Rare Earth Element Industry’s Positive Outlook: 6 Signs to Watch For.

Day 1 of the Asian Metal 2012 International Rare Earth Summit at the W Hotel in San Francisco — among today’s list of speakers is Al Shefsky, President and Director of Pele Mountain Resources Inc. (TSXV: GEM); Peter Cashin, President and CEO of Quest Rare Minerals Ltd. (TSX: QRM) and Diana Bauer, Director of the Office of Economic Analysis at the US Department of Energy. This afternoon Pol Le Roux, Vice President Sales and Marketing of Lynas Corporation Ltd. (ASX: LYC) will also address participants. With all the recent media attention Lynas has been receiving this week I felt Pol kicked off his presentation appropriately with slide 1: Strong Safety Culture. This is in addition to numerous addresses today on the need for global competition and supply, the audience here is resoundingly supportive of the LAMP facility.

Tracy McSheery, CEO of PhaseSpace Inc. spoke about rare earth motors. Founded in 1994, PhaseSpace specializes in optical motion capture, optical tracking and vision. As businessman, engineer and researcher, Tracy has completed projects with University of California – Berkeley, Boeing, FBI, Honda Research, Lockheed Martin, NASA, Sandia National Labs, the US Air Force, Army and Navy among others.

Tomorrow, May 11, 2012, for my opening and welcoming remarks I will discuss the vision behind REE World and our educational initiatives. In listening to today’s speakers, would like to speak about the positive outlook for the rare earth element (REE) industry and why we will see an increase in demand.

Here are 6 strong signs for the rare earth element industry’s positive outlook:

  • With China increasingly tightening the reins on their REE industry, with export quotas and the imposition of value added tax (VAT), the rest of the world is eagerly looking for alternative supply sources of rare earths. That said the rare earth race to production is heating up and for the first time in almost two decades REE production outside of China is imminent. Further, despite ongoing research, to-date we have not uncovered any substitutes for rare earths that match or exceed their inherent and highly coveted properties.
  • Rare earths are needed for almost every electronic device that we use — from our laptops, cell phones, smart phones, flat screen TVs and portable DVD players, their applications in more and more sectors is only increasing. In particular, rare earths in high strength magnets have enabled the miniaturization of these electronic devices and consumer demand for these electronics is also rising. According to the International Data Corporation (IDC) Worldwide Mobile Phone Tracker in 2011 smartphone shipment volumes reached 491.4 million units representing a 61.3% increase from 304.7 million units in 2010. The IDC also anticipates double digit growth in this area for the foreseeable future.
  • The myriad applications for rare earths also seem to be increasing amid the world’s current focus on the green development of technologies. Dysprosium is used in the making of advanced electric motors and battery systems in hybrid propulsion systems. Neodymium is also used as a critical input in the high strength magnets that are found in permanent magnet electric motors. The battery of Toyota’s Prius hybrid vehicle carries about 10 pounds of lanthanum despite being commonly called a nickel-metal hydride battery. Some REE industry experts believe there is not enough lanthanum on the market and a report by JD Power and Associates called, 2011 US Green Automotive Study, foresees a major growth in consumer interest for green cars including hybrids, clean diesel, plug-in hybrids and pure electric cars, predicting a four-fold increase in the sales of green cars by 2016 compared to 2010 figures.
  • Wind turbines represent another area of increasing demand for rare earth elements. On April 9, 2012, the Massachusetts Institute of Technology’s Materials Systems Laboratory released a study indicating that rising demand for clean energy could strain supplies of some rare earths. With the world’s growing population and society’s increasing focus on low-carbon and zero-carbon energy sources the report suggests that a possible bottleneck looms for certain REEs. Wind turbines are one of the fastest growing sources of emission-free electricity which use magnets made from neodymium. A typical wind turbine contains 600 kilograms (about 1,300 pounds) of rare earth elements. The study suggests that dysprosium and neodymium could face serious supply challenges in the years ahead. It further suggests that demand for dysprosium could increase by 2,600% over the next 25 years and that neodymium demand could increase by up to 700%.  
  • Magnetic levitation (maglev) technology is another area in which rare earths play a strategic role. This is a relatively new transportation technology where non-contacting vehicles travel safely at speeds of 250 to 300 miles per hour or faster while being suspended and propelled above a guideway by electromagnetic fields formed by magnets. This technology is currently being used in Japan, Europe and Shanghai. With speed, efficiency and safety these trains are the transportation of the future and without the need for petroleum based fuel they have less environmental impact than other modes of transport.
  • Finally, with their exotic soundings names and being inconspicuously located at the bottom of the periodic table rare earths are no longer a group of 17 obscure elements. If you ever doubted that rare earths have gone mainstream, consider for a moment that the Call of Duty: Black Ops 2 videogame includes a rare earth scenario. This is a real sign that investors, industry followers and the general public are increasingly being exposed to the reality of the importance of rare earths and the strategic applications in which they are used — which will no doubt result in increasing demand.

Disclaimer: Pele Mountain Resources Inc., Quest Rare Minerals Ltd. and Lynas Corporation Ltd. are RareMetalBlog sponsors.