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Rare Earths: Global End-User Outlook

Rare Earths: Global End-User Outlook



Alexis Assimacopoulos of Core Consultants provides an overview of the global end use of rare earths and projects for the rare earth market at Metal Pages' Rare Earths Conference in Beijing September ...

Alexis Assimacopoulos of Core Consultants provides an overview of the global end use of rare earths and projects for the rare earth market at Metal Pages' Rare Earths Conference in Beijing September 2011



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    Rare Earths: Global End-User Outlook Rare Earths: Global End-User Outlook Presentation Transcript

    • Outlook Rare Earths: Global End-Use 15th September 2011 Contact: +27 11 465 8360 / +44 203 004 9683Metal-Pages Rare Earth Conference (Beijing, China) Email: info@coreconsultants.org Website: www.coreconsultants.org
    • Rare Earths have put Green Technology in the Black• Found in numerous modern technologies: computers, mobile phones, cars,ceramics, magnets, wind turbines, etc. Rare Earths do have their dark side though…
    • Overview1. End-Use Markets i. Permanent Magnets ii. Automobiles iii. Wind Energy iv. Glass v. Ceramics vi. Catalysts vii. Lap Tops viii. Mobile Phones2. Rare Earth Outlook
    • Permanent Magnets• Neomagnets (NdFeB) and Samarium-Cobalt magnets (SmCo)• SmCo are highly specialised: deemed too expensive unless for operation in highertemperatures (350°C) or strong erosion• NdFeB used in most modern technologies- below is a breakdown of itscomposition: Elements within NdFeB Percentage by Weight Neodymium (Nd) 29% - 32% Iron (Fe) 64.2%-68.5% Boron (B) 1%-1.2% Alumiunium (Al) 0.2%-0.4% Niobium (Nb) 0.5%-1% Dysprosium (Dy) 0.8%-1.2% Source: www.ndfeb-info.org
    • Year of the Rabbit not so productive as NdFeB prices soar• 2009: NdFeB prices in China rose 32% from RMB 52.5/kg to RMB 69.5/kg• 2010: As Nd prices rose, so too did NdFeB, a further 79% to RMB 124.7/kg• 1Q11: The threat of Nd shortage hits market; Prices rocket up 116% (RMB 269.1/kg)• 2Q11: The market keeps suffering as prices climb RMB 579.6/kg (115%)• July-August 2011: 700 Chinese NdFeB Prices (RMB/kg) NdFeB prices peaked at RMB 600 645.7/kg (521% y.o.y) in Mid- 500 July, but have since softened to 400 around RMB 429.4/kg- a 50.37% decrease m.o.m 300 200 100 0 Niche/growth markets focus 2009 2010 1Q11 2Q11 Jul-11 Aug-11 exclusively on NdFeB; long term growth now relies on Green Car penetration
    • Green Cars are driving the future of rare earths• Hybrid and Electric Vehicles (H/EV) are expected to lead the rare earth market-the global H/EV penetration rate will increase by 12% over the next decade• Global H/EV sales have increased 32% annually since 2004• Biggest growth in H/EV market from Germany (265%), UK (56%), and Japan (48%)• H/EV require: 1200000 1,4015kgs La2O3 H/EV Historic Sales1-1.5kgs Nd2O3 1000000 Sales (units) 1,200.1kgs Dy2O3 Penetration Rate (%) 1,00 800000 0,80 600000 0,60 400000 0,40 200000 0,20 0 0,00 2004 2005 2006 2007 2008 2009 2010 2011
    • Global Vehicle Production•By 2020, there will be 1.5bn cars on the road• During this time, the US and Europe will experience mild (3-5%) growth• China (64%) and India (231%) once again lead the production parade 120 Vehicle Production Outlook (m units)• Productionslumped to 10060.5m in 2009,but bounced 80 Indiaback to 75.9m USin 2010 60 Japan ROW• Production 40 China EuropeOutlook: over107m in 2020 20 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
    • Are H/EV’s too good for the market…? • Green Cars’ life span is 5 times longer than other vehicles • The “trade in” marketing strategy could become a thing of the past • Electric bicycle sales in China to increase 167% by 2015 3.500 Rare Earth Requirement for Electric Vehicles • China’s governmental 3.000 restrictions on electric La2O3 Required 2.500 bicycles could hamper Pr6O11 Required this potential growth 2.000 Dy2O3 Required tonnes Nd2O3 Required 1.50014m H/EV on roads by 1.0002020, but will they 500contain rare earths…? - 2010 2011 2012 2013 2014 2015
    • Wind Energy: all hot air or the future of green technology?• Permanent Magnet (PMG) systems used in new wind turbines- less $, more output• 1 tonne of Nd is required for every 4.5MW PMG motor installed• “Long term savings of Wind Energy include €42/MW for fuel and 0.69g/MW of Co2”(EWEA, 2009)• Substitutions for NdFeB are 450000 Installed Wind Power Capacity Outlook (MW)available- though are much more 400000expensive in the long run (even 350000 China India US Canada Germany Spainwith Nd prices this high) 300000 250000 200000 PMG penetration rate to 150000 increase 18% y.o.y; Wind capacity to reach 350 GW 100000 by 2020 50000 0 2010 2012 2014 2016 2018 2020
    • Glass: A stable market for rare earths, or a transparent shell?• Glass production in 2010 increased 10% from 2009• Demand for glass predominantly from Automobiles, Construction and Specialty• Annual glass demand over last decade has grown 4-5% 100 93% Glass Outlook• Increased vehicle production 90(as aforementioned) should see 80 92%glass remaining a fairly stable 91% 70market source in the medium-long term, though with little m tonnes 60 90%room for independent growth 50 89% 40 30 88% 20 87% 10 0 86% 2010 2012 2014 2016 2018 2020 Available Capacity Demand Capacity Utilisation (%)
    • Global Glass Production• China:  Capacity utilisation has improved (90% in long term)  Market consolidation currently underway• Europe:  EU drop CO2 emissions 20% by 2020- demand for solar panels will boost  Mature market which will see small growth of 2% over medium term Total Flat Glass Production 2010• North America: Rolled Sheet Recession hit construction demand 5% 5% 3.5-4% increase in med-long term Long term growth to come LQ Float HQ Float 35% from specialty glass, 55% especially solar panels in developing nations
    • Ceramics• 9% CAGR since 2006• 2009: first period of negative growth in ceramic market history (-0.1%)• Asia currently produces 5.5m m2, 65% of global production• Middle East/Africa ceramic production up 50% since 2009 Ceramic Consumption 2011 Sanitaryware 5%Ceramic market looks to grow4% over medium-long term, Tableware 18%with Asia once again leadingthe charge Construction 77%
    • Catalysts• Used mainly in the processing of crude oil into gasoline using Fluid CatalyticCracking (FCC)• Crude oil demand/supply impacts demand for FCC: less fuel, less catalysts• Catalyst CAGR 4- 120 Oil Prices ($/bbl)8% over long term 100 80Long term rare 60earth usage incatalysts could 40become diverse,growth of 4-8% 20is expected 0 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
    • Lap Tops • US lap top sales have increased 240% since 2000 (22.5% of market) • Since 1990, Global computer sales have increased 1254% • Lap top penetration rate will peak at 70% in 2015 (23% from 2010) 1200 80% Computer Sales (m units) 70% 1000 Laptop Sales1.75bn lap tops are 60% Global Salesexpected to be in- 800 50%use by 2020 600 40% 30% 400 20% 200 10% 0 0% 1990 1995 2000 2005 2010 2015 2020
    • Mobile Phones• Smart phones have begun overtaking feature phones• iPhone 4 sold 20.3m units in 2Q11, will the iPhone 5 top that?• Asian penetration low• China (26%) and India (48%) have long-term potential Global mobile phone penetration to increase 33% by 2020
    • Outlook for Rare Earths 450000 Long Term Rare Earth Demand 400000 Other Phosphors 350000 Metal Alloys 300000 Catalysts 250000Tonnes 200000 150000 100000 50000 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Long term rare earth end-use will be tough, but ultimately profitable
    • The Rare Earth Market: A Monthly Analysis for the Rare Earth Industry• THE monthly report on rare earths• End-use and price outlook• Available in English or Mandarin*• Data and excel files provided• Have your company profiled *Translated by Metal-Pages
    • Upcoming Core Consultants’ Report Titles Quarterly Analysis of Trends in the Ferrochrome & Stainless Steel Industry Authored and Published by Core Consultants, reviewed by Andrew Jones Resource-Net Quarterly Trends in the Manganese Market Authored by Core Consultants, Published in Chinese by FerroalloynetSino African Relations: An in-depth review of recent Chinese commodity deals and future strategy in Africa A joint venture between Core Consultants & Beijing Axis Quarterly Trends in the Iron Ore MarketAuthored and Published by Core Consultants, Published in Chinese by Steelhome Global Lithium Market Outlook-Projections and strategies to 2020 for a new era of demand Authored by Lara Smith, Published by Metal Bulletin Research 18
    • Core Consultants’ Service Offerings1 Consultancy •Corporate Culture Consulting •Due Diligence & Economic Consulting2 Modelling •Customised Excel Model Building •Model Reviews & Assurance3 Research •Bespoke Research •Commodity Subscription Research4 Customer Satisfaction Surveys5 Corporate Training 19
    • Disclaimer• This document is for information purposes only. The information contained in this document has been compiled from sources believed to be reliable. Whilst every effort has been made to ensure that the information is correct and that the views are sound, Core Consultants cannot be made liable for any loss, no matter how it may arise.• Certain statements contained in this presentation constitute forward-looking statements. Such forward- looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from actual future forecasts. Investors are cautioned not to place undue reliance on these forward-looking statements• Copyright Notice © Core Consultants, 2011. All rights reserved. No part of this publication (text, data or graphic) may be reproduced, stored in a data retrieval system or transmitted, in any form whatsoever or by any means (electronic, mechanical, photocopying, recording or otherwise) without obtaining Core Consultants’ prior written consent. Unauthorised and/or unlicensed copying in any part of this publication is in violation of the copyright law.• Violators may be subject to legal proceedings and liable for substantial monetary damages per infringement as well as costs and legal fees. Brief extracts may be used for the purpose of publishing commentary or review only provided that the source is acknowledged. 20
    • Contact Details 21