RARE EARTHS 101 - Hastings Rare Metals Limited

RARE EARTHS 101
RARE EARTH ELEMENTS: THE BASICS, ECONOMICS
SUPPLY CHAIN AND APPLICATIONS

RARE EARTH BASICS
Rare Earth Elements (‘REE’) are non-toxic elements essential to a cleaner environment and
reduced reliance on fossil fuels. A lso, REE are an enormous potential benefit to human health.
3
Li
4
B e
4 0
Zr
41
Nb
31
Ga
3 2
Ge
3 7
3 9
R b Y
5 5
Cs
5 7
La
7 2
Hf
7 3
Ta
4 9
In
5 0
S n
5 8
Ce
5 9
P r
6 0
Nd 61
P m 6 2
S m 6 3
E u 6 4 Gd 6 5 Tb 6 6 Dy 6 7 Ho 6 8 E r 6 9
Tm 7 0
Y b 71 Lu
Other Rare Metals Light Rare Earths Heavy Rare Earths
There are 16 REE in total, as defined by the U.S. Geological Survey, 15 lanthanide elements
appearing at the bottom on the Periodic Table, with atomic numbers ranging from lanthanum
(57) to lutetium (71), plus the metal yttrium (39); all of w hich display similar physical and
chemical properties. REE deposits tend to occur in two sub-groups:
Light rare earth elements (‘LREE’), which include lanthanum (La), cerium (Ce),
praseodymium (Pr), neodymium (Nd), and samarium (Sm)
Heavy rare earth elements (‘HREE’), which are less common and more valuable, include
europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium (Ho), erbium (Er),
thulium (Tm), ytterbium (Y b) and lutetium (Lu)
Y ttrium (Y ) most commonly occur in association with HREE sub-group
REE are not particularly rare in the earth´ s crust, similar abundance to nick el or tin, but
generally not concentrated in commercially viable ore deposits.
COMMON PROPERTIES OF RARE EARTHS
Silvery-white metals that tarnish w hen
exposed to air, thereby forming oxides
Relatively soft metals; hardness increases
with higher atomic numbers
Reacts with water to liberate hydrogen
gas, slowly in cold/quickly upon heating
M ost REE compounds are strongly paramagnetic
Catalytic, chemical, electrical, metallurgical,
nuclear, magnetic and optical properties
M any REE compounds fluoresce strongly
under ultraviolet light
Reacts with dilute acid to release hydrogen
gas rapidly at room temperature
High melting and boiling points

RARE EARTH ECONOMICS
GLOBAL SUPPLY & DEMAND HISTORY
1794 Rare Earths discovered by Johan Gaddin in Y tterby, Sweden
1903 First commercial production of rare earth flints at Treibach in A ustria
1953 Demand approximately 1,000 tons (US$25 million)
1965 First stand-alone rare earths mine opened at M ountain Pass, US
1985 Development of the NdFeB permanent magnet; China initiates low cost production
2003 Demand approximately 85,000 tons (US$500 million)
2008 Demand approximately 124,000 tons (US$1.25 billion)
2015 Demand approximately 200,000 tons (US$8-9 billion)
Rare Earths Supply & d emand
Demand tpa - REO
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
Source: IMCOA, September 2011
0
2005 2006 2007 2008 2009 2010 2011f 2012f 2013f 2014f 2015f
China Supply ROW Supply China Demand Total Demand
Today, China produces over 95% of the world´s rare earth elements (“ REE” ). New sources are
being developed in Canada, USA and A ustralia. In aggregate, demand and supply w ill be
balanced; how ever, light rare earth elements (“ LREE” ) are expected to be in surplus w hile
heavy rare earth elements (“ HREE” ) in def icit.
Year
RE Export % Change Demand Surplus
Quota
outside China (Shortfall)
(tonnes) (tonnes) (tonnes)
2005 65,609 0.0% 48,000 17,609
2006 61,821 -5.8% 53,000 8,821
2007 59,643 -3.5% 55,000 4,643
2008 56,939 -4.5% 54,000 2,939
2009 50,145 -11.9% 25,000 25,145
2010 30,258 -39.7% 52,500 (22,242)
2011 30,246 0.0% 40,000 (9,754)
2012 31,130 2.9% 41,000 (9,870)
Source: IMCOA, Metal-Pages, Chinese Ministry of Commerce
The China Factor-Reduced Exports
China's government has been implementing a range of policies putting the government in control of
private and unauthorized mines that produce rare earth minerals (especially from the HREE-rich South
China ionic clays), implementing stricter regulations towards improving environmental performance
of its mining sector, and requiring f oreign companies to move f actories to China to complete
production of items using rare earths. The outcome of these policies is reduced availability of rare
earths outside China, higher prices, and the threat of f urther export restrictions. The mark et is
encouraging companies to produce a secure source of rare earths outside China.

RARE EARTH APPLICATIONS
REE are used in everyday products to produce energy, reduce energy, increase energy efficiency,
and in everyday lifestyle consumer and medical products.
Energy
Production
Energy
Reduction
Energy
Efficiency
Lifestyle
Products
Petroleum Refining
UV Filters in Glass
Electric / Hybrid
Vehicles
Color Screens
La
Ce
Nd
Sm
Y
Eu
Tb
High-Pow ered
Electric M otors
Reducing Fuel
Consumption
Rechargeable
Batteries
Hardw are
Components
Nd Dy Tb Nd La Nd
Electric / Hybrid
Vehicles
Lighter Vehicles
Energy-Efficient
Lighting
M edical
Services
La Dy Eu Tb
Ce Y La
W ind Turbines
Smaller, Lighter
Electric M otors
Ce Nd Gd
Nd Dy Tb
Nd Dy Tb
NdFeB PERMANENT MAGNETS
(‘NEO MAGNETS’) are much more
powerful than alternatives, providing better
perf ormance with a smaller size w hich has
lead to many miniaturisation applications.
R a re ea rth ma gnets ha ve been a dva nced
b y n e o d y m i u m , d y s p r o s i u m , s a m a r i u m ,
p r a s e o d y m i u m a n d t e r b i u m .
(BH)max., M GOe
60
50
40
30
20
10
0
Samarium-cobalt
Alnico
Neodymium-iron-boron
Ferrite
1940 1950 1960 1970 1980 1990 2000 2010
Year
ELECTRIC MOTORS
are smaller, lighter weight,
quieter and more energy
efficient with REE magnets.
Typically used in turn-drum
t y p e w a sh e r a n d d r y e r,
motors, vacuum cleaners’ motors,
eleva tor w ind-up motors, a nd compressor
motors.
W I N D T U R B I N E
power generation is directly
proportional to the sweep
a r e a o f t h e bla d e s a n d
t he cu be o f w ind-speed
(similar principles underlie
TIDAD POWER), hence wind
turbine blade spans are getting larger and
the overall assemblies taller.
New designs use Neo magnets for direct
drive turbines connected to permanent
magnet generators.
New designs eliminate gearboxes thereby
reducing energy losses in the machine s
internal operations, risk of f ailures and
maintenance costs.
A p p r o x i m a t e l y 0 . 6 - 0 . 9 t o n n e s o f
Neo ma gnets per mega w a tt, of w hich
a pproxima tely 30% is REE.

HYBRID VEHICLES
cut f ossil f uel use by combining
a gasoline engine,
battery-powered electric
motors and brakes that capture
energy f rom stopping.
Components requiring REE include: the
metal hydride component of a nickel–
m e t a l h y d r i d e ( N i M H ) b a t t e r y ; t h e
electric motor, generator and regenerative
braking systems which are dependent on
rare earth magnets.
Typical hybrid vehicle contains approximately
30 kgs of REE, w ith the majority
co nta ined in a t ypica l N iM H ba t t ery
(approx. 15 kgs).
REE play a critical role in automotive
catalytic converters, which transform the
primary pollutants in engine exhaust
gases into non-toxic compounds.
MRI MACHINES used
f or medica l ima ging and
diagnostics, now incorporate
rare earth permanent
magnets to generate
high strength magnetic fields.
P e r m a n e n t m a g n e t s a r e r e p l a c i n g
expensive tra ditiona l systems of super
cooling wire coils in liquid helium system
to reduce the electrical resistance in the
wire coils.
New units also provide wider, less claustrophobic
space for the patient.
L I G H T E M I T T I N G
DIODES (LEDS) are
80% more eff icient than
i n ca n d e sce n t l i g h t i n g ,
a n d 40% m o r e e f f icie n t
tha n co mpa ct f luorescent
bulbs (CFLs).
LEDs have an expected life of 50,000 hours
and some are sold with 5 year warranties.
LED market value was approx. $4.6 billion
in 2007, and expected to be more than
$11 billion in 2012.
Global policy shift of banning incandescent
light bulbs, to be replaced by CFLs
and LEDs, is gaining momentum. CFLs
increasingly seen as an interim step, as
they present mercury disposal management
issues.
CONSUMER ELECTRONICS c S
such as A pple´
s iPod music
players as well as other high
performance speakers, headphones
or buds, are driven
by tiny Neo magnets, resulting
in smaller, lighter speakers with
faster bass response and lower overall distortion.
GLASS PRODUCTS such
as those used in monitors,
r e q u i r e s ce r i u m o x i d e ,
with unique physical and
chemical properties, as a
building block for very efficient
polishing compounds through
chemical dissolution and mechanical abrasion,
such as solar cell protective glass.
MEDICAL: Rare earths are
u se d in a w ide ran g e o f
applications including drug
t r e a t m e n t s, d i a g n o st i c
techniques and equipment.
Ca ta lyst in biomedica l
a nd chemica l r esea r ch.
Organize complexes used in intravenously
a d m i n i st e r e d co n t r a st i n g a g e n t s t o
enha nce ima ging.
La ser ca ses a nd r a dio iso t o pes u sed in
ca ncer trea t ments.
MONITORS for computers
and plasma televisions are
co a t ed w it h phosphors,
which generate the primary
colours red, blue, and green.
Red requires europium, new
blue europium phosphor retains
brightness ten times longer than previous
blue phosphors, and green is generated by
phosphor doped w ith terbium.
A combination of these primary colour
phosphors are used to create the white
“ backlight used in LCD screens and the
energy efficient “ tri-phosphor light bulbs.
F l U I D C R A C K I N G
CATALYSTS use lanthanum
and cerium in the
refining of crude oil, and
is the major contributor to
the process that enables the
transformation of heavy molecules
into lighter compounds that make up gasoline
and other fuels (e.g. gas, jet fuel and diesel).

REE SUPPLY CHAIN
RARE EARTH ELEMENT PROCESS:
FROM ROCK TO TOMORROW’S PRODUCTS
M ining
From the
ground to
crushed ore
M illing
Grinding and
benef iciation of
REE minerals
Hydrometallurgy
Cracking the REE
minerals to produce
mixed REE oxides
concentrate
S epa r a t io n
Separating and
purifying the
individual REE oxides
R ef ining
To meet specific
downstream technology
applications
Pro du ct s
Permanent magnets,
LED’s, consumer
electronics
London Metal Group´s contribution to REE supply chain
Value added
REE PRICING: DYSPROSIUM AND NEODYMIUM
Dy Oxide 99% min FOB China - Nd Oxide 99% min FOB China
Dy Dy Oxide 99% min FOB China - - $/kg
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
-
A
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r
/
0
1
A
p
r
/
0
2
Apr/01
A
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0
3
Apr/02
Apr/03
A
p
r
/
0
4
Apr/04
A
p
r
/
0
5
Apr/05
A
p
r
/
Apr/06
Apr/07
Oct/07
Apr/08
Oct/08
Apr/09
Oct/09
Date 0 range: 0 April 0 20010
- 0January 0 2012 0
6
A
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r
/
7
O
c
t
/
7
A
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r
/
8
O
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t
/
8
A
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r
/
9
O
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t
/
9
A
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1
0
Apr/10
Oct/10
O
c
t
/
1
0
Apr/11
A J
p u
r l
/ /
1 1
1 1
Jul/11
Jan/12
400,000
350,000
300,000
250,000
200,000
150,000
100,000000
50,000
Nd Oxide 99% min FOB China - $/mt
99% min FOB China - $/mt
Nd Oxid
-
J
a
n
/
1 Source: Metal-Pages
2
CORPORATE SOCIAL RESPONSIBILITY
R a r e E a r t hs a r e essentia l co mpo nents in ma ny clea n a nd gr een
technolo gies. So cia l a nd envir o nmenta l r espo nsibility a nd go o d
corporate governance are integral to the exploration, development
and production stages of any resource project.
Annual Report by Q1-2012.
London Metal Group
w w w.londonmetalgroup.com
Citibank Tower, Canada Square, Canary Wharf
London, E14 5LB - Email: info@londonmetalgroup.com