“Can China’s Rare Earths Dynasty Survive?”
September 2013 Extract
Professor Dudley Kingsnorth
Curtin Graduate School of Business, Curtin University
& Industrial Minerals Company of Australia Pty Ltd
China’s Industrial Minerals and Markets Conference
Disclaimer
(“Forward Looking Statements”)
The statements in this presentation represent the considered views of the Industrial
Minerals Company of Australia Pty Ltd (IMCOA) and the Office of Research &
Development at Curtin University (“Curtin”), Western Australia. It includes certain
statements that may be deemed "forward-looking statements." All statements in this
presentation, other than statements of historical facts, that address future market
developments, government actions and events, are forward-looking statements.
Although IMCOA and Curtin believe the outcomes expressed in such forward-looking
statements are based on reasonable assumptions, such statements are not guarantees
of future performance and actual results or developments may differ materially from
those in forward-looking statements. Factors that could cause actual results to differ
materially from those in forward-looking statements include new rare earth applications,
the development of economic rare earth substitutes and general economic, market or
business conditions.
While, IMCOA and Curtin have made every reasonable effort to ensure the veracity of
the information presented they cannot expressly guarantee the accuracy and reliability
of the estimates, forecasts and conclusions contained herein. Accordingly, the
statements in the presentation should be used for general guidance only.
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Disclosure
Professor Dudley J. Kingsnorth, through the Industrial Minerals Company of
Australia Pty Ltd (“IMCOA”) and Curtin University provides rare earths market and
project development advice to a number of rare earths consumers and producers
This advice is provided on a fee for service basis; with no success or promotional
fees or obligations. There are Confidentiality Agreements in place with many of
these companies, but this does not preclude comment on the public information
available on these companies.
Neither Professor Kingsnorth nor IMCOA own any securities in rare earths
companies. Similarly, Professor Kingsnorth does not hold any executive or nonexecutive positions in any company associated with the critical materials sector.
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IMCOA
Total Rare Earths Demand 2004 to
2012
Estimated Global Rare Earths Demand 2004 to 2012 (t REO ±20%)
(Source: IMCOA-Curtin and Rare Earths Industry Stakeholders)
Year
China
Japan +
N.E. Asia
USA
Europe
+ Others
Total
China’s
Share
2004
38,000
26,000
14,000
12,000
90,000
42%
2006
60,000
26,000
13,000
11,000
110,000
55%
2008
70,000
28,000
15,000
11,000
124,000
56%
2010
74,000
24,500
15,000
9,500
123,000
60%
2012
74,000
18,000
17,000
6,000
115,000
64%
4
Demand and Supply for Rare Earth
Groups in 2012 (±20%)
Rare Earth Oxide
Group
Light Rare Earths
(La, Ce. Pr & Nd)
Medium Rare Earths
(Sm Eu Gd)
Heavy Rare Earth
(Tb, Dy, Er & Y)
5
Demand: Tonnes REO
Global
102,500t
China
64,500t
(63%)
Production: Tonnes REO
Global
China
98,500t
3,500t
2,500t
2,000t
(80%)
4,000t
2,250t
(90%)
10,000t
7,500t
75%
7,500t
7,250t
(95%)
Forecast Rates of Growth 2013-2016
(Note: 1. Now that Mountain Pass and Mt Weld are scheduled to be in production at their Phase 1 design capacities in early 2014
IMCOA is of the view that there could be renewed interest in rare earths, given the associated diversity of supply. 2. The
Forecasts below are based on current trends)
Forecast Global Growth Rates 2013 to 2016
Application
Growth between 2013-2016 with Comments
Catalysts
Steady growth at 4-6%pa 2013 to 2016, which IMCOA believes may improve with better availability and lower cerium
and lanthanum prices
Glass
Minimal growth in 2012; as more cerium becomes available in 2013 to 2016 growth at 4-6%pa
Polishing
Huge growth in 2010/11 due to polishing needs of touch screens, high prices tempered growth in 2011/12. Growth at 510%pa 2013 to 2016, but could be greater with lower cerium prices
Metal Alloys
The biggest unknown is the rate of take-up of Li-ion batteries. IMCOA forecasts growth 2013 to 2016 at 6-12%
Magnets
Price and availability a constraint. Forecast growth 2013 to 2016 of 8-12%pa; which could be greater if more of the rare
earths used in permanent magnets were to become available on a long term sustainable basis, at reasonable prices.
Phosphors
(including Pigments)
The new lighting devices , television and computer screens use less rare earths as a result there are now clear signs
that demand is static. Pigments for plastics, textiles and cosmetics is a high growth sector. Recently, IMCOA has
modified overall forecast growth rates to 0-4%pa, but the market may well contract if the current trend continues.
Ceramics
Steady growth rates at historic rates of 4-6%pa
Other
The use of cerium for water purification is included as a high growth application. Other new applications could include
use of Gd in refrigeration. Growth rate of 6-10% 2015 to 2016
Compound Average
Rate of Growth
Following a minor recovery in demand of 5% in 2012, IMCOA forecasts a CAGR for 2013-16 of 6-12%%pa, marking a
recovery as alternative supplies to China come on-line. However, if China restricts the export of HREEs then this rate of
growth would be constrained.
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IMCOA
The Outlook to 2016
 Will China be more transparent with its intentions/forecasts?
 China will not directly deny rare earths to ROW; but it will continue
to take the measures necessary to maximise ‘value add’ within
China.
 Consolidation of Chinese industry will continue.
 Impact of Baotou Rare Earths Trading Platform could become
significant and set a global pricing benchmark.
 With a greater diversity of supply; R&D in ROW will switch from the
3Rs to developing new applications and more efficient processing.
 The supply of heavy rare earths will remain a concern
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IMCOA
Rare Earths Market: 2013 to 2016
Demand
Year
Total
China
Supply
China
Share
ROW
Total
China
China
Share
ROW
2013f
125,000t
85,000t
68%
40,000t
122,500t
100,000t
82%
22,500t
2014f
136,000t
91,000t
67%
45,000t
143,000t
105,000t
73%
38,000t
2015f
148,000t
95,000t
64%
53,000t
161,000t
110,000t
68%
51,000t
2016f
160,000t
99,500t
62%
60,500t
182,500t
115,000t
63%
67,500t
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IMCOA
Supply & Demand Trends 2016-2020
 Demand in 2020: 200-240,000tpa REO.
 Demand trends:
 Greater availability of non-Chinese products.
 Greater total supply chain management .
 Growth will be limited until new ROW producers are proven.
 Supply in 2020: 240-280,000tpa REO
 Supply trends:
 Availability of HREEs will remain an issue.
 Ongoing consolidation of industry worldwide.
 Will low iron ore prices impact on the viability of Baogang?
 Long Term Prices: US$50-70/kg REO (weighted average consumption basis)
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IMCOA
Potential Impacts on Rare Earths
Demand Forecasts
1. Slower take-up of Li-ion batteries by the automotive sector.
2. Rapid growth in demand for Ce-based water and waste
treatment.
3. Demand for rare earth magnets increases to 20-25%pa due to
increased supply (<US$75/kg Nd2O3)
4. Contraction in demand for phosphor rare earths due to rapid takeup of LEDs.
5. Combination of 1-3 could increase demand in 2020 >250kt REO
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IMCOA
The Outlook for Rare Earths in 2020
 Technology will be the key to new projects and new applications.
 ROW consumers will be able to look forward to a sustainable supply of
light rare earths – new applications will be developed with confidence.
 The supply of heavy rare earths will remain critical for the foreseeable
future.
 Supply of neodymium will be critical – to support growth of 15-25%p.a.
the price will need to be <US$75kg Nd2O3
 The supply of heavy rare earths (Eu, Tb and Y) will remain critical until
heavy new rare earth projects are successfully developed outside
China.
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IMCOA
Any Questions?
Professor Dudley J. Kingsnorth
Curtin University
Executive Director, Industrial Minerals Company of Australia Pty Ltd
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IMCOA