Resource World Magazine

16 www.resourceworld.com d e c e m b e r / j a n u a r y 2 0 1 6 On the demand side of the equation, Glencore's decision to suspend production is expected to hamper the ability of buyers to secure supply of the metal. rAre eArThS Although not as rare as the name suggests, the term rare earth elements (REEs) is used to describe the 15 lanthanide elements or metals, usually grouped with yttrium and scandium. The most common applications include high strength permanent magnets (used in electric vehicles, industrial motors, air conditioners, wind and tidal turbine generators), LED lights, colour monitors, medical equipment and catalysts. REEs are grouped as light rare earth elements and heavy rare earth elements. Europium, terbium, dysprosium, yttrium and neodymium have also been sub-iden- tified as "critical" rare earth elements by the US Department of Energy and are con- sidered materials of significant economic importance by the EU, the US and Canada. Prices soared in 2010 following an attempt by China, the source of 90% of global production, to corner the market, a move that sparked concerns about supply shortages. But as producers and explorers ramped up production plans and consum- ers switched to cheaper alternatives, prices had collapsed by the end of 2011. The price of europium, for example, soared from around $600 per kilogram in 2010 to a peak of $4,200 in the second half of 2011 before tumbling below $200 this year. Still, Canadian companies including, Commerce Resources and Avalon Rare Metals, are developing REE projects on the expectation of rising demand from key sectors such as the magnet industry. High strength neodymium magnets are an essential ingredient in consumer products such as microphones, loudspeakers, head- phones and computer hard drives. Commerce Resources has said its Ashram Rare Earths Project in Québec has the potential to be one of the largest and longest operating REE producers in the world. Avalon is also hoping to develop the Nechalacho Project in the Northwest Territories, describing it as the most advanced heavy rare element develop- ment project in the world outside China. Nechalacho could be brought into com- mercial operation within three years of starting construction, Avalon said. grAPhITe Like most commodities, graphite continues to languish in the face of a strong US dol- lar, the slowdown in China and the lack of economic growth in the US, Europe and Japan, particularly as it relates to the steel industry. Prices are currently in the order of $1,150/tonne for standard large flake material. This is well above the lows expe- rienced during the 1990-2005 period, but also well below the 2012 highs of $2,800/ tonne. However, industry analysts are look- ing to potential catalysts that could boost demand and drive prices higher such as expected growth in the electric vehicle industry. Grid storage could also create the same effect. Much attention has been focused on the Tesla Motors gigafac- tory, which is now under construction in Nevada and which is slated to be opera- tional in 2016. It means the clock is ticking on Tesla securing raw material supply agreements. It has been calculated that Tesla's annual sales target of 500,000 cars would require five or six new graphite mines. That is probably high but nonetheless, 500,000 cars is less than 1% of the annual new car market. EVs are not going to take over the new car market but it does not take much, a per cent or two is huge for the graphite industry. IroN ore The iron ore price (CFR China, 62%) dipped below $50/tonne for the first time since early July. At almost 84 million tons, iron ore stocks in Chinese ports are at their highest level since May. Commerzbank said the latest price slide is being accom- panied by a price war between leading iron ore producers and by an extremely pessimistic attitude among steel pro- ducers. According to the China Iron & Steel Association (CISA), the decline in prices and domestic demand this year is unprecedented. coAl Canada produces over 60 million tonnes of coal, split roughly in half between thermal coal (which is used to fuel power plants) and metallurgical coal, which is used to manufacture steel. While Canada consumes most of its thermal coal domesti- cally, virtually all of its metallurgical coal is exported. Canada accounts for over 10% of global supply. However, as the price of metallurgi- cal coal has plunged 70% in the past four years, it is tough for Canadian producers to compete. In May 2015, Teck Resources announced that it would suspend pro- 25,000 sq. ft Cargo Warehouse Now Open Come visit us at Booth 48 at the BC Natural Resources Forum 5,000 sq ft for lease. Please contact cargo@pgairport.ca

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