This document discusses emerging trends related to specialty metals and infrastructure investment opportunities. It notes that demand for specialty metals is driven by technological advancement and that supply is constrained. Infrastructure projects focused on pipelines, electrical grid upgrades, and water/wastewater treatment could help rebuild infrastructure in a cost-effective manner while creating jobs. Smaller, less intrusive government is also seen as a positive trend. Overall the document advocates that specialty metals and infrastructure are well positioned given emerging demand drivers.

1. Change We Can
Believe In
Richard Karn
Managing Editor
The Emerging Trends Report
Anchorage, Alaska

2. What is the fundamental difference
between these elements?

3. GEOLOGY FOR LIBERAL ARTISTS
elements having a higher atomic number than iron
(Z>26) cannot be formed by nuclear fusion processes
in stars
originate only by neutron or proton absorption of
already existing bigger nuclei.
these capture processes with extremely high fluxes
of neutrons and protons occur exclusively in massive
stars during the end of their life cycle
a supernova explosion both creates these elements
and distributes them through space as 'ash' in an
interstellar cloud
solar system formed by condensation, contraction
and subsequent collapse of an interstellar cloud
> 99% of the matter of the solar system was
concentrated in the sun
the rest is contained in planets, meteorites and
comets

4. Planetesimals were formed out of dust and ice particles; consequently, planets
were built up by collisions of planetesimals.
The material remaining outside the sun has undergone one or more of the following
processes: oxidation, accretion, melting, segregation, and fractional crystallisation.

5. Various transportation and concentration mechanisms over countless cycles
create accumulations of these elements in compounds that sometimes are
economic to mine—most are not
The probability of elements > 26 forming then, is low--as is their relative
abundance

6. Source: USGS

7. Specialty Metals Experiencing
Supply Threat

8. 48 Specialty Metals Experiencing Supply Threat
(number of threats)
Sovereign Risk Scarcity No Substitute By-product Dissipative Use
antimony (5) beryllium (3) bismuth (3) cobalt (3)
fluorspar (2) gallium (3) germanium (3) graphite (3)
hafnium (2) indium (3) lithium (2) magnesia (3)
manganese (2) molybdenum (2) niobium (4) 6 PGMs (5)
15 REEs (4) rhenium (3) scandium (3) selenium (4)
silicon (2) silver (3) tantalum (2) tellurium (4)
tin (3) titanium (2) tungsten (3) vanadium (2)
zirconium (3)
8

9. Specialty Metal Demand Drivers
 Endless pursuit of higher quality, ever more efficient devices at ever
lower prices
 Technology-enabled explosion in material science R&D
 Unique performance characteristics in tech alloys
 Limited substitution + trace amounts used = price inelastic
 Scarcity or byproduct sourcing = supply inelastic
 Many have dissipative uses but no recycling protocols
 Specialty metal demand trajectory is discovery-driven and largely
independent of GDP (unlike oil, base metals, lumber etc)
…cycle back to top and repeat—faster.
www.emergingtrendsreport.com

10. Ruthenium HDD example
HDD Capacity Growth
The Great Stabilizer:
- 3G and 4G super alloys (Ni, Co, V, W, Mo + Re)
- perpendicular bit stacking HDDs
- artificial photosynthesis
- nano-lattice for targeted drug delivery Note that the vertical axis is logarithmic, so
the ‘fit’ to reflect growth in HDD capacity
reflects exponential growth.

11. Scandium: Industry-Changing Potential
 Scandium (Sc) in aerospace:
• Scandium is the most potent grain-refining agent known for aluminium (Al)
• 98% Al : 2% Sc super-alloys have the highest strength-to-weight ratio in use today
• Significantly improves strength, durability, plasticity, and corrosion resistance
• Renders aluminium weldable without heat cracking (rivet-free aircraft)
• Reduces weight and build-cost, improving fuel efficiency and aerodynamics
 Scandium in Solid Oxide Fuel Cells
• > 12 Patents replace Y in Yttrium Stabilized Zirconium electrolytes with Sc
• Lower operating temperature extends fuel cell life and makes housings cheaper
• Critical for fuel cell dynamics and economics
 Scandium in Lighting
• Scandium combusting on the sun is what gives us ‘sunlight’
• Widespread use in film set and stadium lighting to replicate daylight
• New environmentally benign incandescent replacement
 Closest analogue is the Niobium market in 1970’s (today worth US$5-7B
annually from single supplier)

12. Scandium: Demand is there, Supply is lacking
 Global Sc production +/- 8 tons per annum (tpa) sourced primarily as a by-
product from China (REEs), Russia, Ukraine, Kazakhstan (U)
 Aerospace industry and Bloom Energy alone would like to see stable supply
of 300 and 30 tpa respectively of Sc production before retooling
 USGS-quoted price for Sc2O3 is US$1400/kg ($1.4M/ton); anecdotal market
price is US$2,000 – 5,000/kg—when you can get it
 Known Australian JORC-compliant Sc resources:
– Metallica Minerals Ltd: 16.8 Mt @ 130 g/t Sc (2175 t Sc metal/ 3200 t Sc2O3)
– Jervois Mining Ltd: 12 Mt @ 261 g/t Sc (3100 t Sc metal/4700t Sc2O3)
– Platina Resources Ltd: 10.1 Mt @ 340 g/t (3400 t Sc metal/ 5100 t Sc2O3)
 Combined, a 90% recovery rate indicates Australia has enough Sc to supply
global markets with 390 tpa of Sc metal, or 630 tpa of Sc2O3, for 20 years
without further exploration success

13. Why is the Bull Market in Specialty Metals
Being Overlooked?
 Not easy to invest in: mis- & disinformation
 Murky pricing: few are traded on an exchange
 Off-exchange traded metals are unhedgeable
 Many are by-products and sold forward
 Pricing is discovery-driven, not GDP-correlated
 Free Marketeers in denial about Neomercantilist intentions
 Troubles in the EU, USA and Japan—and increasingly in the BRICS
www.emergingtrendsreport.com

14. Specialty Metals in Electronics
Hageluken, Christian:”Sustainable metals recycling from waste electronics”; South Pacific Regional E-waste Workshop; Brisbane, QLD, 21.07.2010.
www.emergingtrendsreport.com

15. Underappreciated but Critical Driver:
eWaste
 321m computers sold globally in 2010-- 98m in US alone
 1.3b cell phones sold globally in 2010; number in use surpasses 5.0b
(Gartner)
 123,000 computers are discarded every day in the US--19% are recycled
 402,000 cell phones are discarded every day in the US--13% are recycled
(EPA)
 200 g/t Au in PC motherboard scrap;
 mobile phone scrap: 340 g/t Au, 3500 g/t Ag, 140 g/t Pd, 130 kg Cu (EPA)
...another is the US
www.emergingtrendsreport.com

16. In 2011, the US...
 produced 23.0 trillion cubic feet of natural gas (#1)
 produced 5.67 million barrels of oil (#3)
 oil reserves worldwide have grown from 642 billion
barrels in 1980 to more than 1.3 trillion barrels in 2009
 has the richest oil shale deposits in the world—
estimates are there are about 1 trillion barrels of
recoverable oil (4 x Saudi Arabia)...and now Canadian
oil sands are considered the second largest

17. Paired Trade: long North American chemical and fertilizer companies, short everyone else

18. Combined crude and product pipelines: 148,622 miles/238,000 km
Combined nat gas transmission and gathering pipelines: 321,944 miles/515,000km
(including distribution mains: 1,539,911 miles/2,463,850 km)
Source: BTS, 2009 data

19. 1. less joy-riding/cruising + increasing use of public transit
2. more on-line and purposeful shopping
3. less gasoline stored in car gas tanks as people only buy for their immediate needs
(254m cars & trucks averaging 20 gals per = 5 B mobile storage)
4. improved fuel efficiency
5. alternate energy fuels, esp. nat gas (Clean Energy Fuels), fleets of municipal buses and
delivery vehicles (UPS) and taxis are growing, far outpacing sales of hybrids and EVs
...but since 1980, the population has grown from 234m to 313m: so a 34% increase in
population was attended by a 47% drop in retail gasoline deliveries--25% of the drop of
which occurred in the second half of 2011 alone.
Sustained high price reflects refineries closing along the eastern seaboard

20. “The addition and withdrawal of intermittent electrical generation to
the grid, such as that from solar and especially wind, have contributed
to the decline in the reliability of the North American electrical grid.”

21. "Beef prices have climbed about 30% over the past two years and roughly 10% from February
2011 to February 2012," said J. Pawlak, restaurant research and consulting firm. (WSJ)
...and then there is ethanol.

22. How sustainable is this?
 Since 1980, the US has created more than 160,000 laws but has
repealed only 79
 The longest document ever written is... The US Tax Code (85,000
pages and growing annually)
 The number of US Federal government employees has doubled
over the last decade (14:1 tax receipts: Fed employee salary)
 Small Business Administration (a government body): "regulations
in general add $10,585 in costs per employee per year."
 ...Peak Government
...the end of the Welfare State
...Thatcher Moment

23. "When you out-go exceeds you income,
your upkeep becomes your downfall."

24. “Something that can’t go on, won’t”

25. "Only in America could the rich people who pay
86% of all income taxes be accused of not
paying their ‘fair share’ by people who don't
pay any income taxes at all."

26. Change We Can Believe In
 Reform is in the air: ‘12 & ‘14 elections
 Smaller, less intrusive gov’t
 Just enforce the regs and laws we have
 Major O&G pipeline RR&E, electrical grid + storage, water
& wastewater treatment
 Infra rebuild: cheap, creates jobs, expands productive side
of economy
 Spec Mets are leveraged to the massive demand on the
horizon