Special Report: Rare Earth Elements in 2016

As Apple (NASDAQ:AAPL) states in an interesting video release, “...in world with limited resources, some things can’t be replaced.”

The short, one-minute clip reveals Apple’s most recent innovation: a robot named Liam, who is able to disassemble an iPhone in 11 seconds. Compared to existing technology that takes minutes per phone, Liam is an impressive machine that could change the entire future of metals resourcing. 

liam

“...to rescue cobalt and lithium from the battery, separate gold and copper from the camera, and extract silver and platinum from the main logic board, so the materials in your iPhone can live on.”

Why is Apple spending three years and an undisclosed amount of money on recycling iPhones?

The elements found in an iPhone are just a few of roughly fifty elements that are essential to green technology’s present and future, and the iPhone is just one of many technologies that depends on those elements. Along with lithium, gold, and copper is a class of elements known as the Rare Earth Elements (REE)--resources that the Japanese call “seeds of technology:”

Lanthanum
Praseodymium
Cerium
Neodymium
Samarium
Promethium
Europium
Dysprosium
Holmium
Gadolinium
Terbium
Thulium
Scandium
Yttrium
Erbium
Ytterbium
Lutetium

“Alien-sounding elements such as yttrium, neodymium, europium, terbium and dysprosium are key components of energy-saving lights, powerful permanent magnets and other technologies. And then there are gallium, indium and tellurium, which create the thin-film photovoltaics needed in solar panels.” -Scientific American


Supply:

In reality, these elements and metals aren’t actually rare. In fact, they are relatively common throughout the planet. They are also often found in conjunction with each other, and separation can prove even more difficult than the initial discovery. The true difficulty is finding concentrated quantities significant enough to support extraction in an economically viable way.

Getting the metals out of modern technology has been a pain, since they are incorporated in tiny amounts into increasingly-complex devices. A circa-2000 cell phone used about two dozen elements; a modern smartphone uses about 70.

Supply and scarcity have also been consistent concerns for investors and organizations with an interest in rare earths and other technology-dependent metals. In 2011, the average price of rare earth metals shot up by as much as 750%, due in part to supply issues. Although those prices declines through 2012 and 2013, we saw stabilization throughout 2014. Continued signs show a promising resistence to further decline. 

The Department of Energy and the European Union now fret over potential shortages of these metals because the speed of technological innovation may soon outpace our ability to develop sustainable supplies to support them. The DOE now counts five of the REEs as “critical materials,” crucial to new technology but whose supply is at risk of disruption. The department's experts are closely monitoring global production of along with the production of lithium.

The American Chemical Society reports that nearly half of naturally occurring elements face supply risks, as 97% of the world's rare earth elements are produced in China.

REEproduction

Rare earths are produced in small quantities, often several thousands of tons annually or less; blended with other metals; and traded in back-room deals. But don’t let their obscurity fool you. They are critical to green technology. Their unique properties make the products we buy smaller, faster and more powerful.


Demand:

Thin, cheap solar panels need tellurium, which makes up a scant 0.0000001 percent of the earth’s crust, making it three times rarer than gold. High-performance batteries need lithium, which is only easily extracted from briny pools in the Andes. Platinum, needed as a catalyst in fuel cells that turn hydrogen into energy, comes almost exclusively from South Africa.

Several pounds of rare earth compounds are in batteries that power every electric vehicle (EV) and hybrid-electric vehicle.

"Rare earth availability is a serious problem as the EV market grows, though I'm not seeing much consternation about it yet. We could be trading dependence on one commodity, foreign oil, for another, rare earth metals." — Mike Crane, Operator of EV and Hybrid Global Parts Supplier

REEs shape the way we live; they are critical components in consumer electronics such as televisions, tablet computers, cameras, and mobile phones. Due to their unique optical and magnetic properties, REEs are used to make rechargeable batteries found in hybrid cars, as well as a variety of defense technology. REEs are also essential to many green energy technologies,  hence the title: Green Elements.

defenseuses

If we succeed in meeting the International Energy Agency’s minimum recommendation of nearly quadrupling wind power capacity by 2030, growing electric vehicle use more than 100-fold by 2025, and increasing battery efficiency, specialty metals like dysprosium and cobalt will take center stage.

It is becoming increasingly urgent for developers to find REEs and other metals in various parts of the world and through various techniques (like Liam and recycling.) This becomes more and more apparent every time I talk to high-performance battery manufacturers and companies that rely on rare earth magnets for things like wind turbines and energy efficient electric motors.

The global Rare Earth Metals Market is anticipated to reach $9 billion by the end of 2020, and the market will exhibit a healthy 13.67% CAGR between 2017 and 2021.

In North America alone, more than $329 billion in economic output is dependent on rare earth elements. Unfortunately, that output could be greatly stunted if the supply of REE and other metals does not increase enough to sustain demand.

Avalon Advanced Materials, Inc. (AVLNF), based in Canada, is uniquely focused on rare metals and minerals spanning across six projects. Avalon holds a diverse rare metals and minerals property portfolio, offering investors exposure to lithium, tantalum, zirconium, rubidium, cesium, indium, gallium, germanium, rare earths and tin. Three projects are in advanced stages of development, although one REE project in the Canadian Northwest Territories has been put on hold for the time being. The company is also in development stages for a handful of projects, including the investigation a number of processes for the production of lithium hydroxide, now preferred in some battery cathodes because of better power density, a longer life cycle, and higher prices.

avalon

Tantalus Rare Earths is a German company developing a large rare earth opportunity in Madagascar. Tantalus has been exploring the area since 2008 and has obtained consistently promising results. As a result, the company is currently shifting the focus from exploration to preparations for production.

"Tantalus’ vision is to become an environmentally and socially sustainable rare earth supplier providing an alternative for rare earth users to the current dominance of Chinese supply. It is the Company’s established belief that the market is currently lacking such a supplier and that many rare earth buyers are waiting for Tantalus to provide material for the world market."

The company represents a challenge to the Chinese market domination, especially with low operational costs resulting from more advanced (and proven) extraction technology. Tantalus is especially rich in magnetic rare earths, the fastest-growing end use segment of the market. Quest Rare Minerals (QRMLF) is also based in Canda and is also focused on the $11 billion rare earth magnets industry, crucial to wind turbines, electric motors, and others. However, Quest's projects will not be in production phase for another 5-10 years. 

Rare Element Resources (REEMF) is another exploration stage company focused on the Bear Lodge Property in Wyoming. REEMF has developed a proprietary technique to recover the most high-purity concentrates of rare earth products. Wyoming was ranked among the top ten Global Mining Jurisdictions by Canada's Fraser Institute in 2015. The company has also gained full endorsements from state legislature, creating an opportunity for state financing. 

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The Wealth Daily Research Team


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