Europium – an Incidental Rare Earth
Who mines for Europium? Well no-one, but everyone, I know of. Everyone has a little bit; some more than others; but who are the drivers to this illustrious phosphor. We need to understand the drivers in the REO game and a little history will help (or confuse).
Misch metal was the first real use of REO. 1800’s and flints. Old timer stuff. The mines were roughly in balance since all they were extracting were the cerium, lanthanum, and probably some contaminant called neodymium. The other REO elements and their advanced uses were still generations away. Lanthanum was the first tear-away to disturb the balance. 1950-1960 and the fluid cracking catalyst market went ballistic. Result – imbalance since over-production to get more lanthanum resulted in an excess of cerium and the price fell. Cerium didn’t recover until 1980-odd when the technology era was upon us. Glass (silicon chip and screens) polishing powders were the saviour of the cerium business. Oops imbalance again, as now cerium is in greater demand than the lanthanum that’s co-produced. Watch out here come the magnets! A new imbalance since neodymium is now in the mix and there are three simultaneous non-linear equations to be solved. Getting tough in the light rare earth (LREO) space to understand what are the drivers and what is the balance? May I suggest the following. With current Chinese output meeting their internal demand and limited exports, and, by and large, Rest of World (ROW) growth supplied by Molycorp, Lynas, Great Western and Alkane, the commodity supply direction of cerium, lanthanum and neodymium will be based on price. Whoever is the cheapest, the longest, wins! Will there be any new commodity REO players? Only if they can produce neodymium at a price that will allow them into the market space. These other new opportunities are all relatively high CAPEX, with an uncertain cerium and lanthanum long term demand. So justifying the CAPEX and getting >$500 million will be tough on what will be assessed as a stand-alone neodymium project.
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Recently the advent of dysprosium, and to a certain extent, yttrium, has raised another set of equations to be solved. These heavy rare earths (HREO) are not commodity. They are low volume, very specialised, strategic inputs. Their use is so specialised that the future direction (and location) of our high technology age could be controlled by those who have access to dysprosium. If I can elaborate. There are currently only half a dozen advanced HREO projects that could conceivably be in production by 2016-17. Ranked by HREO contained we have Strange Lake, Norra Karr, Ucore, Hastings and Zeus. Not many players when there are a dozen large multi-national car companies with ambitious hybrid aspirations, half a dozen wind turbine companies all wanting large permanent magnets, especially for off-shore applications, and then there are the high speed rail developers. Who gets the dysprosium? Who gets the technology / green energy advantage? Only the first few end users who see their future so clearly that it is compelling them to lock into their current hi tech need for dysprosium and to thenceforth get into the supply chain as a partner. Long term supply equals a long term ability to rely on high quality HREO based permanent magnets.
Projects that are neither competitive as commodity LREO, or are not sufficiently endowed in HREO are in a difficult space, with these difficulties of definition, financing will be a difficult process.
So what about does the above production scenario do for the supply side of europium? If you look at the above production scenario, there is an output of europium coming out of each of the projects. Will that be enough? Looking at various predictions, it does not look like it. So what is the answer? The other projects that have not been listed above, will need to look at europium to see if it is a key economic opportunity for their resource development challenge. Will we see projects being developed simply based on europium (with by-products of LREO and HREO)? Economics provides the answer. The value of the product europium will need to justify a CAPEX of >$500 million, an OPEX of ~$200 million/year, with an IRR of >20%. If there are any europium projects out there that meet these criteria we will then have another set of non-linear simultaneous equations to solve to predict the world’s supply side for REO. Any budding mathematicians available to help us predict the future? No sensibly, the future of the non-commodity REO space will be controlled by those hi-tech developers and users who need security of supply to ensure their developed hi-tech has long term security of supply in whichever combination of REO they need. The world open-trade market for non-commodity REO will dry up as it will all be moved via long term contracts. What is available will be those small amounts produced as by-products from those projects that are commodity driven or the remnant of the HREO projects that only want the dysprosium or yttrium. Illegal opportunities will dwindle as long term hi-tech operators meet their long term needs on long term contracts. This could be the start of some long awaited stability. Let’s keep our fingers crossed. That is until the gadolinium refrigerator takes off, or terbium is included in the dysprosium equation, or the lutetium detectors become main stream as the baby boomers get just that little bit older. There is still that opportunity for more simultaneous non-linear equations to solve.
So where does that leave europium? Can still only see a future as an incidental rare earth.
Mr Mackowski is a qualified engineer in mineral processing with over 30 years technical and operational experience in rare earths, uranium, industrial minerals, nickel, kaolin ... <Read more about Steve Mackowski>