Monday, August 1, 2011
US might become illiquid and insolvent
The pass of US pulbic debt ceiling increase only serves as a temporary pain killer, which cannot reverse the trend that US is becoming illiquid and insolvent.
Monday, July 25, 2011
Gold Price, Run Run!!
My cements:
It looks like gold price surge is a not short-term trend even if it is very hard to forecast how long and how far this round of hike will go. Put all the factors together, which include American economy slump and debt celing, European PIGS syndrome, we can tell gold can serve one of the best hedging tools. In addition to that, the Chinese government will have to buy more gold, perhaps in a significant amount, and the emerging countries have started the precious metal and jewelry buying spree. All those factors can hold up the price of gold until all the uncertainties clear away.
One suggestion to the politicans: please get real and make things work, right away, since the things are not that complex as they look like.
Gold futures climbed to a record $1,624.30 an ounce as U.S. lawmakers failed to reach an agreement on raising the federal debt limit, boosting demand for the metal as a haven investment.
U.S. House Speaker John Boehner plans to press ahead with a two-step debt-limit extension that President Barack Obama has threatened to veto, fueling concern the nation is lurching toward a default as early as Aug. 2. Greece’s credit rating was cut three notches by Moody’s Investors Service. Europe’s debt woes drove gold to all-time highs in euros and pounds last week.
“Gold is feeding off the uncertainty of the debt negotiations,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “Gold is in a ‘can’t lose’ situation with the debt negotiations because regardless of the outcome, the dollar is going to suffer.”
Gold futures for August delivery rose $14.20, or 0.9 percent, to $1,615.70 at 10:40 a.m. on the Comex in New York. The previous record was on July 19.
Republicans and Democrats prepared competing plans for raising the U.S. debt ceiling. Mohamed A. El-Erian, whose Pacific Investment Management Co. runs the world’s biggest bond fund, said the U.S. may lose its AAA debt rating even if lawmakers avoid a default.
Before today, gold rose 13 percent this year, heading for the 11th straight annual gain. Investors boosted holdings in exchange-traded products backed by the metal to a record 2,122.6 metric tons on July 20.
Silver futures for September delivery rose 40.3 cents, or 1 percent, to $40.525 an ounce on the Comex.
Palladium futures for September delivery fell $1, or 0.1 percent, to $805.40 an ounce on the New York Mercantile Exchange. Platinum futures for October delivery dropped 60 cents to $1,797.80 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.
It looks like gold price surge is a not short-term trend even if it is very hard to forecast how long and how far this round of hike will go.
One suggestion to the politicans: please get real and make things work, right away, since the things are not that complex as they look like.
Gold Surges to Record on Haven Demand
http://www.bloomberg.com/news/2011-07-25/gold-surges-to-record-as-u-s-debt-impasse-threatens-default-aaa-rating.htmlQ
By Pham-Duy Nguyen and Nicholas Larkin -
Gold futures climbed to a record $1,624.30 an ounce as U.S. lawmakers failed to reach an agreement on raising the federal debt limit, boosting demand for the metal as a haven investment.
U.S. House Speaker John Boehner plans to press ahead with a two-step debt-limit extension that President Barack Obama has threatened to veto, fueling concern the nation is lurching toward a default as early as Aug. 2. Greece’s credit rating was cut three notches by Moody’s Investors Service. Europe’s debt woes drove gold to all-time highs in euros and pounds last week.
“Gold is feeding off the uncertainty of the debt negotiations,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “Gold is in a ‘can’t lose’ situation with the debt negotiations because regardless of the outcome, the dollar is going to suffer.”
Gold futures for August delivery rose $14.20, or 0.9 percent, to $1,615.70 at 10:40 a.m. on the Comex in New York. The previous record was on July 19.
Republicans and Democrats prepared competing plans for raising the U.S. debt ceiling. Mohamed A. El-Erian, whose Pacific Investment Management Co. runs the world’s biggest bond fund, said the U.S. may lose its AAA debt rating even if lawmakers avoid a default.
Before today, gold rose 13 percent this year, heading for the 11th straight annual gain. Investors boosted holdings in exchange-traded products backed by the metal to a record 2,122.6 metric tons on July 20.
Silver futures for September delivery rose 40.3 cents, or 1 percent, to $40.525 an ounce on the Comex.
Palladium futures for September delivery fell $1, or 0.1 percent, to $805.40 an ounce on the New York Mercantile Exchange. Platinum futures for October delivery dropped 60 cents to $1,797.80 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.
Wednesday, July 20, 2011
Myhrvold: Tech Giants Discover Value of Patents
http://www.bloomberg.com/news/2011-07-20/patents-are-very-valuable-tech-giants-discover-nathan-myhrvold.html
Patents rarely make headlines, but they did this month when Nortel Networks Corp., the defunct Canadian telecommunications giant, auctioned off its patent portfolio and drew an astonishing winning bid of $4.5 billion from a group of companies that includes both Apple Inc. (AAPL) and Microsoft Corp. (MSFT)
The sale marks a watershed in the maturity of intellectual property markets and a dramatic shift in strategy for technology companies. Suddenly these companies are acknowledging that patents are a strategic asset worth billions.
Here’s an inside look at what happened -- and what’s at stake -- and remember, as you read this, that my company buys and licenses high-tech patents.
Most big tech companies inhabit winner-take-most markets, in which any company that gets out in front can develop an enormous lead. This is how Microsoft came to dominate in software, Intel Corp. in processors, Google Inc. (GOOG) in web search, Oracle Corp. in databases, Amazon.com Inc. in web retail, and so on.
As a result, the tech world has seen a series of mad scrambles by companies wanting to be king of the hill. In the late 1980s, the battle was for dominance of spreadsheet and word-processing software. In the late 1990s, it was about e- commerce on the emerging Internet. The latest whatever-it-takes struggle has been over social networks, with enough drama to script a Hollywood movie.
In each case, the recipe for success was to bring to market, at a furious pace, products that incorporate new features. Along the way, inconvenient intellectual property rights were ignored.
In fact, many tech companies forbid their engineers from checking whether their products incorporate others’ patents. The practice amounts to an intellectual property version of “don’t ask, don’t tell.”
As tech giants commercialized ideas that had been pioneered by small companies and merged once-separate technologies into new products, they infringed other people’s patents. Personal computers took over publishing, photo processing, cash handling and a million other functions once performed by other companies’ patented products. Smart phones likewise displaced more specialized devices, such as GPS units and bar-code readers. When the TV commercial says, “There’s an app for that,” the “that” part is sometimes covered by patents the app creator doesn’t own.
The biggest companies, which have always touted their brilliant innovations to justify the billions of dollars in stock options they pay their executives, have been in the odd position of attacking the patent system and publicly deprecating the innovations of others. Patents attempt to create a level playing field, but the last thing an 800-pound gorilla of a company wants is a fair fight. After succeeding in part by stealing other people’s inventions, they decry any inventors who have the temerity to ask for a share of the returns.
In Congress, lobbyists for every major semiconductor, software and Internet-services company worked for seven years to undermine the much-needed patent reform bill and to delay its passage. (The House and Senate each recently passed a version of the bill; they are now working to reconcile the two measures.)
Yet even as that was going on, a growing number of tech companies started to discover that patents might be useful after all. In 2009, Micron Technology, a major computer chipmaker, transferred about 4,500 of its patents to a renowned patent litigator in the hope that he could make some money on them. And in the past two years, Microsoft has sued companies that were using the Linux computer operating system and Android, Google’s mobile-phone platform, to collect on what it viewed as its share of the patent liability that is hidden in a lot of “free” software.
Microsoft and Apple could have sued Google; most of the disputed features are in Android code. Instead, they elected to sue Google’s customers as a way to avoid an all-out war with the search giant -- reminiscent of how, in the Cold War, the U.S. and the Soviet Union used to battle by proxy in places such as Vietnam. Oracle, buoyed by patents it got in its acquisition of Sun Microsystems, was less circumspect; it sued Google directly.
These tussles set the stage for Nortel to put on the block more than 6,000 patents and patent applications, which cover many features of current and future mobile phones, in an auction orchestrated by Lazard Ltd. Analysts at my company and elsewhere in the industry found that the patents were good, but what made them extraordinary wasn’t their quality -- it was simply that they were on the market and hadn’t been widely licensed. Just six months ago, the expected selling price had been $200 million to $400 million -- a lot of money, but still a pittance compared with the prize of being the biggest winner in the smart-phone business.
Many people were surprised that Google stepped forward; it has consistently been one of the most outspoken critics of the patent system, presumably because it faces enormous potential patent liability. Even its basic business model of advertising- supported search was first invented and patented by a company called GoTo.com, which sued Google for infringement in 2002. Google settled the lawsuit shortly before its initial public offering in 2004.
The amount of Google’s offer was unexpected, but the high price made perfect sense. Google has very few of its own patents; with Nortel’s portfolio, it could change the balance of power in the smart-phone industry. It could threaten to countersue any company that attacked Android, or it could even take a page from Apple’s book and go on the attack. Such potent ammunition in the battle for smart-phone supremacy could be worth far more than $900 million.
A third shocker was how Google structured its public bid. Neither I nor anybody I have spoken with can explain what Google was thinking. Had it simply waited for the auction, it easily could have won. Other bidders had much lower expectations and wouldn’t have had the time to get board approval for bids large enough to stay in the game.
Then, as the auction began, Google unveiled one more surprise. Its bids were numbers like $1,902,160,540. That’s a billion times Brun’s constant, which appears in the mathematics of prime numbers. And its successive bids were other mathematical constants, including one for pi billion dollars ($3,141,592,653).
Math geekiness, it turns out, doesn’t guarantee victory. A consortium of six other companies -- Microsoft, Apple, RIM, Sony Ericsson Mobile Communications AB and EMC Corp/Massachusetts -- won with an astounding $4.5 billion bid.
More importantly, this sale validates the notion that patents will be a fundamental tool in the tech industry. They had been moving toward that position for years, but the magnitude of Nortel’s sale shows that they have arrived. Patents virtually define the pharmaceutical and biotech markets, and in the future they could play the same role for tech.
What’s next? The history of mergers and acquisitions suggests one possibility. Once upon a time in the clubby atmosphere of corporate America, hostile takeovers were rare; gentlemen just didn’t do such things. Then, in the 1960s, the hostile takeovers came to be accepted as a legitimate business tool. Similarly, the strategic use of patents now appears to be accepted in the technology industry. If that’s true, then Nortel is just the beginning.
(Nathan Myhrvold, the former chief strategist and chief technology officer at Microsoft and the founder of Intellectual Ventures, is a Bloomberg View columnist. The opinions expressed are his own.)
For more Bloomberg View columns.
To contact the author of this column: Nathan Myhrvold at Nathan.Myhrvold@intven.com.
To contact the editor responsible for this column: Mary Duenwald mduenwald@bloomberg.net
Patents rarely make headlines, but they did this month when Nortel Networks Corp., the defunct Canadian telecommunications giant, auctioned off its patent portfolio and drew an astonishing winning bid of $4.5 billion from a group of companies that includes both Apple Inc. (AAPL) and Microsoft Corp. (MSFT)
The sale marks a watershed in the maturity of intellectual property markets and a dramatic shift in strategy for technology companies. Suddenly these companies are acknowledging that patents are a strategic asset worth billions.
Here’s an inside look at what happened -- and what’s at stake -- and remember, as you read this, that my company buys and licenses high-tech patents.
Most big tech companies inhabit winner-take-most markets, in which any company that gets out in front can develop an enormous lead. This is how Microsoft came to dominate in software, Intel Corp. in processors, Google Inc. (GOOG) in web search, Oracle Corp. in databases, Amazon.com Inc. in web retail, and so on.
As a result, the tech world has seen a series of mad scrambles by companies wanting to be king of the hill. In the late 1980s, the battle was for dominance of spreadsheet and word-processing software. In the late 1990s, it was about e- commerce on the emerging Internet. The latest whatever-it-takes struggle has been over social networks, with enough drama to script a Hollywood movie.
In each case, the recipe for success was to bring to market, at a furious pace, products that incorporate new features. Along the way, inconvenient intellectual property rights were ignored.
Copyrights Are Easy
Yes, copyright was almost religiously enforced. Copyrights are trivial to obtain (just type the “c” in a circle symbol), and software companies see them as essential to restraining piracy, which hurts revenue. Patents are a different story, however. It takes time for engineers to apply for patents and even more time if they diligently respect other people’s patents. So technology companies typically did neither.In fact, many tech companies forbid their engineers from checking whether their products incorporate others’ patents. The practice amounts to an intellectual property version of “don’t ask, don’t tell.”
As tech giants commercialized ideas that had been pioneered by small companies and merged once-separate technologies into new products, they infringed other people’s patents. Personal computers took over publishing, photo processing, cash handling and a million other functions once performed by other companies’ patented products. Smart phones likewise displaced more specialized devices, such as GPS units and bar-code readers. When the TV commercial says, “There’s an app for that,” the “that” part is sometimes covered by patents the app creator doesn’t own.
Patent Vulnerability
Once tech giants got to the top, they realized that their cavalier treatment of patents had left them vulnerable. If you already control 90 percent of the market, your own patent portfolio does little for you. But outside patent owners sometimes show up and ask to be paid. Last month, the U.S. Supreme Court decided that Microsoft, the company I used to work for, must pay almost $300 million to a Toronto-based company called I4i LP, which claimed its patented technology was used in Microsoft Word. All tech companies face this sort of claim, and they’re not happy about it.The biggest companies, which have always touted their brilliant innovations to justify the billions of dollars in stock options they pay their executives, have been in the odd position of attacking the patent system and publicly deprecating the innovations of others. Patents attempt to create a level playing field, but the last thing an 800-pound gorilla of a company wants is a fair fight. After succeeding in part by stealing other people’s inventions, they decry any inventors who have the temerity to ask for a share of the returns.
In Congress, lobbyists for every major semiconductor, software and Internet-services company worked for seven years to undermine the much-needed patent reform bill and to delay its passage. (The House and Senate each recently passed a version of the bill; they are now working to reconcile the two measures.)
Yet even as that was going on, a growing number of tech companies started to discover that patents might be useful after all. In 2009, Micron Technology, a major computer chipmaker, transferred about 4,500 of its patents to a renowned patent litigator in the hope that he could make some money on them. And in the past two years, Microsoft has sued companies that were using the Linux computer operating system and Android, Google’s mobile-phone platform, to collect on what it viewed as its share of the patent liability that is hidden in a lot of “free” software.
Attack by Apple
It isn’t just about the money; these are also strategic moves. Apple, flush with the iPhone’s success but understandably worried that it might wind up becoming the R&D outfit that prototyped ideas that made others rich, has recently sued HTC Corp., Samsung and others. Just last week, the company won a preliminary ruling from the International Trade Commission, which if upheld will prevent HTC from importing smart phones into the U.S., essentially wiping out its business here.Microsoft and Apple could have sued Google; most of the disputed features are in Android code. Instead, they elected to sue Google’s customers as a way to avoid an all-out war with the search giant -- reminiscent of how, in the Cold War, the U.S. and the Soviet Union used to battle by proxy in places such as Vietnam. Oracle, buoyed by patents it got in its acquisition of Sun Microsystems, was less circumspect; it sued Google directly.
These tussles set the stage for Nortel to put on the block more than 6,000 patents and patent applications, which cover many features of current and future mobile phones, in an auction orchestrated by Lazard Ltd. Analysts at my company and elsewhere in the industry found that the patents were good, but what made them extraordinary wasn’t their quality -- it was simply that they were on the market and hadn’t been widely licensed. Just six months ago, the expected selling price had been $200 million to $400 million -- a lot of money, but still a pittance compared with the prize of being the biggest winner in the smart-phone business.
Google Bids
Google then made its move, tendering a public stalking- horse offer of $900 million that sent shock waves through the industry. Even stranger, its offer allowed Lazard to shop the deal for several months.Many people were surprised that Google stepped forward; it has consistently been one of the most outspoken critics of the patent system, presumably because it faces enormous potential patent liability. Even its basic business model of advertising- supported search was first invented and patented by a company called GoTo.com, which sued Google for infringement in 2002. Google settled the lawsuit shortly before its initial public offering in 2004.
The amount of Google’s offer was unexpected, but the high price made perfect sense. Google has very few of its own patents; with Nortel’s portfolio, it could change the balance of power in the smart-phone industry. It could threaten to countersue any company that attacked Android, or it could even take a page from Apple’s book and go on the attack. Such potent ammunition in the battle for smart-phone supremacy could be worth far more than $900 million.
A third shocker was how Google structured its public bid. Neither I nor anybody I have spoken with can explain what Google was thinking. Had it simply waited for the auction, it easily could have won. Other bidders had much lower expectations and wouldn’t have had the time to get board approval for bids large enough to stay in the game.
Schemes and Counterschemes
Instead, the stalking-horse offer set in motion unprecedented scheming and counterscheming among strange bedfellows. Companies that normally fight one another, such as game-console rivals Microsoft and Sony and smart-phone rivals Apple and Research in Motion Ltd., pondered whether they hated the prospect of a patent-powerful Google even more. Investment companies like mine, which had been interested in Nortel’s portfolio for its potential financial return, decided the bidding was too rich for our blood, and dropped out. As the auction neared, rumors flew about who was teaming up with whom and how high the bids would soar.Then, as the auction began, Google unveiled one more surprise. Its bids were numbers like $1,902,160,540. That’s a billion times Brun’s constant, which appears in the mathematics of prime numbers. And its successive bids were other mathematical constants, including one for pi billion dollars ($3,141,592,653).
Math geekiness, it turns out, doesn’t guarantee victory. A consortium of six other companies -- Microsoft, Apple, RIM, Sony Ericsson Mobile Communications AB and EMC Corp/Massachusetts -- won with an astounding $4.5 billion bid.
Google’s Strategy
The result effectively retains the status quo. Google still has no strategic weapon to compensate for the patent liability inherent in Android, so the lawsuits will continue. Some in the industry think Google acted brilliantly; the company is no worse off than it was before, and it cost its competitors $4.5 billion. Others argue that Google was somehow snookered by Lazard into a disastrous strategy that has left its competitors better armed for the fight -- and more than a little angry. You don’t pay $4.5 billion for assets and then let them sit on the shelf.More importantly, this sale validates the notion that patents will be a fundamental tool in the tech industry. They had been moving toward that position for years, but the magnitude of Nortel’s sale shows that they have arrived. Patents virtually define the pharmaceutical and biotech markets, and in the future they could play the same role for tech.
What’s next? The history of mergers and acquisitions suggests one possibility. Once upon a time in the clubby atmosphere of corporate America, hostile takeovers were rare; gentlemen just didn’t do such things. Then, in the 1960s, the hostile takeovers came to be accepted as a legitimate business tool. Similarly, the strategic use of patents now appears to be accepted in the technology industry. If that’s true, then Nortel is just the beginning.
(Nathan Myhrvold, the former chief strategist and chief technology officer at Microsoft and the founder of Intellectual Ventures, is a Bloomberg View columnist. The opinions expressed are his own.)
For more Bloomberg View columns.
To contact the author of this column: Nathan Myhrvold at Nathan.Myhrvold@intven.com.
To contact the editor responsible for this column: Mary Duenwald mduenwald@bloomberg.net
Saturday, December 4, 2010
Rare Earth Metals Not So Rare but Valuable
http://seekingalpha.com/article/103972-rare-earth-metals-not-so-rare-but-valuable
The rare earth metals are, in fact, not that rare.
The most commonly occurring rare earth metals - cerium, lanthanum, neodymium and yttrium - are actually more common in the Earth's crust than lead. And even silver.
While cerium, the most abundant rare earth metal, is more prevalent (60 parts per million (ppm)) than copper, even lutetium (0.5 ppm) and thulium (0.5 ppm), the least abundant, are to be found in the Earth's crust in greater quantities than antimony, bismuth, cadmium and thallium. (The outlier is promethium, which, it appears, is not to be found in the Earth's crust, and which is only used in compound form, of which, to date, some30 have been prepared.)
Abundance of Elements In The Earth's Crust
Note: Abundance (atom fraction) of the chemical elements in Earth's upper continental crust as a function of atomic number.
Many of the elements are classified into (partially overlapping) categories: (1) rock-forming elements (major elements in green field and minor elements in light green field); (2) rare earth elements (lanthanides, La-Lu, and Y; labeled in blue); (3) major industrial metals (global production > ~3x107 kg/year; labeled in bold); (4) precious metals (italic); and (5) the nine rarest "metals" - the six platinum group elements plus Au, Re, and Te (a metalloid).
Source: USGS
So, why are they called the "rare earth" metals? Probably from the uncommon oxide-type minerals, or earths, from which they were originally extracted. The corollary to their abundance is, however, the fact that, to date, their "discovered minable concentrations are less common than for most other ores."
What Are The Rare Earth Metals?
The rare earth metals (aka, REM, rare earth elements [REE] or, sometimes, just rare earths) are a group of 15 chemically similar elements (grouped separately in the periodic table) known as lanthanides. Commercially, the rare earth grouping usually also includes scandium and yttrium, both of which are actually elements above lanthanum in the periodic table.
In more physical terms, these metals range in color from shiny silver to iron gray. As the USGS describes them, they "are typically soft, malleable, ductile and usually reactive, especially at elevated temperatures or when finely divided." At the lower end, cerium has a melting point of 798° C and, at the upper, lutetium has a melting point of 1,663° C.
It will come as no surprise that the unique properties (catalytic, chemical, electrical, metallurgical, nuclear, magnetic and optical) of the REM, and, in particular, both their specificity and versatility, have led to their being used for a wide variety of purposes.
From relative obscurity, they are now important economically, environmentally and technologically.
What Are They Used for?
The range of applications in which they are used is extraordinarily wide, from the everyday (automotive catalysts and petroleum cracking catalysts, flints for lighters, pigments for glass and ceramics and compounds for polishing glass) to the highly specialized (miniature nuclear batteries, lasers repeaters, superconductors and miniature magnets).
The Rare Earths And Some Of Their End Uses
Name | Symbol | Some End Uses |
Cerium | Ce | Catalysts, Ceramics, Glasses, Misch Metal*, Phosphors and Polishing Powders |
Dysprosium‡ | Dy | Ceramics, Phosphors and Nuclear Applications |
Erbium‡ | Er | Ceramics, Glass Dyes, Optical Fibers, Lasers and Nuclear Applications |
Europium‡ | Eu | Phosphors |
Gadolinium‡ | Gd | Ceramics, Glasses, Optical and Magnetic Detection and Medical Image Visualization |
Holmium‡ | Ho | Ceramics, Lasers and Nuclear Applications |
Lanthanum | La | Automotive Catalysts, Ceramics, Glasses, Phosphors and Pigments |
Lutetium‡ | Lu | Single Crystal Scintillators |
Neodymium | Nd | Catalysts, IR Filters, Lasers, Permanent Magnets and Pigments |
Praseodymium | Pr | Ceramics, Glasses and Pigments |
Promethium | Pm | Phosphors and Miniature Nuclear Batteries and Measuring Devices |
Samarium | Sm | Microwave Filters, Nuclear Applications and Permanent Magnets |
Scandium | Sc | Aerospace, Baseball Bats, Nuclear Applications, Lighting and Semiconductors |
Terbium‡ | Tb | Phosphors |
Thulium‡ | Tm | Electron Beam Tubes and Medical Image Visualization |
Ytterbium‡ | Yb | Chemical Industry and Metallurgy |
Yttrium‡ | Y | Capacitors, Phosphors (CRT and Lamp), Radars and Superconductors |
Groups: yttrium and lanthanide (Scandium falls into neither category)
‡ Heavy REM
* Misch Metal is an alloy of rare earth metals used not only for lighter flints, but also, probably more importantly, in purifying steel by removing oxygen and sulfur.
Separately, or as compounds, various rare earth metals are used also in the production of superalloys.
REM are now especially important, and used extensively, in the defense industry. Some of their specific defense applications include: anti-missile defense, aircraft parts, communications systems, electronic countermeasures, jet engines, rockets, underwater mine detection, missile guidance systems and space-based satellite power.
USGS figures for 2006 indicate that the three main uses of REM in the U.S. were: automotive catalytic converters (25%), petroleum refining catalysts (22%) and metallurgical additives and alloys (20%).
Source: USGS
In many of these applications, the REM are used in the form of low-cost compounds. As oxides, they are used extensively in the ceramics and glass industries and, in addition, for various metallurgical uses. Indeed, it has been estimated that only 25% of mined REM-bearing materials are actually processed to extract individual metals.
The REM most commonly used as separated metals are: cerium, europium, gadolinium, neodymium, samarium and terbium.
Rare Earth Metals Supply
From having been a major producer (and consumer) of REM (from the Mountain Pass mine in the Mojave Desert, Calif.) until the mid-80s, the U.S. now no longer mines any REM. The world's major producer is China (particularly from its Bayan Obo mining operation in Inner Mongolia), with considerably lesser amounts coming from Brazil, India and Russia. Since 2000, domestic REM consumption in China (which now accounts for over half of the country's overall REM products) has exceeded that of the U.S.
Global Rare Earth Metal Oxide Production - 1950-2006 (‘000s Tonnes)
Source: Russian Journal of Non-Ferrous Metals (from USGS)
While REM deposits in China and the U.S. are primarily to be found in the mineral bastnäsite (80-90% of all raw materials produced), elsewhere - and in particular in Australia, Brazil, India, Malaysia, South Africa, Sri Lanka and Thailand - they are usually to be found in the mineral monazite. (There are also monazite resources both in China and the U.S.) Mining monazite can, however, be a little tricky, as the ore tends to contain the radioactive elements thorium (see Cobalt: More Than Just Blue) and radium.
In addition, there are also REM-containing ion-absorption ores in the south of China. Importantly, these last contain around 80% of the world's known resources of the less-widespread heavy, yttrium group, metals.
World Mine Production (Tonnes)
Country | 2006 | 2007 |
China | 119,000 | 120,000 |
India | 2,700 | 2,700 |
Brazil | 730 | 730 |
Malaysia | 200 | 200 |
Thailand | - | - |
Australia | - | - |
U.S. | - | - |
Other Countries | NA | NA |
Total (rounded) | 123,000 | 124,000 |
Source: USGS
Although it mines no REM of its own, in 2007, the U.S. remained a major importer, exporter and consumer. From 2003-2006, China accounted for some 94% of its REM-related imports.
While not yet actually recommencing mining operations (for environmental, regulatory and market reasons), toward the end of 2007, Molycorp Inc. (wholly-owned by Chevron) resumed operating its rare earth separation plant at Mountain Pass. The company continues to sell bastnäsite concentrates and REM intermediaries, together with refined products, from its existing mine stocks. Permits to recommence mining are still pending.
Rare Earth Metals Demand
Domestic demand in the U.S., as well as the demand for REM globally, remained strong in 2007, and have continued so in 2008. This has been true both for mixed rare earth compounds and the metals and their alloys. According to the USGS: "The trend is for a continued increase in the use of rare earths in many applications, especially automotive catalytic converters, permanent magnets, and rechargeable batteries."
Forecast Growth Of Rare Earth Metals Usage
Element | Application | Consumption (Tonnes p.a. of REO) | Growth Rate (% p.a) | |
2006 | 2012 | |||
Ce, La, Nd, Pr | Battery Alloy | 17,000 | 43,000 | 17 |
Dy, Nd, Pr, Sm, Tb | Magnets | 20,500 | 42,000 | 13 |
Eu, Tb, Y | Phosphors | 8,500 | 14,000 | 9 |
Ceramics | 5,500 | 9,000 | 9 | |
Others | 8,000 | 13,000 | 8 | |
Ce, Nd, La | Catalysts | 21,500 | 32,000 | 7 |
Ce, La, Pr | Polishing Powder | 14,000 | 21,000 | 7 |
Ce, Er, Gd, La, Nd, Yb | Glass Additives | 13,000 | 14,000 | 1 |
Total | 108,000 | 188,000 | 10 | |
REO = rare earth oxide
Source: Roskill HK Rare Earth Conference, November 2007
The prices of most REM rose in 2007, and with the exception of neodymium and praseodymium (both metal and oxides) and terbium (oxide), the prices of most REM (metals and oxides) have either remained the same, or continued to rise in 2008.
Price - US$/Kg | ||||
Name | Oxide | Metal | ||
End-2007 | End-Oct 2008 | End-2007 | End-Oct 2008 | |
Cerium | 3.60 | 3.80 | 7.10 | 10.50 |
Dysprosium | 94.00 | 118.00 | 125.00 | 153.00 |
Erbium | 35.00 | 35.00 | N/A | N/A |
Europium | 368.00 | 525.00 | 560.00 | 700.00 |
Gadolinium | N/A | N/A | 25.00 | 28.00 |
Lanthanum | 4.60 | 8.00 | 6.00 | 13.00 |
Lutetium | 550.00 | 550.00 | N/A | N/A |
Neodymium | 30.00 | 20.00 | 40.00 | 29.00 |
Praseodymium | 28.00 | 20.00 | 37.00 | 29.00 |
Samarium | 4.40 | 4.40 | 14.00 | 26.00 |
Terbium | 633.00 | 621.00 | 750.00 | 793.00 |
Ytterbium | 55.00 | 55.00 | N/A | N/A |
Yttrium | 12.00 | 12.00 | 29.00 | 42.00 |
Misch Metal (48% Ce) | 6.00 | 8.00 | ||
Misch Metal (25% La) | 12.00 | 14.00 | ||
Source: Tianjiao International
With such strong domestic demand for REM in China, there are now controls on production and exports (tariffs and quotas). And in some places, because of environmental concerns, among other things, there are both mining restrictions and mining quotas.
According to Roskill's 2007 report on the economics of rare earths and yttrium, this has "brought fundamental change to the global industry, taking it from oversupply to demand shortages."
Indeed, in its report, Roskill envisaged that, with demand growth for rare earths forecast at 8-11% per annum, and should China's strict control persist, there will be a significant need for "new non-Chinese capacity in the next 3 to 4 years."
2007 - Supply/Demand Forecast
Source: Roskill
Opportunities In Rare Earths
As with the minor metals, there are no exchanges on which REM are traded. Both the physical metals and their different oxides can, however, be bought from various specialist rare earth companies.
It seems reasonable to assume that there will always be demand for rare earths metals. While there are substitutes, these are usually not as effective. Since no REM are currently mined in the U.S., and Molycorp is a wholly-owned subsidiary of Chevron, no direct investment in any significant U.S. mining operations for these metals is possible. Looking overseas, there are, however, some opportunities for exposure.
India, unfortunately, is out, as all three rare earth production companies are government-owned.
A recent news snippet about the Japanese chemical group Showa Denko(Bloomberg Ticker - SHWDF:US) was of particular interest on two counts. Not only did it state that the company had set up a joint venture to extract dysprosium in Vietnam, but also that it was doing so because it wanted to secure a "stable supply" of rare earth magnetic materials as, currently, it relies on China - where, indeed, it currently has two subsidiaries (Baotou and Ganzhou).
China
If, however, the world's largest REM producer is of interest, then, among the Chinese companies mining REM in Bayan Obo, is the quoted Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co Ltd (Baogang) (Bloomberg Ticker - 600111:CH).
Quoted companies mining REM elsewhere in China include: China Rare Earth Holdings Ltd (Bloomberg Ticker - CREQF:US), Aluminum Corporation of China (aka Chinalco) (Bloomberg Ticker - ACH:US), Neo Material Technologies (Bloomberg Ticker - NEM:CN).
Recently, however, the mines in Sichuan were shut down, and there are strict quotas in places in Fujian, Guangdong, Hunan and Jiangxi, where there has been severe environmental damage.
Australia
In Australia, there are currently a number of rare earth mining projects at various stages of development.
According to an ASX announcement at the beginning of July this year, the "Demonstration Pilot Plant" at Alkane Resources' (Bloomberg Ticker - ALK:AU) Dubbo Zirconia project was set to go 24/7 in late July, and it stated that "(l)aboratory scale testing for recovery of the rare earth elements is scheduled to commence in July."
Arafura Resources (Bloomberg Ticker - AFAFF:US) expects the rare earths processing plant at its Nolans Project in the country's Northern Territory to be in production in 2011.
Based on November 2005 figures, the company compared its Nolans resource with some others around the world.
Source: Arafura Resources Limited
At its Mount Weld project in Western Australia, Lynas Corporation(Bloomberg Ticker - LYSCF:US) completed its first mining "campaign" in May. Based on figures updated in March this year, the company believes its resources at the project now amount to some 12.24 million tonnes at 9.7% rare earth oxide, which will produce some 1,124,000 tonnes of REO.
Canada
In addition to Neo Material Technologies out of Toronto, with its operation in China, there are three other Canadian companies involved, to a greater or lesser extent, in REM in Canada itself.
Avalon Ventures Ltd (Bloomberg Ticker - AVL:CN) has its Thor Lake Project near Yellowknife in Canada's Northwest Territories with, according to the company, "[e]xceptional enrichment in Neodymium & Heavy REE."
VMS Ventures (Bloomberg Ticker - VMS:CN), out of Vancouver, has its Eden Lake Carbonatite Complex in Manitoba, where REM were discovered in 2003.
Great Western Minerals Group (Bloomberg Ticker - GWG:CN), out of Saskatoon in Saskatchewan, has its Hoidas Lake Rare Earth Project which, in the words of the company, "...is North America's most advanced Rare Earth Element (REE) property in development..." and "...has the potential to supply at least 10% of North America's consumption of REE for many years."
Finally, Canada's Rare Element Resources (Bloomberg Ticker - RES:CN), has not only gold on its Bear Lodge, Wyo., property, but also, in its words, "significant high-grade rare-earth elements."
For those interested in looking "downstream," there are a number of REM producers internationally, especially in Japan. In the U.S., however, apart from Chevron's Molycorp, both France's chemical company Rhodia(Bloomberg Ticker - RHA:FP), and WR Grace's (Bloomberg Ticker - GRA:US) Grace Davison division are actively involved in processing rare earths.
Afterwords
First, it has been estimated that current global consumption of REM now accounts for around 70-75% of their total production. This leads one to believe that considerable quantities of mined REO remain, as yet to be processed.
Second, the mineral ore resources currently mined to produce REM contain different groups of metals, not just particular, individual, metals in isolation. So, instead of some of these metals being by-products of other metals, as, say, rhenium is of moly, and moly is of copper, they are essentially "co-products" - mine for one and the others come free.
The corollary to this, however, is that the economics of mining on such a "volume" basis could lead to it just not being viable to mine such ore resources for one or two REM alone, especially if the other metals contained in the REO do not "pay their way." In future, therefore, the composition of a mine's REO resources - as opposed just to the volume of ore it can produce - may well become critical to that mine's economic viability.
Third, even though rare earth metals are classified as critical minerals in the U.S. National Academies' "criticality matrix," the U.S. National Defense Stockpile at present contains none.
Resources
Subscribe to:
Posts (Atom)