EDITOR: | January 6th, 2016 | 29 Comments

Rare earths financing: a contrast in fortunes

| January 06, 2016 | 29 Comments
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piggy_bankMoney has never been more important for the emerging rare earth players. We have seen that in spades over the past week or two on the Australian scene. Today Lynas Corp (ASX:LYC | OTCQX:LYSDY) reported it had in the second half of 2015 exceeded its target of 1,860 tonnes of neodymium/praseodymium production, thus ensuring the interest rate it is paying its Japanese financiers drops by 0.5%. Not only that, but the performance will be reassuring the Japanese that performance at LYC is heading in the right direction.

In the case of two other companies, we have a contrast in fortunes when it comes to those all-important financial backers. Peak Resources (ASX:PEK) has not only put in place its financing (last February) for A$29.2 million, but its main backer has just taken a larger stake. Appian, a fund based on the Channel Island of Jersey, has just turned convertible notes into shares to inject another A$2.1 million into Peak (at a substantial premium to recent traded share price) to lift its holding to 16.1%. The company’s other backer, the International Finance Corp (IFC), part of the World Bank group, is another steady rock under Peak and its Ngualla project in Tanzania.

Appian was established with backing from Anglo American, Rio Tinto, JP Morgan and Bain Capital. As Peak has pointed out, Appian’s management team have been involved in running more than 60 mines between them, 30 of those in Africa. The IFC is backing Peak because it is developing its mine in Tanzania, one of those countries targeted by the agency for development finance.

Peak is now powering along its development path, the most recent announcement being the appointment of Rocky Smithas chief operating officer for development; Smith was previously the managing director at Molycorp’s Mountain Pass.

Then there’s Northern Minerals (ASX:NTU), which is the other side of the REE money coin. At the end of September, according to its quarterly report for that period, the company had cash reserves of A$1.42 million. However, it was banking (literally, in some sense) on the A$49.5 million financing package agreed to by a subsidiary of Jilin Ji En Nickel Industry. The Chinese had done their due diligence on the Browns Range project in Western Australia and expressed themselves satisfied. As InvestorIntel had reported mid-2015, Chinese companies were showing interest in acquiring rare earth projects abroad, and it seemed Browns Range would have ticked all the boxes what with its attractive proportion of heavy elements, notably dysprosium.

However, the Chinese did not meet their first deadline to stump up the A$17 million next tranche of the funding, and were given an extension until Christmas Eve – which they also missed, and now the deal is off.

Northern Minerals has commissioned an Australian firm to take over the financing search and meanwhile has slashed its budgets. In the present commodity climate, finding money for a rare earth project is not going to be an easy task given the struggle at Lynas and the succumbing of Molycorp that have coloured investor views of the sector.

But is also leaves a question hanging: why has a large Chinese outfit walked away from a HREE project, and an advanced one at that? Why, when in the longer term China is going to require foreign supplies of some REE elements?

It’s not as if Jilin Ji En is pulling down the shutters. A month ago it joined China Railway Resources in a plan to develop a graphite mining project in Luobei, in Heilongjiang province in northeast China. Ji En Nickel is to spend the equivalent of $310 million to get the project up and running.

By that standard, A$17 million is spare change, especially in view of the fact that you get your hands on what will be an important source of dysprosium and other HREE.

Jilien Ji En is some size. When the deal was signed last February the Chinese company, listed on the Shanghai Stock Exchange, was valued at the equivalent of $3.4 billion. Even with the semi-collapse of many Chinese stock prices, Jilin Ji En this week is still worth $2.8 billion.

Regardless of what the reason is for the Chinese company to renege on its deal with Northern Minerals, the development underlines the fact that, in the REE business these days, having your financing secure has never been more important.


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Comments

  • JJBeswick

    There’s certainly been plenty of commentary here about the fundamental shifts in the RE demand space.
    Phosphors are history, sadly. Goodbye high value Y and Eu.
    Magnets rule the high-value RE space and cost cutting by Dy/Tb thrifting there has really been the innovation story of the last few years. That simply leaves Northern Minerals without a market for its product. Add low grade and lack of (anywhere near) local infrastructure and the project really does look like a crock; short or long term.

    January 6, 2016 - 10:28 AM

  • Jack Lifton

    Robin,

    I note that Peak is well managed and that its financing is non-Chinese. I suspect that Northern has run into a political situation that has influenced Jilin Ji En as much as any late recognized infrastructure or grade issues. It is my belief that overseas investments in rare earths by Chinese companies will be limited to those companies such as Chalco, which are members of the Gang of Six SOEs that now control the Chinese rare earths supply chains. Even if Jilin Ji En is a subsidiary of one of the Six, and I do not know if it is, such investments will not be made by subsidiaries who have no one below them in the pecking order to blame when things go wrong.
    It is the same I believe for lithium, graphite, and the other clean-tech oriented technology materials.

    I note that if Lynas produced 1,860 tons of Pr/Nd then it must have produced 8-9000 tons of total rare earths. Thus I believe that the result was for the last quarter of 2014, and certainly indicates that the module in service is near capacity. Congratulations to Lynas.

    Jack

    January 6, 2016 - 10:59 AM

  • Jeff Thompson

    Have Jilin Ji En lost interest in heavy rare earths, or have they switched horses to back another candidate?

    January 6, 2016 - 2:44 PM

  • Janet

    Northern Minerals has been put in a precarious position. Hopefully the funding they want and need can be found. Thanks for this info, great article.

    January 6, 2016 - 3:10 PM

  • charles.1

    Thanks for the great article Robin. Cash is certainly king, and supportive financing partners are worth more than rocks in the ground. Northern Minerals has a very high % of Y which has fallen out of favour, and its high market cap vs peers would have made incoming investors question the highly priced deal.

    I don’t believe Northern has the benefit of any by-product minerals or metals that can feed stronger markets (c.f. Alkane, Tasman) so interesting to see the business plan they come out with.

    January 6, 2016 - 4:28 PM

  • Anndy

    Robin and Jack,
    As much as I would have liked to have seen Lynas produce in excess of 1860 tonnes for the last quarter, the announcement to the market was that it was for the previous 6 months from July 1st …

    January 6, 2016 - 4:49 PM

  • Robin Bromby

    Thanks — yes, that was my mistake. The text has been corrected. I can only plead that we are so used to reporting in terms of quarters that the eye did not pick up the correct time period. Nevertheless, this does not take away from the Lynas performance.

    January 6, 2016 - 4:58 PM

  • Robin Bromby

    JJBeswick: if this change is so, then it just again illustrates how quickly the ground changes under so many tech metal stories. It illustrates how perilous it is to predict anything!

    January 6, 2016 - 5:00 PM

  • Bill

    Good point Jack, it may be as simple as that … “Jilin Ji is not one of the big 6” …. and that’s why they couldn’t get PRC approval to invest in Northern

    That is the most logical reason I have seen put forward thus far for the PRC not approving the investment in Northern

    January 6, 2016 - 7:33 PM

  • Tim Ainsworth

    Coincidence?

    Projects receiving support currently (see ARU today + PEK + LYC) are NdPr value based.

    IMCOA 2015 Demand/Supply data shows Nd the only RE in significant deficit, plus a small tonnage of Erbium, and Dy 215% OVERsupplied.

    Leading Chinese NdFeB manufacturer JL Mag, part of Sth RE Group with 9000tpa HRE quota, forecasting 50% drop in Dy demand 2014/2019, with 65% of its magnet grades already Dy Free/Lite.

    Now ACREI posting articles on the subject last few daze:

    “studies demonstrate the effectiveness of the regulation of the grain boundary structure optimization of thermal deformation magnet rheology and increase the coercive force for the development of non-heavy rare earth high coercivity rare earth permanent magnet material”

    ac-rei.org.cn/portal.php?mod=view&aid=4447
    ac-rei.org.cn/portal.php?mod=view&aid=4438

    Shows the Chinese aren’t so far behind the Japanese:

    sdk.co.jp/english/news/13382/13817.html
    sanyodenki.com/news/newslist/20120823_sanmotion_r.html
    (plenty more, sans eyes wide shut)

    Jien already locked into 16% Orion Metals au.finance.yahoo.com/q/bc?s=ORM.AX&t=5y&l=on&z=l&q=l&c= maybe they baulked at a similar result?

    January 6, 2016 - 8:44 PM

  • rclockel

    Please note for the future. Google has it’s self driving cars running around Silicon Valley with Lidar Sensors directing their way. These sensors operate on Nd and Ce doped YAG crystals.

    Also, Tesla automobiles run on induction electric motors, but BMW and Mercedes Benz electric cars are using permanent magnet motors. Much more efficient.

    For the future

    January 9, 2016 - 11:06 AM

  • Jeff Thompson

    Good range of comments on this article. An interesting question will be to what degree the residual Nd and Pr components of each companies deposit can still produce a viable business plan for those surviving juniors worldwide whose distribution is skewed towards heavy rare earths. The reduced HREE demand and current oversupply (worsened by “illegal” mining) puts a big dent in the economics of those who had counted on primarily HREE revenue, but which companies will have still enough Nd/Pr in their deposits to make their overall spectrum of all REEs and supplementary non-REE byproducts worth pursuing?

    January 9, 2016 - 11:48 AM

  • Tim Ainsworth

    Jeff, I’m standing in the warehouse of my ROW RE company and I have a bag of HRE concentrate in one hand and a bunch of little baggies of all the individual HREO in the other, can you walk me thru exactly how I am going to monetise them?

    The who & where, what values & annual volumes, the real time customers who can turn my concentrate or HREO into practical products?

    Pretty much everything I’ve seen so far ends with an historically based forecast, all looking ridiculous both values & volumes ATM, and perhaps some vague references to market segments.

    If you suggest Chinese toll processing won’t my concentrate be subject to the new 27% production tax? And 17% VAT on re-export, IF I can get an export permit? And I’ll be competing with the current base price for HRE con circa $17kg.

    Can anyone point to a factually path to real markets for anything like the tonnages being spruiked, rather than vague references to “future demand” that has shown no signs of materialising past 3/4 years? In reality there appears to be ample evidence the major demand segments are declining thru re-engineering sponsored by the price spike 2010/11.

    January 10, 2016 - 3:13 PM

  • Jeff Thompson

    Good questions, Tim, and if I had the answers I’d probably be running my own rare earth company. Mainly I was trying to emphasize that since most non-producing juniors don’t fall into a single category but have a distribution spread that straddles across LREs, HREs, and other byproducts, then when one of those three segments undergoes even larger price drops/larger oversupplies (as with HREs) than the other two segments have recently, in the end it is still the total sum of all revenue sources from all three segments, factoring in reduced prices and reduced volumes, that will determine if a project can profitably enter production or not.
    Jeff

    January 10, 2016 - 7:51 PM

  • Bill Keene

    Magnet producers outside of China offer product at a premium cost to Chinese magnets, they have to do so to make a profit. Their manufacturing costs are high and the raw materials shipped to them from China cost more (Metal pages quotes all Chinese RMB prices VAT inclusive) than if obtained in China, hence the cost of the magnets are higher. However they supply into industries that require a short and dependable supply chain, such as the automotive industry, which operate “just-in-time” production. Hence they require suppliers that are credible and legally responsive.

    The length of the supply chain and the dependability of the supplier is of paramount importance to non Chinese manufacturers.

    I can’t see untested and unproven newly developed substitute products, from an unknown supplier being taken up by non-Chinese manufactures.

    Presently most commodities are at multi year lows, which isn’t helping developers of rare earth projects as prices drive economic projections and valuations.

    January 10, 2016 - 11:54 PM

  • Alex

    Tim , if you have HK company you can after two years establish Chinese company, so if you will sale it to your self you can keep VAT in China (if your company will be more then 200 000 USD turnaround)
    After some time you can get export licence , but I am not sure that you can return VAT if you will export RE.
    But if you concentrate is not from China (for instance from Russia) you have to get VAT when you export it from Russia (VAT 18%)

    January 11, 2016 - 12:29 AM

  • Tim Ainsworth

    Thnx Alex, just noticed your comment, but I wasn’t referring to VAT but rather the domestic tax by value on RE concentrate.

    Doubt anyone’s tested it but hard to see imported concentrate dodging the 22% con tax, particularly given HRE is running circa 200% oversupplied by IMCOA 2015 data.

    BEIJING Asian Metal 4 Feb 16 – As rare earth oxide prices still stood at a low level, and consumers were inactive to make purchases, separation plants were in n hurry to make replenishment of ion rare earth concentrate. Thus, mainstream prices of ion rare earth concentrate still hovered at RMB105,000-110,000t USD16,031-16,794t by cash payment, without much change compared with that of one month ago. (USD16.03/16.80)

    BEIJING Asian Metal 29 Jan 16 – As the prices of europium oxide 99.99%min, gadolinium oxide 99.5% and samarium oxide 99.9%min are still at low levels, separation plants have no intention to deal with SmEuGd concentrate, which results in limited deals in SmEuGd concentrate market. In order to remove the effect of the dropping price of europium oxide 99.99%min, insiders adopt a pricing manner which also takes terbium content into account. As the prices of seprarted has already been at a low level, SmEuGd concentrate prices are still relatively stable at RMB55,000-60,0… (USD8.36/9.13)

    Do those prices already incl. 22% con tax?

    Talk of “substantial” increase in con tax, along with further consolidation, perhaps with H1 production quotas post Spring Festival? Will be interesting to see if they shift the bulk of “illegals” onto the books by adjusting LRE to better reflect underlying demand.

    February 8, 2016 - 8:48 AM

  • Alex

    Really you can process SmEuGd only at China and Japan
    It is in stock at Silmet-Molycorp , SMZ-Kazakstan outside china plus a lot of Yttrium-Europeim scrap concentrates which was produced by scrap recover companies which add this product to the world market and being sourse of illegal production in China.
    Lynas does process it or sale to Japanese ?
    As China it can occur from LREE processing with 9%-11% Tax only and from HREE concentrates with 22 % Tax. How they will balance this two different concentrates with this Tax system I wonder.
    Lets see what will happens in new chinese year.

    February 10, 2016 - 2:33 AM

  • Gareth Hatch

    We can see that magnet production continues to be the dominant positive driver for general REE project development. While it is indeed the case, that the price spikes of 2010/2011 accelerated efforts already underway to reduce heavy REE (HREE) usage (specifically Tb and Dy) in sintered magnets, what is frequently missed is that the cost of actually producing such magnets, is significantly higher than the cost of producing materials with similar magnetic properties, but which rely on appreciable Tb and / or Dy content.

    Introducing newly engineered materials such as lower-HREE-containing sintered magnets naturally takes time and significant investment and so there is always going to be a lag between the development of such materials and their commercialization. A challenge arises when this lag time is longer than the time over which the price of the materials being targeted for usage reduction (in this case Tb and / or Dy) comes down from the historic highs, to levels seen prior to the price spikes.

    At some point, the previously assumed cost savings obtained by reducing HREE content in these magnets, may be (or presently are) less than the additional incremental processing costs required to produce grain-boundary-modified and other ‘enhanced’ magnet powders, which don’t need as much of the HREEs to achieve the same magnetic properties.

    Thus it is entirely possible that the reduction in demand for HREEs for magnet production is only temporary, since at some point producers who use or switch back to magnet compositions with the ‘old’ levels of HREEs, will have a cost advantage over those that are producing the enhanced powders (assuming a stable source and cost of supply – not a trivial assumption, I know).

    I will also note that the reduction in demand for Tb in phosphor applications, has led to more Tb being available to magnet-alloy producers, further reducing the pressure to engineer HREEs out of these materials. Use of Tb can actually result in superior coercivities (ability to resist demagnetization due to heat or the presence of other strong magnetic fields in a system) to Dy usage. Tb was the original HREE of choice for permanent magnets, before increased demand for Tb in phosphor applications, drove the price up for this element, causing a switch to Dy and its subsequent greater usage.

    At the end of the day, given our present understanding of the materials science behind the development of high-performance REE-based magnets, there will always be a need for the use of HREEs in the material grades required for magnets that are subject to the most challenging of engineering conditions, such as for electric motors and generators in electric vehicles and other such applications.

    With apologies to Mark Twain, I therefore must conclude that reports of the death of HREEs for magnet production have been exaggerated – recent demand reports notwithstanding.

    February 10, 2016 - 7:40 AM

    • Bill

      thank you Gareth

      February 11, 2016 - 5:13 AM

  • Jeff Thompson

    Appreciate your explanation of the complex market dynamics on LREE/HREE balances and how they may shift as a function of price movements, Gareth. The lag times are a particularly important variable and difficult to gauge given the influence that the opaque market in China has. On HREEs, would be interested on any thoughts you may have on a possible future application of ytterbium as an aluminum alloy strengthening additive as an alternative to the higher priced scandium?

    February 10, 2016 - 8:30 AM

  • Tim Ainsworth

    Constructive thoughts Gareth, way past time there was some objective analysis of economic values rather than the incessant “wot’s in the ground” X some opaque future price deck.

    Bearing in mind design & materials inputs were probably locked down mid 2014 for the 2016 Volt Larry Nitz, head of Hybrid and Electric Powertrain Engineering for GM, makes some very interesting comments:

    https://chargedevs.com/features/2016-chevy-volt-gms-top-electrification-engineers-on-designing-the-all-new-erev/

    “We can’t really control the price of these REs, and I’m not sure they’re really market-priced anyway because they’re largely controlled by a Chinese monopoly. So we wanted to reduce the amount of dependency. There are two different kinds of REs. There is the lighter kind we use in consumer goods like ear buds and a lot of other devices. They work great. They have great magnetic characteristics, but they don’t operate very well at higher temperatures like those seen in automobiles. Then we have the heavier REs, like dysprosium. It’s very expensive and it has better temperature characteristics.

    Our objective in the gen-2 Volt was to become less dependent, especially on the heavier REs that can only be commercially found in China. So we use a mix of the light and heavy, reducing the amount of heavy REs (such as dysprosium and terbium) by 80% – using only one-fifth the amount – and a 50% reduction overall in the lighter rare earths such as neodymium and praseodymium.”

    Is that a comment on respective economic values to GM vs market prices 2014? Large part of the overall RE reduction was switching out NdFeb for ferrite:

    “Also, one of the motors uses no RE magnets at all. We were able to do that by using a ferrite magnet, which has less magnetic strength.”

    “It’s lower cost, but certainly there is more design complexity to doing a ferrite motor.”

    Somewhere in there an economic threshold was breached, what will be interesting to see is whether the ferrite substitute survives the next major drive train update, presumably with more cost effective NdFeB available.

    Undoubtedly Dy & Tb will be around in high temp areas like EV drive trains for a long time, but very much within an economic threshold, or everyone will drive a Tesla.

    Plenty of evidence about that for the great majority of less demanding applications that threshold has bumped up against Dy CoP, certainly no supply issues ATM.

    Worth bearing in mind one of the stated goals of the 10Bn yuan investment in the Baotou Hi Tech zone under the new Five Year Plan is the 40% reduction of NdFeB manufacturing costs, particularly referencing HRE free, but would obviously have to have an impact on all inputs.

    Great majority of RE discussion is supply side whereas sustainable demand will only be created by producing REE under their respective economic thresholds by sector. With prices over, then under, shooting, plus shifting sector demand, does anyone want to take a punt at true economic values ATM?

    February 11, 2016 - 12:01 PM

  • Quality

    Tried to understand what you said Tim? Not an expert in this area? Not also sure whose bat you are pushing. Looked Gareth up, he worked in designing and making magnets for long time.
    The problem is that there are HREE outside of China but no one is willing to go after them commercially.
    If we end up ignoring their use wouldn’t Chinese then end up making more superior products which they will export to the rest of the world. Their quality will be as good as one from US or Germany if not better at the fraction of the cost?

    February 11, 2016 - 8:54 PM

  • Quality

    Jeff,
    You mean yttrium as an alternative to Scandium?
    Interested in Gareth’s view but aviation industry is notoriously conservative.
    You are talking about years of testing and prototype trials.

    February 12, 2016 - 12:48 AM

  • Jeff Thompson

    Quality – not yttrium, but ytterbium as a possible alternative to scandium in aluminum alloy applications (but not in other scandium applications). Not a great deal of information available on this, but two older reports linked here, one with positive results, one with negative results:

    http://www.scientific.net/MSF.546-549.1021
    http://digitalcommons.mtu.edu/etds/28/

    Abstract from the first link:
    “The effect of 0.30 Yb (mass fraction,%) additions on the microstructure and properties of high strength Al-Zn-Mg-Cu-Zr aluminum alloys has been investigated by TEM, optical microscopy, hardness and electric conductivity measurement, tensile test, stress corrosion cracking test. The results show that the ytterbium additions to high strength Al-Zn-Mg-Cu-Zr aluminum alloys significantly inhibited recrystallization during solution treatment. The tensile and yield strengths, elongation, hardness, electric conductivity and stress corrosion cracking resistance of the Yb-containing alloys are improved compared to the alloys without Yb additions. By Yb additions, the critical stress intensity (KISCC) is enhanced from 7 MPa·m1/2 up to 14.5 MPa·m1/2 with the improvement of the strength and ductility. The mechanism for the property improvement from Yb additions has been discussed.”

    As you point out, this is in it’s infancy, and if it worked at all, it would take years to develop and prove out with testing, but the applications could be widespread, including both automotive and aircraft. Scandium apparently works even better than ytterbium in aluminum alloys, but costs more, so there is potentially a place for both Yb and Sc in the market depending on the severity of the technical specs required in different applications, and their relative usages would be likely governed by the economic thresholds that Tim and Dr. Hatch so eloquently elaborate on in the comments above, for the case of the more developed market tradeoffs between Nd and Dy/Tb in different applications, with the price differences they carry.

    February 12, 2016 - 10:35 AM

  • Tim Ainsworth

    Perhaps have a read of the article by Dr Stan Trout 3yrs ago that got me questioning the HRE mantra:

    http://spontaneousmaterials.com/Papers/Spring2013.pdf

    February 13, 2016 - 9:45 PM

  • Jeff Thompson

    The well-written article that Tim referenced above got me thinking about another factor that is often given short shrift – that of how long do we expect a piece of equipment we make to last? Excerpted from the article:

    “In the early stages of design, a temperature range is selected for a device. The choice of maximum temperature turns out to be the most significant decision in the material selection process because it determines the amount of Dy that is likely to be needed in a sintered NdFeB magnet. In addition, the choice of the maximum temperature if often done a bit carelessly, with little regard for the heavy rare earth consequences. If you enjoy studying magnet datasheets as I do, the connection between maximum temperature and Dy content is very clear, although it is rarely stated in this way. We really need to train an entire generation of designers to challenge the automatic selection of maximum temperature and to be sure that it is selected wisely, i.e. no higher than absolutely necessary. This single change will lead to the selection of grades with the lowest possible Dy content that will do the job. This will be profoundly helpful because it is the best hedge against future heavy rare earth vulnerability.”

    I don’t have any direct experience with rare earth magnet design, but I can imagine if it is anything like other electronics design, the margin of safety for absolute maximum ratings of components above the maximum operating temperature will play a crucial role in determining the failure rate of the overall product, and the mean time between failure (MTBF), or basically how long will the product will last on average. For example, when designing in electrolytic capacitors that are operating in high power environments, the voltage rating of the capacitor is usually chosen to be at least a factor of two greater than the maximum expected voltage at that node in the circuit. A 6kV rated capacitor is often used in a 2.8kV application. You can put in a 3.0kV rated capacitor and it will work today, and tomorrow, and next year. But the more components you put into a product that just barely exceed their operating conditions, the more quickly you degrade the overall life expectancy of the product. Is the device built to last 5 years? 10 years? 20 years? 50 years? With the travelling wave tube and klystron amplifiers I work with, the design of the heat sinking structure around the TWT is absolutely critical with thousands of watts of heat being dissipated. A structure that cools the TWT to only 100C may be minimally sufficient, but if you can lower the temperature just another 10C you may get an additional 5-10 years of life from the TWT. It is possible through careful use of accelerated life testing, which subjects a device to rapid and repeated iterations between minimum and maximum temperature extreme, to make forecasts on the life expectancy of a certain design using different component ratings, but they are just forecasts, and the proof is in the pudding that you only know for sure years later, and a conservative approach will always overrate components because it is very easy to lose customer’s if “nuisance” failures accumulate to quickly.

    It all depends on what our expectations as “consumers” are, and what are expectations as “designers” are, and the two are often at odds. In the past, many products were built to last. We still have an old Sears freezer that has been running continuously since 1971 in the outdoor garage with virtually no problems. And yet the indoor refrigerator breaks and has to be replaced about every 5-10 years. Maybe that’s just random luck, or maybe the fridge designers are using the cheapest possible components in the system just to get it over the 5 year mark before it fails, because this will maximize the revenues to their industry by forcing us to rebuy more often. I would rather pay 50% more for a product if it was going to last me 200% longer, but of course the problem is that it’s hard to know ahead of time if one brand is really going to last that much longer than another brand. Historical reputations of companies count when making that determination, but even those evolve/devolve as the years go by and can’t really be counted on as the good managers and engineers leave certain companies.

    This tradeoff between cost, temperature rating, and lifespan goes well beyond consumer electronics. As I read about the aging U.S. submarine fleet, at some point when a new generation of submarines is built to replace them, a key question for designers will be are they going to be built to last 20 years? 30 years? 40 years? You may only plan for 20 years but who knows if the president/congress/voters 20 years from now will be amenable to paying for replacements then, and your 20-year sub may actually have to serve for 35 years.

    As military applications likely represent a relatively small percentage of total rare earth consumption, perhaps a more relevant question is in the consumer electronics world, do consumers even notice or care about lifespan? I may value my freezer that has been running since 1971, but does my neighbor, who buys a new iPhone every 2 years anyway really care whether his old iPhone would have lasted 10 years? Does it matter to him if his current 1080p TV which is only 5 years old is going to keep running, because next year he’s going to buy that fancy new 4K-resolution TV anyway? The future consumption rate of rare earths is going to be influenced be these sorts of design-life decisions and consumer-attention-span considerations.

    February 14, 2016 - 6:42 AM

  • Jeff Thompson

    Correction – strike “electrolytic” from the above. I was going to give a low-voltage example where a 35V-rated or 50V-rated electrolytic cap may be used for a 24V application rather than a 25V-rated cap when higher reliability is desired, but of course the high-voltage example I gave instead would use a different type of cap, not electrolytic, forgot to edit my adjective.

    February 14, 2016 - 7:01 AM

  • Quality

    Interesting article from Dr Trout. What does Dr Hatch has to say about it?

    February 15, 2016 - 3:51 AM

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