http://news.yahoo.com/s/nm/20090831/india_nm/india420934  

By Steve Gorman Steve Gorman – Sun Aug 30, 11:52 pm ET

LOS ANGELES (Reuters) – The Prius hybrid automobile is popular for its fuel efficiency, but its electric motor and battery guzzle rare earth metals, a little-known class of elements found in a wide range of gadgets and consumer goods.

That makes Toyota's market-leading gasoline-electric hybrid car and other similar vehicles vulnerable to a supply crunch predicted by experts as China, the world's dominant rare earths producer, limits exports while global demand swells.

Worldwide demand for rare earths, covering 15 entries on the periodic table of elements, is expected to exceed supply by some 40,000 tonnes annually in several years unless major new production sources are developed.

One promising U.S. source is a rare earths mine slated to reopen in California by 2012.Among the rare earths that would be most affected in a shortage is neodymium, the key component of an alloy used to make the high-power, lightweight magnets for electric motors of hybrid cars, such as the Prius, Honda Insight and Ford Focus, as well as in generators for wind turbines.Close cousins terbium and dysprosium are added in smaller amounts to the alloy to preserve neodymium's magnetic properties at high temperatures.

Yet another rare earth metal, lanthanum, is a major ingredient for hybrid car batteries.Production of both hybrids cars and wind turbines is expected to climb sharply amid the clamor for cleaner transportation and energy alternatives that reduce dependence on fossil fuels blamed for global climate change.

Toyota has 70 percent of the U.S. market for vehicles powered by a combination of an internal-combustion engine and electric motor. The Prius is its No. 1 hybrid seller.Jack Lifton, an independent commodities consultant and strategic metals expert, calls the Prius "the biggest user of rare earths of any object in the world."Each electric Prius motor requires 1 kilogram (2.2 lb) of neodymium, and each battery uses 10 to 15 kg (22-33 lb) of lanthanum. That number will nearly double under Toyota's plans to boost the car's fuel economy, he said.Toyota plans to sell 100,000 Prius cars in the United States alone for 2009, and 180,000 next year. The company forecasts sales of 1 million units per year starting in 2010.As China's industries begin to consume most of its own rare earth production, Toyota and other companies are seeking to secure reliable reserves for themselves.

Reuters reported last year that Japanese firms are showing strong interest in a Canadian rare earth site under development at Thor Lake in the Northwest Territories.A Toyota spokeswoman in Los Angeles said the automaker would not comment on its resource development plans. But media accounts and industry blogs have reported recently that Toyota has looked at rare earth possibilities in Canada and Vietnam.

Rare Earth Metals Background:  

A large, readily extractable supply of rare earths mined in the United States would represent a critical economic and strategic asset with a ready market. Thorium Energy, Inc’s mineral deposits contain quantities of gold in conjunction with minable and substantial quantities of commercial grade rare earth elements coexisting with the thorium deposits. Rare earths represent a particularly compelling and highly predictable commercial opportunity for the company. This is viewed as a near term source of revenue for Thorium Energy, Inc which could be potentially lucrative as well as capable of providing funds and leverage for the extraction and marketing of the thorium. 

Rare Earth Metals Applications:  

·          Cerium;                  Used in automotive emission control “catalytic converters” and in the chemical and oil industries as an oxidation and cracking catalyst also used in the manufacture of glass, paint and ceramic products.  

·          Lanthanum;            The critical material for the manufacturing of nickel metal hydride rechargeable batteries; universally used today in mass produced hybrid automobiles such as the Toyota Prius. Lanthanum is also used in fluid cracking catalysts for processing heavy crude oils and/or tar sands and the production of glass and ceramics.  

·          Neodymium;            The critical material for modern high strength light weight permanent magnets necessary for the electric motors for electric cars and the generators for wind powered turbine production of electricity  

·          Samarium;              Used in the production of magnets, lighting products and neutron absorbers.

·          Europium;               The critical material for the red color in all modern display applications such as television and digital projectors.

·          Gadolinium;            Used in electronics, for magnetic refrigeration (no moving parts or dangerous gases), and acts as an alloy agent.

·          Yttrium;                    Used in CRT production, lasers and semi conductors. 

New uses for rare earths as technology metals have grown exponentially during the last twenty-five years. Innovations in the automotive, oil, and electronics industries have generated applications for rare earths which are critical and irreplaceable. The automotive industry demands substantial quantities of neodymium in neodymium iron boron permanent magnet alloys. These magnets were developed for the automotive industry in order to shrink the size and weight of small electric motors while maintaining their power rating, thus reducing weight and unwanted bulges in car design. Magnets containing neodymium are also part of the mechanism that generates electric power in wind turbines.

Rare Earth Metals Market Discussion:

The projected proliferation of new wind farms over the next 10 years will add to the stress on the available supply of neodymium. Annual Neodymium demand for all uses is about 22,350 metric tons, of which 20,000 metric tons is directed toward the existing magnet sector. Demand for neodymium by 2014 is projected to be 36,500 metric tons, of which 34,500 metric tons is for magnets. Supply of neodymium in 2014 is estimated at 36,000 metric tons, which includes anticipated contributions from properties that have not yet been brought on stream.  The nickel metal hydride battery, invented in the 1980s, also contains large amounts of rare earths. The rechargeable batteries in cell phones have significant rare earth element (REE) content and each Toyota Prius hybrid car contains over 44 lbs. of rare earths (for batteries and electric motors). 

The critical metal for the production of the rechargeable nickel metal hydride battery is the rare earth metal lanthanum, which makes up about 1/3 of the total of all rare earths mined today, or 40,000 metric tons last year. The increasing production of hybrid automobiles by Toyota, Honda, and Ford has already strained the existing supply to the breaking point. To meet their stated mass production goals the OEM automotive industry must invest in the expansion of the production of the rare earth metals. In order for these end-users to minimize their country’s risk of depending on China it will be necessary for them to invest in rare earth mining in politically stable, rule-of-law, countries such as the USA. Thorium Energy, Inc. is ideally suited to be the recipient of such investment.  

Within the U.S. defense establishment, rare earth elements are particularly critical ingredients in smart bombs, guided missiles and other precision guided munitions. A large body of the USA's highest technology and most costly conventional armaments are dependent for its entire supply of certain critical REE materials on the People’s Republic of China. Replacement by U.S. sources can provide opportunities both financial and political.  World wide demand for all rare earths is estimated today (2009) to be more than 130,000 metric tons per annum; at this rate demand is now outstripping supply.

The PRC is the principal driver for the continuing reduction of rare earths export allocations. Recent alarming announcements from China indicate that it may immediately cut off the export of the heavy rare earths altogether (amounting to over 95% of the available supply, as of 2009) and eliminate them from their next five-year economic program (2010-2015). Domestic American production from Mountain Pass, California was more than 20,000 metric tons per annum at its peak. This source, which was the only producing mine in North America, ceased production in 2002.

Rare Earth Metals Legislative Discussion:

Recent congressional actions highlight the United States Government’s growing concern over the worldwide availability of rare earth materials necessary to support both the renewable energy and defense sectors.  Senator Evan Bayh (D-IN) and Representative Mike Coffman (R-CO) have both included amendments in the Fiscal Year 2010 National Defense Authorization Act requiring a government assessment of the availability of rare earth materials to support industry and the defense market.  These studies will culminate with a report that proposes a strategy for ensuring a long-term domestic supply of rare earth materials, a report Thorium Energy believes will spur increased interest in the domestic market.  

Rare Earth Metals Competition Discussion:

Currently, there is no Rare Earth Elements production taking place in North America., or anywhere of significance outside of China or not under Chinese economic control. This is due to the fact that Chinese mining and trading companies have recently bought controlling interests in two Australian mining operations each about to commence production of rare earth ores. This action effectively removed the Australian ores from the world market and targeted them for the burgeoning Chinese domestic market.  Chinese domestic demand for rare earth elements could easily equal Chinese production projected for 2012.

China has been anticipating this event for the last five years by steadily reducing the allocations of rare earth metals for export and by raising the export duty to a point where they can set the minimum price for rare earths. The purpose of this stratagem is to force foreign producers of rare earth based technologies to move their production to China, thereby creating jobs in China and bringing foreign technologies as payment for the opportunity.

Rare Earth Metals Summary:

Chinese controlled REE prices are expected to continue to rise dramatically. The Australian acquisitions by the Chinese may enable China to meet its projected domestic shortfall by 2014-15, but will also insure that without new production in North America the world will be cut off from any supplies of rare earths by 2014 at the latest. The only new North American resources and reserves of rare earths are currently being developed in Canada. A movement to reopen a California mine shut down by Chinese predatory pricing 15 years ago has been halted by regulatory concerns.  

Mining operations set to start up in Australia have, for the reasons outlined above, been removed from consideration as supply sources for non Chinese customers. Thus, the existing supply/demand situation augurs well for Thorium Energy, Inc.

It is important to note that the USGS has now recognized Thorium Energy’s deposits in the Lemhi Pass district of Idaho and Montana as one of only four proven substantial deposits of REE’s in the world outside of mainland China and Chinese control. Further it has been noted that Thorium Energy’s REE deposits show high levels of neodymium, which is perhaps the most critical metal on the technology horizon and without which there will be no wind power, electric vehicles, or computer hard drives.  

Thorium Energy, Inc:

19 East, 200 South, Suite 1080 ~ Salt Lake city, Utah 84111 USA http://www.thoriumenergy.com/

Ed Cowle: Phone: USA 1.914. 713.3129 ~ Email:  This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Jack Lifton: Phone: USA 1.248. 739.1729 ~ Email: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it