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Jack Lifton
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Jack Lifton is an Independent consultant and commentator, focusing on the market fundamentals and future end use trends of the rare metals. He specializes in the sourcing of nonferrous strategic metals and on due diligence studies of businesses in that space. His work includes exploration,... More
My company:
Technology Metals Research
My blog:
The Jack Lifton Report
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  • Rare Earth Production and Supply Issues: The First Steps Towards Global Resource Re-Distribution?
    All of the apocalyptic predictions about what will happen to both US military security and its civilian economy if China cuts off the export of the rare earth elements, in the production of which  China currently has a monopoly, are masking an even more important dilemma. What will happen to China if it cannot produce or obtain not only sufficient rare earth elements to maintain its rate of domestic growth?

    The rare earth supply "crisis' can and will be solved when there is sufficient production of heavy rare earths outside of China to resolve the impending shortage that the Chinese perceive as a serious threat to the massive growth that they have planned primarily for their their domestic green technology industry, among others. 

    The recent hubbub about reduced Chinese export quotas for the rare earth elements seems to not address the point that the quotas may in fact only affect  the export of raw materials and not the rare earth elements contained in finished or semi-finished goods. If it is just the raw materials forms (separated and purified chemical compounds) the export of which are being reduced then it may not matter so much at all, because China has been reducing its export of ALL such raw materials since the beginning of the 21st century when it openly decided to require that Chinese raw materials not be exported unless as much value as possible had been added in China first. This was a program to create jobs in China and to bring new technologies and manufacturers to China in search of secure supplies of raw materials. It worked and seems to have simply become state policy.

    I have been saying for some time that the rare earth elements supply issue is just the tip of a rare metals supply issue that will grow to monumental proportions in this decade if China's domestic economy continues to grow as a consumption driven economy. China is already far and away the all time largest producer in history of steel; it today produces some 50% of the world's raw steel. This has resolved the issue of supplying the necessary structural metal to advance China to a world class industrial power.

    Now it is the time for China to begin producing or acquiring all of the technology metals, such as the rare earths, so all of those buildings can be electrified, the roads can be filled with high tech vehicles, and the people can have cell phones, flat screen television, and personal computers.

    To the one billion of us in the Americas, Europe, and Japan who already live in the age of technology we must now try to add one and a third billion additional Chinese, and to do this, apparently, in just another generation. Even assuming that non-Chinese technology utilization grows at only a small rate, if at all, from where are we going to get the resources of minerals, energy, and water to more than double the production of technology metals?  The answer is that we will not be able to do it. The world will now move towards higher and higher prices for technology metals. This and the geographic and geological distribution of metals, minerals, energy, and water may well lead to a world of have and have not nations. It may well be that geology becomes destiny and those that do not produce their domestic resources may wind up ultimately only being financially able to be suppliers to the others. I am not talking only of African nations. I am speaking also of the United States.

    Without ad hominem attacks on me or on my patriotism tell me please how we avoid America's economic decline without now and immediately producing and conserving our own resources and without going out into the world to find resources to sustain our standard of living and quality of life?

    japan and Korea have already begun to do just that in order to survive as industrial nations. Have we decided not to continue as one?

    Disclosure: none
    Aug 16 10:32 PM | Link | 4 Comments
  • Chinalco steps up drive for rare earths: Ominous News for Non Chinese Rare Earth Juniors, but Perhaps, Not for All of Them
    An article in this evening's Beijing based "People's Daily" freely available on the Internet states that:

    "Chinalco has initiated discussions with the Guangxi State-owned Assets Supervision and Administration Commission (SASAC) to develop rare earth mines with local miners, and also participate in the processing projects, said the source on condition of anonymity."

    For the almost total number of non-Chinese rare earth wannabe miners who failed to bother to show up this week in Beijing for the 6th Annual International Conference on Rare Earth Development and Application & China Rare Earth Summit 2010 this will be devasting news to their business models.

    With the exception of the higher atomic numbered "heavy rare earths" China likely has more than enough rare earth reserves to satisfy even its growing domestic needs indefinitiely. What has been holding up the progress of China's rare earth mining sector is a combination of historical environmental mismanagement that has now led the government to curtail the activities of the exisitng mining operations pending a vast clean up and a need to consolidate to take advantage of economiees of scale and to eliminate illegal mining and smuggling.

    The People's Daily article also says that:

    "Industry sources said Inner Mongolia-based Baotou Steel Rare Earth High-Tech Co has led rare earth consolidation in northern China, while Jiangxi Copper Corp and Ganzhou Rare Earth Mineral Industry Co will take up the mantle in Sichuan and Jiangxi."

    So now China will have just three, or at most four, rare earth miners, and each one will be a subsidiary of a massive commodity metal producer/refiner with all of the mining and refining and fabricating skills that go along with that status to say nothing of management skills and access to capital.

    I think we need to look now only for non-Chinese junior miners, who have the heavy rare earths in commercially significant quantities, as long term investments. I believe that in the near term there will be a large and growing Chinese/Japanese/Korean market for lower atomic numbered rare earths such as neodymium and lanthanum for rare earth permanent magnets and nickel metal hydride batteries, but this market will be supplied ultimately from the massive Chinese resources now to be developed or expanded by the iron, copper, and aluminum enterprises within China.

    There is still going to be a growing demand for the heavy rare earths and these will be supplied by non-Chinese miners unless, that is, the Chinese investment community snaps them up too.

     

     



    Disclosure: I own Great Western Minerals Group stock
    Aug 05 6:43 AM | Link | 5 Comments
  • A First Report from the 6th International Conference on Rare Earth Development and Application & China Rare Earth Summit 2010
    I am in Beijing where I am attending and have spoken at the Chinese Society of Rare Earths now regular annual conference for 2010.I was honored to be one of only three American guest speakers. The other two were America's most well known academic experts on rare earths, Professor Karl Geschneider of the Ames Laboratory at the Iowa State University and Professor William J. Evans of the University of California, Irvine. 

    The conference has 300 attendees who are a comprehensive group representing the academic, business, and governmental sectors of the Chinese rare earth research (academic and business), development, mining, refining, and end use manufacturing industries.

    I was asked to speak about "The American Perspective of the Rare Earth Supply Issue." My powerpoint presentation and a commentary will be posted shortly on the web site, Technology Metals Research, www.techmetalsresearch.com, which I co-edit with Dr. Gareth Hatch.

    Although most of the nearly 100 speakers in the 6 technical tracks and most of the 222 papers listed on the program were highly technical there were interspersed among them some that were purely descriptive of mines, processes, and imprtant sectors dependent on the rare earth metals such as permanent magnets, batteries, phosphors, wind energy generation, and other clean-tech/green-tech applications.

    My Australian colleagues, Dudley Kingsnorth, of IMCOA and Judith Chegwidden of Roskill Information Services both were also invited guest speakers and Ms Chegwidden was the moderator of the session of the introductory session at which I spoke. I beieve that they will post their talks on their resepctive web sites soon.

    I am here in China to find out what the Chinese rare earth industry is doing and where it is going. I have a scientific background, and I was once a researcher myself. i also worked in product development with the rare earths for phosphors and batteries, so I was interested in and able to understand most, if not all, of many of the technical papers I heard. But my biggest surprises came from the survey papers on clean-tech/green-tech applications of the rare earths.

    It is obvious from the vantage of the rare earths' sector in China that China is simply racing ahead of the rest of the world in volume production as well as development of state-of-the-art clean tech and green tech products.

    For example it was pointed out that China built and installed 13 gigawatts of wind turbine electric generating capacity last year using rare earth permanent magnets for efficiency and low maintenance. The astounding prediction was made that by 2020 China will install 330 gigawatts more of wind power each 1.5 megawatts of which will require one metric ton of neodymium iron boron magnet alloy, which if it contains 34% of neodymium, would mean that the Chinese wind power industry would need 70,000 tons of neodymium, approximately 3 1/2 times the 2008 production of that metal, all as new added material, between now and 2018-19.

    I plan to write much more on this topic during the next few weeks, but I believe that the trend is clear. China will be the driver for, and the home of, the most demand in the world for the rare earth metals from now on.

    There wasn't much talk about Molycorp in China other than to hope that if it gets into production Chinese customers will have an opportunity to buy its products. The only non-Chinese rare earth mining venture present was Great Western Minerals Group, (GWG.V) of Canada. Its chairman gave a talk on his "mine to market" strategy, and he told me he was there both because he was invited and in order to continue negotiations for a strategic alliance with a Chinese refiner on an African project the goal of which is to supply GW's UK magnet alloy plant, Less Common Metals, with feedstock metals for its operations from GW's South African venture at Steenkampskraal.

    Japanese companies and academics were well represented and there were even French and Russian miners and refiners. 

    I was disappointed that there were so few Americans and as for the American media I saw only NPR's Marketplace and the New York Times' Asia correspondent although only the NPR reporter interveiwed me.

    If the rare earth supply issue is so important to America's security why then do so few Americans and almost no American media come to the world's premier rare earth informational event. It is most likely because China is the center of the world rare earth industry in all of its aspects.

    The Chinese and Japanese magnet industries both need heavy rare earths. They may even need light, imported,non-Chinese, rare earths sometime before 2015, but I think it is clear that after 2015 they will both  need heavy rare earths from outside of China.. Japan, by contrast, will need both types of rare earths from the outside by 2015 if Chinese demand should exceed or meet its domestic supply capability by then, which is probable, so that China no longer is willinmg to export rare earths..

    If all roads lead to Rome then certainly the home of all metals is now China.

     


    Disclosure: I own 25,000 shares of GWG.V
    Aug 04 10:45 AM | Link | Comment!
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