1.
Rare earth elements:
Global market overview
JAMES SEAN DICKSON FGS

2.
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3.
Industrial Minerals
 Magazine founded in 1967 as a spin-off from Metal Bulletin with a non-
metallic minerals focus
 2009: Online news service launched at www.indmin.com
 Industrial Minerals Events
 Pricing for industrial minerals
 Premium, high-precision graphite and fluorspar pricing
 Rare earth industry news and analysis
 Follow us: @indmin, @jdickson_indmin, @lsyrett, @lizgyeke etc.

4.
Rare earth elements
= Industrial Minerals pricing

5.
LREE vs HREE
Light rare earths (LREE)*
 Scandium (Sc)
 Yttrium (Y)
 Lanthanum (La)
 Cerium (Ce)
 Praseodymium (Pr)
 Neodymium (Nd)
 Promethium (Pm)
 Samarium (Sm)
Heavy rare earths (HREE)*
 Europium (Eu)
 Gadolinium (Gd)
 Terbium (Tb)
 Dysprosium (Dy)
 Holmium (Ho)
 Erbium (Er)
 Thulium (Tm)
 Ytterbium (Yb)
 Lutetium (Lu)
Bold = decreed “critical” by the US Department of Energy in the “Critical Materials Strategy 2010” report. This
designation is given by policy makers and commercially minded developers and is not a chemical subgroup.
*As referred to by
industry. The sciences
focus on electron
configuration as the
light-heavy defining
characteristic.

6.
Uses
 High-technology applications
 Polishing powders
 Fluorescent lighting
 Lighter flints
 Arc lighting
 Data storage devices
 Lantern mantles
 Catalytic converters
 Magnets
Ferrofluid on glass,
resting on a high-
strength rare earth
magnet (Gregory F
Maxwell, Wikimedia)

7.
Source rocks
Major sources
 Carbonatites
 Ion adsorption clays
 Monazite hosted in heavy mineral
sand deposits
Smaller or potential sources
 By-product of phosphate fertiliser
production
 By-product of uranium processing
 By-product of alumina red mud
processing
 Peralkaline igneous rocks
 Pegmatites
 Monazite ± apatite veins

8.
Reserves vs production
Reserves, tonnes (USGS)Mine production, tonnes (USGS)
Proportion of REE, less Y,
contributed by producing
countries
in 2015 (Gambogi, 2015a).
Global distribution of
REE resources in
2014, excluding Y
(Gambogi, 2015a).

9.
Chinese dominance
Rare earth production during the last half of the 20th century and early 21st
century (BMacZero, Wikimedia).
 China has dominated production
since the 1990s
 Mountain Pass the majority supplier
until that period
 Low labour costs and lax
environmental standards allowed
dominance
 Not thought to be related to
resource abundance or particularly
advantageous deposit properties

10.
Boom and bust
Boom
 Diplomatic dispute between China and
Japan results in temporary export ban to
major consumer
 In addition, export quota were reduced
 Inexperienced investors enter sector
 Prices rose in some cases by multiple
thousands of percent
 Cerium, for example, rose in price by
2400% between June 2010 and August
2011 from $6/kg to $149.5/kg
Bust
 Consumers substitute rare earth
alternatives
 New production comes online in the
US and Australia
 Illegal miners ramp up production in
China
 WTO rules against Chinese
“protectionism”
 Prices fell back by up to 98%

11.
Power of language
 Totemic language used by
inexperienced investors
 US defence industry often said to be
at China’s mercy concerning rare
earth supply
 Others (e.g. Tim Worstall) argue that
the monopoly was broken as soon as it
became a concern to the world,
therefore it is not a problem
“The Middle East has oil.
China has rare earths.”
– Deng Xiaoping, 1992

12.
Prices
1
10
100
1,000
10,000
Pricesin$/kg(Log(10))
Rare earth oxide prices, minimum 99%, FOB, China, $/kg, bulk
Cerium Low
Cerium High
Dysprosium Low
Dysprosium High
Europium Low
Europium High
Lanthanum Low
Lanthanum High
Neodymium Low
Neodymium High
Praseodymium Low
Praseodymium High
Samarium Low
Samarium High

13.
Oversupply
 Deposits typically biased towards LREE
 Illegal mining
 Molycorp and Lynas Corp. enter
production
 High prices increase output
 High prices cause demand
destruction
 WTO ruling removes export restrictions
The grade of in situ REO at Lynas’s Mount Weld Duncan
and Lanthanide deposits, and Molycorp’s Mountain
Pass mine. From Technology Metals Research (2015).

14.
Element specific issues
 Europium phosphors traditionally used
to add warmth to fluorescent lighting
tubes and for red in CRT televisions
 Europium phosphors likely to be
phased out by LED lighting
 LCD/OLED/plasma televisions
 Substantial demand destruction could
see prices soften further in the future
 Other metals face potential
headwinds (cerium, dysprosium)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
03/01/2011 03/01/2012 03/01/2013 03/01/2014 03/01/2015
$/kg
Europium oxide, minimum 99%, FOB, China, $/kg, Bulk
Low High

15.
Case for development
 HREE market conditions more positive
than LREE market conditions
 Rare earth permanent magnet
demand projected to increase
(electric vehicles, wind power etc.)
 Chinese reforms starting to have an
effect(?)
Electric vehicle companies like Tesla are driving
interest in permanent magnets (raneko, Flickr).

16.
Chinese reforms
Positive for development
 Consolidation will result in six approved
rare earths miners in China
 Illegal mining crackdown
 Export taxes and quota replaced with
resource taxes and production quota
(partially WTO mandated)
 More stringent environmental
standards (raising costs)
Negative for development
 Industry may become more opaque
via professionalisation of Chinese
interests, yielding less data and
information
 Large grants given to Baotou and
Ganzhou to develop high-technology,
high-return products

17.
The West
Molycorp
 Declared bankruptcy in June 2015
 Mountain Pass rare earths mine held in
“care and maintenance” mode as of
late October
 Debts stand at $1.9bn as of early
November
 Plans to write-down debts or split into
saleable business units
Lynas Corp.
 Marginally more favourable rare earth
distribution in Mount Weld than
Mountain Pass
 Smaller (but still substantial) debts
 Starting to generate positive free cash
flow
 Recently met requirements to reduce
lending interest rates

18.
Barriers to entry
 Low prices
 Processing complexity and costs
 Supply chain complexity
 Investor wariness
 Demand destruction
 Chinese reforms
There is a metaphorical wall lining off rare earths juniors from
the production side of the sector (Jakub Halun, Wikimedia).

19.
Looking ahead
 LREE production-based market entry no longer viable
 HREE markets are stronger with a greater ability to absorb fresh supply
 Interest in deposits with high proportions of magnet-utilised rare earths is
increasing
 Innovative processing technologies are largely unproven but could
change industry dynamics substantially

20.
HREE approach
Wolverine deposit (Browns Range) rare
earth distribution
Praseodymium Lanthanum Neodymium
Cerium Europium Lutecium
Thulium Terbium Holmium
Samarium Ytterbium Erbium
Gadolinium Dysprosium Yttrium
Mount Weld Central Lanthanide Deposit
rare earth distribution
Praseodymium Lanthanum Neodymium
Cerium Europium Lutecium
Thulium Terbium Holmium
Samarium Ytterbium Erbium
Gadolinium Dysprosium Yttrium
Rare earth distributions
at the Wolverine deposit
of Northern Minerals’
Browns Range project
(Northern Minerals).
Rare earth distributions at
the Central Lanthanide
Deposit of Lynas Corp’s
Mount Weld mine
(Technology Metals
Research).

21.
Magnet approach
“Everybody talks about 'lights’ and
'heavies’ - but what really matters when
it comes to rare earths is magnetics.”
- Ian Bamborough, Spectrum Rare Earths
“It’s all about the magnet metals.”
- Peak Resources
The proportional value of REO consumed by various industries from 2011-2014
(Industrial Minerals Company of Australia, 2015). The permanent magnet sector
is, proportionally, increasing in importance on a total consumption value basis.

22.
Processing approach
 Early removal of cerium and lanthanum
 Molecular recognition technology (Ucore
Rare Metals)
 Continuous ion exchange/chromatography
improvements (Texas Rare Earth Resources)
 Heap leaching (Texas Rare Earth Resources)
 Free flow electrophoresis (Geomega
Resources)
 Offtake with chemical companies (e.g.
Tantalus Rare Earths, Rare Earth Salts)
Rare earths separation is complex
and costly (Arafura Resources).