Huge Rare Earth Deposits Found In Pacific: Report

Kaori Kaneko PlanetArk 4 Jul 11;

Vast deposits of rare earth minerals have been discovered on the seabed of the Pacific Ocean amounting to 1,000 times those on land, media reported on Monday citing a study by Japanese researchers.

The deposits are estimated to amount to 100 billion metric tons, the Nikkei business daily said.

They are believed to lie at a depth of 3,500 to 6,000 meters and cover an area of over 11 million square meters, the reports said.

China, which produces 97 percent of global rare earth supplies, has been tightening trade in the strategic metal, which is used in high-tech electronics, magnets and batteries, causing concerns globally about supply and triggering jumps in prices.

The study by researchers from the University of Tokyo and the Japan Agency for Marine-Earth Science and Technology is to be published on Monday in the online edition of the British science magazine Nature Geoscience, the reports said.

Japan's imports of rare earths from China fell 3 percent in May from April, the first month-on-month drop in three months, as the price of the metal surged, Japan's finance ministry said last month.

Demand could pick up later in the year as Japan continues to recover from the March 11 earthquake.

(Editing by Michael Watson)

Japan finds rare earths in Pacific seabed
BBC News 4 Jul 11;

Japanese researchers say they have discovered vast deposits of rare earth minerals, used in many hi-tech appliances, in the seabed.

The geologists estimate that there are about a 100bn tons of the rare elements in the mud of the Pacific Ocean floor.

At present, China produces 97% of the world's rare earth metals.

Analysts say the Pacific discovery could challenge China's dominance, if recovering the minerals from the seabed proves commercially viable.

The British journal Nature Geoscience reported that a team of scientists led by Yasuhiro Kato, an associate professor of earth science at the University of Tokyo, found the minerals in sea mud at 78 locations.

"The deposits have a heavy concentration of rare earths. Just one square kilometre (0.4 square mile) of deposits will be able to provide one-fifth of the current global annual consumption," said Yasuhiro Kato, an associate professor of earth science at the University of Tokyo.

The minerals were found at depths of 3,500 to 6,000 metres (11,500-20,000 ft) below the ocean surface.
Environmental fears

One-third of the sites yielded rich contents of rare earths and the metal yttrium, Mr Kato said.

The deposits are in international waters east and west of Hawaii, and east of Tahiti in French Polynesia.

Mr Kato estimated that rare earths contained in the deposits amounted to 80 to 100 billion tonnes.

The US Geological Survey has estimated that global reserves are just 110 million tonnes, found mainly in China, Russia and other former Soviet countries, and the United States.

China's apparent monopoly of rare earth production enabled it to restrain supply last year during a territorial dispute with Japan.

Japan has since sought new sources of the rare earth minerals.

The Malaysian government is considering whether to allow the construction of an Australian-financed project to mine rare earths, in the face of local opposition focused on the fear of radioactive waste.

The number of firms seeking licences to dig through the Pacific Ocean floor is growing rapidly.

The listed mining company Nautilus has the first licence to mine the floor of the Bismarck and Solomon oceans around Papua New Guinea.

It will be recovering what is called seafloor massive sulphide, for its copper and gold content.

The prospect of deep sea mining for precious metals - and the damage that could do to marine ecosystems - is worrying environmentalists.

Underwater Rare Earths Likely A Pipe Dream
Julie Gordon PlanetArk 7 Jul 11;

An underwater bonanza of rare earth deposits discovered by Japanese scientists poses little threat to miners already developing major rare earth projects on solid ground.

Companies such as Molycorp, Lynas and Avalon Rare Metals may rest assured that developing the offshore bounty could take decades and cost billions, making it little more than a pipe dream, analysts say.

"'Desperado', that's the first word that comes to mind," said Jacob Securities analyst Luisa Moreno. "It makes for some nice headlines, but I don't think it would really be feasible to do this."

The discovery of the vast deposits, located on the floor of the Pacific Ocean, 3,500 to 6,000 meters (11,500 to 20,000 feet) below sea level, marks the latest bid by the Japanese to secure their own supply of rare earths, which are critical ingredients in the production of high tech products.

Prices for rare earth metals have skyrocketed over the last year as China, producer of some 97 percent of the global supply, has repeatedly clamped down on exports.

Dysprosium, which is used to make magnets for hybrid cars and smartphones, has soared to $3,600 a kilogram, up from $300 a kg a year ago, while neodymium, also used in magnets, is hovering at about $450 a kg, up from $45 late last year.

Outside China, Japan is the largest consumer of the group of 17 metals, and the breakneck price jumps have hit it hard. The country's demand for rare earths is expected to shrink by as much as 30 percent in 2011 as companies cut usage, sources told Reuters.

"Obviously they are very frustrated and very desperate for alternatives," Moreno said.

She noted that the Japanese have been experimenting with rare earth recycling, and are also looking to invest in rare earth exploration projects around the world.

"They want to be independent from China," she said. "These materials are really, really critical for their economy."

PUMP AND SEPARATE

With some 80 billion to 100 billion tonnes of contained rare earths, the underwater deposits outlined by Japan are certainly larger than any deposits found on solid ground -- but the feasibility of harvesting the metals from sea sludge is less clear.

According to Japanese scientists, it is simply a matter of pumping up the material from the ocean floor and using acid to extract the rare earths from the mud.

But analysts aren't so sure.

They point out that rare earths are notoriously tricky to process on a commercial level, and that development of the deposits, located miles underneath the sea, would be costly.

"The technology you would need, with the pressure and the corrosive factors that are there," said Dahlman Rose analyst Anthony Young. "I think this one falls into the camp of something that is less likely to ever be developed."

Certainly there are mining companies that see value in the ocean floor.

Canada's Nautilus Minerals plans to develop an underwater copper project off the coast of Papua New Guinea, while the diamond industry has been mining off the Namibian shoreline for years.

But with hundreds of companies exploring and developing rare earth deposits on solid ground, analysts say the value of mining the metals underwater remains unclear.

"The cost of undersea mining, necessarily, is going to be high," said Byron Capital Markets analyst Jon Hykawy. "The value of the mined products must therefore be high."

"Rare earths have become pricier, but they are by no means pushing the levels of the prices of really rare materials such as gold."

BETTER BETS

Chinese state media reported on Wednesday that the country is planning to reform its export of rare earths based in part on World Trade Organization rules, a move that could loosen the supply crunch.

Still, analysts say there is a clear need to develop mines outside China, and the top pick for many is Molycorp, which plans to start up its Mountain Pass mine in California next year, ramping up to output of 40,000 tonnes a year by late 2013.

Rival Lynas, which owns the Mount Weld mine in Australia, plans to start up production by the end of the year, hitting 22,000 tonnes annually in 2013.

Junior miners such as Avalon, Rare Element Resources and Great Western Minerals are all clamoring to be next.

With global demand at about 130,000 tonnes in 2010 and expected to grow rapidly over the next five years, Molycorp and Lynas together can produce about a third of the world's need.

If Japan develops the deep sea deposits, which a government source said could come into production within five to 10 years, it also would be a huge source of supply.

"Just one square kilometer (0.4 square mile) of deposits will be able to provide one-fifth of the current global annual consumption," said Yasuhiro Kato, an associate professor of earth science at the University of Tokyo.

Still, rare earth producers and explorers are not fazed by the possibility of future competition from offshore mines.

"It's ridiculous to think you'd be able to dig anything up and haul it up from those kinds of depths," said an executive at a Canadian-listed rare earth company, who declined to speak on the record because of the sensitivity of the issue.

"I'll wait for the giant squid and the prehistoric monsters that will come out of the bottom of the sea first before we see any rare earths."

(Editing by Peter Galloway and Jeffrey Hodgson)