Monday, January 18, 2010

Lithium and REE: Toyota Hits The Accelerator On Hybrid Production, But Will They Have The Rare Metal Supply To Do So? TNR.v, CZX.v, WLC.v, RM.v, LI.v,

It is our second investment bottleneck. This investment area could have even more potential then very exciting Lithium opportunity itself. If in Lithium space resources are presented in more or less available form even in a tightly controlled market, REE market is controlled by China with over 95% of the market under its influence.
"If we decided to drive electric cars and charge their Lithium battery with wind, solar and other green power generated energy - time is study Rare Earth Elements. Every time you click on your Blackberry, iPhone or use your PowerBook you are at the mercy of all these elements.
There are Rare Metals like Lithium, Tantalum and Niobium among them and Rare Earth Elements:
"The REE group is considered to include the 15 lanthanide elements: lanthanum, cerium, praseodymium, promethium (does not occur naturally), neodymium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium. The elements yttrium and scandium are also included as they have similar chemical properties, making 17 REEs in total."Rare Earth Elements Molycorp Video
Neodymium magnet is at the heart of Green Energy Revolution - strongest rare earth magnet available it allows to make a smaller lighter and more powerful electric motors used in hybrids, electric cars and wind turbines."


By: Darrel Whitten Monday, January 18

The Nikkei is reporting that Toyota (7203) now plans to boost hybrid car production by two-fold in 2011 from 2009 by boosting volume of its best-selling Prius model as well as the introduction of 10 new hybrid models in the next 2~3 years.

Toyota plans to claw its way back from heavy losses in FY2009 and lagging market shares in BRICs/emerging markets by getting back to its production roots and hitting the accelerator on hybrid production, particularly in its domestic factories, but also by increasing production overseas in Thailand, Australia, China, the UK and the US. By 2012, the Company aims to be producing 1.1 million hybrid units, versus total global production of 6.40 million automobiles in 2009.

The problem is, these materials could become the new crude oil of the 21st century, with all developed and newly emerging nations scrambling to ensure supply of a finite resource, for which Japan is almost completely dependent on imports. For example, global automobile production uses over 130 tons of platinum annually, while hybrid automobile production is expected to be the main driver of lithium demand for lithium-ion batteries used in these cars.

Like other developed nations, Japan is now in full strategic development mode to ensure it and its major companies like Toyota have sufficient supply of key rare earth metals to support its new push toward clean, high tech products--in Viet Nam, the Republic of Kazakhstan, Brazil, Canada, Bolivia and virtually anywhere in the world where such resources exist. Japan's METI already established a formal strategy to ensure supply of rare metals in July 2009 that includes a) government support for, a) basic material diplomacy, b) recycling/recovery of resources in Japan, c) development of replacement materials for rare earths and d) strategic stockpiling of seven rare earths in addition to indium, gallium, cobalt and tungsten in order to ensure a 60 day supply of these materials.

In doing so, they are competing with France, other developed nations and China to secure these resources. China itself now produces 97% of current production of rare earth metals, 75% of tungsten and 58% of indium, but is already beginning to restrict exports of these key materials.

In a mass production and consumption society like Japan, their best source of such materials may lie in the mountains of consumer electronics and mobile phones that are discarded every year. For example, it is estimated that their are 1,500 tons of recoverable indium in the TVs that Japan's discards every year, equal to just under 40% of the proven reserves in the world, while the recoverable gold is equal to 16% of the world's reserves.
However, while there is estimated to be JPY100 worth of recoverable metals in each discarded mobile phone, the price of gold contained therein accounts for over half of this, while the 10 varieties of rare metals contained are worth only around JPY10. In other words, rare metals used in such products is like the spice used in cooking food, i.e., absolutely necessary, but not the main ingredient.

However, because of the small amount of existing production, world demand for rare earth metals used in cell phones, hybrid cars, wind turbines and many electronic applications is currently over 110,000 tons/year, and expected to grow some 71% to 188,000 tons by 2012 (US
Geological Survey), while world demand is expected to exceed supply by some 40,000 tons/year in several years.

Popular hybrid car models such as the Toyota Prius, Honda Insight and Ford Focus all use these metals. In fact, some experts of metals consider the Prius as the largest consumer of rare earth metals 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.

An estimated 15% or so of lithium output is used in batteries today, but that figure is forecast to jump to about 40% by 2020 due to rising demand for lithium-ion car batteries. The market size of lithium-ion batteries for eco-cars is estimated to grow to slightly less then JPY400 billion ($4.2
billion) in 2015 before swelling to nearly JPY1 trillion in 2020.

As a result, global industry could end up moving from the frying pan into the fire in their rush to reduce dependence on fossil fuels, at least for automobiles, and Japan's import dependency on key raw materials could become worse, not better, as emerging countries such as Bolivia where these new materials are located hold the developed and emerging countries ransom for these materials. After all, the lessons of OPEC and the wealth that crude oil has brought to the Middle East and to other developing nations like Venezuela are not lost on these countries."
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