EDITOR: | November 24th, 2013 | 17 Comments

Replacing rare earths and ‘other’ technology metals: world technology to take a step backwards?

| November 24, 2013 | 17 Comments
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Jack-Lifton-TMSMea culpa. I was wrong in 2011 when I said that if rare earth prices kept rising then the OEM automotive industry would “engineer them out.” I didn’t realize that there was then, and is now, no intention whatsoever of engineering out the weight savings and energy efficiency of rare earth permanent magnets in motor vehicles. Instead the trend has been to add water to the soup to make it go further; I mean that engineering research has concentrated on determining the minimum amount of rare earths that can be used to achieve the same result. This type of engineering research was certainly not a priority until the rare earth bubble alternately expanded and deflated after 2007. The problem has become one of minimizing the amount of rare earths per vehicle as world production of motor vehicles has resumed its steady and dramatic increase. Less use per individual vehicle is mandatory if the total number of vehicles produced is increasing faster than the increase from new production and recycling of the critical technology metals’ resources.

The “technical” press, which is still stubbornly uninformed about such matters reports frequently that a laboratory scale use of some relatively common material is the prelude to the replacement of a technology metal by that material. This type of manufacturing illiteracy has long been common in the OEM automotive industry press corps, in particular, with regard to the replacement of the platinum group metals as active exhaust emission catalysts. This has been going on for as long as those catalysts have been used. Investors who today are becoming interested again in the platinum group metals should note, by the way, that the global new production of platinum and palladium today is only around 200 metric tons each and that of rhodium is around 30 tons. I recall first hearing about a research program to replace these catalytic metals in 1979. The pressure to replace them is magnitudes greater than any pressure to “replace” the rare earths. The answer, as with the rare earths, has been to use as little as will give the desired effect and, in the case of the platinum group metals, to intensively recycle.

The problem is simply stated: the properties of the individual chemical elements that give rise to their use in technologies beneficial to humans cannot be duplicated by simple substitutions. Membership in the periodic table of the chemical elements is the most exclusive club in the universe. The study of the electronic properties of materials is in its early stages, historically. So far it looks like the useful (to us) electronic properties of materials are due to the electron configurations of the outer shells of their atoms. These shell properties in turn are dependent on the makeup of the nucleus of the atom. All we humans can do is study this and make the best out of what nature has provided us. We CANNOT engineer atoms to our specifications.

The Samsung Corporation, one of the Korea’s and the world’s largest manufacturer of high-tech consumer goods is based in a country, The Republic of Korea, which has no domestic resources of technology metals. The Korean government has just in the last three years organized a national effort to source and stockpile technology metals and minerals critical to Korea’s economic survival as a high tech manufacturing powerhouse. Korea , of course, just as China and Japan, would prefer to mine or buy raw materials and process them into industrial components and assemblies in Korea, and, of course, Samsung is one of the key technology companies to which the Korean government has turned to help create a total domestic key technology metals supply chain.

In the meantime in a classical example of corporate self-serving double-speak Samsung has allowed the servile journalists in its sector to put about the story that Samsung is working diligently to replace the rare earth in their applications. That must be why quasi-governmental entities such as KORES are scouring the world for rare earth resources. China and Japan, of course, already have and use stockpiling of critical metals for their domestic industrial and military security.

The point I am trying to make is that the rare earth permanent magnet, the rare earth laser, and the rare earth phosphor are the reasons that Samsung and every other similar company has its huge high tech mass produced consumer device business. Rare earths allow the miniaturization of the components of high tech mass produced consumer devices that transform electrical signals into motion, sound, images, and light. They cannot be replaced economically or practically.

I’ve been looking for an analogy to explain the sheer nonsense of wasting ink or electrons to say that after several generations of chemical processing research and development to enable sufficient rare key technology metals to be produced to support the mass production of high tech miniaturized consumer electronic devices, which themselves are the result of a century of research and development in physics and materials, a company, say Samsung, has decided to embark upon a research program to replace these materials and technologies. I’ve come up with this analogy: The US military which can no longer get rare earths, tungsten, or antimony because they are only produced and processed by an enemy has decided to forego the use of “smart” weapons, armor, armor piercing ammunition, and electronically controlled aircraft and ships and will equip its forces with the latest steel edged weapons and bronze armor. Portable phones will be provided to general officers along with wagons to transport the antimony free lead acid batteries required to power them.

In the history of the world technology has never taken a step backwards. Do you want to bet that will be reversed anytime soon?

Those nations that do not encourage long term investments in the production, refining, and fabrication of technology metals will not be high tech consumer product producers much longer. The clock is running.


Jack Lifton

Editor:

Jack Lifton is the Sr. Editor for InvestorIntel Corp. and is the CEO for Jack Lifton, LLC. He is also a consultant, author, and lecturer ... <Read more about Jack Lifton>


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Comments

  • Tracy Weslosky

    Absolutely by far — the very best Jack Lifton column, in my humble opinion that has been written to date on the issues relating to sustainability… in order to achieve global technology advancements, which have always been a driver for economic leadership; we require consistent and reliable production/pricing/supplies of technology metals. Thank you.

    November 24, 2013 - 12:45 PM

  • vacuum

    Seems like this article brings us full circle in our considerations of what a REE mining property need be like.

    A few weeks ago, when Jack learned us about mine tonnage vs. processing, perhaps it became easy to begin to believe that in all ways the processing was all that mattered, not the stuff itself.

    There’s a theme running in American culture for at least two decades. That is: America can do design while others do the stuff (manuf labor and commodity input). Probably this theme was established in order to mollify concern over the loss of America’s industries to globalization. Furthermore, it goes along with the financialization of the economy–e.g., instead of producing more actual silver, just manipulate futures so demand is not reflected in price. . . . The theme is so entrenched in American culture now that many Americans believe they can always get something for/from nothing.

    So, it is nice to hear Jack say that REE stuff matters.

    November 24, 2013 - 4:53 PM

  • Steve Mackowski

    Jack. As usual the hammer hits the nail fair and square. The REO space is growing fast. Those who capitalise on its benefit will get the technology edge that their business sector, their industry and their country needs. I would like to pose an hypothesis.
    What if the world is constrained in the supply of magnet performance boosting dysprosium by say 50%, just as a number?
    Does every magnet have to be limited to half its previous Dy percentage? Does it go from 8 to 4? Or from 6 to 3? Does it have to suffer the loss of performance for the sake of being average? Or do those applications that the world needs to ensure a technology future, a green energy future, a worlds best practice future deserve the limited dysprosium supply? Those applications that do not deserve the limited supply of Dy can make do with a lot less. While other more worthy causes take the world to a better place. I remember a few years ago seeing neodymium based magnets on $1 dolls to replace the function of buttons. Waste!!!
    So who decides which users of a limited dysprosium supply get supply? Those hi tech, green energy leaders, those businesses, industry sectors, countries who want to place themselves, in fact, need to place themselves at the forefront of the hi-technology and green energy revolution.
    So to those businesses, industries and countries who need specialised REO applications, what is your response?

    November 25, 2013 - 5:09 AM

    • Jack Lifton

      Steve,

      You make an uncomfortable point. In the USA’s current cockup with a poorly thought out expansion of medical coverage the same issue, the allocation of limited resources, is called the “death panel” issue. Who gets to decide who gets medical attention when there is only so much to go around? in the case of dysprosium I would think that the solution will be to prioritize as follows:
      1. The military
      2. Medical and safety
      3. Transportation
      4. Entertainment

      In the USA no one lobbies for the preservation of the lifestyle of the ordinary person, but suppliers to the military and the health industries use tens of billions of dollars to bribe public officials to allocate resources, mainly money, to their championed industries. All sense of proportion has been lost by the corrupt national government of the USA. Redirecting funds from a single warship, a squadron of 8 fighter planes, or a dam could insure a self-sufficient rare earth total supply chain for North America.
      Only China, Japan, and Korea seem to have “industrial plans” to ensure the survival of their high tech industrial bases. Europe is catching on to this also.
      America’s last chance is playing out poorly as its wealthiest disengage from the future and live in a cocoon of privilege and cash and carry government eager to be paid to perform.

      November 25, 2013 - 6:07 AM

    • Gareth Hatch

      Surely the market will decide?

      Commercial Nd-Fe-B magnet producers typically sell 20-30 different material grades, containing a range of Dy and other elemental content. The design engineer selects the grade on the basis of required magnetic performance, and his procurement person is asked to pay the going rate for the material. If that rate is too high for his taste, then either the additional cost is passed on to the customer, the design engineer’s company reduces its margins, or the design engineer is asked to re-design, perhaps by dropping down a grade or two, and figure out how to compensate for the lower robustness of the magnet accordingly.

      If “we” really need more Dy, “we” can get it, if “we” are willing to pay for it. Are things complicated by the fact that it is co-produced with the other rare-earth elements? Of course. But in the absence of artificial pricing shenanigans of the sort we say in 2010 and 2011, which initially had nothing to do with lack of supply, the market will surely turn marginal producers into economic producers.

      I have yet to see ANY real evidence of a Dy shortage, despite the issues of the past few years.

      November 25, 2013 - 12:24 PM

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  • Veritas Bob

    Jack,

    You wrote “We CANNOT engineer atoms to our specifications.”

    Well, maybe not yet, but hang in there baby, we ain’t seen nothing yet. Remember, even the great Ben Franklin said you can’t split the atom, and we know how that turned out. Who’s to say that some day there won’t be a genetic engineering meets fusion/fission for some kid of controlled atomic rearrangement?

    November 25, 2013 - 12:14 PM

    • Veritas Bob

      Well, “kid” was a typo (meant to be “kind”), but perhaps was actually a Freudian slip, now that I think of it. By analogy with designer kids (genetic engineering), I was suggesting we might some day get designer atoms, which is the controlled fission/fusion (or maybe something else) part? Maybe go down to your local cyclotron and pick up some designer atoms?

      November 25, 2013 - 3:12 PM

  • Eric Scerri PhD

    Dear Jack,
    An extremely interesting article on a very a propos topic.
    Can you recommend any good general accounts of how rare earths act in the way that they do in relation to their chemical and physical properties? I am looking to incorporate more about these elements in my UCLA teaching given their economic, geopolitical and technological applications. Please also get in touch via E-mail if possible for follow-up.

    regards,
    eric scerri, author of several books on the periodic table and elements
    http://www.ericscerri.com

    November 25, 2013 - 2:40 PM

  • Al

    Great article Jack!

    November 25, 2013 - 3:34 PM

  • gobucks

    A couple points–

    1. The minimization of rare earths needed to do a given job, driven by rising prices, is just good old-fashioned engineering. It’s what we do.
    2. Why should anybody have to decide on products with or without one rare earth element or another? Don’t we live in a “global” marketplace? Do I want a cell phone that weighs a couple ounces, or one that weighs a couple pounds–that’s the real choice. To wit–say a US-based Lab comes up with a magnet 90% as good as Nd-Fe-B/Dy. What do I care? I can still buy the real article elsewhere.

    Finally, a joke. A designer hears that ABC Company is touting a new, incredible “designer atom” based material, with properties far better than anything he’s seen. So he calls the sales rep and makes an inquiry for his potential application. The obliging sales rep says “why, yes, we are offering it for sale. How many micrograms would you like to buy?”.

    Guess you had to be there.

    November 25, 2013 - 5:28 PM

  • Bill Keenes

    A recent Goldman Sachs report states that HREEs are expected
    to remain in deficit and therefore become even more valuable.

    While China and other rare earth-producing countries will have a
    surplus of light rare earth elements from 2013 onwards, the world
    will see a shortage of heavy rare earths, the report notes.

    http://resourceinvestingnews.com/63235-uses-of-rare-earths-part-two-heavy-rare-earths.html

    November 25, 2013 - 11:36 PM

  • Elvios Lincoln

    I can assure you my company has in fact dramatically changed our mix of ferrite-ndfeb motors since 2011. There is a price that customers are willing to pay and a price they are NOT willing to pay. Some things will stay NdFeB because weight or efficiency demands it must. However, by definition, these things are smaller. Overall the required mass demand of rare earth magnets, for my company, is way down. However, our overall sales are higher than pre-recession.

    We also see dependence on heavy rare earth in the long run as a non-starter. We will embrace the new Japanese, heavy rare earth free free alloys.

    The current rare earth prices are significantly above 2010 pricing. This trend will keep the lid on significant rebound in demand, in my opinion as an end user.

    November 26, 2013 - 5:51 AM

  • J

    Jack,
    On one hand I agree with you on the point about creating new elements. On the other hand I beleive that these companies are not trying to create new elelemnts, instead the research is to find new combinations of elements that will give us the same or better properties than the ones produced with rare earths. Shutting the door on this type of research does not make sense. The following is a good example of this type of research:
    http://www.4-traders.com/SHOWA-DENKO-KK-6491222/news/Showa-Denko-KK–Showa-Denko-Develops-Dysprosium-free-Magnetic-Alloy-for-Factory-Automation-Applic-17499901/

    “Showa Denko Develops Dysprosium-free Magnetic Alloy
    for Factory Automation Applications
    Showa Denko K.K.
    Nov 26, 2013

    Showa Denko (SDK) (TOKYO:4004) has developed a new grade of neodymium-based magnetic alloy for factory automation (FA) applications, which alloy does not contain dysprosium (element symbol: Dy) but gives the same performance as conventional products in which Dy is added to increase heat resistance. SDK has started commercial production of the new product.

    While SDK has already commercialized Dy-free magnetic alloys for HDD voice coil motor and wind-power generation motor applications, the company this time has developed a new Dy-free magnetic alloy for FA applications, in which higher levels of Dy is usually added. The new technology will enable SDK to further reduce the levels of added Dy for more demanding applications such as electrically-assisted power steering and electric vehicles. Thus, the new technology will contribute toward solving the future problem of resource limitations.
    ….”

    November 26, 2013 - 1:14 PM

  • Eric Scerri

    Perhaps it’s because I am a naive academic but,

    1. Why would a company like Samsung encourage the press to write that there are efforts to find alternatives to REs or cheaper mixes even if it knew that replacements are not the way to go? Why even play such a game? Would they not be better served by admitting that elements are quite unique as Jack writes and that only a particular one serves for a particular purpose? Would companies not get better support from their governments in securing better supplies of REs if they told the “truth”, as Jack sees it, rather than adopting such double-speak?

    2. Now a general point. Surely the seeking of alternatives is the mother of invention. After all did not green technologies (that ironically depend so much on REs), emerge from a need to find alternatives to a dependence on oil? Even I am not so naive to think that it was just driven by the desire to save the planet from global warming.

    http://www.ericscerri.com

    November 26, 2013 - 3:23 PM

  • Godsons Li

    I agree with your point of view, now China is considering how to control the price of rare earth and get rare earth pricing

    November 28, 2013 - 9:35 PM

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