Rare Earth Elements Market Shares, Strategy, and Forecasts, 2011 to 2017

Table of Contents

Rare Earth Elements Executive Summary

Rare Earth Elements Executive Summary ES-1

China Becomes A Goliath In The Rare Earth Industry ES-1

Actions by China ES-1

Rare Earth Elements Market Shares ES-2

China Major Plans To Build A National Rare Earth

Resources Strategic Reserves Base ES-4

Rare Earth Elements Market Forecasts ES-4

Chinese Rare Earth Elements Companies Reduced ES-9

Rare Earth Elements Market Description and Market Dynamics

1. Rare Earth Elements Market Description and

Market Dynamics 1-1

1.1 Term Rare Earth Is A Misnomer. They Are Not Rare At All 1-1

1.1.1 Discovery Of Rare Earth Elements 1-2

1.1.2 Mountain Pass Molybdenum Corporation of America 1-2

1.2 Rare Earth Elements 1-3

1.2.1 Definition of Rare Earth Elements 1-4

1.2.2 NdFeB Has Superior Permanent Magnetic Properties 1-4

1.2.3 Rare Earth Elements 1-5

1.3 Rare Earth Minerals Key In Growth Of

Renewable Energy Technologies 1-8

1.4 Producing Rare Earth Oxides: No Small Task 1-9

1.4.1 China’s Clampdown On Exports 1-10

1.4.2 Dramatic Shift Is Beginning To Take Place 1-10

1.4.3 U.S. Rare Earth Deposits 1-10

1.4.4 Educational Awareness Of Rare Earth Elements 1-11

1.5 Rare Earth Minerals Industry 1-12

1.5.1 Global Consumption Of Rare Earth Elements 1-14

1.5.2 Chinese Consumption Of Rare Earth Elements 1-14

1.5.3 Demand for Rare Earth Products 1-17

Rare Earth Elements Market Shares and Market Forecasts

2. Rare Earth Elements Market Shares and Market Forecasts 2-1

2.1 China Becomes A Goliath In The Rare Earth Industry 2-1

2.1.1 Actions by China 2-1

2.1.2 Finding and Mining More Rare earth elements 2-2

2.1.3 Mountain Pass Mine in California Competing with China 2-2

2.1.4 Rare Earth Curbs May Prove a Windfall for

Molycorp, Lynas as Prices Surge 2-4

2.2 Rare Earth Elements Market Shares 2-5

2.2.1 China Major Plans To Build A National Rare Earth

Resources Strategic Reserves Base 2-13

2.2.2 Chinese Rare Earth Elements Companies Reduced 2-14

2.2.3 Molycorp Mountain Pass California 2-14

2.2.4 Alkane Rare Earth Market 2-15

2.2.5 Rare Earth Mineral Mining Market Shares 2-15

2.2.6 Rare Earth Mineral Market Production Shares 2-16

2.2.7 China 2-16

2.2.8 Glencore International AG 2-16

2.2.9 Lynas’ Mt. Weld 2-16

2.2.10 Molycorp’s Mountain Pass 2-17

2.2.11 Rare Earth Curbs Spur Opportunities for

Molycorp, Lynas 2-17

2.3 Rare Earth Elements Market Forecasts 2-18

2.3.1 Rare Earth Mineral Molycom Market Forecasts 2-23

2.4 Global Rare Earth Market Profile 2-28

2.4.1 Rare Earth Elements Applications, Including Magnets 2-32

2.5 Rare Earth Mineral Applications 2-34

2.5.1 Military 2-35

2.5.2 Communications 2-38

2.5.3 Hybrid Electric Vehicles 2-38

2.5.4 Clean Drinking Water 2-39

2.5.5 Aircraft 2-39

2.5.6 Incandescent bulbs 2-40

2.5.7 Rare-Earth 2-40

2.5.8 Displays 2-41

2.5.9 Rare earths Radar Systems 2-42

2.5.10 Gamesa Corp. Tecnologica SA Windmills 2-45

2.6 Rare Earth Elements Prices 2-47

2.6.1 Factors That Could Influence Demand For

Rare Earth Products and Push Prices Upward: 2-48

2.6.2 Molycorp 2-50

2.6.3 Price of Rare Earth Products 2-52

2.7 Chinese Rare Earth Mineral Quotas 2-54

2.7.1 Costs of Rare Earth Mineral Water Pollution And

Discharge Standards 2-56

2.7.2 Chinese Pay Toxic Price for a Green World 2-58

2.7.3 Japan And South Korea Have Built Up Stockpiles Of

Rare Earth Minerals 2-58

2.7.4 Japan Gets 20 Percent Of Its Rare Earth From China’s

Black Market 2-58

2.7.5 Costs of Rare Earth Mineral Water Pollution And

Discharge Standards 2-60

2.8 Rare Earth Elements Regional Analysis 2-61

2.8.1 Chinese Rare Earth Mineral Quotas 2-62

2.8.2 China Export Quota For The Second Half Of 2010,

Which Reduced Rare Earth Exports by 72% 2-64

2.8.3 Chinese Pay Toxic Price for a Green World 2-66

2.8.4 Japan And South Korea Have Built Up

Stockpiles Of Rare Earth Minerals 2-66

2.8.5 Japan Gets 20 Percent Of Its Rare Earth From

China’s Black Market 2-66

2.8.6 German Government Adopted A Strategy To

Secure Supply Of Raw Materials Including Rare Earths 2-67

2.8.7 Japan 2-67

2.8.8 Kyrgyzstan 2-67

Rare Earth Elements Product Description

3. Rare Earth Elements Product Description 3-1

3.1 China’s Rare Earth Elements Industry: 3-1

3.1.1 Rare Earth Elements Industry Severe Environmental

Damage in China 3-6

3.1.2 China Pollutant Discharge Standards 3-7

3.1.3 Rare Earth Deposits In China 3-9

3.1.4 Two Key State Rare Earth Elements Laboratories

In China 3-9

3.1.5 Two Other Laboratories In China Dedicated To

Rare Earth Elements 3-11

3.1.6 China Pursues Rare Earth Resources 3-11

3.1.7 Issues Facing China’s Rare Earth Resources 3-12

3.1.8 China Continually Worries About Depleting

Rare Earth Reserves 3-13

3.1.9 China Dominates Magnet Industry 3-13

3.1.10 China Major Plans To Build A National Rare

Earth Resources Strategic Reserves Base 3-14

3.1.11 Chinese Rare Earth Elements Companies Reduced 3-15

3.1.12 Bayan Obo Geology And Tectonic Setting 3-19

3.1.13 Carbonate Rocks of Bayan Obo 3-21

3.1.14 Mineralogy of the Bayan Obo Orebodies 3-21

3.1.15 Bayan Obo REE 3-23

3.1.16 Bayan Obo Deposits in China 3-28

3.1.17 Mianning Deposits in China 3-29

3.2 US Rare Earth Elements Industry 3-29

3.2.1 One Potential Threat to US REE From China 3-30

3.3 Molycorp Minerals 3-30

3.3.1 Molycorp Purchased Mountain Pass in 1951 3-32

3.3.2 Molycorp Mothballed Mine 3-33

3.3.3 Molycorp Minerals Expects To Produce 3,000

Metric Tons Initially 3-33

3.3.4 Molycorp Deposits Of Rare-Earth Elementss 3-34

3.3.5 Molycorp Hybrid Electric Vehicles 3-37

3.3.6 Molycom Water Purification 3-39

3.3.7 Molycorp Minerals Arsenic Sequestration Industrial

Process Waste Streams 3-41

3.3.8 Molycomp Rare Earth Elements Enable A

Wide Variety Of Defense Technologies 3-41

3.4 Lynas Corporation, Australian Mining Company 3-43

3.4.1 Lynas Corp, Mount Weld 3-44

3.4.2 Lynas Australian Block 3-44

3.5 Avalon / Thor Lake 3-45

3.6 Great Western / Hoidas Lake 3-45

3.7 Great Western, Rareco Steenkampskraal 3-45

3.8 Mt. Weld Carbonatite 3-45

3.9 India’s Heavy-Mineral Sands Deposits In The States of

Kerala, Orrisa, and Tamil Nadu 3-46

3.10 Re-cycling Rare Earth Minerals 3-46

3.11 Arafura Resources Ltd. 3-46

3.12 Alkane Resources Ltd. 3-47

3.13 Glencore International AG 3-47

3.14 German Government Adopted A Strategy To

Secure Supply Of Raw Materials Including Rare Earths 3-47

Rare Earth Elements Technology

4. Rare Earth Metal Technology 4-1

4.1 Rare Earth Ore Technology Description 4-1

4.1.1 Rare Earth Ores 4-1

4.1.2 MolyCorp Rare Earth Minerals 4-2

4.2 Rare Earth Elements Uses 4-9

4.2.1 La Lanthanum 57 4-9

4.2.2 Ce Cerium 58 4-9

4.2.3 Pr Praseodymium 59 4-10

4.2.4 Nd Neodymium 60 4-10

4.2.5 Pm Promethium 61 4-11

4.2.6 Sm Samarium 62 4-11

4.2.7 Eu Europium 63 4-12

4.2.8 Gd Gadolinium 64 4-13

4.2.9 Er Terbium 65 4-13

4.2.10 Dy Dysprosium 66 4-13

4.2.11 Ho Holmium 67 4-14

4.2.12 Er Erbium 68 4-14

4.2.13 Tm Thulium 69 4-14

4.2.14 Yb Ytterbium 70 4-15

4.2.15 Lu Lutetium 71 4-15

4.2.16 Y Yttrium 39 4-15

4.2.17 Sc Scandium 21 4-16

4.2.18 Loparite 4-16

4.2.19 Xenotime 4-17

4.2.20 REE 4-17

4.2.21 REE Supply 4-17

4.3 Rare Earth Elements Sources 4-18

4.3.1 La Lanthanum 57 4-18

4.3.2 Ce Cerium 58 4-19

4.3.3 Pr Praseodymium 59 4-19

4.3.4 Nd Neodymium 60 4-19

4.3.5 Pm Promethium 61 4-19

4.3.6 Sm Samarium 62 4-19

4.3.7 Eu Europium 63 4-20

4.3.8 Gd Gadolinium 64 4-20

4.3.9 Er Terbium 65 4-20

4.3.10 Dy Dysprosium 66 4-20

4.3.11 Ho Holmium 67 4-21

4.3.12 Er Erbium 68 4-21

4.3.13 Tm Thulium 69 4-21

4.3.14 Yb Ytterbium 70 4-21

4.3.15 Lu Lutetium 71 4-22

4.3.16 Y Yttrium 39 4-22

4.3.17 Sc Scandium 21 4-22

4.3.18 Dictionary 4-23

4.4 Disposal Of Rare Earth Metal Tailings 4-28

4.5 Rare Earth Minerals: US Environmental Regulations 4-31

4.5.1 Mine Health and Safety Laws 4-36

4.5.2 Molycorp Mountain Pass Facility 4-37

Rare Earth Elements Company Profiles

5. Rare Earth Elements Company Profiles 5-1

5.1 Alkane 5-1

5.1.1 Alkane Dubbo Project – New Revenue Numbers 5-2

5.1.2 Alkane Cudal – New Gold And Base Elements Discovery 5-3

5.1.3 Alkane Light Rare Earth Concentrate And A Heavy Rare Earth Concentrate 5-3

5.2 Arafura 5-5

5.3 Baotou League, East Mine, Bayan Obo 5-5

5.3.1 Bayan Obo Aeschynite-(Nd) : (Nd,Ce,Ca)(Ti,Nb)2(O,OH)6 5-5

5.4 Darhan Muminggan United Banner Main pit,

Bayan Obo (Bayun-Obo) 5-6

5.5 East Mine, Bayan Obo 5-8

5.6 Inner Mongolia Baotou Steel Rare Earth High-Tech Co 5-10

5.7 Lynas Corporation 5-11

5.8 Molycorp 5-13

5.8.1 Molycorp Mine Process and Development Plans 5-14

5.8.2 Molycorp Non-Binding Letter Of Intent With Hitachi 5-16

5.8.3 Molycorp Products and Markets 5-18

5.8.4 Molycorp Modernization and Expansion of

Mountain Pass Facility 5-19

5.8.5 Molycorp Acquired the Mountain Pass Facility on

September 30, 2008 5-19

5.8.6 Molycorp Revenues 5-20

5.8.7 Molycorp Revenues 5-23

5.8.8 Molycorp Mountain Pass Location 5-26

5.8.9 Rare Earth Reserves and Non-Reserve Deposits 5-28

5.8.10 Molycorp Customers 5-29

5.8.11 Molycorp Ore Processing 5-32

5.8.12 Molycorp Mine-to-Oxides 5-33

5.8.13 Molycorp Processing Technologies 5-34

5.8.14 Molycorp Oxides-To-Elementss/Alloys 5-36

5.8.15 Molycorp Alloy and Magnet Production Joint Ventures 5-37

5.8.16 Molycorp Decision to Double Original Planned

Production Capacity 5-38

5.8.17 Molycorp Sumitomo Investment 5-39

List of Tables and Figures

Rare Earth Elements Executive Summary

Figure ES-1 ES2

Rare Earth Elements Market Driving Forces

Figure ES-2 ES-3

Rare Earth Elements Market Shares, Dollars, 2010

Figure ES-3 ES-6

Rare Earth Elements Market Forecasts Dollars,

Worldwide, 2011-2017

Figure ES-4 ES-8

Samples of Rare Earth Compounds Displayed In

The Showroom At Inner Mongolia Baotou Steel

Rare-Earth Hi-Tech Co. in Baotou, Inner Mongolia,

Figure ES-5 ES-10

Close Up showing Bayan Obo, the world’s Largest

Rare Earth Mine, located north of Baotou, Inner Mongolia, China

Rare Earth Elements Market Description and Market Dynamics

Figure 1-1 1-7

Rare Earth Elements Table

Table 1-2 1-13

Rare Earth Elements Existing And Emerging Applications

Table 1-3 1-16

April 2010 U.S. GAO Briefing Conclusions

Rare Earth Elements Market Shares and Market Forecasts

Table 2-1 2-3

Steps to Starting New Rare Earth Elements Mine

Table 2-2 2-4

Rare Earth Elements Mine Time Consuming Step By Step Processes

Figure 2-3 2-5

Rare Earth Elements Market Driving Forces

Figure 2-4 2-6

Rare Earth Elements Market Shares, Dollars, 2010

Table 2-5 2-7

Rare Earth Market Shares, Dollars, Worldwide, 2010

Table 2-6 2-8

Rare Earth Market Shares, Production of Ore, Worldwide, 2010

Table 2-7 2-9

Light Rare Earth Market Shares, Production of Ore,

Worldwide, 2010

Table 2-8 2-10

Heavy Rare Earth Market Shares, Production of Ore,

Worldwide, 2010

Table 2-9 2-11

Rare Earth Element Markets, Segments of Ore Use

Table 2-10 2-12

Rare Earth Elements Regional Market Segments, Dollars, 2010

Table 2-11 2-13

Rare Earth Market Shares, Production of Ore,

Worldwide, 2008, 2009, 2010

Figure 2-12 2-20

Rare Earth Elements Market Forecasts Dollars,

Worldwide, 2011-2017

Figure 2-13 2-21

Rare Earth Elements Market Forecasts Tons of

Ore Shipped, Worldwide, 2011-2017

Table 2-14 2-22

Rare Earth Elements Reserves

Table 2-15 2-29

REEs Critical Materials To Existing Applications

Because Of Unique Properties

Table 2-16 2-30

Rare Earth Elements Market Segment Forecasts

Tons of Ore, Worldwide, 2011-2017

Table 2-17 2-31

Rare Earth Elements Market Segment Forecasts Percent,

Worldwide, 2011-2017

Table 2-18 2-35

Rare Earth Mineral Applications

Table 2-19 2-48

Factors That Could Influence Demand For Rare Earth

Products And Push Prices Upward

Table 2-20 2-50

Rare Earth Project Variables

Table 2-21 2-52

Rare Earth Products Prices

Table 2-22 2-53

Rare Earth Products Prices

Table 2-23 2-61

Rare Earth Elements Regional Market Segments,

Dollars, 2010

Table 2-24 2-62

Rare Earth Market Shares, Production of Ore,

Worldwide, 2008, 2009, 2010

Rare Earth Elements Product Description

Figure 3-1 3-5

Samples of Rare Earth Compounds Displayed In The

Showroom At Inner Mongolia Baotou Steel Rare-Earth Hi-

Tech Co. in Baotou, Inner Mongolia,

Figure 3-2 3-16

Close Up showing Bayan Obo, The World’s

Largest Rare Earth Mine, Located North of Baotou,

Inner Mongolia, China

Figure 3-3 3-18

Bayan Obo Mining Area

Figure 3-4 3-20

Geologic Map of Bayan Obo

Figure 3-5 3-22

Bayan Obo, the World’s Largest Rare Earth Mine, Located

North of Baotou, Inner Mongolia, China

Figure 3-6 3-26

Bayan Obo REE Ore Outcropping

Figure 3-7 3-27

Bayan Obo Outcrop of Bodies Of Massive Magnetite (MT)

And Hematite (HE)

Figure 3-8 3-35

Molycorp Rare-Earth Elementss Used for Wind Mills

Figure 3-9 3-36

Molycorp Deposits Of Rare-Earth Elements

Used to Make Wind Mills

Figure 3-10 3-37

Molycorp Hybrid Electric Vehicles Use of Rare Earth Minerals

Figure 3-11 3-38

Battery Pack for Toyota Prius

Figure 3-12 3-40

Molycorp Minerals Portable Clean Drinking Water Device

Table 3-13 3-42

Molycomp Rare Earths Critical To Many Defense

Related Applications

Figure 3-14 3-43

Rare Earth Mineral Night Vision and Optics Applications

Rare Earth Elements Technology

Figure 4-1 4-1

Rare Earth Ores

Figure 4-2 4-2

MolyCorp Rare Earth Minerals

Figure 4-3 4-3

Bastnasite Rare Earth Mineral Weight % of Total

Figure 4-4 4-4

Monazite Rare Earth Mineral Weight % of Total

Figure 4-5 4-5

Laparite Weight % of Total

Figure 4-6 4-6

Xenotime Rare Earth Metals Weight % of Total

Figure 4-7 4-7

Lateritic Rare Earth Ore Weight % of Total

Figure 4-8 4-8

Lateritic Rare Earth Mineral Weight % of Total

Table 4-9 4-33

Molycorp Sample Environmental Permits

Rare Earth Elements Company Profiles

Figure 5-1 5-5

Rare Earth Elements Mine Samples from

East Mine Bayan Obo China

Figure 5-2 5-7

Dolomite, Bastnasite, Parisite, and Magnetite

Figure 5-3 5-9

Rare Earth Elements Crystals

Figure 5-4 5-9

East Mine, Bayan Obo

Table 5-5 5-13

Molycorp Rare Earth Elements Development Goals

Table 5-6 5-15

Molycorp Initial Production of Rare Earth Elements

Figure 5-7 5-26

Molycorp Mountain Pass Location

Figure 5-8 5-27

Molycorp Open Pit Mine

Figure 5-9 5-38

Molycorp Rare Earth “Mine-To-Magnets”

Production Supply Chain