New North American Rare Earth Production Could Help Toyota Save GM 18 comments
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The Japanese press is reporting that Toyota (TM) is studying the idea of licensing its current (full) hybrid power train to collapsing General Motors (GM). I'm sure that this supposition is true, but would such a move be possible?
As the supply situation for the critical rare earth metals, lanthanum, neodymium, praseodymium, dysprosium, and terbium stands today, with all of them coming only from China, the answer is an emphatic "No!" The proven, durable, reliable, long lived nickel metal hydride (NiMH) batteries used by Toyota and manufactured in-house by Toyota depend critically for their operation on the above named metals as do the brushless DC electric drive motors also used by Toyota to construct the Prius hybrid and the Toyota and Lexus hybrids it makes today. There would be only one way for new supplies of the critical rare earth metals to be generated, but it would take a political act of courage by the Obama administration.
Toyota would like to make and sell more hybrids using the Prius power train. GM could easily meet the new fuel economy rules if it could make large numbers of cars using the Toyota Prius power train. The need for very large numbers of vehicles is both the solution to GM's problem and the problem itself for Toyota.
Today, in May 2009, essentially all of the world's lanthanum, neodymium, praseodymium, dysprosium, and terbium come from the People's Republic of China. These rare earths are growing in demand for products made in and for the Chinese home market. China itself was facing a shortfall of rare earth metals that was expected to occur in 2011-12. Recently Chinese companies bought two Australian miners, Lynas and Arafura, both of which were about to enter operations to produce, and in the case of Lynas, refine, large quantities of rare earths. These acquisitions have given the Chinese a breather on their own shortfall of rare earths, pushing the date for such an event into the period of the five year plan after the next.
It is very unlikely that China would agree to provide new supplies of rare earths to Toyota before satisfying her own domestic demand.
This is probably why Toyota scaled back its announcement of its own increased production of nickel metal hydride batteries and Prius-type power trains earlier this year. It is rumored that Toyota planned last March to announce that after it had reached its previously announced target for NiMH batteries and Prius-type power trains of 1,000,000 of each a year by 2012 it would attempt to raise that goal to 2-3 million units a year by 2014. No such announcement was made, it is said, because Toyota realized that its plans were limited by its inability to guaranty its supply of the critical rare earth metals.
Toyota could therefore help itself if it offered to license the NiMH based technology to GM in return for the US government cutting through the red tape, and perhaps investing ARRA funds directly, to get Molycorp's Mountain Pass rare earth mine reopened and ramped up to speed and getting, itself, Toyota, a share of the critical rare earths produced there for its own hybrid production in payment.
Simultaneously, although on a longer time line than for Molycorp, Toyota and the US Government could look into getting Thorium Energy's large Idaho and Montana rare earth deposits into production as well as those of Avalon Rare Metals and Great Western Minerals group in Canada. Next in line for development would be the Quebec deposits of Quest Uranium and the Greenland deposits of Canadian International Minerals.
It is obvious that if the US and the Canadian governments wanted to keep GM in business and drive fuel efficicency they could both sponsor development of the rare earth deposits that North America has as a green development initiative.
If the US Congress and the Canadian Parliament would open the way with enabling legislation for rare earth mining, the fuel efficiency problem could be solved right now, or at least by 2015, with existing proven technology.
Is there enough political courage in North America to actually solve a problem with existing technology rather than just talk about it and fund pie-in-the-sky in order to put it off for the next guy by looking concerned and involved?
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Cobalt is used in NiMH and Li batteries.
Toyota is using Neodynium in their PM electric motors. Cobalt-Samarium is another possibility but it is more expensive.
Thank you, and be aware that more detailed quantification of natural resources, reserves, production capacities, and present and future production capabilities are coming soon to an Internet site near your fingertips. My new feature," Jack Lifton's Corner," will appear shortly on kaiserbottomfish.com, as a free part of an otherwise subscription only excellent newsletter on Canadian mining stocks. The theme of Jack Lifton's Corner is natural resource production limitations on specific technologies.
The development of mass uses for the technology metals, lanthanum and neodymium is very recent and so the existing uses are not obsolescent, much less obsolete. Therefore in order to increase the production of NiMH batteries and wind generators, for example, it is necessary to increase the total production of both of these, never found alone, rare earth metals, so that some of the new production may be dedicated to increasing the production of those devices. The problem is not just the rate of increase but the limitations on that rate of increase. These factors will entirely determine how many NiMH batteries and how many wind generators can be built. This fact based on quantitative reasoning-David Hume, are you listening?-is the only fact that matters. Politicians and activists can influence only the reaching of the limit of production capacity. That capacity will be an easily determined number based on the actions of nature long ago as measured by the best and brightest of every generation who choose to study nature rather than try to control it.
NiMH batteries will be useful but marginal in the electrification of motor vehicles, as perhaps lithium ion batteries may turn out to be, but the key to the mass electrification of motor vehciles in the next few generations is the lead based battery.
Thus, endeth the lesson.
Inquiring minds really should inquire more!
Lynas Corp is 51% owned by a Chinese government company. In there recent conference call, the head director of Lynas stated emphatically that Lynas would sell globally and not just to China. The government owned co-owner is basically out to make a profit, not horde. The chinese gov. co-owner are major share holders, and so are looking out for the best interest of the shareholders. The head director of Lynas Corp also has the deciding/tie-breaking vote. Please expose any flaws in my thinking in the above, but thats the impression I got from the conference call.
From an investment stand point, whats a better rare earth company to buy shares in than Lynas Corp?
Thanks for the excellent article.
In my opinion the answer to your question, "From an investment stand point, whats a better rare earth company to buy shares in than Lynas Corp?" is Avalon Rare Metals.
Jack Lifton
Thank you for the response.
It varies a lot from what prediction you read, but there could be a pretty big shortage of many of the rare earths as early as next year - or as late as 2020.
RECYCLING. From existing installations. Since the mentioned Nd applications use large amounts in well defined parts as batteries, electric engines or generators, it is very easy to install a performing recycling scheme. A first mover will start in Germany soon: NEOCYCLE / neocycle.de.
Best regards
Manfred
There are no "performing" rare earths mines as of yet in industrialized countries. I would say that in the long term you should look at Avalon Rare Metals in Canada and for the near term Molycorp's Mountain Pass in California.
I would like to find out more about NEOCYCLE.
Best regards,
Jack Lifton
Thanks.
www.trendslate.com/200.../