Rare Elements: Market Gives a Green Light
In the world market of rare earth metals big changes are coming. China will no longer be the sole supplier of these metals on the world market, where its share has decreased due to a deliberate restriction of its exports. This provoked shortage and sharp rise in prices on rare metals, opening up opportunities for other countries to increase their production and export, including for Kazakhstan.
Rare earth metal (REM) is a group of 17 elements including scandium, yttrium, lanthanum and the lanthanides (gadolinium, holmium, dysprosium, europium, ytterbium, lutetium, neodymium, praseodymium, promethium, samarium, terbium, thulium, cerium, erbium). In turn, lithium, beryllium, zirconium, tantalum, niobium and other elements form a group of rare metals. Both of these groups form a list of 35 “rare elements”.
Despite their name, rare earth metals are quite common, but the capital costs of their production are relatively high and amount $40 thousand per ton. The most important sources of rare earth minerals are monazite, falls, bastnesite, xenotime and gadolinium. Uranium deposits contain the considerable amounts of REM and RM as associated components.
Lanthanum, cerium, praseodymium, neodymium and samarium are categorized as light REM and they are less valuable as they occur more frequently. The rest of metals, including yttrium, are called moderately severe and heavy REM, they are considerably higher valued in the market.
RM and REM are in greaty demand in the high-tech industries, such as engineering tools, electronics, aerospace technology, military industrial complex, nuclear engineering, mechanical engineering, chemical and glass industries. Mere automotive industry consumes thousands tons of REM. Many “green” innovations, on which Kazakhstan is oriented today focus, are also dependent on these elements. They are used in the production of wind turbines, energy-conservative lights and hybrid engines. Not surprisingly, the main consumer of REM are now a highly developed countries such as Japan (which accounts for over 50% of global rare earth metals), as well as the U.S., France and Germany.
At the same time, in 2003 China began to gradually reduce the volume of rare earth metals exports and in 2009 introduced a quota within the implementation of reasonable nature and environmental management strategy. Wherein, if the first quota was 50,145 tons, in 2010 and 2011, it decreased, respectively, to 30 258 and 30 184 tonnes. In September 2011, Chinese authorities reported that halted production at three of the eight largest mines.
As a result, REM consumers all around the world have attended the search for alternative sources of supply. However, many of them began to buy rare earth metals to create strategic reserves.
Importers fears which are related to the instability of the future supply from China, naturally affected the price situation: the price of individual rare earth oxides since the introduction of the first quota to the beginning of 2011 has increased by times.
And yet, now deficit in the global rare earth market is not observed. Even with trimmed exports of China are quite capable of meeting demand. For example, in 2012 under quota of 30,996 tonnes the export volumes of Chinese rare earth metals fell to 16,235 tonnes or 3.3% compared to the previous year. Moreover, since the end of III quarter 2011 REM has become cheaper as the main consumers reduced their purchases. Thus, according to the site www.mineralprices.com cost of yttrium containing not less than 99.9% during 2012 fell 40% to $120 per kilogram.
According to the Australian corporation Lynas Corp., the price of rare earth metals fell further in the first three months of this year, thus keeping the trend of falling from record highs in 2011. For instance, the average Lynas’s price for the raw material from the field Mount Weld decreased during the quarter by 13%, which reached to $37.22 per kg. Despite the fact that a year ago it amounted to $92.2.
Some analysts fear that in the short term the price of rare earth metals may continue to fall, which is primarily caused by the reduction in demand for these metals in China amid a slowdown in its economy. Another circumstance that pushes the quotes is the commissioning of new capacities for the production of rare earth metals outside of China and, as a result, the surplus increases in the market. Thus, Molycorp Inc., situated in the U.S., has already completed the capacity expansion of its core enterprise Mountain Pass. In turn, Lynas continues the building of mining and beneficiation complex for rare earths metals in Malaysia.
However, in the long term perspective the REM consumer aspiration to diversify their sources of supply will cause a further increase in demand and prices. We should remember that year the Chinese government has introduced a new package of rare earth metals export quotas, lowering it over the last year ones by almost 2 times: the export of the light rare earth capped at 13,563 kg and export of heavy earth metals at 1938 t. Moreover, it is expected that by 2015 the Chinese production and consumption of rare earth metals may become equal and China itself will turn into rare earth metals importer.
The Service of Geology, Geodesy and Cartography of the United States (USGS) forecasts that in 2015 the Chinese production of rare earths will amount about 175 million tonnes, which would correspond to about 78% of world production. Production of the remaining 50 tonnes of rare earth metals should be provided by other countries, including Russia and India, which currently produce only 4–8 tons.
According to the forecast of the analytical group Core Consultants by 2015 the global shortage of critical rare earth metals, which include neodymium, europium, terbium, dysprosium and yttrium, may amount to 20 tons. This process will be supported by the development of end-markets, based on environmentally friendly technologies, such as the production of the wind turbine and electric.
According the estimates of the consulting company Industrial Mineral Company of Australia (IMCOA) the annual global demand for rare earth metals by 2016 should reach 160 thousand tons and by 2020 it will increase by 50%, reaching 200–240 thousand tons. 130–150 thousand tons of rare earth metals will be covered by the China’s consumption.
Thus, the favorable long-term situation on the REM world market creates the opportunity to develop own capacity for the producers of rare elements such as the U.S., Australia and Kazakhstan. Russia has quite ambitious plans for this market; it has set a goal to take 10% of the world production of rare earth metals by 2020.
Thus, even if Russia, USA, Europe, Australia and Africa at the same time will increase exports, prices will remain relatively high and demand for rare earth materials will only increase as the world becomes more high-tech.
As you know, our country has large deposits of rare metals and rare earth metals. According to the Institute of Geological Sciences, rare earth elements are contained in the titanium-rare earth deposit Kundybay, rare metal - Janet, South Zhaur, Koktenkol, Top Espe, Karasu, as well as in the phosphate array of Karatau. Upon the condition of their rational use Kazakhstan is fully able to develop the production and export of rare earth products, continuously improving its purity and degree of applicability for use in the most high-tech industries.
However, until recently, in our country rare metals were mainly produced as the by-products of nonferrous-metals industry. Thus, RSE Gezkazganredmet produces rhenium from the exhaust gases of metallurgical production of Kazakhmys Corporation, and JSC Kazakhstan Aluminium at the alumina production receives gallium. On Ust-Kamenogorsk metallurgical site of Kazzinc LLP along with major products, such as lead, zinc and cadmium, there is a production of indium, thallium and selenium. These elements are extracted from the lead production, as well as tellurium is produced from alkali alloys of refining black lead. JSC Kazatomprom produces tantalum, beryllium, niobium and molybdenum, Kaznioby LLP – niobium and JSC Ust-Kamenogorsk Titanium Magnesium Plant – vanadium. Herewith, generally, the MMC leaders of Kazakhstan are focus primarily on the production of basic (most profitable) components, and therefore losses at the extraction, beneficiation and metallurgical processing of rare-earth metals reach 80–85%.
Hope for the real change of situation appeared at the end of last year when the first stage of the plant for production of bulk concentrates and compounds of rare-earth metals in Stepnogorsk Akmolinskiy region started its operation. At the moment, JC SARECO LLC (Summit Atom Rare Earth Company) is the only company in the country, in which strategy includes the development of high-tech fields of metals industry on the REM basis. The founders of the Company are National Joint Stock Company Kazatomprom (51%) and Japanese Sumitomo Corporation (49%).
The plant in Stepnogorsk was built with compliance of all environmental standards and is a complex of thermal and hydrometallurgical processing of various raw material types. This plant was developed jointly by the Kazakhstan, Japanese and European scientists and engineers.
The project, where Kazatomprom and Sumitomo Corporation invested KZT 4.4 billion ($30 million), is designed for an annual production of 1.5 thous. tonnes of TREO (total rare earth oxides) with further capacity increase to 3 million tonnes in 2015 and up to 5–6 thous. tonnes in 2017. The estimated cost of annually produced products is estimated to be KZT 6.8 billion.
According to the General Director of JC SARECO LLC Anton Manycha, the main objectives for the firstling of domestic rare earth industry is the development of industrial technologies and division of bulk concentrates on individual rare earth metals, as well as these products output to the foreign markets.
As the Head of Public Relations Department of National Joint Stock Company Kazatomprom, Christina Podshivalova, explained in 2013 it is planned to produce about 1 million tons of TREO, and in 2014 to reach the full first stage capacity. At the same time, about 40% of the total production will be the so-called rare-earth metals of the heavy group, which is the scarcest and high-demand today. Until the end of this year, the plant will debug and improve the production technology.
SARECO’s main target market is Japan, where in the next year beginning the first Kazakhstan rare earth products should be shipped. It is planned to import 1.5 million tons of rare earth metals annually (which is ap. 7.5% of the total demand of the Land of Rising Sun), including about 20 tonnes of dysprosium (about 3% of the annual Japanese demand for the metal).
The Company does not limit itself to the project for the REM bulk concentrate production. Subject to provide with long-term sources of raw materials, there will be established a separation proceeding by 2015 and in a few years the production of magnets based on rare-earth metals will be arranged.
Currently the plant uses the earth concentrates accumulated since the Soviet times, as raw rare. First of all, there will be processed man-made mineral formation materials (tailing dump). In the future the development of natural deposits is planned.
Such a phased strategy is logical, because the man-made waste accumulated over the years of mining and metallurgical and chemical complex in Kazakhstan, differ in high content under extracted major securities and related components. According to various experts, the country has accumulated from 14 to 25 billion tons of industrial waste. The content of rare-earth metals in them reaches 0.6%, which is comparable with some ore deposits, but because they can be regarded as an independent source of raw materials. At present the country is processed no more than 2% of man-made waste.
One of recent examples concerns the legacy long dead giant chemical industry of the Soviet times is Shymkent phosphorus plant. In March 2013, the Southern Kazakhstan scientists found REM in its waste production. According to the Doctor of biological sciences, professor Akmaral Isayev, it is actually a full-fledged field of rare-earth elements: 700 thousand tons of sludge within the grounds of the city, contains 700 tons of gallium, germanium 600–650 tons, 500 tons of scandium, up to 2 tons of oxides such as lanthanum, neodymium, samarium, and so on.
Real prospects for the development of rare earth industry in Kazakhstan open a seemingly negative fact, as the depletion of high-grade ore. As a result, there was a need to engage in the development of ore with low, cost-effective processing of which is only possible with a radically new ways of opening with a complex extraction of valuable components.
The benefits of Kazakh scientists already have the corresponding work. In particular, the National Center for complex processing of mineral raw materials already developed and tested in pilot conditions versatile technology that enables a comprehensive and cost-effective to engage in the processing of most of the deposits of rare metals and rare earth metals. The basis of the technological scheme founded a new approach which avoids the classical enrichment in the basic (non-ferrous, rare and rare-earth) metals. According to the Head of Laboratory of titanium and vanadium of this Center Vladillen Kozlov, products of promising industrial complex will include more than ten items: rare earth oxides concentrate, yttrium, scandium, vanadium, molybdenum and uranium flux for ferrosilikoalyuminiya production of ferrosilicon and silicon oxide, nano-carbon sorbent, and alumina to produce aluminum and potassium fertilizers.
In summary we should notice that today Kazakhstan has all the initial conditions required to become the world leader in rare earth metals market. On the one hand, the long-term favorable market conditions and investors ready to cooperate, ensure the distribution (other than Japan, they include South Korea, Germany and France). On the other hand, there are sufficient raw materials, specialized metallurgical base and effective production technologies. It remains only to properly manage these competitive advantages.