of mine tailings.
"China has made a big sacrifices for rare earths extraction," said Wang, who said she has spent her whole 30-year career overseeing the industry. "It has damaged our environmental resources."
Wang spoke at the Minor Metals & Rare Earths 2009 conference, cohosted by China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters and Metal Pages Ltd., a London-based metals trading and information company.
China accounts for 95 percent of global production and about 60 percent of consumption of rare earths, which include such metals as dysprosium, terbium, thulium, lutetium and yttrium, according to the U.S. Geological Survey.
The United States supplied nearly all its rare earths needs from its own mines as recently as 1990, according to the USGS. But it says output plunged after the market was flooded with low-cost ore from China, which has lower labor costs and less-stringent environmental controls.
China wants to develop its industries to process rare earths and create products from them, Wang said.
China banned new wholly foreign-owned processing ventures in 2002 but some French and Japanese companies set up operations before that, Wang said. She said new foreign investors will be required to work through joint-ventures with Chinese partners.
Last year, China exported 10,000 tons of rare earths magnets worth $400 million and 34,600 tons of other rare earths products worth $500 million, according to Wang.
China used 70,000 tons of rare earths in 2008 out of reported total global consumption of 130,000 tons, Wang said. She said she believed global consumption was higher than indicated by the official statistics.
China's demand for rare earths has surged as manufacturers shifted production of mobile phones, computers and other products to Chinese factories.
The United States and European Union have objected to similar Chinese controls on exports of other industrial materials. They filed a World Trade Organization complaint in June accusing Beijing of improperly favoring its industries by limiting exports of nine materials including bauxite and coke in which it is a major supplier.
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Associated Press researcher Bonnie Cao contributed to this article.
