The Race for Heavy Rare Earths gets Heavy

100 years ago the most popular kind of car was electric but they didn’t use REE’s. A Prius today uses 100g of the Heavy Rare Earth Element, (HREE) dysprosium.  That might not seem like a lot, but 100% of dysprosium currently comes from China and that’s a lot of control. The possible availability of HREE’s outside of China in the near future was the big question at REE World’s Technology Metals Summit in Toronto last week. Lynas is likely to be the first to supply Japanese car manufacturers, but other Australian miners have found even larger deposits of HREE’s, including dysprosium.

Everyone wonders about when production of HREE’s will take off, but first you have to have the deposits. The places that HREE’s are being found are in the far north and far south.  Even though China is currently the only supplier of dysprosium, HREE’s make up only a small percentage of total RE oxides (TREO’s) found in China and most of the rest of the world, sometimes less than 1%. In Australia, two companies have found very high concentrations of the heavy rare earths. Northern Minerals, (ASX: NTU) has found HREE’s constitute 94% of TREO, of which 67% is yttrium and 9% is dysprosium, at their Browns Range Project in northern Western Australia. Hastings Rare Metals, (ASX: HAS) has found 85% heavy rare earth oxides at their Hastings Project, also in northern  Western Australia, including significant amounts of dysprosium. So clearly the supply exists, but who will be able to produce, and when?

Many rare earths have uses for which there is no substitute, but dysprosium is sometimes substituted in magnetic applications, but not for its use in electric car batteries. Dysprosium is so rare that other REE’s such as neodymium are used instead, and other ferrous metals, but dysprosium is preferred for magnets, and irreplaceable in electric car batteries. Supplies outside of China have been found in large quantities in Australia. But who will be able to break the Chinese monopoly? Lynas will surely be the first but the other two Australian Companies are likely to be in quick succession. With supplies becoming possible from outside of China it is likely that dysprosium will become even more in demand.  This is because if you can use a substitute for something you can only get from one source it makes sense to do so, but a stable supply of dysprosium will make users more certain that its supply won’t dry up or become incredibly expensive.

However just today, Feb 6th 2012, trading of Hastings stock was halted pending funding announcements. Having the resources is one thing though being able to produce is another. Many companies are scrambling to get online in the next two to three years and whoever does is certain to increase the value of their company greatly. Having high amounts of dysprosium will make companies attractive to investors so it will be interesting to hear what Hastings and others have to say about funding in the near future.