RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A....

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RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology Association June 9, 2011 Washington, DC

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Page 1: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the

Buyers, and the Trade Rules

Keith A. Delaney

Executive Director

Rare Earth Industry and Technology Association

June 9, 2011

Washington, DC

Page 2: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

REITA Members (as of May 31, 2011)

© Rare Earth Industry and Technology Association 2011

Industry RE Resource Companies

Academia

Now Molycorp Metals

Page 3: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

Why are we in this predicament?The Scale of Clean Energy DemandApplications Typical Quantity of

RE Oxides per unit

Traditional Markets i.e. disc drives, personal electronic devices, power tools, etc.

Grams

Hybrid and electric vehicles – direct drives and electric assist motors

Kilograms

PMG Wind Turbines Metric Ton

© Rare Earth Industry and Technology Association 2011

Integrated Starter/Generator

Page 4: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

Rest of World Demand1 for REO and the Sources of Supply Increments

2011 - 2015

© Rare Earth Industry and Technology Association 2011

1 Kingsnorth, Dudley, presentation to The Hague Centre for Strategic Studies, January, 2011

Page 5: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

Clean Energy Buyers’ View

For sustained investment in Clean Energy, OEMs must be assured of reliable sources of supply of Rare Earth materials / components / devices at manageable prices

(As long as there is a perceived supply gap, price and availability of REO will continue to remain unstable and problematic to OEM sustained investment)

© Rare Earth Industry and Technology Association 2011

4 MW Offshore Wind Turbine

Chevy Volt

Chevy Volt

Page 6: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

Where Will 2016 – 2020 REO Supply Increments Come From?

© Rare Earth Industry and Technology Association 2011

Light Rare Earth Resources Heavy Rare Earth Resources

Arafura Resources Alkane Resources

Rare Element Resources Avalon Rare Metals

Toyota/Sojitz/Govt. of Vietnam Great Western Minerals Group

Page 7: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

Other High Profile RE Resource Project Companies

© Rare Earth Industry and Technology Association 2011

Heavy Rare Earth Resources

Matamec Resources

Mitsubishi / Neo Material Technologies

Quest Rare Metals

Sumitomo / Kazatomprom

Toyota/Indian Rare Earths JV

Ucore Rare Metals

Page 8: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

RE Project Companies’ Issues

Reliable Supply Manageable Pricing

Lack of accurate demand forecasts – huge error bars.

Limited marketing reach

Cost minimization – variable and fixed

Adequate development funding to accelerate the 5-12 year process to develop and commercialization process

New profitable markets for Ce / La

Enough RE properties in the queue so that ROW production capacity tracks with demand

© Rare Earth Industry and Technology Association 2011

Page 9: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

Reducing New RE Project TimelineProject Management Lesson:

Spend Extra Resources to Save TimeWhile Maintaining Quality

© Rare Earth Industry and Technology Association 2011

Page 10: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

Reducing New RE Project TimelineWhen Resources are Tight

Single Project Companies with limited track records

Credit is tight in general – long payback for these investments is problematic

Technical talent scarcity?

© Rare Earth Industry and Technology Association 2011

Page 11: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

New RE ProjectFunding / Support SourcesLending Markets

Capital Markets

Trading Companies – Sumitomo example

OEMs – Toyota, Sojitz and Mitsubishi

Governments – JOGMEC example© Rare Earth Industry and Technology

Association 2011

Page 12: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

Two Areas Ripe for Global Collaboration - Extending the Life of RE Resources

© Rare Earth Industry and Technology Association 2011

Recycling of end-of-life products: technologies needed / business opportunities / best practices

Manufacturing efficiencies and reduced waste of raw materials at and downstream of RE processers

Page 13: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

The Process Yield Opportunity in the RE Magnet Supply Chain

© Rare Earth Industry and Technology Association 2011

Unit Op 1 Unit Op 2 Unit Op 3 Overall Yield

Chemical Industry Standard

90% 90% 90% 73%

Not Untypical

62% 70% 65% 28%

Page 14: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

What Should OEMs Be Doing?Understand the vulnerabilities within its individual

supply chains. Address vulnerabilities and plan for diversification of supply.

Engage in conversations with RE property developers and the rest of its downstream supply chain.

Agree on means to transparently communicate and protect proprietary forecasts of RE requirements

© Rare Earth Industry and Technology Association 2011

Page 15: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

What Should OEMs Be Doing?

Demonstrate Commercial Commitment LOIs Off-take agreements Loans JVs

(Capital sources prefer to see

“Demand Pull” as the market driver

and not a technology push by

suppliers)

© Rare Earth Industry and Technology Association 2011

Nissan LeafAll-Electric Vehicle

Page 16: RARE EARTHS, AN UPDATE: A Fresh Look at the Suppliers, the Buyers, and the Trade Rules Keith A. Delaney Executive Director Rare Earth Industry and Technology.

Tomorrow’s Technology Today

http://www.reitausa.org


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