neodymium and praseodymium (ndpr) · too believe this is the future of our society, peak should be...

ENABLING LOW CARBON TECHNOLOGIES

Neodymium and Praseodymium (NdPr)

The biggest blind spot in the global

commodity market

A commodity and industry focused

white paper by Peak Resources

Author: Michael Prassas October 2017 / Updated February 2018

“NdPr: The Biggest Blind Spot in the Global Commodity Market” February 2018


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Table of Contents Foreword ................................................................................................................................................................ 4 What are Rare Earths? .......................................................................................................................................... 9

General Application Overview & Rare Earth Definitions ...................................................................................... 9 The Market and it’s Dynamics ............................................................................................................................ 10

Supply – China’s Almost Absolute Control of the RE market ............................................................................ 11 China ............................................................................................................................................................. 11 Illegal Mining ................................................................................................................................................. 14 China’s Rare Earth Industry Consolidation and the Way Forward ................................................................ 15

Supply: Rest of the World.................................................................................................................................. 18

NdPr Demand Supported by Global Legislation – Not If But When ................................................................ 19 Why Peak? ........................................................................................................................................................... 21 The Premier NdPr Development Story Globally ............................................................................................... 21

The Management Team .................................................................................................................................... 22 The Asset – The Ngualla Rare Earth Deposit ................................................................................................... 23 Our Product Basket - Absolute Alignment with High Growth Markets ............................................................... 24 Commercial Excellence ..................................................................................................................................... 25 Operational Excellence ..................................................................................................................................... 26 Leading the Pack – Peak Performance ............................................................................................................. 27

The Investment Proposition - Peak Performance Across All Categories ....................................................... 27 The Benchmarking Study .............................................................................................................................. 28 Adamas Intelligence Benchmarking Exercise - Introduction ......................................................................... 29 Cross-Comparison of Projects’ Operating Profit Margins .............................................................................. 30 Cross-Comparison of Projects’ Operating Costs Weighted to PrNd Oxide Only ........................................... 31 Pre-Production Capital Expense Payback Period ......................................................................................... 32 Proportion of Annual Production Comprised of ‘Market-Needed’ Rare Earths .............................................. 33 Peak Resources Benchmarking Exercise – Extraction ................................................................................. 34

China: Strengthening the Global Superpower Position. ................................................................................. 35

Global Macro Economics & Trends ................................................................................................................... 36 China’s Domestic Economy .............................................................................................................................. 40 The Rare Earth Pricing Eco System .................................................................................................................. 45

Uses and Trends of NdPr ................................................................................................................................... 46

NdFeB Magnets & Permanent Magnet Motors .................................................................................................. 46 What are NdFeB Magnets? ............................................................................................................................... 47 Best in Class - The Permanent Magnet Brushless Motor Engine ...................................................................... 49

Megatrend No1: Automotive & E-Mobility ......................................................................................................... 50

E-mobility Sales Forecasts ................................................................................................................................ 58 Automotive - What is the Impact on the Global Demand of NdPr? .................................................................... 60 NdPr Price Elasticity / Price Sensitivity and Replacement Risks ....................................................................... 61

Peak Resources Extrapolation Based on the UBS Report May 2017 ........................................................... 62 The Different Engine Technologies ................................................................................................................... 63

The AC Induction Engine Without Permanent Magnets ................................................................................ 63 The DC Brushed Permanent Magnet Engine ................................................................................................ 65 The DC Brushless Permanent Magnet Engine.............................................................................................. 65

Megatrend No.2: Wind Energy ........................................................................................................................... 66

The Market - Status Quo ................................................................................................................................... 69 Latest Technological Developments ................................................................................................................. 70 The Market Players ........................................................................................................................................... 71 Market Forecast ................................................................................................................................................ 72 Wind – The NdPr Demand ................................................................................................................................ 74



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Overview of Existing Drive Line Technologies .................................................................................................. 76 Overview of Today’s Established Drive Line Configurations ............................................................................. 77 How Do DFIG Turbines Work? .......................................................................................................................... 78 Advantages of Permanent Magnet Generators (PMGs) .................................................................................... 79 Replacement Threats for DD-PM Turbines ....................................................................................................... 81 Onshore – The Market Share of Individual Drive Trains ................................................................................... 83 Onshore – Drive Train Configuration Depending on the Nominal Power of the Generator ............................... 84 Offshore – Market Share of the Individual Drive Trains ..................................................................................... 86 Price Elasticity / Price Sensitivity of NdPr in the Wind Turbine Business .......................................................... 88

Other NdFeB Applications.................................................................................................................................. 89

Potential Megatrends ........................................................................................................................................ 90 Robotics ............................................................................................................................................................ 91 Magnetocaloric Fridges ..................................................................................................................................... 93 Drones, Planes and Other Electric Flying Objects ............................................................................................ 95 Consumer Electronic Drones ............................................................................................................................ 96 Flying Cars, Air-Taxis, Passenger Drones & Electric Airplanes ........................................................................ 97 Marine Propulsion Solutions.............................................................................................................................. 98 Electric Bikes ..................................................................................................................................................... 99 Electric Scooters ............................................................................................................................................. 100 Automotive Accessories .................................................................................................................................. 101 Others ............................................................................................................................................................. 102

The General Substitution Risk for NdFeB ....................................................................................................... 103

Substitution ..................................................................................................................................................... 104 Increased Efficiency ........................................................................................................................................ 107 Recycling......................................................................................................................................................... 108

Corporate Business Development Strategy ................................................................................................... 110 Appendix ............................................................................................................................................................ 111

Praseodymium Applications ............................................................................................................................ 111 Neodymium Applications ................................................................................................................................. 112 Lanthanum Applications .................................................................................................................................. 113 Cerium Applications ........................................................................................................................................ 115



4 4

Foreword

This report has been compiled with the aim of providing a comprehensive understanding of the dynamics of the

Neodymium Praseodymium (“NdPr”) business as well as sharing the overall corporate strategy of how Peak African

Minerals (PAM) respectively Peak Resources Limited (“Peak”) intends to position and distinguish itself as a supplier

of choice in the rare earth industry.

The objective of this report is to connect the dots between information and facts already available in the public

domain, giving a comprehensive understanding of how the rare earth industry and market operate, how we believe

the market will develop and how this will ultimately effect Peak as a competitive producer.

The most accurate material and knowledge available in the public domain on the individual areas has been sourced

and collated to provide a comprehensive summary. We do not claim to be the sole author of the content of this

document and recognize that some content has been copied, modified and arranged in a new context as relevant

from different sources. Where possible, the individual sources of the content have been listed.

Best regards,

Michael Prassas

Disclaimer and Cautionary Statement

The information contained in this document is provided by Peak Resources and the author for general educational

purposes only. Certain information herein is based on third-party sources that are believed to be reliable, but whose

accuracy is not guaranteed. This document contains statements that could constitute forward-looking statements,

describing expectations, opinions, or guidance that are not statements of fact.

Forward looking statements may include, among others, statements regarding future market supply and demand,

government policies, and other market dynamics, or the assumptions underlying any of the foregoing. In this

document, words such as "may", "could", "would" "will", "likely", "believe", "expect", "anticipate", "intend", "plan",

“goal”, "estimate”, “forecast” and similar words and the negative forms thereof are used to identify forward-looking

statements.

Forward-looking statements are subject to known and unknown risks, uncertain ties and other factors that are

beyond Peak Resource’s control, and which may cause actual results, level of activity, performance or

achievements to be materially different from those expressed or implied by such forward-looking statements.

This document is provided on an “as is” basis, and neither Peak Resources nor the author make no representations

or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability

with respect to the third-party information, data, or charts contained herein, for any purpose. Use of all information

herein is voluntary, and reliance on it should only be under taken after an independent review of its accuracy,

completeness, efficacy, and timeliness. Any reliance placed on such information is therefore strictly at the risk of

the user.

In no event will Peak Resources or the author be held liable for any loss or damage including without limitation,

indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits

arising out of, or in connection with, the use of this document or the information contained within it.

https://www.linkedin.com/in/michaelprassas/



5 5

Executive Summary

Welcome!

On the following pages, we will share with you our understanding of the rare earth market and market-outlook-

dynamics as well as the corporate strategy and overall vision for Peak as a Company.

Electrification is the Future of Mobility

Peak anticipates that our society will ultimately be driven by electrification - be it on the road, water or air. If you

too believe this is the future of our society, Peak should be on your radar as its Ngualla Rare Earth Project is one

of the largest and highest-grade undeveloped neodymium praseodymium (NdPr) deposits globally. Perhaps of

even greater significance is Peak’s position as the only rare earth project developer worldwide who aims to be fully

vertically integrated by building its own oxide and carbonate refinery, ensuring it maintains complete pricing power

in the supply chain. NdPr is the raw material which is literally the driving force behind the majority of automotive

electric motors and the heart of the upcoming global electric revolution.

Our main product, NdPr oxide, of which we aim to produce 2,810 tpa, is the key ingredient for the strongest magnets

in the world which are the heart of permanent magnet motor/generator. NdPr is a core enabler of the electrification

era of our society and lacks any real substitution threat on the horizon whilst offering greater torque than competing

technologies at the same values of current and voltage and more power by weight. In some occasions there might

be a potential to reduce the usage of NdPr in NdFeB permanent magnet motors by adding Cerium but in no case

NdPr can ever be totally replaced.

95% Penetration of NdPr Electric Motors

This technology represents an unprecedented growth opportunity for NdPr due to the almost 100% adoption of this

technology by the automotive industry as a drive line solution for electric vehicles. In addition to the existing positive

sentiment towards electrification in the market, we anticipate an acceleration of demand due to tighter global

emission standards and stricter legislation on environmentally harmful technologies (see page 19). For these

reasons, we see Peak operating as a core raw material supplier in the most attractive growth segments of the next

industrial revolution. In addition to the strong growth forecast from the Electric Vehicle sector, additional demand

drivers such as automation and robotic solutions combined with AI (see page 91), sustainable wind energy (see

page 66) and the global trend of electric mobility (see page 50) are supporting this extraordinary growth story.

Peak is operating in an attractive market in the backdrop of a strong macroeconomic environment. The NdPr market

is already demonstrating a compound annual growth rate of 7.4% (CAGR) that is outpacing the individual GDP

growth rates of the biggest industrial nations worldwide. Estimates for the growth in electrification show high double

digits year after year for the coming decade. For example, in 2017 global plug-in vehicle sales reached nearly 1.2

million vehicle resulting in a 57% YoY growth. Therefore the overall fundamentals are already beginning to look

exceptional.

Significant Supply Shortages in NdPr

Due to the increasing technological shift in mobility from combustion to E-mobility technologies and the cost

competitiveness of wind energy compared to established energy sources, we anticipate that our main product,

NdPr, will face a significant supply shortage around 2025 and will be heavily under supplied. Estimates by leading

industry observers expect this shortage to be in the range of ~20,000 - 30,000 tpa which is equivalent to current

legal production levels. This will be further exacerbated by the restricted Chinese production quotas which are to

take full effect by 2020, limiting their annual legal NdPr production to a maximum of ~27,000 tpa. It is also forecast

that China will become a net importer of NdPr by 2020.

The market entry timing of Peak is perfectly aligned with the overall market dynamics allowing Peak to capture the

first significant volumes when demand ramps up. Notably, the market forecasts that by ~2023, the cost of ownership

of an electric vehicle will be lower than that of an internal combustion engine thus allowing Peak to take full

advantage of what is likely to be an enormous gap in supply versus demand.

http://statisticstimes.com/economy/countries-by-projected-gdp-growth.php

http://statisticstimes.com/economy/countries-by-projected-gdp-growth.php

http://www.peakresources.com.au/news/global-plug-in-sales-for-2017-q4-and-the-full-year-prelim/




6 6

Demand is Underpinned by Government Legislation

Already in 2017, several major government announcements have been made regarding future plans for these

technologies. The Netherlands aims to ban the sales of new internal combustion engines (ICE) vehicles entirely by

2030. France and UK announced that by 2040, they too intend to accomplish this goal. The European Union CO2

reduction goal for 2050 requires 95% decarbonisation of road transport.

China, the largest single electric vehicle market worldwide, recently announced a new law which will enforce a NEV

car quota. Commencing in 2018, the Ministry of Industry and Information Technology has proposed to introduce

regulations that will require car manufacturers who produce more than 50,000 conventional fuel driven vehicles

p.a, to meet the New Energy Vehicle (NEV) budget requirements. This will be represented by a credit system with

minimums of 8%, 10% and 12% for 2018, 2019, and 2020 respectively. The credits are transferable from car

manufacturer to another. Furthermore, the Chinese Government confirmed in 2017 that they are working on a

deadline for the sales of ICE vehicles in the Chinese market altogether.

The Indian government has recently announced significant investment into an EV industry and wants to see electric

vehicle use reach 100% by 2030.

In the backdrop of a demand cycle underpinned by Government legislation, it seems a foregone conclusion that

the momentum behind e-mobility electrification is here to stay.

One of the Largest and Highest-Grade Development Projects Globally

The Ngualla Rare Earth Project, located in Tanzania, is one of the largest undeveloped, highest grade, NdPr rich

rare earth deposits outside of China. The deposit has favourable weathered bastnaesite mineralogy with low levels

of phosphate and carbonate and low radio-nuclei levels. The highly economic Bankable Feasibility Study (BFS)

utilised only 22% of the total mineral resource and still yielded a 26-year mine life. This demonstrates the scale,

expandability and strategic significance of the Ngualla Project.

Being one of the lowest cost producers in this specialist commodity segment will reward Peak Resources with

becoming a truly viable vertically-integrated, non-Chinese supplier offering a sustainable, 100% transparent,

traceable, ethical and quality focused supply solution with top tier environmental standards located with its refinery

in the UK with sustainable economics. These features will enable Peak to enter successful relationships with the

downstream business and become a prosperous corporation delivering consistent profits to its stakeholders.

Peak is the Only ‘Fully-Integrated’ Rare Earths Developer

In comparing the various rare earth development projects, the market is not comparing apples-to-apples. Other

than Lynas, an existing NdPr producer, Peak’s development peers all aim to produce an intermediate concentrate

which they will export to a third party Asian refiner. Given the strategic significance of this commodity, not having

the means and expertise to separate the final rare earth elements means losing ultimate control over the pricing

and supply chain.

At its planned UK separation refinery, Peak will be producing the final rare earth elements which can be exported

directly to the integrated magnet manufacturers. Whilst other developers are working on pilot test programs to

attempt the final separation themselves, no developer, other than Peak, has yet been able to demonstrate their

ability to be fully-vertically-integrated to a Bankable Feasibility Study (BFS) level. This is due to Peak’s exceptional

in-house expertise as well as the comparatively simple metallurgy of the Ngualla deposit.

Simple Refining Process Reduces Execution Risk and Lowers Capex and Opex

Peak deliberately designed the refinery process to reject the low-value material cerium from early on, therefore

allowing the planned UK refinery to operate on a much smaller scale with most of the focus being given to Peak’s

champion product, NdPr.

This enables Peak to run the UK refinery process just a little bit above ambient temperature on low acidity levels,

directly resulting in a low corrosion risk operation meaning we are able to use simple, lower-cost materials like

polymer piping and tanks rather than steel and other expensive exotic materials such as titanium or tantalum

equipment.

http://www.peakresources.com.au/news/the-dutch-government-confirms-plan-to-ban-new-petrol-and-diesel-cars-by-2030/

http://www.peakresources.com.au/news/france-to-ban-sales-of-petrol-and-diesel-cars-by-2040/

http://www.peakresources.com.au/news/new-diesel-and-petrol-cars-banned-from-uk-roads-by-2040/

http://www.roadmap2050.eu/

http://www.peakresources.com.au/news/china-gives-automakers-more-time-in-worlds-biggest-ev-plan/

http://www.peakresources.com.au/news/india-to-sell-only-electric-cars-by-2030/



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Located in a modern industrial park providing easy access to all production relevant utilities and supplies, the UK

refinery provides exceptional versatility and adaptability. A major infrastructural advantage is that we do not need

to build tailings infrastructure or facilities for our residues and effluents as pre-established facilities are already

available on the chosen site. These supporting attributes of Peak’s industrial footprint will assist in securing our

future position as an industry leader.

Our corporate strategy is focused on being one of the lowest cost operators in the sector and at the same time

being one of the most innovative. Peak plans to achieve this using a smart and sophisticated IT approach which

will support us to secure leadership amongst our peers and offer a premium experience to our customers, combined

with an ethical and sustainable supply chain solution providing services unprecedented in the mining industry. This

will place Peak with an attractive and unique selling proposition which will differentiate us from our competitors.

More Than $100 Billion Already Committed to the Electric Vehicle Revolution

As previously highlighted, applications in the automotive and wind sectors will be key applications in influencing

future demand growth of permanent magnets, and in particular for NdFeB, respectively, NdPr.

The Automotive Industry has the clear leading position in impacting the global demand on NdPr magnets and the

related raw materials. Bloomberg confirmed just recently that more than 90 billion USD will be invested in electric

vehicles by the global automakers and the number is still growing with Nissan and Porsche. Furthermore, in a

recently published market summary by McKinsey & Company, it was established that 200 new electric vehicles will

be launched by 2019. Market experts predict that electric and plug-in-hybrid vehicles will most probably make up

two thirds of the automotive market by 2030 in a market of +100 million units sales per year.

After Tesla announced they’d chosen to use an NdFeB permanent magnet motor (“PMM”) for their high volume

vehicle Model 3, the already strong position of this rare earth technology has moved from a ~90% market share

towards nearly 100% market share among all passenger car manufacturers. In this context, it’s important to also

understand the nature of the automotive business and the lifecycle management of these platforms and the impact

on the lifecycle of components.

The aforesaid positive developments in total cost of ownership (TCO), country targets, governmental incentives

and announcements of the car manufacturers themselves indicate that there is a very good chance that the pool

of operating electric cars will grow from 3.2 million globally today to approx. 9 -12 million by 2020, and between

~30 million and ~60 million by 2025.

The development of a large variety of popular EVs in the market space from 2020 will be a game changer in regards

to the global NdPr demand and its global supply chain. It is predicted that during 2022-2025, the cost of ownership

of a HEV/EV will become lower than that of a traditional combustion engine vehicle. This is the moment when the

classic S-curve for innovations kicks in and the demand for NdPr will skyrocket (see similarities of the life cycles

like the shift from Black/White TV’s to colour TV’s and from a standard mobile phone to smart phones, see page

21).

To give you an idea of the order of magnitude of this evaluation, the automotive industry alone will have the potential

to absorb today’s global annual production of legally manufactured NdPr in just one year when electric mobility will

reach a global market share of ~40%. Demand from the automotive industry will create a massive shortfall in global

NdPr by 2025 at the latest.

Robotics and Automation: The Great Disruptor

Furthermore, we see the robotics and automation solution sector is becoming a reality as another upcoming

disruptive force in the century of electrification. With autonomous driving reaching stage 5, Artificial Intelligence has

tackled one of its biggest hurdles and robotics is set to take-off in a big way. We believe there will be an

unprecedented shift from manual industrial labour to AI robotic solutions. This upcoming technology shift, in which

NdPr is to play a vital role in the permanent magnet motors within robotic solutions, represents a life changing

industrial revolution equivalent to those triggered by the invention of steam engines, motor cars and electricity.

http://www.peakresources.com.au/news/global-carmakers-to-invest-at-least-90-billion-in-electric-vehicles/

http://www.peakresources.com.au/news/nissan-to-invest-9-5bn-in-china-to-boost-electric-vehicles/

http://www.peakresources.com.au/news/porsche-to-double-investment-in-plug-in-vehicles/

http://www.peakresources.com.au/news/the-future-of-mobility-in-india-challenges-and-opportunities-for-the-auto-component-industry/



https://www.linkedin.com/pulse/has-been-confirmed-tesla-model-3-use-permanent-magnet-michael-prassas/

https://www.linkedin.com/pulse/why-matters-telsa-changed-its-motor-technology-michael-prassas/



8 8

The NdPr Price Hasn’t Yet Seen Demand-side Pressure

We believe that the supply chain will first consume their existing inventory levels to delay any purchases as long

as possible. Particularly in the export business, we will see a classic trade-off between air shipment costs versus

actual price increase. This is caused by the established industry practice to manage raw material prices with a raw

material price index formula which causes a 3-4 month delay on pricing effects in the wider market. This short-term

focus on maximizing profits of the rare earth industry and the fact that the magnet industry still operates on fixed

price long term contracts will seriously amplify the future pricing trend as getting new industry capacity online will

take a minimum of 3 years. In mid-2017, the first investors from the capital market entered the rare earth market to

speculate, adding more complexity to the market environment. In the last 12 months, between February 2017 and

February 2018 the NdPr price performance was +30% reaching ~52 USD/Kg NdPr oxide domestic China.

With these facts in mind, we project an overall sustainable continuous uptrend for NdPr prices, despite the classic

short-term pull backs as we have experienced recently (Q4-2017), as NdPr represents a core pillar of this new

century of electrification.

Peak Resources Offers Investors the Most Leverage in the Sector

Peak Resources represents the absolute value investment proposition among its peers when it comes to worldwide

development projects in the special metals sector. The market fundamentals are unfolding and provide an idea on

the project potential and upside. At a market capitalization of only $28.33m (as at 7 Feb 2018) the potential upside

for any investor is substantial.

We aim to become the next Lynas. We aim to produce 9,290 tpa rare earth oxide equivalent, which is a little bit

more than half (58%) of Lynas’ established product output of 16,003 tpa in 2017. Like them, we are planning to be

fully integrated with our own refining capability which assures that the company retains the pricing power through

the supply chain to the final saleable oxide product stage. No other western project developer currently has

publicized plans to be capable of this. All our peers are aiming to commercialize an intermediate concentrate or

intend to find a tolling partner for processing their material to the final commercial saleable product stage. None of

our peers have been successful in securing binding commercial tolling agreements, however they incorporate in

their business cases tolling assumptions, projected sales and revenues of finished oxides for which they do not

currently have a secured route to market. It is important to note that currently there is no solid understanding as to

values or established routes to market for intermediate rare earth concentrates (pre-refining).

It is interesting to acknowledge that their indicated capital and operational expenditures still remain higher than that

of Peak’s, which has been fully stress tested under the BFS. This further underpins the quality of Peak Resources,

its asset in Tanzania and the planned refinery in UK.

If you have a look at Peak’s project KPIs (see page 27) you will see that Peak has a better cost base, better product

mix and better overall project economics compared to its peers. Furthermore, Peak’s Ngualla Project is one of the

biggest undeveloped NdPr resource worldwide of which the BFS only takes into account 22% of the resource -

once again demonstrating the scale and significance of this deposit and the opportunity Peak represents.

Peak is aiming to produce over 9,290 tpa of rare earth products in total (2,810 tpa NdPr and 6,480 tpa other rare

earth materials) at an operating cost of ~US $91 million p.a. Taking just the annual NdPr portion into account,

Peak’s unit operating cost would be just US $32.24/kg per kg NdPr (91 million divided by 2,810 tpa).

With the market price for NdPr sitting at US $51.84kg (RMB 328) as at 10/01/2018. Using this price, Peak would

generate a profit of US $19.60/kg or US $55.08 million cash per year. And don’t forget - this is completely

ignoring sales profits from the remaining 6,480 tpa of additional rare earth material available.

If you compare Peak’s Net Present Value (NPV) projections against Lynas’ market cap of AU $1.06 billion (8 Feb

2018) one is able to fully comprehend the true potential value of Peak Resources.

JUST DO THE MATH!

Peak Resources is the go-to Fully-Integrated Rare Earth Specialist



9 9

What are Rare Earths?

General Application Overview & Rare Earth Definitions

A rare earth element (REE) or rare earth metal (REM), as defined by IUPAC, is one of a set of seventeen chemical

elements in the periodic table, specifically the fifteen lanthanides, as well as scandium and yttrium. Scandium and

yttrium are considered rare earth elements because they tend to occur in the same ore deposits as the lanthanides

and exhibit similar chemical properties.

Rare earth elements are:

cerium (Ce), dysprosium (Dy), erbium (Er), europium (Eu), gadolinium (Gd), holmium (Ho), lanthanum (La),

lutetium (Lu), neodymium (Nd), praseodymium (Pr), promethium (Pm), samarium (Sm), scandium (Sc), terbium (

Tb), thulium (Tm), ytterbium (Yb) and yttrium (Y).

Despite their name, rare earth elements are – with the exception of the radioactive promethium – relatively plentiful

in Earth's crust, with cerium being the 25th most abundant element at 68 parts per million, or as abundant as copper.

They are not especially rare however typically they are not found in concentrated deposits that allow for economic

mining. They tend to occur together in nature and are difficult to separate from one another.

Complexities in separation

Rare earth elements are in principal immobile elements which does not enable them to be found in concentrated

veins like gold or silver. Rare earth elements can be mobilized by applying different levels of mild acidic Ph levels

in solvent extraction cells through a multi separation stages which requires hundreds if not thousands of individual

cells. Additionally, usually the host mineral contains several impurities like for example monazite contains quite

high levels of Thorium and Uranium which provides additional complexity to the separation process.

General overview of Rare Earth applications:

Source: Shades of Grey and Wikipedia and others

https://en.wikipedia.org/wiki/International_Union_of_Pure_and_Applied_Chemistry

https://en.wikipedia.org/wiki/Chemical_element

https://en.wikipedia.org/wiki/Chemical_element

https://en.wikipedia.org/wiki/Periodic_table

https://en.wikipedia.org/wiki/Lanthanide

https://en.wikipedia.org/wiki/Scandium

https://en.wikipedia.org/wiki/Yttrium

https://en.wikipedia.org/wiki/Ore

https://en.wikipedia.org/wiki/Cerium

https://en.wikipedia.org/wiki/Dysprosium

https://en.wikipedia.org/wiki/Erbium

https://en.wikipedia.org/wiki/Europium

https://en.wikipedia.org/wiki/Gadolinium

https://en.wikipedia.org/wiki/Holmium

https://en.wikipedia.org/wiki/Lanthanum

https://en.wikipedia.org/wiki/Lutetium

https://en.wikipedia.org/wiki/Neodymium

https://en.wikipedia.org/wiki/Praseodymium

https://en.wikipedia.org/wiki/Promethium

https://en.wikipedia.org/wiki/Samarium

https://en.wikipedia.org/wiki/Scandium

https://en.wikipedia.org/wiki/Terbium

https://en.wikipedia.org/wiki/Thulium

https://en.wikipedia.org/wiki/Ytterbium


https://en.wikipedia.org/wiki/Radioactive_decay

https://en.wikipedia.org/wiki/Earth%27s_crust

https://en.wikipedia.org/wiki/Abundance_of_elements_in_Earth%27s_crust

http://chinawaterrisk.org/wp-content/uploads/2016/07/CWR-Rare-Earths-Shades-Of-Grey-2016-ENG.pdf



10 10

The Market and it’s Dynamics

Rare earths suffer from a supply and demand

imbalance problem, as the ratio in which the

elements occur in nature differ significantly from the

ratio in which they are used in industrial applications.

As a result, depending on the particular industrial

technology area, some rare earth elements are in a

significant oversupply whilst others are in supply

deficit which results in amplified, extreme pricing

scenarios.

In 2011, the rare earth industry experienced a pricing

bubble initiated by a conflict between Japan and

China. As we know, bubbles are never healthy for

any industry as it always triggers events which

ultimately causes disruptions on either the demand

or supply side. The situation in 2011 caused

customers to endeavour to become less reliant on

rare earths, reducing their consumption where

possible or avoiding them completely. The polishing

powder industry experienced, at the peak, close to

50% reduction of total demand due to customers

recycling/reusing their powders instead of

purchasing virgin material for each application.

The rare earth industry experienced another big

event when in 2012-2013, LED technology took

over from florescent lamps. As a consequence, the

need for traditional phosphors (Eu and Y) was

reduced dramatically. The industry anticipated that

this process of transition would take 4-6 years

however in reality, it was just 2 years before the

phosphor business as we knew it was cut by more

than half, leaving industry giants like Osram and

Phillips struggling to adjust to the significantly

decreased demand levels. With the end of the

phosphor era, minerals like terbium, europium and

yttrium lost significance and were repositioned in the

market. Some people believe that this transition was

accelerated due to the pricing events of 2011.

The aftermath of this event and in particular, how

quickly the transition to LED technology occurred, is

a great example directly contradicting the popular

belief that a lengthy process is required in order for

new technologies to replace existing ones and that

their potential to completely change an industry

sector is constrained. It shows how quickly change is

happening nowadays.

In years past, we have also seen new technologies

introduced which have replaced rare earth

consuming technologies, in turn reducing the overall

global rare earth oxide consumption. For example,

solid state drives (SSD) are replacing the traditional

hard disk drives (HDD) and NiMH batteries will

gradually be replaced by Li-Ion batteries.

Altogether the rare earth industry suffered a loss of

around 40,000 tonnes in annual sales of rare earth

oxides due to industry efforts to reduce the need for

rare earth materials.

Then in 2015 we experienced another significant

event for the rare earth pricing. China scrapped its

export quotas and export tariffs on rare earths after

losing a World Trade Organisation case led by the

USA and supported by Japan and the EU. In

consequence, export price declined by approx. 20-

35% over the following two months resulting in a 6

year low in pricing. Prices dropped so low that in

2016, hardly any upstream rare earth producers

inside or outside of China made any profits. From our

perspective, rare earth prices have bottomed out

in 2015. Since then we can see that the sentiment in

the market has changed. We see below, 4 main

drivers for an improvement on the future pricing:

The new Chinese rare earth strategy for the up

and downstream business

Macroeconomics and the anticipated global

growth- especially carbon low technologies

The trend of more stringent legislation to reduce

the global carbon footprint

Upcoming new technologies which will initiate a

shift and change in demand for commodities



11 11

Supply – China’s Almost

Absolute Control of the RE market

China

China surpassed the US as the world largest rare

earth producer in 1986 with an annual output of

~12,000 tons. Since then, China has dominated the

global rare earth market reaching 85% global

market share in 2017. The main export markets are

Japan, followed by USA and then the European

Union. Nowadays, China has almost achieved

monopoly in the upstream of the business and is

dominating several downstream areas as well. In the

permanent magnet space, China has achieved

similar control as in the upstream business- reaching

a global market share of approx. 80-85%.

Active mines outside of China are few and are

located in Russia, Australia, USA, Malaysia, India,

Burundi and Myanmar.

In 1998 the Chinese government began to restrict

rare earth exports and ultimately established an

export quota system to manage and control the rare

earth business, a move which caused friction with the

western industrialised nations. This eventually

materialized in a complaint initiated by the United

States, Japan and the European Union being lodged

with the World Trade Organization (WTO) in 2012.

They argued that China’s rare earth export quota

system granted the Chinese industry players unfair

advantages and that the established Chinese

framework would represent governmental resource

protectionism. The Chinese government defended

themselves claiming that the set-up was meant to

protect the environment and gain control over

negative, illegal repercussions.

In March 2014, the WTO concluded that the Chinese

government must revoke the established export tariff

and quota system, which Chinese government

implemented in May 2015.

Most of China’s rare earth reserves are located in the

provinces of Inner Mongolia, Sichuan, and

Shandong, and within seven provinces that share

borders in southern China (Jiangxi, Fujian,

Guangdong, Guangxi, Hubei, Hunan and Yunnan).

The deposits in Inner Mongolia and Sichuan contain

mainly light rare earth elements. Inner Mongolia’s

Bayan Obo is the biggest mining reserve in China,

accounting for ~84% of total REEs reserves. Most

rare earth enterprises in China are located in the

areas where there are rare earth mines. Three major

rare earth bases in China are as follows:

1. The northern production base for rare earths is

dominated by Baotou with an estimated

separation capacity of ~80,000 tpa.

There are approx. 60 rare earth enterprises

including 20 key enterprises. Baotou has two

enterprises with annual processing capacity of

more than 10,000 tons of rare earth

concentrates, five backbone enterprises with

more than 5,000 tons of capacity, and 12

enterprises with 2,000 –3,500 tons of capacity.

The remaining enterprises have less than 2,000

tons of processing capacity. The Inner Mongolia

Rare Earth High-tech Company is the largest

Chinese enterprise for rare earth mineral

production and rare earth smelting and

processing.

2. The medium & heavy rare earth production base

is in the south of China and concentrated in the

provinces Jiangxi, Fujian, Guangdong,

Guangxi, Hubei, Hunan and Yunnan which are

dominated by ion-type rare earths with an

estimated separation capacity of ~60,000 tpa.

In 2013 out of 104 mining rights in the southern

provinces 88 were owned by Jiangxi Ganzhou

Rare Earth Mining Ltd, an enterprise with 20

rare earth separation firms and annual capacity

of ~60,000 tons. The company is located in

Ganzhou city and produces mostly medium and

heavy rare earths. The China Minmetals

Corporation has established China Minmetals

Rare Earth Co., Ltd. in Jiangxi Province with an

investment of CNY 2 billion over 5 years, aiming

at an annual separating capacity of ~13,500

tons.

3. The production base for bastnaesite is in

Sichuan and has an estimated separation

capacity of ~30,000tpa. In the Sichuan Province

are approx. 28 rare earths enterprises. Two or

three enterprises are large scale operations the

other ones are rather small but responsible for

considerable environmental pollution and

damage.

In 2010 the Chinese Ministry of Industry and

Information Technology (MIIT) and National

Development and Reform Commission (NDRC)

developed plans to consolidate the industry. They

initiated a restructuring of the industry and regulatory

reforms to integrate the RE industry. In 2014 they

announced that they have selected 6 state owned

enterprises (SoE) which should take full control of the

Chinese rare earth industry and it is expected that

these companies will consolidate 100% of the

Chinese upstream and downstream rare earth

industry.

https://en.wikipedia.org/wiki/Ministry_of_Industry_and_Information_Technology

https://en.wikipedia.org/wiki/National_Development_and_Reform_Commission



12 12

The six SoE are as follows:

1. Inner Mongolia Baotou Steel Rare Earth Hi-Tech,

2. Xiamen Tungsten Co. Ltd,

3. China Minmetals Corp.,

4. Aluminum Corp.of China,

5. Ganzhou Rare Earth Group Co. Ltd

6. China National Nonferrous Metals Industry Guangzhou Corp

According to the China Rare Earth Industry

Association, annual capacity of rare earths was

~300,000 - 400,000 tpa or more in 2016, and the six

group capacity (~50 companies) was about

~280,000 tpa. In addition, China has a recycling

capacity of approx. ~40-50,000 tpa.

The official Chinese production quota from 2014 to

present (August 2017) is 105,000tpa with an

additional estimated 35,000t - 45,000t REO resulting

from illegal Chinese production.

Since the total industry capacity is ultimately

unknown, and even we report in this market

summary different figures, we have to assume that

the real figure is among the different published data.

However with the further industry consolidation in

China we expect that total industry capacity will

continuously be reduced.

http://www.peakresources.com.au/news/the-ministry-of-industry-and-information-technology-issued-second-batch-total-production-control-quota-of-rare-earth-for-2017/



13 13



14 14

Illegal Mining

To understand the magnitude of China’s illegal

mining industry and the disconnection between the

official Chinese quota system and actual production,

we are going to recalculate the NdPr oxide

consumption from the reported annual Chinese

production of NdFeB permanent magnets.

Accordingly the official quota, in 2017, China will

produce 105,000tpa oxides. A good ratio for Nd + Pr

output would be approx. 25% across all deposits

which would result in total ~26,250tpa produced

NdPr oxides. According to the 2016 report published

by Roskill, the ratio should be even smaller resulting

in 18,000 -19,000 tpa NdPr. According to Ruidow a

Chines Pricing house 2017 November, NdPr

represented 20.09% or 16kt Nd and 4.8kt Pr of the

official 105kt quota in 2016.

Furthermore, the Chinese government announced in

2016 that it plans to limit the annual production of

oxides to max 140,000 tpa and the separation

capacity to 200,000tpa by 2020. This would limit the

maximum annual available output of NdPr to

~35,000tpa, or in case of a linear extrapolation of the

Roskill assumption, 24,000-25,333 tpa.

Source: www.magneticsmagazine.com

additional info: more_than_you_ever_wanted_to_know

If we now take a look at reported Chinese NdFeB

volumes of ~95,000tpa NdFeB magnets (ADAMAS

2016 Report) and consider that 30% of the reported

volume is pure NdPr and we add 20% conversion

losses (oxide to metal) on top, we end up with an

actual 2016 consumption of 34,200tpa of NdPr

(28,500 + 5,700).

Ruidow informed the market at the rare earth

conference 2017 in HK that 2016 China alone has

produced sintered NdFeB Magnets of 135k and

bonded NdFeB magnets of 3.2k, resulting in a

feedstock of approximately 49.750 tpa (41,46k

+8.29) of NdPr.

It appears that China represents approximately 85%-

90% of global production with the remaining volume

produced by Japan and a few other small producers

across the globe.

Additionally, according to Asian Metal China data (16

Feb 2017), China’s NdFeB magnet exports in 2016

were up by 15.6% YOY. Magnet exports in 2016

were 26,944t, up by 15.6% from 23,300t in 2015. At

3,172t, the US was the biggest importer-

representing 12% of China’s total exports in 2016.

This should provide us rough idea in regards to the

global footprint of the magnet business.

If we connect these numbers we can see that today

the supply and demand are already no longer in

balance and that there is a gap of approx. 2,727t

NdPr (34,200 - 26,250 =7,950t - 5223t Lynas (2017)

to 18,277t (49,750-26,250=23,500 -5,223)

It could of course be argued that historical stockpiles

can be activated to address this imbalance however

even if this were a possibility, the back supply is not

endless and it too will run out eventually.

We can only guess what the actual size of illegal

mining is today! This conservative approach would

suggest that in reality, the actual gap is considerably

larger than our calculation. It is also clear that the

illegal volumes come out ultimately of existing

Chinese legal operations and there is no such thing

like a hidden illegal rare earth shadow operation in

China. As soon as the Chinese government

continuously supervise the industry to comply with

the governmental KPI’s and the overall Agenda the

supply-demand imbalance will become more and

more visible.

It is important to understand, regardless of the final

numbers, certain physical rules must be obeyed. To

obtain 10,000 tpa of incremental NdPr oxide, it

requires minimum production of ~45,000 tpa

incremental mined total oxides. Each incremental

demand of 10,000tpa NdFeB magnets requires

~3,700 tpa NdPr oxide including conversion losses.

To recap and to visualize the consequences of these

findings, we should recall that as one of the best

undeveloped NdPr deposits worldwide, Peak

Resources requires a capex of just US $365 million

and an annual Opex of 91 million to mine 711,000tpa

ore, thus producing 32,700tpa of 45% rare earth

mineral concentrate and delivering 2,810tpa NdPr in

total.

https://metalevents.com/rare-earths-community/ministry-of-industry-and-information-technology-2017-first-rare-earth-production-amount-plan

http://www.businesstimes.com.sg/energy-commodities/china-to-limit-rare-earth-output-to-no-more-than-140000-tonnes-a-year-by-2020

http://www.magneticsmagazine.com/main/articles/is-there-an-optimum-price-performance-metric-for-permanent-magnet-materials/

http://www.waltbenecki.com/uploads/more_than_you_ever_wanted_to_know.pdf



15 15

China’s Rare Earth Industry

Consolidation and the Way Forward

Even though China has dominated the rare earth

space for decades, they have failed to attain pricing

power or to generate large profits. To the contrary,

the Chinese rare earth industry generated huge

losses during 2014 to 2016, reaching the peak in

2015 when the industry sector and the big 6

generated an accumulated 800 million RMB in

losses.

In 2017, the consolidation into the SoE has nearly

finished but it is obvious that the Chinese rare earth

industry is still facing fundamental challenges that

will lead to a dysfunctional market which does not

follow normal market economics and mechanics. To

tackle these issues, the Chinese government has

identified the following 6 key areas which will drive

their agenda and action plan in transforming the

Chinese rare earth industry:

1. Environmental and operational compliance

and excellence

Irrational exploitation of rare earth resources has

caused serious damage to domestic Chinese

ecology. The Chinese government understands that

the current status quo is not acceptable or

sustainable and therefore have continuously

improved the standards for environmental protection,

production technology, resources and energy

consumption in order to impose more rigorous

requirements on the scale of production and the

equipment enterprises use for rare earth smelting or

separation. As of 2015, in principle, no new rare

earth smelting or separation projects in China will be

approved.

The extraction of rare earths in Ganzhou region have

severely damaged the Dongjiang River where it is

estimated that ecological restoration will cost at least

CNY 38 billion. This is a prime example of the

magnitude of the harm that is being reported. For

more information, please refer to following report:

Rare Earth Shades of Grey

2. Industry consolidation

The Chinese government has made it a priority to

consolidate the industry into the big 6 SoE by either

closing the small rare earth operations or integrating

them to the big 6.

The objective is to reduce the number of industry

players involved in mining and processing to

approximately ~20, achieving this through mergers,

phasing out small-scale, unlicensed mines and

general non-compliant operations thus reversing the

downturn trend of rare earth prices. The principal

objective is to tackle the serious overcapacity issue.

3. Research and Development

The objective is to move away from low value/low

quality products to strive for higher product quality

and more environmentally compliant rare earth

industry operations. The Chinese government

requires industry players to expend more focus on

R&D, technological transformation and equipment

investments. It is understood that the capability of

self-development and true innovation are

fundamental for the desired transformation- which is

why the Chinese government is encouraging its

domestic industry to invest in research centres to

expedite efficiency, research and indigenous

innovation.

4. Technology Enhancement

In the 13th 5 year plan “Made in China 2025” and the

latest rare earth policies, the Chinese government

emphasises and encourages the expansion of the

development of high-tech applications in conjunction

with the consumption of rare earth minerals.

Especially in the fields of e-mobility, renewable

energy, information technology and the development

of a circular economy (recycling), China has

experienced unprecedented growth during the last

few years and is determined to exceed the historical

results in the near future.

For further details on the policies and the 5 year plan,

please refer to the following sources:

Published October 2016 "Rare Earth Industry

Development Plan (2016-2020)" of the “Ministry

of Industry & Information Technology”, this plan

represents the implementation of the new “Rare

Earth Industrial Standard Regulation” which was

published on July 1, 2016.

13th 5 year plan “Made in China 2025” see

dedicated chapter

National Traceability System on Key

Commodities (including rare earths)

5. National Rare Earth storage programme /

Stockpiling.

The Chinese government is carrying out stockpiling

programs and are buying out the market volumes

which have been produced in excess demand in

order to support the pricing and to secure strategic

supply for the domestic market.

Commercial Stockpiling: The National

Development and Reform Commission have been

https://translate.google.com/translate?hl=en&sl=zh-CN&tl=en&u=http%3A%2F%2Fstock.sohu.com%2F20160324%2Fn441910854.shtml

https://translate.google.com/translate?hl=en&sl=zh-CN&tl=en&u=http%3A%2F%2Fstock.sohu.com%2F20160324%2Fn441910854.shtml

https://www.newsecuritybeat.org/2017/03/china-begins-adjusting-true-cost-rare-earths-decarbonization/

http://chinawaterrisk.org/wp-content/uploads/2016/07/CWR-Rare-Earths-Shades-Of-Grey-2016-ENG.pdf

https://translate.google.com/translate?hl=en&sl=zh-CN&tl=en&u=http%3A%2F%2Fwww.miit.gov.cn%2Fn1146295%2Fn1652858%2Fn1652930%2Fn3757017%2Fc5287765%2Fcontent.html




http://www.gov.cn/zhengce/content/2016-01/12/content_10584.htm

http://www.gov.cn/zhengce/content/2016-01/12/content_10584.htm



16 16

targeting the light rare earth (LREs) since 2012 and

in 2013 the acquisition of heavy rare earths was also

ramped up- with the source of these materials being

the 6 SoE. Each SoE is required to stock in-house a

30% minimum of the volume supplied to the central

stockpile program. These products are required to be

packed according to national standard and

transported from the six large SOEs warehouses to

the national warehouse.

National stockpile (SRB): This program is in

addition to the commercial stock piling program

mentioned above. It was launched by the Chinese

government in 2016 and is managed by the State

Reserve Bureau (SRB). The program was initiated to

support the market pricing. In June 2016, a Rare

Earth National Stockpile meeting was held in Beijing,

chaired by the State Reserve Bureau and supported

by MIIT and NDRC. The prices offered by SRB were

so low that all of the six SOEs refused to supply.

6. Illegal mining and small size enterprises

The objective is moving the rare earth industry into a

higher value-adding, more technically advanced

sector. The Chinese government understands that

the barrier for entering the rare earth industry is

currently too low, especially considering of the ionic

clay deposits in the south of China. This problem is

amplified by the lack of rigorousness in the

implementation of the existing legislation and afore

mentioned industry strategy. It’s also understood that

the existing legal and regulatory framework still has

deficiencies which provides loopholes and

interpretations that allow illegal mining and

separation to continue to be carried out.

Grey areas have been identified in the rare earth

recycling business in regards to traceability of feed

material which has opened the doors for illegal

activities and malpractice. This issue has not been

resolved and still requires serious attention.

The central and local governments need to

continuously maintain robust efforts to prevent illegal

mining and smuggling. Unfortunately a certain level

of illegal activities will always exist, but the current

level is unacceptable and damaging to the industry

as a whole. And more importantly, the damage

caused to the environment is severe and ultimately

inexcusable.

The Chinese government understands that it is

essential to tackle the aforesaid 6 major identified

areas and to advance them as a whole while keeping

the focus on the lead enabler of the transformation

“The consolidation process”. It will be essential to

continuously progress in the identified areas so that

the industry can transform and start to follow normal

market mechanics and economical rules.

It is acknowledged that it is almost impossible to

control the hundreds of small and illegal businesses

scattered all over the country- especially in rural

areas in the south of China. Illegal mining, production

and smuggling has seriously disrupted market order

and has been one of the major factors which has led

to the substantial decline in the price of rare earth

products due to oversupply from these illegitimate

entities.

The central government must supervise local

provincial governments to prevent collusion and

illegal project approvals and strengthen the

management of public opinion by reporting success

stories and good examples of best industry practice,

but also exposing and condemning negative

examples.

The central government is required to play a more

active supervisory role due to the existing conflict of

interest between central government, local provincial

governments and individual major industry players

which slows down the implementation of the policies

and overall strategy.

Specific rare earth laws and regulations such as the

proper implementation of the new Chinese Resource

Tax and the planned expansion to include the Water

Resources Tax need further improvement in their

definition and execution so the ambiguity of terms

and meaning are reduced to a minimum and do not

leave any further space for misinterpretation.

If they manage to accomplish a continuous

improvement in the main identified areas, they will

succeed with the transformation. However the

prerequisite is stricter law enforcement which will

lead to higher operating cost and raise the entrance

barrier, eventually materializing in higher rare earth

pricing. This would automatically wipe out the less

significant small/medium enterprises which should

have never entered the market in the first place and

would solve the existing overcapacity problem. As a

result, normal market mechanisms would again play

a decisive role and rare earth pricing would recover

to a sustainable level. This would result in active

industry players operating on healthy margins and

generating decent profits enabling them to invest in

R&D and innovation and ultimately allowing them to

upgrade their business and operations.

Since mid-2016 it appears that the Chinese

government is ‘walking the talk’ and are more

determined than ever to enforce and improve the

existing legislation and to combat misconduct in the

areas of social law, general corruption,

http://www.loc.gov/law/foreign-news/article/china-resource-taxes-adjusted-for-rare-earth-tungsten-molybdenum/


https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/tax/ta-2016/deloitte-cn-tax-tap2502016-en-161028.pdf




17 17

environmental law and in particular general illegal

mining operations.

Source: page 9 -17; different Elsevier publications,

Overview on China's Rare Earth Industry Restructuring and

Regulation Reforms report, Asian Metal and other

publications.

For more information, please refer to following

content:

THE YEAR 2017 – SUMMARY- China

waging ‘unprecedented pollution

crackdown

160809 – China daily – China to crack down

on illegal rare earth mining

160824 – Roskill – Rare Earths: China to

take tougher stance on illegal mining

161213 – SMM – Analysis of China

Crackdowns on Rare Earth Sector, SMM

Reports

170126 – INDMIN – Chinese provinces

crack down on rare earth activities

170220 – Reuters – China to crack down

on illegal mining, as miners meet on output

cuts

170911 – Taipei Times - PRC curb on illegal

mining boosting rare earth metals

170907 – Bloomberg - Rare Earth Metals

Electrified by China's Illegal Mining Clean-

Up

http://www.bioone.org/doi/abs/10.5814/j.issn.1674-764x.2017.03.001

http://www.bioone.org/doi/abs/10.5814/j.issn.1674-764x.2017.03.001

http://www.peakresources.com.au/news/the-year-2017-china-waging-unprecedented-pollution-crackdown/



http://usa.chinadaily.com.cn/business/2016-08/09/content_26399377.htm

http://usa.chinadaily.com.cn/business/2016-08/09/content_26399377.htm

https://roskill.com/news/rare-earths-china-take-tougher-stance-illegal-mining/

https://roskill.com/news/rare-earths-china-take-tougher-stance-illegal-mining/

https://news.metal.com/newscontent/100714958/Analysis-of-China-Crackdowns-on-Rare-Earth-Sector,-SMM-Reports



http://www.indmin.com/Article/3657092/Chinese-provinces-crack-down-on-rare-earth-activities.html

http://www.indmin.com/Article/3657092/Chinese-provinces-crack-down-on-rare-earth-activities.html

http://www.taipeitimes.com/News/biz/archives/2017/09/11/2003678192

http://www.taipeitimes.com/News/biz/archives/2017/09/11/2003678192

https://www.bloomberg.com/news/articles/2017-09-07/rare-earth-metals-electrified-by-china-s-illegal-mining-clean-up





18 18

Supply: Rest of the World

Outside of China, the rare earth industry has only a

few active mines located in Russia, Australia, USA,

Malaysia, India, Burundi and Myanmar.

Rare earths were not mined in the US at all during

2016. Molycorp, once North America’s sole producer

of rare earths, filed for bankruptcy in 2015 and was

put on care and maintenance later that year. In June

2017, Molycorp’s Mountain Pass operation was

acquired by JHL Capital Group QVT and Shenghe

Resources for USD 20.5 million.

With its Mt Weld mine located in Western Australia

and solvent extraction plant in Malaysia Kuantan,

Lynas is currently the only significant rare earth

producer outside of China, able to produce up to

4800-6000 t p.a. of NdPr.

COMPANY COUNTRY MINE/REGION

China Northern Rare Earth Group China Inner Mongolia

China Southern Rare Earth Group China Sichuan, Jiangxi

Chinalco Rare Earth Group China Guangxi, Shandong

China Minmetals Rare Earth Group China Hunan,Yunnan,Jiangxi

Fujian Rare Earth Group China Fujian

Guangdong Rare Earth Group China Guangdong

Molycorp USA/China Mountain Pass

Lynas Corporation Australia Mt. Weld

Pegang Mining Malaysia Kinta Valley

Myanmar Ye Huang Mining Myanmar Kokang

Lovozerskiy Russia Lovozero

Indian Rare Earth Linited India Tamil Nadu

Kerala Metals and Minerals India Kerala

Nuclear Industries of Brazil Brazil Buena Norte

http://www.mining.com/web/molycorp-inc-signs-restructuring-support-agreement-with-key-creditors/

http://www.mining.com/mountain-pass-sells-20-5-million/

https://www.lynascorp.com/Pages/Home.aspx



19 19

NdPr Demand Supported by Global Legislation – Not If But When

From our perspective, we are in the early days of a

new industrial revolution of electrification which will

strongly rely on NdPr technologies, respectively

NdFeB permanent magnets, and we believe that

the framework for the upcoming decarbonisation

century has been put in place during the last 3-5

years. We are currently on the threshold of these

niche technologies entering the market and

changing modern technology as we know it.

The future demand growth of NdPr is underwritten

and fully supported by an existing number of

technological and governmental policies, initiatives

and developments including urbanisation, industry

modernisation and stricter environmental standards.

Emissions legislations are a huge portion of this

with the primary focus on significant reduction of

greenhouse gasses, anti-idling laws and greater

vehicle efficiency.

These factors are expected to drive a steady

significant growth of low to zero emissions

technologies and hence the global NdPr demand.

We believe that upwards of 50% of future demand

will be underpinned by these regulations and

initiatives.

For more information, please refer to the following

sources:

Montreal > The Kigali Agreement +

summary

The Paris agreement COP 21

Efforts is regards to Energy efficiency (EU

overview

IEA global database of policies

OECD paper in regards of policy alignment

activities

In the automotive sector in particular, we can expect

immense progress due to positive changes in public

awareness the and overall sentiment in society

towards e-mobility technologies. This has been a

key driver towards the rapid changes we have seen

in legislation in the past 2-3 years compared to the

drawn out processes of years prior.

Internal combustion engines have dominated our

streets for over a century now, with an operational

fleet of ~1.3 billion cars (2015) on our roads. With

an annual car manufacturing capacity of around 100

million vehicles per year, it will take approx. 20

years for a complete transition to e-vehicles to be

achieved. NdPr and NdFeB magnets will play a

pivot role in this new era of mobility and electric

automatization, causing them to become a critical

element in the future societal developments.

Already in 2017, several major governmental

announcements have been made regarding future

plans for these technologies. The Indian

government has announced "massive" investments

and wants to see electric vehicle use reach 100%

by 2030. The Netherlands aims to ban the sales of

new cars with ICE engines entirely by 2030. France

and UK announced that by 2040, they too intend to

accomplish this goal. The EU CO2 reduction goal for

2050 requires 95% decarbonisation of road

transport. China, the largest single electric vehicle

market worldwide, has announced the launch of a

new law which will enforce a New Energy vehicle

(NEV) car quota. Commencing in 2018, the Ministry

of Industry and Information Technology has

proposed to introduce regulations that will require

car manufacturers who produce more than 50,000

conventional fuel driven vehicles p.a, to meet the

New Energy Vehicle (NEV) budget requirements.

This will be represented by a credit system with

minimums of 8%, 10% and 12% for 2018, 2019,

and 2020, respectively. The credits are transferable

from one OEM to another.

Furthermore, we predict that more urban areas like

the biggest cities in this world will start to ban

internal combustion engines form their city centres

to improve air quality and noise levels. To provide

you an idea of the impact of such measure, please

check out this video here.

These new policies and more stringent legislation

roadmaps are forcing automakers to rethink their

product offerings. Today the main force of the E-car

deployments are governmental subsidies and tax

advantages, but step by step, the governments and

local authorities are implementing policies aimed at

reaping the benefits of EVs. Tools currently

available for policy makers include purchase

subsidies, measures supporting EVSE deployment,

evolving fuel economy standards plus many others,

each paving the way for e-mobility to become a

popular, mainstream technology.

As battery pack costs decrease, electric vehicles

will become increasingly cost competitive. The need

for vehicle purchase incentives will diminish and

subsidies for electric cars will no longer be required.

It is expected that with a bigger electric vehicle

share in the market, the governmental revenues

stream will need to be remodelled (e.g. fuel tax) and

new tax model will need to be implemented. Hence,

https://translate.google.com/translate?hl=en&sl=auto&tl=en&u=https%3A%2F%2Fde.wikipedia.org%2Fwiki%2FMontreal-Protokoll

https://en.wikipedia.org/wiki/Montreal_Protocol

http://www.nab.vu/document/kigali-amendment-factsheet

http://www.climatefocus.com/sites/default/files/20151228%20COP%2021%20briefing%20FIN.pdf

https://www.c2es.org/international/negotiations/cop21-paris/summary

https://ec.europa.eu/energy/en/topics/energy-efficiency/energy-efficiency-directive

https://en.wikipedia.org/wiki/EU_Energy_Efficiency_Directive_2012

https://www.iea.org/policiesandmeasures/energyefficiency/?country=United%20States

http://www.oecd.org/env/Aligning-policies-for-the-transition-to-a-low-carbon-economy-CMIN2015-11.pdf

http://www.oica.net/wp-content/uploads/Total_in-use-All-Vehicles.xlsx



http://www.peakresources.com.au/news/the-dutch-government-confirms-plan-to-ban-new-petrol-and-diesel-cars-by-2030/

http://www.peakresources.com.au/news/france-to-ban-sales-of-petrol-and-diesel-cars-by-2040/

http://www.peakresources.com.au/news/new-diesel-and-petrol-cars-banned-from-uk-roads-by-2040/





https://vimeo.com/139454115

https://en.wikipedia.org/wiki/Government_incentives_for_fuel_efficient_vehicles_in_the_United_States

https://en.wikipedia.org/wiki/Government_incentives_for_plug-in_electric_vehicles



20 20

the rising costs of developing combustion engines

that meet ever-stricter emissions regulations could

make some electric models more affordable as

soon as 2025-2027. These new and more stringent

legislations will directly translate to higher

manufacturing costs for manufacturers of traditional

ICE’s, which will definitely accelerate the adoption

of new energy vehicles and therefore their market

penetration. A point will come where car

manufacturers must make a strategic decision on

how they want to move forward in regards to

investment returns and the overall deployment of

their resources.

For further information regarding automotive

emission standards, please refer to the following

sources:

Car Emissions - What/How/Why

Umicore Group - Emission standards

Overview of the emission control

standards in the G20 countries and the

way forward

European emission standards

Low-carbon fuel standard

California Air Resources Board “CARB”

Source: Download Electric Vehicles - The quiet rEVolution (73 pgs)

Source: .mckinsey study - the future of mobility in India 2017

http://www.caremissionstestingfacts.eu/

http://www.slideshare.net/UmicoreGroup/umicore-capital-markets-day-2015-catalysis

https://en.wikipedia.org/wiki/European_emission_standards#Obligatory_vehicle_CO2_emission_limits

https://en.wikipedia.org/wiki/Low-carbon_fuel_standard

https://en.wikipedia.org/wiki/California_Air_Resources_Board

https://www.arb.ca.gov/msprog/acc/acc-mtr.htm

http://library.liberum.com/SingletrackCMS__DownloadDocument?uid=9be7b1ed-de0e-4226-8377-7aae5ff82e26&docRef=f70c1635-9139-433b-8f03-71c03d3f4e98&jobRef=414721c3-1460-4876-871a-7125bf4efc0b

https://www.mckinsey.com/~/media/mckinsey/industries/automotive%20and%20assembly/our%20insights/the%20future%20of%20mobility%20in%20india/the-future-of-mobility-in-india.ashx



21 21

Why Peak?

The Premier NdPr Development Story Globally

Peak possesses many unique qualities which are all

relevant to Peak’s success in becoming the low-cost,

sustainable, innovative supplier of choice in the rare

earth industry.

At Peak, an unrivaled management team with direct

rare earth experience & management capabilities

meet with a world class deposit and a perfect

alignment with the market to create a company that

has the potential to skyrocket, combined with new

consumer applications and technologies expected to

materialize on a scale of incremental multi-million

unit sales per year- each of them containing more

than a kilogram of Peak’s material.

We believe that these are extraordinary times in

which we live and that the impending business

opportunities are those that arise just once in a

lifetime. Careful observers will recognize that the

product adoption curves have recently gotten

steeper, the market dynamics have accelerated and

the classic product lifecycles undergo the same

dynamics. If we put this information in context with

what is happening in the e-mobility segment right

now, we understand that this industry is at the verge

of leaving the early adapter segment and is ready to

take off!

We aim to establish Peak as a solution provider in

the low carbon, clean mobility and clean energy

sectors. We perceive ourselves as a manufacturer of

bespoke, niche rare earth specialties with an

exceptional and unique asset. We aim to become a

strategic marketer in the rare earth space, creating

value by understanding customer needs and market

dynamics including supply demand sensitivity,

market mechanisms, value-in-use differences

between products, pricing and contracting principles.

We position ourselves as a provider to the

downstream, predominantly in Catalysis, Metal

Alloys and Magnet producers and business by

understanding their requirements- especially their

sensitivities in further processing. We strive to serve

our customers with a steady, high quality and

sustainable solution.

We understand that commercial and operational and innovation excellence are together the core pillars for our future success and add substantial value to the bottom line. With this in mind, we have developed the following strategy that aims to drive our core pillars of success:

People make the difference – a top class management team

Innovation, Commercial & Operation excellence

The Hybrid model – our defined strategy for our route to market

Physicals drive financials – the quality of our assets



22 22

The Management Team

Peak Resources is the only rare earth developer who

has both extensive in-house rare earth

manufacturing experience as well as rare earth sales

expertise. The Company has infused this know-how

into the engineering design and BFS to produce the

best outcome for Peak, its stakeholders and its

customers. Combined with real-life operational

experience, rare earth expertise and thorough pilot

plant operation and testing, Peak Resources has

extensively de-risked the mine-to-product supply

chain.

Peak has the full advantage of the extensive rare

earth know-how of CEO-Rocky Smith, who

possesses a BS Chemistry from Fort Lewis College,

Durango, Colorado, and the majority of his 35+ year

career working in specialty metals and materials.

Rocky’s first-hand knowledge of production and

separation was invaluable in assisting Peak in

designing its process and separation methodology.

Rocky is one of the few western mining executives

who possesses an in-depth knowledge of the rare

earth industry including the supply chain, coupled

with extensive experience with startup and

operations of complex chemical process facilities

including rare earths. Rocky was formerly Managing

Director for Molycorp’s Mountain Pass Rare Earth

operations where he was pivotal in the development

of the process solution, going on to manage the day

to day refining operation, leading a team of 500+

people.

The track record of our management team shows we

have a steady yet highly capable approach. The

management team is well connected in the industry

and have the capability to build out the business and

team and to deliver quality products with a reliable,

sustainable supply chain. We aim to add value to our

customers’ business by being engaged, strategic

partners who provide insights into the rare earth

market

As a management team, we want to be recognized

for proactive, innovative thinking, taking ownership

and delivering profitable growth.

To assure that Peak Resources Marketing, Sales

and Business development activities are aligned with

the industry’s needs and requirements, Michael

Prassas joined the Peak team in 2016. Michael is an

experienced marketing, sales and business

development executive. Before Peak, Michael, was

the Global Account Manager for Automotive

Catalysis and Sales Manager - Rare Earth Systems

for leading global chemical company Solvay/ Rhodia.

Michael’s primary responsibility was for Rare Earth

Mixed Oxide sales in Europe and Africa. Michael has

over 20 years’ experience in sales and marketing

and his focus has been negotiating long-term supply

contracts with global accounts and developing

business relationships and offtake agreements with

some of the world’s largest automotive companies.

In addition to sales and marketing, Michael has

extensive experience in business development and

has been involved in start-up companies providing

technology to the automobile industry.

Lucas Stanfield formerly Peak’s Project Manager

and moving into the role of General Manager of

Development in 2017, manages our Mining

application process in Tanzania with the support of

our local team. Lucas was responsible for the

management of the company’s scoping, preliminary

feasibility, refinery location selection and bankable

feasibility studies. He has spent a considerable

amount of time in Tanzania representing the

Company, has an excellent working relationship with

all stakeholders in country and is very well placed to

further advance the Ngualla Project.

We understand that a reliable and successful

operation is based on developing organic in-house

talents. We are convinced that people really do

matter and are the crux of an effective enterprise. We

understand that as leaders, we must develop the

capabilities of employees, foster their careers and

manage the performance of individuals and teams.

http://www.peakresources.com.au/the-team/



23 23

The Asset – The Ngualla Rare

Earth Deposit

Ngualla is one of the world’s largest and highest

grade undeveloped neodymium (Nd) &

praseodymium (Pr) rare earth projects.

The Ngualla Rare Earth Project is centred on the

Ngualla Carbonatite in southern Tanzania, 147

kilometers from the city of Mbeya on the edge of the

East African Rift Valley. The name ‘Ngualla’ comes

from the Swahili word for ‘bald head’ which reflects

the appearance of the hill – mostly bare land on

which there is no habitation, agriculture, grazing or

reserves.

The weathered Bastnaesite Zone that is the target for

initial development occurs as a thick blanket of high

grade rare earth mineralisation from surface on

Ngualla Hill. Rare earths are contained within the

mineral bastnaesite within a weathered host rock that

contains very low levels of phosphate, carbonate,

uranium and thorium compared to other rare earth

deposits. This makes it easy-to-mine by low strip

ratio open pit techniques and subsequently upgraded

to a high grade processed concentrate through a

multi stage processing plant on site.

The Total Mineral Resource estimate for the Ngualla

Project above a 1% REO cut-off is 214.4 million

tonnes at 2.15% REO, for 4,620,000 tonnes of

contained REO. Included in this Mineral Resource is

the Weathered Bastnaesite Zone Mineral Resource,

the measured and indicated portions of which form

the basis of the Ore Reserve estimate.

At a 1% REO cut-off, the Mineral Resource estimate

for the Weathered Bastnaesite Zone is 21.3 million

tonnes at 4.75% REO, for 1,010,000 tonnes of

contained REO. Details of the Mineral Resource

estimate are contained within the ASX

Announcement “Higher grade Resource for Ngualla

nearly 1 million tonnes REO" dated 22 February

2016.

The Ore Reserve estimate for the Ngualla Project is

18.5 million tonnes at 4.80% REO for 887,000 tonnes

of contained REO. ASX Announcement “Ngualla

Rare Earth Project – Updated Ore Reserve” dated 12

April 2017 provides further details and

assumptions. The Ore Reserve represents just 22%

of the total Mineral Resource but is sufficient to

support a mine life of 26 years.

The Company plans to export approximately 32,700

tonnes per annum of rare earth concentrate grading

45% REO from Tanzania to the UK refinery.

Ngualla is also host to widespread, high grade

niobium-tantalum, phosphate, fluorspar and barite

mineralisation. These additional commodities are at

an early stage of evaluation and represent potential

upside opportunities for additional products from the

project.

The planned total capital expenditure in Tanzania as

defined by the detailed BFS study and the Project

update estimated at US $200 million including 15%

contingency and plus 5% owners costs. We

anticipate for Tanzania an annual operational

expenditure of US $51 million.

The superior physical attributes of the Ngualla

orebody combined with the unique advantages of the

Tees Valley refinery location makes Peak the lowest

operating and capital cost project of any comparable

rare earth developer. In regards to the superior

position of the Ngualla asset and its global

competitiveness we like to refer to the independent

analysis of the consulting company ADAMAS see

page 27-33.

Tanzania is politically stable and has a well-

established mining culture, being the fourth largest

gold producer in Africa. Existing transport

infrastructure together with a low tonnage, high value

product will enable cost effective transport from

Ngualla to the deep water port in Dar es Salaam.

In July 2017, the Tanzanian government changed

their mining legislation. Since the changes were

introduced, Peak’s senior executives have spent

considerable time in Tanzania continuing to develop

strong working relationships with government

officials and other stakeholders. On his most recent

visit, Peak’s CEO, Rocky Smith met with senior

officials in the new Ministry of Minerals, obtaining

further clarity on the implementation of the new

legislation as well as the timing of Peak’s pending

Special Mining Licence application.

Due to the impending revolution of electrification,

today's commodity landscape will experience a

seismic shift and Tanzania with its rich mineral

resources such as rare earths, niobium, graphite etc,

is in the unique position to transform its country to

something similar to what Dubai experienced in the

1960s. The key element of success in this

transformation will be how the country’s executives

manage to establish a collaborative, transparent and

predictable secure environment which attracts

foreign investment and operations.

https://wcsecure.weblink.com.au/pdf/PEK/01713794.pdf






http://www.peakresources.com.au/wp-content/uploads/2017/04/14144-peak-bfs-web-use-11-04-2017.pdf





24 24

Our Product Basket - Absolute

Alignment with High Growth

Markets

Peak’s processing strategy has been enhanced to

maximize the yield for 2 main minerals neodymium

and praseodymium (NdPr).

These two minerals are the core ingredients for

manufacturing permanent magnets (NdFeB

magnets), which are used in high-efficiency electric-

motors and generators enabling low carbon

technologies. The demand for NdPr is expected to

grow rapidly as one of the core enablers for the

upcoming new technology chapter.

The high strength to weight ratio of NdFeB magnets

facilitates the miniaturization of electric motor

systems and is the preferred solution when it comes

to the tradeoff between weight versus performance.

Peak’s production basket is in line with the highest

value and growth market.

NdPr accounts for ~90% of Peak Resources’

revenue and represents the main focus of the

marketing, sales and business development

strategy. With its unique Ngualla deposit in Tanzania,

Peak Resources is perfectly positioned to become a

sustainable and long term supplier to meet increased

global demand in the green energy, e-mobility and

electrification sectors.

The overall annual product output is projected to

be as follows:

2,810 REO tpa of neodymium-

praseodymium oxide 99%

4,230 REO tpa or 7,995 tpa lanthanum rare

earth carbonate product

1,920 REO tpa 3,475 tpa of a cerium rare

earth carbonate product

330 REO tpa or 625 tpa of a SEG + Heavies

RE chloride or carbonate product



25 25

Commercial Excellence

Marketing and the use of sophisticated strategies

and tools are the basis with which to differentiate

yourself and your company from the rest of the

competition. By providing customers with better

services, experiences and higher transparency, this

enables us and our customers to make better

decisions and will ultimately contribute significantly to

the bottom line of Peak. We understand that through

consistent implementation, there is an opportunity to

generate long term value from commercial

excellence and we have identified following enablers:

Product-market strategy

Commercial value capturing

o Trading incl. arbitrage, speculation

opportunities and international swing

capacity, consignment or global

decentralized stock locations,

financing, pricing incl. transactional

pricing,

o Contract-management including the

right balance between fix - floating

pricing, spot and long term agreements

o Key Account management including

technical expertise/support to offer

bespoke solutions, logistics

(packaging, labeling), managing

customers process, purchasing,

regulation and risk

o Branding( white label no service versus

branded with Service)

Commercial System (Operating System +

Management System + capabilities)

Our analysis and experience makes it clear that

marketing and sales represent an opportunity for

mining companies to add substantial value to the

bottom line. Our vision is to aim for long term supply

contracts but also pursue and capture additional

value through continuous arbitrage opportunities,

superior insights, short-term price developments and

potential shortages.

A robust product-market strategy has been

developed which perfectly aligns with the Company’s

assets. Our decision has been guided by our

commercial aspiration, linking our portfolio to the

most attractive market segments and customers.

Based on our experience and detailed level of market

insight, we have a clear visibility of the existing

margin framework in the industry and perfectly

understand the value in use differences. Due to this

clear understanding of the value of our products

compared with the other options available to

customers, this enables us to position ourselves as

an integrated solutions provider and to capture the

maximum market value.

Based on our insights, we have developed a product-

market strategy where our products need to sit high

on the quality curve in terms of impurities and grade

to maximize the value our products can generate for

Peak. It is essential and critical to ensure that our

products are able to access the high value market

and pass customer specification and technical cut-off

points.

We are aware that the catalysis mixed oxide

business is the most profitable mainstream rare earth

segment and delivers the best margins in the rare

earth industry. In catalysis, depending on the

application and volumes, producers can access good

margins. Due to the opaque nature of the rare earth

industry, we know that there are a substantial

amount of custom made, niche applications

implemented across the globe which are known only

by the individual customers and the direct supplier

who holds the business. Based on our experience

and knowledge, we believe some of these will be

accessible to Peak.

As part of this strategy, we have decided to cover

additional elements of the value chain beyond mining

and separation. We will offer our customers

additional services such as logistics (transport),

stockpiling and warehousing, technical services,

third-party trading and further processing. By being

more deeply integrated into the value chain, we

ensure to remain connected to the market and to

obtain access to valuable market insights that can be

used to Peak’s advantage.

Next to organic growth Peak also recognizes that as

a prerequisite to securing the ability to capture the

indicated additional value from the downstream

business, through either partial ownership or JV

agreements, the Company will need to secure

access to industrial capacity and know-how in China

as number one leading rare earth market worldwide.

This will become extremely important when the

market starts to gather momentum and therefore

Peak’s team is already actively working on the

execution of this strategy. For the overall delivery of

this strategy, we are aware that it is instrumental to

implement a 24/7, 360o connected operational and

commercial management system which will allow us

to generate, both internally and externally, the

required transparency and access to real-time

information enabling us and our customers to make

informed and correct decisions.



26 26

Operational Excellence

Relationships between suppliers and customers are

essential elements in building financial and economic

value and also play a key role in the promotion of

social and environmental best practice.

This is a top priority at Peak and consequently we

are committed to the principles of sustainable acting

in all areas of manufacturing and procurement – be

it mining, labour, raw materials, energy, chemicals or

other goods or services. We believe that besides the

traditional elements of qualifying, ranking or

assessing a supplier (quality, technical

specifications, price, service, and technology) the

ranking in regards to sustainable and environmental

and social practice should play a vital role. The

process of sourcing raw materials in the industry is

particularly struggling due to illegal practices

including child labour, non-compliant environmental

operations and the total lack of transparency

regarding the place of origin.

Peak is committed to offering its customers cradle to

grave transparency, giving peace of mind when it

comes to sourcing rare earth material. Our

customers will always know where the product has

come from and where, how and by whom it has been

processed ensuring quality every single time.

Peak aims to become a recognised quality provider

of oxide, chemicals material and metals to low

carbon technology sectors worldwide including

catalysis, automotive, and the wind turbine industry.

In support of our vision, our policy is to establish and

maintain a practical but comprehensive Quality

Assurance Management System (QA-S), Health,

Safety, Security and Environment policies (HSSE)

and Corporate Social Responsibility based on ISO

9001:2015, ISO 14001, OSHA 18001 and REACH.

This will be central to the delivery of our commitment

to customer satisfaction and continuous

improvement.

Guided by following standards:

Peak Resources Code of Conduct

Universal Declaration of Human Rights

ILO Declaration on Fundamental Principles and

Rights at Work

Guidelines on occupational safety and health

management systems ILO-OSH 2001

Eco-Management and Audit Scheme (EMAS)

ISO 14001 series environmental management

systems

OHSAS 18001 Health and Safety Systems

ISO 9001:2015 Quality management systems

REACH/ ECHA Registration, Evaluation,

Authorisation and Restriction of Chemicals.

http://www.un.org/Overview/rights.htm

http://www.ilo.org/dyn/declaris/DeclarationWeb.IndexPage

http://www.ilo.org/dyn/declaris/DeclarationWeb.IndexPage

http://www.ilo.org/public/english/protection/safework/managmnt/guide.htm

http://ec.europa.eu/environment/emas/index_en.htm

http://www.iso14000-iso14001-environmental-management.com/

https://www.bsigroup.com/en-GB/ohsas-18001-occupational-health-and-safety/

https://www.iso.org/standard/62085.html

http://ec.europa.eu/environment/chemicals/reach/reach_en.htm

https://echa.europa.eu/



27 27

Leading the Pack – Peak

Performance

The Investment Proposition - Peak

Performance Across All Categories

The outstanding quality of the Ngualla Rare Earth

project becomes clearly visible when the project is

compared with its peers based on a set of KPI’s. The

bucket diagrams below shows 4 KPI’s that we

believe are required for such an exercise. Peak

proves its superior position amongst its peers by

achieving the highest overall ranking. For the

detailed explanation of the defined KPI’s we would

like to refer to the dedicated section on our website.

This exceptional position has also been reflected in

the results of the Bankable Feasibility Study

published on 12 April 2017 and the Project Update

published on the 12 October 2017, materializing in

following results:

NPV10 - Pre Tax and Royalties US$ 686 million*

NPV10 - Post Tax and Royalties US$ 444 million*

IRR – Post Tax and Royalties 22%*

Annual operating margin EBITDA US $150

million p.a.*

Unit operating cost US 32.24 /kg NdPr

(total annual Opex of ~91 million divide by only the annual NdPr output of 2810. Ignoring the sales of our other rare earth material of 6480 tpa)

*see pricing deck information here page 47

At a pricing level of USD 51.84 (328 RMB dated 10th

January 2017) for 1 kg of NdPr Peak Resources

would generate per sold NdPr kg 19.60 USD or 55.08

million USD positive cash only from the projected

2,810t p.a. NdPr sales.

Peak is the leading global development project with

one of the world’s lowest operating costs of NdPr

oxide.

Peak is the place where top class rare earth

expertise and experience meet with a world class

deposit and a perfect alignment with the market.

The benchmarking exercise which has been

performed by Adamas Intelligence plus the Peak

Resources in-house analysis clearly shows that

Peak is the superior choice among its peers and is

leading the competition.

Why Peak is Number 1:

Peak’s deposit has peer beating metallurgical properties allowing for a less complex separation process compared to its competitors.

Peak’s BFS utilised only 22% of its JORC resource, yet yielded a 26 year mine life. The expansion potential of the planned operation is enormous.

The at-surface and high-grade deposit equates to a low strip ratio and therefore, very low OPEX.

Other than Lynas, no other NdPr producer or developer has the ability to have a ‘fully integrated’ supply chain and complete the

final separation themselves.

http://www.peakresources.com.au/the-investment-proposition/






28 28

The Benchmarking Study

Peak Resources commissioned a benchmark study

with Adamas Intelligence to get an unbiased opinion

and summary on the quality of the Ngualla project

and the overall results of the BFS study. The final

conclusion and result is summarized below.

We would like to acknowledge the generosity of

Adamas in allowing Peak to share extracts of this

comprehensive Benchmarking exercise in this

paper.

Using this extensive Benchmarketing analysis

independent industry experts ADAMAS came to

the following key findings and takeaways:

1. The Ngualla project has potential to be the

lowest cost producer of NdPr oxide among its

peers, and the lowest cost producer of TREO.

2. The Ngualla project has potential to yield the

highest pre-tax operating profit margin

among its peers.

3. High-demand rare earths used in permanent

magnets and catalysts make up 76% of planned

annual rare earth oxide production from Ngualla;

the highest proportion among incumbents.

4. The Ngualla project is one of only two low-

CAPEX rare earth projects outside of China with

potential to payback pre-production capital

expenses in under three years.

5. At current price levels, the Ngualla project is the

only project among its peers with potential to

earn a pre-tax operating profit from

production of NdPr oxide only.

Furthermore, Peak continues to run its in-house

benchmarking report, following its peers and tracking

their progress. We have attached an extract of this

report showing Peak’s position versus its Australian

Peers for your reference. Please find the details on

Page 34.

Both analyses come to the same conclusion of the

exceptional quality of Peak Resources’ asset and

underpin Peak’s position to become the next Lynas

and respectively, the next fully integrated, leading

rare earth producer outside of China.

Disclaimer: The pages 28 to 33 have been re-

produced with permission from the Adamas

Intelligence benchmarking study.

.

https://www.adamasintel.com/AdamasIntel/Adamas%20Intelligence%20-%20The%20Critical%20Metals%20and%20Minerals%20Experts.html



29 29

Adamas Intelligence Benchmarking

Exercise - Introduction

Global demand for certain rare earth elements is

poised to grow strongly over the coming ten years

with little-to-no new global production to

compensate. In fact, as China, the world’s dominant

producer of rare earth elements, continues to clamp

down on illegal rare earth production in the nation,

Adamas Intelligence forecasts that global production

of some rare earth elements may in fact decrease.

Within the next ten years Adamas Intelligence

believes that the evolving supply – demand

fundamentals of the rare earth market will open a

window of opportunity for multiple new rare earth

mines to be developed outside of China, so long as

these new mines are economically viable, and their

output is comprised predominantly of the rare earth

elements the market will necessitate most.

Adamas Intelligence was engaged by Peak

Resources to carry out a benchmarking study of

development-stage rare earth projects globally to

determine how the company’s Ngualla project

compares to its peers across metrics that Adamas

believe are critical to techno-economic success.

Adamas began with an all-encompassing group of 38

projects in 16 nations – all of which have at minimum

completed a compliant Preliminary Economic

Assessment (“PEA”), although several have

advanced further through completion of a compliant

Pre-Feasibility Study (“PFS”), and/or compliant

Feasibility Study (“FS”).

For each project, Adamas extrapolated key project

metrics, such as capital costs, operating costs,

sustaining capital costs, planned production

quantities, and many others, from their latest

technical reports, as available, and subsequently

‘normalized’ the extrapolated metrics using identical

exchange rate and toll-processing cost assumptions

for all so as to make the data amenable to an ‘apples-

to-apples’ analysis.

Seven of the 38 projects were eliminated from further

consideration at the outset of the analysis due to a

lack of publicly-available information – primarily

because many of the projects are privately owned.

Of the remaining 29 projects, Adamas eliminated an

additional six projects from further consideration due

to a lack of independently verified and/or up-to-date

information pertaining to the latest publicised project

development strategy.

Thereafter, we cross-compared the remaining 23

projects across six metrics that we believe are

defining attributes of economically-promising

investment prospects, in the context of our long-term

forecasts for rare earth prices, by-product prices,

exchange rates, and toll-processing costs



30 30

Cross-Comparison of Projects’

Operating Profit Margins

In the below graph, the cash cost of each project is

shown as a percentage of its respective product

basket value in order to normalize the product value

of each project, and ultimately, cross-compare the

operating profit margin that each project has

potential to yield.

The cash cost of production as a percentage of

product basket value of each project is plotted along

the y-axis, indicated by the height of each blue and

grey column.

The product basket value of each project, expressed

as 100%, is also plotted along the y-axis in the graph,

indicated by the horizontal dark blue line.

Finally, as in the other graphs, the annual TREO

production capacity proposed for each project is

plotted along the x-axis in graph, indicated by the

width of each blue and grey column.

As shown below, the Ngualla project (bright blue)

has potential to be a profit leader among its peers

with the highest operating profit margin among

incumbents.

Cross-comparison of project cash costs as a

percentage of product basket value

Cash Cost = Operating Cost + Sustaining Capital Cost + Toll-Separation Cost (if applicable)



31 31

Cross-Comparison of Projects’

Operating Costs Weighted to PrNd

Oxide Only

Below graph shows the total cash cost of each

project has been weighted to production of NdPr

oxide only to cross-compare the production costs of

projects under a scenario in which high-demand

NdPr oxide (or individual Pr oxide and/or Nd oxide)

is the only saleable product.

In below graph, each project’s cash cost of NdPr

oxide production is plotted along the y-axis, indicated

by the height of each blue and grey column. We

calculated these costs by dividing the average

annual cash cost projected for each project by the

average annual NdPr oxide production level

projected for each project.

Below graph shows the cross-comparison of

project cash costs weighted to production of

PrNd oxide only

The dark blue line indicates Peak Resources’ long-

term average NdPr oxide price forecast, as

extrapolated from the October 2017 Ngualla

Feasibility Study Update.

Finally, the annual NdPr oxide production capacity

(or individual Pr oxide and/or Nd oxide capacity)

proposed for each project is plotted along the x-axis

in below graph, indicated by the width of each blue

and grey column.

As shown in below graph, the Ngualla project

(bright blue) has potential to be the lowest-cost

producer of NdPr oxide among incumbents, and

is the only project among its peers with a

projected NdPr oxide production cost below U.S.

$40 per kilogram.

Cash Cost = Operating Cost + Sustaining Capital Cost + Toll-Separation Cost (if applicable)



32 32

Pre-Production Capital Expense

Payback Period

Below graph shows the projected pre-production

capital expense associated with each project has

been plotted along the y-axis, and the forecasted

annual pre-tax operating profit attributed to each

project has been plotted along the x-axis.

By dividing a project’s y-axis value (capital expense)

by its x-axis value (operating profit) the estimated

payback period of its pre-production capital expense

has been quantified (in years). The dashed lines in

below graph represent ‘isochrons’ along which the

capital expense payback period is fixed.

Cross-comparison of projects’ pre-production

capital expense payback periods:

As shown below graph, the Ngualla project

(bright blue triangle) is one of just two low-

CAPEX rare earth projects outside of China with

potential to payback pre-production capital

expenses in under three years, and one of just

five low-CAPEX projects with potential to

payback in less than six years.

Note: Annual pre-tax profit shown is projected average per annum over mine life. Long ramp-up periods for new mines will extend payback.



33 33

Proportion of Annual Production

Comprised of ‘Market-Needed’ Rare

Earths

In a recent report, titled “Rare Earth Market Outlook:

Supply, Demand, and Pricing from 2016 through

2025”, Adamas Intelligence concluded that a handful

of high-demand rare earth oxides (“neo-CREOs”) will

become increasingly vulnerable to supply disruptions

over the coming ten years should China not

substantially increase production and multiple new

sources of supply outside China not emerge.

The five high-demand rare earth oxides Adamas

identified as most vulnerable to supply disruptions,

and most critical to clean energy and electric

mobility, are neodymium oxide, praseodymium

oxide, lanthanum oxide, terbium oxide, and

dysprosium oxide.

Percent of each project’s annual TREO

production comprised of ‘market-needed’ rare

earths

As shown in below graph, the Ngualla project

aims to produce a basket of saleable rare earth

products containing the highest proportion of

‘market-needed’ rare earth oxides among

incumbents.

neo-CREOs = (“new-Critical Rare Earth Oxides”) = Neodymium oxide, Praseodymium oxide, Lanthanum oxide, Terbium oxide, Dysprosium oxide



34 34

Peak Resources Benchmarking

Exercise – Extraction

P

ea

k R

eso

urc

es

-In

-ho

use

- R

E B

en

chm

ark

ing

An

aly

sis

Pe

ak

Re

sou

rce

s Ly

na

s H

ast

ing

s A

rafu

ra R

eso

urc

es

Gre

en

lan

d

Alk

an

e R

eso

urc

es

Mo

lyC

orp

- M

P M

ine

Pro

ject

Na

me

N

gu

all

aM

t W

eld

/ L

AM

PY

an

gib

an

aN

ola

nK

van

efj

eld

Du

bb

o Z

irco

nia

Pro

ject

(D

ZP

)M

ou

nta

in P

ass

Ma

rke

ts C

ap

- 1

0 F

eb

rua

ry 2

01

82

7.1

mil

lio

n A

UD

1.0

2 b

illi

on

AU

D1

98

mil

lio

n A

UD

57

.58

mil

lio

n A

UD

9

7.2

6 m

illi

on

AU

D1

46

.77

mil

lio

n A

UD

NA

Pro

ject

Lo

cati

on

Ta

nza

nia

WA

Au

stra

lia

WA

Au

stra

lia

NT

Au

stra

lia

Gre

en

lan

d

NSW

Au

stra

lia

C

ali

forn

ia,

USA

Pro

ject

ow

ne

rsh

ip7

5%

10

0%

92

%1

00

%8

8%

10

0%

Un

de

r n

ew

US/

Ch

ina

ow

ne

rsh

ip

Fin

al

in-h

ou

se p

rod

uce

pro

du

ct

2,8

10

tpa

Nd

Pr

Oxi

de

& 7

,99

5tp

a

La o

r 3

,74

5tp

a C

e c

arb

on

ate

s/

chlo

rid

es

an

d m

ix 6

25

tpa

SEG

/Ha

vie

s ca

rbo

na

tes

5,2

23

tpa

Nd

Pr

Oxi

de

& s

ing

le L

a

or

Ce

ca

rbo

na

tes/

chlo

rid

es

an

d

mix

SE

G/H

ea

vie

s ca

rbo

na

tes

10

,78

0 o

xid

e e

qu

iva

len

t

Inte

rme

dia

te p

rod

uct

-

15

,00

0

Mix

of

lig

hts

an

d h

ea

vie

s

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rme

dia

te p

rod

uct

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16

,45

0 N

dp

r ri

ch m

ixe

d

carb

on

ate

an

d 1

3,2

50

mix

ed

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riu

m r

ich

ca

rbo

na

te

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rme

dia

te p

rod

uct

-

tota

l

an

nu

al

ou

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t n

ot

pu

sbli

she

d

1,0

31

tp

a Y

ttri

um

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de

e 2

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an

d 2

in

term

ed

iate

s:

La 1

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1

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/ C

e 2

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7 t

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co

nce

ntr

ate

+

6,6

64

tp

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on

cen

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te

in t

he

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st 2

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0 t

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oth

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de

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sep

ara

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ne

w

ow

ne

rsh

ip t

he

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lan

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exp

ort

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ae

site

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fo

r fu

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er

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cssi

ng

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th

ey

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du

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nh

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ith

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ryY

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oca

tio

n i

n U

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es,

10

0%

ow

ne

d l

oca

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n i

n

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lays

ia

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s, 1

00

% o

wn

ed

lo

cati

on

USA

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pro

du

cts

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– o

nly

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re E

art

hN

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on

ly R

are

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nly

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art

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es

– P

ho

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ori

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cid

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c

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fniu

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art

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ve

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ish

ed

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ff

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ish

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/

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take

sw

ork

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th

e D

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up

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go

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fin

ish

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take

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rk i

n P

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de

r n

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ow

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rsh

ip

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no

mic

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era

log

yB

ast

na

esi

teM

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ati

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on

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azi

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ati

te,

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an

ite

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en

stru

pin

e,

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ale

rite

eu

dia

lyte

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asi

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ast

na

esi

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Re

sou

rce

mil

lio

n t

on

na

ge

21

4.4

02

3.1

02

1.0

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73

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75

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35

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tal

RE

O G

rad

e2

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%7

.34

%1

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%6

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%

Nd

Pr

in %

20

.97

%2

3.1

4%

34

.27

%2

6.5

1%

No

t p

ub

lish

ed

No

t p

ub

lish

ed

16

.09

%

tota

l O

re R

eso

urc

e N

dP

r to

nn

ag

e9

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92

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88

4,2

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NA

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36

2,3

14

Re

serv

e m

illi

on

to

nn

ag

e1

8.5

09

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ese

rve

to

be

up

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ted

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h

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ue

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dif

fere

nt

pro

cess

)1

08

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18

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tal

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Nd

Pr

in %

21

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3.2

9%

41

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17

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tota

l O

re R

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ton

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nu

al

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of

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rese

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mil

lio

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qu

ire

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es

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de

fin

ed

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es

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in K

ore

a

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s -S

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tici

pa

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dic

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or

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no

t a

pp

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pli

cab

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thin

g

dis

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in

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pe

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clu

de

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80

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incl

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n

oth

ing

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pp

lica

ble

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tici

pa

ted

to

llin

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pe

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e/

US

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ero

= i

nh

ou

se i

ncl

in

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ex

+

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pe

x

ze

ro =

in

ho

use

in

cl i

n O

pe

x +

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pe

x

2.5

0

no

t p

ub

lish

ed

n

ot

pu

bli

she

d

no

t p

ub

lish

ed

z

ero

= i

nh

ou

se i

ncl

in

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ex

+

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pe

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US

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kg

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3

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1

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16

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3

US

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kg

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29

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13

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pe

x in

ten

sity

(U

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/kg

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de

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M)

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12

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14

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20

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pe

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ten

sity

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l R

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)

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cess

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35 35

China: Strengthening the Global Superpower Position.

China has issued a recent update of its 5 year plan

called “China’s 13th five year plan Made in China

2025”. This plan clearly articulates the shift in China’s

strategy of moving away from low-tech to become a

high-tech technology manufacturing downstream

industry nation. From our perspective, this decision

will clearly further increase the Chinese domestic

demand and consumption of rare earth minerals and

accelerate the potential shortage of NdPr.

Further information on the “Made in China 2025

Plan” can be found here:

1. Information of The Chinese State Council:

made in china 2025

2. IoT summary :

http://www.cittadellascienza.it/cina

3. European Chamber: China manufacturing

2025: putting industrial policy ahead of market

trends

Source: HKTDC research

Growth of Industrial Enterprises in China

http://economists-pick-research.hktdc.com/business-news/article/Research-Articles/China-s-13th-Five-Year-Plan-The-Challenges-and-Opportunities-of-Made-in-China-2025/rp/en/1/1X000000/1X0A6918.htm


http://english.gov.cn/2016special/madeinchina2025/

http://www.cittadellascienza.it/cina/wp-content/uploads/2017/02/IoT-ONE-Made-in-China-2025.pdf

http://www.europeanchamber.com.cn/en/china-manufacturing-2025






36 36

Global Macro Economics &

Trends

From a macro perspective, it is predicted that the

world will experience continuous substantial growth

in all areas. It is projected that the world population

will grow from 7 to 9 billion by 2040. Consequentially,

this will lead to a net-increase of the global energy

demand of an estimated 25 percent by the year

2040. Energy demand will increase 100% from

today’s perspective but it is estimated that 75% of

this growth can be avoided by energy saving

initiatives. The assumed 25% is similar to adding

another North America and Latin America to the

world’s current energy demand.

Source: Exxon Mobile energy outlook 2017

Additionally it is predicted that we will experience a

substantial growth of the middle class which will

expand on a global basis, more than doubling by

2030 to reach almost 5 billion people. This would

ultimately result in doubling the world GDP by 2040

causing a stronger urbanisation trend towards more

and larger mega-cities. These cities will have to

address the issues which arise with such

developments for instance problems with pollution

and overall mobility management.

Source: Exxon Mobile energy outlook 2017

http://cdn.exxonmobil.com/~/media/global/files/outlook-for-energy/2017/2017-outlook-for-energy.pdf




37 37

The unprecedented expansion of the global

middle class:



38 38



39 39

Overall, the sheer unstoppable growth of the global

population will fundamentally underpin the increase

of the demand for basic commodities which are

essential for certain industries and societies to

function. Among them are rare earth minerals which

are present in any kind of high-tech technology but

especially in e-mobility, robotic and low carbon

energy solutions.

As incomes rise, individuals will seek to upgrade their

standard of living- like buying their first car, taking an

oversea vacation or upgrading their housing

situation. In conjunction with these changes, the

demand for rare earth minerals will rise as well.

The 4 categories below are enabled through the

utilization of rare earth minerals and will drive the

demand and pricing for rare earth minerals not only

through organic growth of the population, but also

through gaining significant additional market shares

due to their superior performance and features.

1. Housing & Electricity solutions (Wind energy,

Smart home solutions)

2. Mobility & Transportation solutions (E-mobility

Trains, Trucks, Vans, Cars, bikes etc.)

3. Communications & Education (Mobile phones,

tables, computers etc.)

4. Productivity & Robotics/ Artificial Intelligence (“AI”)

solutions (domestic and industry use of robotic

solutions)

In the meantime, the World Bank and oil majors have

acknowledged that renewable energy and e-mobility

plays a vital role in shaping our future and in one way

or the other, the change will come – it’s inevitable.

“We always overestimate the change that will

occur in the next two years and underestimate

the change that will occur in the next ten years.

Don't let yourself be lulled into inaction.”

Bill Gates

For further information on the outlook of

macroeconomics in connection and wind energy and

e-mobility, please refer to following documents and

sources:

2017 exxon mobil - outlook for energy 2017-

2040

2017 bp - energy outlook 2017

2017 Total - integrating climate into our

strategy_

2016 Shell_- energy_scenarios_2050

2017 Energy Perspectives

2017 Brookings – The unprecedented

expansion of the global middle class

2017 Worldbank - The Growing Role of Minerals

and Metals for a Low Carbon Future

2017 - The Credit Suisse Research Institute's

Global Wealth Report



https://www.bp.com/content/dam/bp/pdf/energy-economics/energy-outlook-2017/bp-energy-outlook-2017.pdf

http://www.total.com/sites/default/files/atoms/files/integrating_climate_into_our_strategy_eng.pdf

http://www.total.com/sites/default/files/atoms/files/integrating_climate_into_our_strategy_eng.pdf

http://folk.ntnu.no/skoge/book-cep/more/shell_energy_scenarios_2050.pdf

https://www.statoil.com/en/how-and-why/sustainability/energy-perspectives.html

https://www.brookings.edu/wp-content/uploads/2017/02/global_20170228_global-middle-class.pdf

https://www.brookings.edu/wp-content/uploads/2017/02/global_20170228_global-middle-class.pdf

http://documents.worldbank.org/curated/en/207371500386458722/The-Growing-Role-of-Minerals-and-Metals-for-a-Low-Carbon-Future


https://www.credit-suisse.com/corporate/en/research/research-institute/global-wealth-report.html?WT.i_short-url=%2Fgwr&WT.i_target-url=%2Fcorporate%2Fen%2Fresearch%2Fresearch-institute%2Fglobal-wealth-report.html&ref=https%3A%2F%2Fwww.credit-suisse.com%2Fcorporate%2Fen%2Fresearch%2Fresearch-institute%2Fnews-and-videos%2Farticles%2Fnews-and-expertise%2F2015%2F10%2Fen%2Fglobal-wealth-in-2015-underlying-trends-remain-positive.html

https://www.credit-suisse.com/corporate/en/research/research-institute/global-wealth-report.html?WT.i_short-url=%2Fgwr&WT.i_target-url=%2Fcorporate%2Fen%2Fresearch%2Fresearch-institute%2Fglobal-wealth-report.html&ref=https%3A%2F%2Fwww.credit-suisse.com%2Fcorporate%2Fen%2Fresearch%2Fresearch-institute%2Fnews-and-videos%2Farticles%2Fnews-and-expertise%2F2015%2F10%2Fen%2Fglobal-wealth-in-2015-underlying-trends-remain-positive.html



40 40

China’s Domestic Economy

If we take a close look at the cost situation in China,

we can see that during the last 5-10 years the overall

trend was that manufacturing costs increased year

by year. China’s manufacturing cost advantage is

now eroding and it is understood that China will

undergo the same transition as all developed

industry nations have. This is mainly driven by fact

that that wages in China have risen much faster than

the increases in productivity or inflation.

Source: Tradingeconomics.com / National Bureau of statistics of China

https://www.bls.gov/fls/china.htm#charts



41 41

It has been observed that China has started to

experience an outflow of low-end manufacturing jobs

to less developed countries with more attractive labor

cost like Vietnam, Miramar, Laos, Cambodia or Sri

Lanka.



42 42

For decades the wages of Chinese workers have

been significantly rising from year to year and in

combination with the trend of a shrinking working-

age population, it is expected that this phenomenon

of increased manufacturing costs will continue.

It’s anticipated that the shift to advanced, higher

value manufacturing will fuel the competition going

forward and will push those countries who are unable

to aptly manage this transition to the backseat. It is

crucial for China to accelerate the transformation of

its domestic industry to a high-tech industry so that

enough time is allowed to build up the required

capabilities and expertise.

China will be unable to rapidly transform into

service economy. For the foreseeable future, the

manufacturing sector will remain the backbone of

China's economy- which is why the Chinese

government is pushing its companies to automate,

boost research budgets and move towards higher-

value products.

In this context, the government has encouraged

takeovers of European and U.S. enterprises with

advanced technology to accelerate this transition.

China surprised the world with an all-time record

when it announced takeovers worth $US 246 billion

in 2016. In 2017, China invested 158.1 billion (-31%

YoY) globally, 4.7 billion has been invested in the

mining sector alone this calendar year.

Source: Bloomberg

2016 takeover examples:

2016 Qingdao Haier Co. Spends $5.6 Billion To Buy GE Appliance Business

2016 Midea spends $5 Billion for German robotic company Kuka2016 HNA Group buy’s Ingram Micro for $6 billion

2016 ChemChina spends $43 billion for the Swiss pesticides and seeds group Syngenta

China's Geely Buys $9 Billion Daimler Stake

For further details, please see: Bloomberg’s China

Deal Watch

This expected trend will require China to continue to

spend billions (if not trillions) of dollars to upgrade

their working force capabilities and modernize their

industrial footprints like manufacturing lines and

automation, robotics and research.

Therefore, the prediction is that the trends outlined

above will continue to contribute to an increase in

Chinese manufacturing costs. This will have an

impact on the overall landscape of Chinese prices

including rare earth minerals.

Particularly if we consider that the Chinese mining

industry sector is not only confronted with the overall

phenomenon of increasing cost, but it also has to

deal with the fact that it is required to undertake new

investments, and to accept additional new cost

because of more stringent enforcement of

operational & environmental regulations and new tax

regimes. See details here:

https://www.bloomberg.com/news/articles/2017-05-10/china-s-246-billion-takeover-spree-is-crumbling-as-sellers-balk

https://www.bloomberg.com/news/articles/2017-05-10/china-s-246-billion-takeover-spree-is-crumbling-as-sellers-balk

https://www.bloomberg.com/graphics/2016-china-deals/

https://www.cnet.com/au/news/its-official-ge-appliances-belongs-to-haier/

http://www.reuters.com/article/us-kuka-m-a-mideamidea-group-idUSKBN14J0SP

http://www.reuters.com/article/us-kuka-m-a-mideamidea-group-idUSKBN14J0SP

http://www.reuters.com/article/us-ingram-micro-m-a-tianjin-tianhai-idUSKCN0VQ2U0

http://www.cnbc.com/2017/05/05/chemchina-clinches-43-bln-takeover-of-syngenta.html

http://www.cnbc.com/2017/05/05/chemchina-clinches-43-bln-takeover-of-syngenta.html

https://www.bloomberg.com/news/articles/2018-02-23/china-s-geely-is-said-to-be-buying-9-billion-stake-in-daimler



https://tradingeconomics.com/china/inflation-cpi



43 43

April 30, 2015 New Resource Tax Reform +

Deloitte summary

December 25, 2016; China to introduce

environmental tax for enhanced pollution

control

Considering the highlighted global and Chinese Macro-economic factors and that the 6 State-owned entities that control the Chinese rare earth business made very little profit during 2015 and 2016, it is apparent that such low pricing levels are unsustainable.



http://www.chinadaily.com.cn/business/2016-12/26/content_27774181.htm

http://www.chinalawtranslate.com/2016%E5%B9%B4%E4%B8%AD%E5%8D%8E%E4%BA%BA%E6%B0%91%E5%85%B1%E5%92%8C%E5%9B%BD%E7%8E%AF%E5%A2%83%E4%BF%9D%E6%8A%A4%E7%A8%8E%E6%B3%95/?lang=en

http://www.chinalawtranslate.com/2016%E5%B9%B4%E4%B8%AD%E5%8D%8E%E4%BA%BA%E6%B0%91%E5%85%B1%E5%92%8C%E5%9B%BD%E7%8E%AF%E5%A2%83%E4%BF%9D%E6%8A%A4%E7%A8%8E%E6%B3%95/?lang=en



44 44

Rare Earth Pricing

The production capacity of primary rare earth

products is still in serious surplus. Although the

consolidation of the industry into 6 SoE has

significantly reduced the separation capacity, with a

final output of ~200,000 tons, the problem of

overcapacity is still quite severe. In addition, illegal

mining is still being driven by huge economic benefits

and the environmental damage caused by these

operations is not included in the value and pricing of

the product, leading to oversupply of the market and

low prices.

As highlighted in this summary, we believe that there

are enough market elements to positively impact the

price performance of NdPr in the future. For this

reason, we believe the recent NdPr price increase

+97% up to ~77 USD (September 2017) is the

beginning of a long-lasting, sustainable upward trend

with the usual correction cycles (see end of the year

2017) underpinned by a changing market

environment. By 2020, we expect to see prices in the

range of US $75 -$110 /kg for NdPr oxide 99%.

Rare Earth pricing tracking chart:

In the long term, we expect cerium to face an

oversupply situation. The main demand for cerium

has historically come from the polishing powder

business however in recent years, consumers have

created strategies that allow them to reuse/recycle

existing cerium and consequently have significantly

decreased their need to purchase virgin material.

Another factor to consider is that as a byproduct of

NdPr, cerium will still be produced however the

buying market no longer exists to support cerium

sales of that level. With this in mind, we predict a

chronic oversupply situation in cerium. The same

statement could apply for lanthanum also, however

we believe that core applications will see a stable

demand, and possibly even growth, for applications

like FCC (yield improver +10% crude oil to Gasoline),

Ferrite magnets, glass and ceramic manufacturing,

infrared absorbing glass, high strength alloy steel

and NiMH batteries and PVC thermal stabilizer etc.



45 45

The Rare Earth Pricing Eco

System

Below we have prepared a simplistic view on the rare

earth market and its individual drivers and

influencers for the NdPr rare earth pricing. In

principle, it’s all about supply and demand balance

generated in a market environment which follows the

same overarching rules and normal market

mechanics apply to determine the value of a product.

The red elements represent critical elements, green

represent positive factors on NdPr pricing and the

blue elements show the NdPr value chain.



46 46

Uses and Trends of NdPr

NdFeB Magnets & Permanent

Magnet Motors

Neodymium-Iron-Boron (NdFeB) based permanent

magnets are indispensable and the key enabler for

today’s technologies and more importantly, for the

low carbon future of our technology-driven society.

When compared to other permanent magnets such

as Alnico and Ferrite, NdFeB magnets offer

substantially stronger magnetic fields per volume,

which make them suitable for high performance

products with compact designs.

NdFeB magnets are especially important for clean

energy, low carbon products such as electric

mobility solutions (bikes, cars, trains, trucks,

commercial vehicles, drones and other e-aircrafts),

wind turbines and domestic and industrial

automatization and robotic solutions.

With recent surges in demand for these core

technologies and the continuing trend of

miniaturizing products, it is expected that the

demand for NdFeB magnets is poised to grow. Being

the key minerals in manufacturing NdFeB magnets,

it is inevitable that demand for neodymium

praseodymium will experience this significant

upturn also.

Globally, China represents the largest market for

NdFeB magnets, followed by Japan, Europe and the

USA. As China provides a secure and economical

supply of the major raw materials, most of the rare

earth magnet manufacturers are based in China.

Other manufacturers are located in the USA, Europe

and Japan.

Key Players include:

Hitachi Metals (Japan)

Shin-Etsu Chemical Co. (Japan)

Ltd, Daido Steel Co.Ltd., (Japan)

TDK (Japan)

Vacuumschmelze (Germany)

Magnequench (China)

Zhong Ke San Huan (China)

Zhenfhai Magnetic (China)

Tianhe Magnets (China)

Shougang Magnetic Material (China)

Jingci Magnet (China)

Hangzhou Permanent Magnet Group (China)

Ningbo Yunsheng High-tech Magnetics Co. (China)

JPMF Guangdong Co. Ltd. (China)

Adams Magnetic Products (USA)

Electron Energy Corp (USA)

Arnold Magnetic Technologies (USA)

Thomas &Skinner

Tengam

Magnet Applications

Electrodyne

Magnum

With fossil energy proven to be no longer sustainable

due its carbon footprint and the overall impact on our

society, energy generation focus is shifting towards

the renewable and low carbon sources.

Wind energy has become a prominent solution

among renewable sources of energy, in 2015 adding

an additional incremental capacity of 63 GW,

accumulating a total installed global capacity of 433

gigawatts by end of 2015. It is predicted that the size

of the permanent magnet market in the energy

generation sector will increase substantially in the

near future as governments across the globe commit

to replace environmentally damaging energy

sources with renewable energy solutions.

The automotive industry is, and will continue to be, a

major contributor to the growth of permanent magnet

demand as these products are extensively used in

vehicles. In a standard passenger car, more than 30

individual applications are present. In 2015, the

automotive industry had an all-time record year with

90.8 million new registered motor vehicles sold

globally and were a massive contributor to the global

GDP, governmental income (2015 taxation revenues

from the EU alone were 401.5 billion Euro) and thus

enhanced lifestyles globally.

The increasing growth of the middle class, especially

in China and India, will influence the permanent

magnet market positively. This will create

investments for innovative production lines and

further development of low cost manufacturing

processes by deploying more and better robotic

solutions- which will in turn further accelerate the

global demand. NdFeB products will witness a

positive overall growth due to increasing demand for

lightweight, miniaturized equipment and powerful

products with superior aesthetics.

https://www.acea.be/uploads/publications/ACEA_Pocket_Guide_2016_2017.pdf



47 47

What are NdFeB Magnets?

Rare-earth magnets are strong permanentmade

from alloys of rare earth elements. Developed in the

1970s and '80s, rare-earth magnets are the

strongest type of permanent magnets available,

producing significantly stronger magnetic fields than

other types such as ferrite or alnico magnets. There

are two types of popular permanent magnets

neodymium magnets and samarium-cobalt

magnets. Rare earth magnets are

extremely brittle and also vulnerable to corrosion,

so they are usually plated or coated to protect them

from breaking, chipping, or crumbling into powder.

A neodymium magnet (also known

as (NdPr)2Fe14B, NIB or Neo magnet) is made

from an alloy of neodymium, iron and boron to form

the Nd2Fe14B tetragonal crystalline structure.

Developed independently in 1982 by General

Motors and Sumitomo Special Metals, neodymium

magnets are the strongest type of permanent

magnet commercially available. They are

considered strong because they resist

demagnetization and have a high saturation

magnetization. The saturation magnetization is

related to the magnetic energy a material can

store, so it's an indicator of the physical pull

strength the magnet can achieve. Many other types

of magnets have been replaced by NdFeB magnets

in modern products that require strong permanent

magnets.

Comparing remnant flux density (magnetic strength) and

coercivity (resistance to demagnetisation) for different hard

magnetic materials.

Source: Wikipedia

Neodymium magnets appear in products where low

mass, small volume, or strong magnetic fields are

required. Neodymium magnet electric motors are

used in the electric motors of hybrid and electric

cars, and in the electricity generators of direct drive

wind turbines and below other applications:

Computer Hard Drive Magnets (replacement technology solid state memory),

Microphones,

Headphones,

Dentures,

Loudspeakers,

Magnetic Pump Couplings,

Door Catches,

Magnetic Suspension, Motors (e.g. washing machines, drills, food mixers, vacuum cleaners, hand dryers),

Generators (e.g. Wind turbines, Wave Power, Turbo Generators, etc),

Sensors, Orthopaedics, Halbach Arrays,

Jewellery,

Healthcare,

MRI and NMR,

Magnetic Separators

TWT (Transverse Wave Tube)

Magnetic Bearings

Lifting Apparatus

Limpet Pot Magnets

Starter motors

ABS systems

Fans Eddy Current

Brakes

Alternators

Meters

Magnetic Clamps

Magnetic Levitation

Electro-acoustic pick-ups

Switches

Relays

https://en.wikipedia.org/wiki/Alloy

https://en.wikipedia.org/wiki/Rare_earth_element

https://en.wikipedia.org/wiki/Ferrite_(magnet)

https://en.wikipedia.org/wiki/Alnico

https://en.wikipedia.org/wiki/Neodymium_magnet

https://en.wikipedia.org/wiki/Samarium-cobalt_magnet

https://en.wikipedia.org/wiki/Samarium-cobalt_magnet

https://en.wikipedia.org/wiki/Brittle

https://en.wikipedia.org/wiki/Corrosion

https://en.wikipedia.org/wiki/Plating

https://en.wikipedia.org/wiki/Coating


https://en.wikipedia.org/wiki/Neodymium

https://en.wikipedia.org/wiki/Iron

https://en.wikipedia.org/wiki/Boron

https://en.wikipedia.org/wiki/Tetragonal_crystal_system

https://en.wikipedia.org/wiki/General_Motors

https://en.wikipedia.org/wiki/General_Motors

https://en.wikipedia.org/wiki/Sumitomo_Metal_Industries

https://www.youtube.com/watch?v=uQWHjj6ofwo&vl=en



48 48

A Typical Composition of NdFeB Alloy:

Main Elements within

NdFeB

Weight

Percentage

Neodymium &

Praseodymium (75%Nd

25%Pr)

29% - 32%

Iron (Fe) 64.2% - 68.5%

Boron (B) 1.0% - 1.2%

Aluminium (Al) 0.2% - 0.4%

Niobium (Nb) 0.5% - 1%

Dysprosium (Dy) 0.8% - 1.2%

One of the more important uses for dysprosium is

its usage in neodymium‐iron‐ boron permanent

magnets (NdFeB) to improve the magnets’

resistance to demagnetization, and by extension, its

high temperature performance. The Dy content

could be increased up to 9% to allow the magnet to

operate at high temperatures, i.e. up to 200 °C.

For further information on the role of Dysprosium in

permanent magnets, please refer to following

document compiled by Arnold Magnetic

Technologies.

http://www.arnoldmagnetics.com/Portals/0/Files/Tech%20Library/Technical%20Publications/Tech%20Papers/Important%20Role%20of%20Dysprosium%20in%20Modern%20Permanent%20Magnets-150906.pdf?ver=2015-09-21-101237-413

http://www.arnoldmagnetics.com/Portals/0/Files/Tech%20Library/Technical%20Publications/Tech%20Papers/Important%20Role%20of%20Dysprosium%20in%20Modern%20Permanent%20Magnets-150906.pdf?ver=2015-09-21-101237-413



49 49

Best in Class - The Permanent

Magnet Brushless Motor Engine

In an electric traction motor, NdFeB magnets allow

a very strong magnetic field to be generated in a

very small volume. The alternative would be to use

electromagnets, where a magnetic field is

generated by passing current through a conducting

coil. It can be shown that a 3 mm thick piece of

NdFeB magnet produces the equivalent magnetic

field to passing 13 A (being the rating of a UK home

electrical socket) through a coil with 220 turns of

copper wire. In terms of space, if a current density

of 10 A/mm2 is assumed in the conductor (which is

typical for normal operation of a traction motor),

then an equivalent electromagnetic coil might have

five times the cross sectional area of the NdFeB

magnet. At the same time the coil would produce

losses in the windings of 50 W or more per metre

length of the coil, arising due to the electrical

resistance of the conductor. To put this in

perspective, in a representative 80 kW traction

motor the optimum use of NdFeB magnets would

theoretically be equivalent to saving perhaps 20% in

total motor volume and, conservatively, in the order

of 300 W of winding loss.

Source: http://www.sciencedirect.com

When judged against the closest competing

technologies, these motors are considered

unbeatable performance, representing the most

suitable solution for automotive applications

delivering the highest energy efficiency, coercive

force and power density. The permanent magnet

brushless motor engine technology has the

ability to produce a larger torque than competing

technologies at the same values of current and

voltage and more power by weight. They also suffer

less electric and mechanical loss, and benefit from

simple rotor/stator configurations. They are smaller

sizes (as much as one third of most AC motor sizes,

which makes installation and maintenance much

easier), and they have the ability to maintain full

torque at low speeds. Ultimately resulting in a

longer driving range due to lesser energy/battery

drainage than using other engine designs.

For further information regarding automotive engine

technology and the superior performance of

permanent magnet engines in comparison to other

existing technologies, please refer to the following

links:

1. Comparing AC and PM motors for

automotive applications

2. Comparison of characteristics of various

motor drives

http://www.sciencedirect.com/science/article/pii/S2214993715000032#f0010

http://www.parkermotion.com/whitepages/Comparing_AC_and_PM_motors.pdf


http://www.digitalxplore.org/up_proc/pdf/287-14924247205-8.pdf

http://www.digitalxplore.org/up_proc/pdf/287-14924247205-8.pdf



50 50

Megatrend No1: Automotive &

E-Mobility

Auto-Manufacturers Have Already Committed

$100B to 200 new models

Traditionally, the success of new technologies tend

to be underestimated by establishments due to the

nature of the mindset and corporate DNA. Thanks

to Tesla, who challenged status quo and claimed

technology leadership in the automotive space,

things have changed during the last three years.

Tesla has managed to push the established original

equipment manufacturers (OEM’s) out of their

comfort zone and has forced them to reconsider

their product strategies. Tesla needs to succeed in

becoming a viable, alternative supplier which

customers can go to for an E-mobility solution. This

will ensure that the big OEM’s have to ‘walk the talk’

and go full speed ahead in developing their

improved offers around this transition so that

consumers will have the opportunity to make a

decision on which technology will prevail. With the

changing sentiment in our society towards E-

mobility, it’s widely accepted that the transition will

happen- the question now is only ‘how quickly will

this happen?’

The net result has been the planned release of

approximately more than 200 new electric vehicles

by 2019 and perhaps by 2025 the model landscape

may have even doubled. More than 90% of these

vehicles will most likely be equipped and

homologated with permanent magnet engines. The

individual company announcements below support

this evidence:

Hyundai-Kia, GM, BMW Group , Honda, VW Group,

Daimler, Nissan, BYD, Ford. Toyota, Porsche

Infinity Motor Company, Volvo

E-mobility is on its way to becoming mainstream

and we have seen a tidal wave of investment into

electric vehicles by leading car manufacturers.

During the past 2 years, a majority of the leading

car manufacturers have reshaped their product

roadmaps creating greener, more energy efficient

vehicles that will comply with new emissions rules

and regulations by increasing their focus on

electrified vehicles.

Demand for Mobility Remains Strong

Global demand for mobility is increasing as

population and wealth grow. Growing prosperity in

emerging economies helps lift their citizens from

poverty into middle class and with it comes an

increased demand for energy and mobility. The

growth in demand has been driven by a growing

road vehicle fleet, including heavy vehicles and

motorcycles, which has more than doubled since

2000 from 1.1 billion to 2.3 billion road vehicles in

2015. The majority of this growth has been

motorcycles. The momentum of EV penetration is

growing and economy of scale and total cost of

ownership will make EVs more competitive

compared to ICEVs, ready to take over the mobility

market.

Exponential Electric Vehicle Demand Growth for

the next 20 years.

In 2015, electric car sales reached more than

550,000 vehicles (BEV & PHEV). With in excess of

1 million vehicles already on the road, this equals

1.26 million vehicles in total. The annual sales of

electric cars in 2015 represents 0.75% of the total

90 million passenger cars registered in 2015- of

which China alone represented ~25 million. In 2016,

global sales climbed to 94 million, of which China

represented 28 million, the cumulative number of

electric vehicles produced globally surpassed the 2

million mark. In 2017 annual sales of electric

vehicles more than tripled compared with 2015.

According to Statoil, by 2020 the amount of full

electric and plug-in hybrid electric cars is expected

to reach around 16 million, 1.2% of the global fleet.

A pivoting point will be reached around 2025 when

EVs will gain a competitive advantage over Internal

Combustion Engine Vehicles (“ICEVs”) and the

impact on global oil demand will become evident,




http://www.peakresources.com.au/news/hyundai-kias-grand-electrification-plan-korean-brands-aim-to-leapfrog-past-competitors-with-26-models-by-2020/

http://www.peakresources.com.au/news/general-motors-is-going-all-electric/

https://www.press.bmwgroup.com/united-kingdom/article/detail/T0273124EN_GB/bmw-group-announces-next-step-in-electrification-strategy?language=en_GB

http://fortune.com/2016/04/21/honda-new-green-cars-clarity/

http://www.peakresources.com.au/news/vw-announce-84-billion-investment-in-electric-cars/

http://www.peakresources.com.au/news/daimler-invests-massively-in-green-powertrain-technologies-all-mercedes-benz-model-series-will-be-electrified/

http://www.peakresources.com.au/news/nissan-to-invest-9-5bn-in-china-to-boost-electric-vehicles/

http://www.bloomberg.com/news/articles/2016-03-29/byd-sees-electric-car-sales-tripling-in-market-coveted-by-tesla

http://www.peakresources.com.au/news/ford-plans-to-invest-11-billion-to-electrify-its-most-iconic-vehicles/

http://www.peakresources.com.au/news/toyota-plans-to-roll-out-10-all-electric-vehicles/

http://www.peakresources.com.au/news/porsche-to-double-investment-in-plug-in-vehicles/

http://www.peakresources.com.au/news/infiniti-to-go-electric-from-2021/

http://www.peakresources.com.au/news/volvo-betting-on-electric-moves-to-phase-out-conventional-engines/

http://www.oica.net/category/sales-statistics/

http://www.oica.net/category/sales-statistics/





51 51

not only in mature economies but worldwide. By

2030, the EV share of the global fleet will have

grown to 12%. Throughout the 2030s, due to the

effects of changes in transport patterns,

digitalisation and electrification strengths, light-duty

diesel cars will become an insignificant portion of

new car sales. The electricity share of the global

bus and truck fleet will have grown from almost

nothing in 2017 to around 10% in 2030. The global

trucking fleet is expected to increase in all

scenarios, driven by increasing population and

economic growth.

Overall, E-mobility is set to grow and to conquer the

mobility market with its applications, be it passenger

cars, motorbikes, scooters, trucks, buses or vans

and with this transition, the commodities required to

build these new technologies will flourish.

NdPr at the heart of 99% of Electric Vehicle

Motors

NdPr is the core ingredient to produce the strongest

magnets in existence- so called NdFeB magnets.

These magnets are needed to build the most

efficient and best performing electric

generators/motors in the world. Permanent magnet

motors have gained upwards of 90% market share

among all car manufacturers/OEM’s worldwide and

represents the leading engine technology.

Bloomberg confirmed in January 2018 that 90 billion

USD are already committed to be invested in

electric vehicles by the global automakers and the

number is still growing.

To understand the magnitude of the upcoming

avalanche and impact of this technology roll out, it

is important to know that each permanent magnet

vehicle which replaces a combustion engine vehicle

represents a minimum net incremental demand of

1kg of NdPr oxide.

If you multiply this number by the predicted annual

electric vehicle sales in the near future, you will end

up with millions of kilograms of material that the

automotive industry will need to purchase from the

market annually. And do not forget that we are only

talking about one individual NdPr application

requiring a significant amount of new incremental

demand which will disrupt the current

supply/demand situation.

This dominance of permanent magnet motors can

be demonstrated through their existing market

share among all car manufacturers. Since August

2017 it’s clear that also Tesla will us the permanent

magnet Motor technology for its power trains,

resulting in a ~99% market share for permanent

magnet motor solution powered by neodymium and

praseodymium oxide.

Additionally it’s important to note that today, a

standard mid-class vehicle contains more than 30

individual applications which use NdFeB permanent

magnets (see page 52). Our understanding is that

the listed applications represent approx. ~0.6 kg

NdFeB magnets accumulatively.

The engine of a hybrid or battery electric vehicle

contains an additional ~1.5 to 2.5 kg of NdFeB

permanent magnets. Including losses occurring

during the manufacturing process, we calculate that

the approximate demand for pure NdPr oxide is

40% of the final weight of the NdFeB magnet.

Therefore, each new energy vehicle represents ~1

kg incremental demand of NdPr oxide. (See

reference UBS report and Toyota Prius).

~99% of all electric cars in the market today are

equipped with a NdPr motor technology and based

on public available information on new electric

vehicle launches this trend should continue and

remain the dominating motor technology for the

future.

Source: Hybridcars.com 2016 August

With Teslas announcement that it will adopt a

permanent magnet motor for it’s Tesla Model 3 ,

NdFeB permanent magnet Motors (PMM) has

reached close to ~99% market share.

The NdFeB PMM technology is now clearly the

leading engine technology and industry standard.

Above chart shows the Market status by end of the

year 2016 before the Model 3 launch, representing

only model X and S.

Therefore we believe that due to the upcoming

technology shift in the automotive space, one of the

biggest industry sectors globally, the commodity

market will change fundamentally and with it, the

landscape for related commodities with NdPr at the

forefront.



http://www.reuters.com/article/us-mining-toyota-idUSTRE57U02B20090831

http://www.peakresources.com.au/news/tesla-model-3-why-permanent-magnet-motor-instead-of-induction-motor/

http://www.peakresources.com.au/news/tesla-model-3-why-permanent-magnet-motor-instead-of-induction-motor/

http://www.peakresources.com.au/news/teslas-model-3-is-powered-by-a-258-horsepower-ac-3-phase-permanent-magnet-motor/



52 52

Each mid/ high end ICE and electric vehicle has

approximately up to 30 individual NdFeB

applications additionally to the engine:

Source: BMI Research

Sunroof Motor Windshield Wiper Motor

Windshield Washer Pump Mirror Motors

Economy and Pollution Control Heat/ ventilation +

Air conditioning Control Unit Ignition System + Starter Motor

Climate con., Coolant Fan Motor E turbo, Cruise Control

Defogger Motor Headlights Motor

Heat Air Conditioner Motor Liquid level indicator

Anti-Skid Sensor and Motor

Tailgate Motor Speakers Four Wheel Steering Electric Power Steering Fuel Pump Motor Door Lock Motor Seat Belt Motor Seat Adjust Motor Lumbar support Gauges Window Lifter Motor Suspension System Throttle and Crankshaft position sensor Traction Control



53 53

Lithium Battery Manufacturing Capacity a

Barometer of NdPr Requirements

We believe a good early indicator for anticipating

such supply demand imbalance is the available and

planned expansion of the global manufacturing

capacity of batteries. According to Bloomberg the

expected industry capacity should grow by 2020 up

to 313.226 GW globally and it continues to grow. If

we assume that the average battery capacity per

vehicle is somewhere between 50kWh and ~75kWh

( reference model Tesla 3 full EV vehicle ) then

soon the supply chain has the capability to serve

the market with between 4.2 to 6.2 million

vehicles per year by 2020 and we understand that

the businesses owning these capacities are

intending to utilize them.

If we consider that plug-in vehicles have an average

battery size of 20kWh then the planned lithium

battery capacity in 2020 would be enough to supply

15.6 million Plugin hybrids. Therefore, we see

2020 as key inflection point.

At present, more than US $20 billion has been

invested by companies like VW, Samsung, LG

Chem, BYD, Boston-Power , Foxconn , Tesla -

Panasonic, Daimler , CATL and Tesla into new

capacity for lithium batteries and storage factories

world-wide.

Reduced Ownership Costs to Drive Inflection in

EV demand by 2025

Bloomberg predicts that between 2025-2027,

electric vehicles (EV) could hit an inflection point

where the total cost of ownership (TCO) of an EV

will be lower than of a traditional internal

combustion engine (ICE) vehicle

According the latest UBS report published in May

2017, this point could even be reached by 2018 for

some vehicle categories, starting with Europe.

“Consumer cost of ownership parity” initiates the

inevitable shift of the tide towards E-mobility, kicking

off the classical S-curve phenomenon with an

acceleration that will shock market participants who

underestimated the projected market transition

towards E-mobility. For the first time, we will see a

significant end-consumer rare earth application

coming online with a disruptive impact to the rare

earth market.

Main driver and key-enabler to initiate this event will

be to reduce the overall cost of the battery pack.

UBS highlighted the fact that for the Chevrolet Bolt

model, the battery pack represents ~ 30% ($209 /

kWh = $12,522 = 60 kWh) of the total vehicle cost

of 30,000 USD (US $37,000 without US

Government subsidies) which is in line with the

overall OEM market. It is crucial to understand the

magnitude of E-cars now being offered in this price

range because today, the high volume sales

segment in the USA has an average sales price of

29,000-30,000 USD. This is the first time that E-

cars will address this high volume sales segment

with the models like Tesla/ Model 3 ~ US $35k and

the GM/ Bolt with a price of ~ US $30,000 after

federal tax credit initiating a new level of

competition.

Source: UBS

Looking at the historical cost reduction progress,

producers and industry analysts are confident that

the progress in this field can be accomplished

without any new breakthroughs in terms of battery

http://www.peakresources.com.au/news/the-breakneck-rise-of-chinas-colossus-of-electric-car-batteries-the-key-to-overtaking-tesla-by-2020-lots-of-government-help-for-evs/

https://en.wikipedia.org/wiki/Electric-vehicle_battery#Plugin_hybrids

http://www.techtimes.com/articles/161873/20160530/volkswagen-to-build-15-5-billion-battery-factory-in-a-bid-to-reposition-itself-in-electric-car-industry.htm

http://electricvehiclecouncil.com.au/samsung-building-a-gigafactory-for-ev-batteries/

http://www.reuters.com/article/lg-chem-poland-idUSL3N17H1IV



http://www.ibtimes.com/chinese-gigafactory-byd-says-it-could-have-battery-production-capacity-roughly-equal-1847002

http://www.greentechmedia.com/articles/read/Boston-Power-Aims-to-Rival-Tesla-With-Gigawatt-Battery-Factories

http://www.wsj.com/articles/foxconn-plans-to-spend-5-billion-on-factories-in-indias-maharashtra-state-1439035640

https://www.tesla.com/en_AU/blog/panasonic-and-tesla-sign-agreement-gigafactory

https://www.tesla.com/en_AU/blog/panasonic-and-tesla-sign-agreement-gigafactory

http://media.daimler.com/marsMediaSite/en/instance/ko/Daimler-invests-500-million-Euros-in-new-battery-factory-in-.xhtml?oid=9919932

http://www.peakresources.com.au/news/chinese-battery-maker-signs-massive-supply-contract-with-nevs-ahead-of-build-out-of-new-gigafactory-size-plant/

https://www.bloomberg.com/features/2016-ev-oil-crisis/

https://www.bloomberg.com/news/articles/2017-05-26/electric-cars-seen-cheaper-than-gasoline-models-within-a-decade

https://en.wikipedia.org/wiki/Total_cost_of_ownership

http://www.peakresources.com.au/news/1999/

http://www.automotivebusiness.com.br/abinteligencia/pdf/EV-Price-Parity-Report.pdf



54 54

technology, and without massive discounts or

subsidies. The market expects that the cost will be

further reduced from today’s average market price

of ~US $300/kWh to ~US $130/kWh by 2022-25.

Tesla has set an even more ambitious goal of

reaching US $100/kWh by 2020-2022. The

achievement of this milestone would clearly enable

electric mobility to unleash its full potential in

becoming the key technology in mobility sector.

Source: GlobalEVOutlook2017

China will dominate Electric Vehicle Uptake

Electric cars (without Hybrids) hit a new record in

2017, with more than 1,2 million new vehicle

sales worldwide. The People’s Republic of China is

clearly leading as a nation this global trend. In 2017,

China was by far the largest electric car market,

accounting for more than 50% of the electric cars

sold in the world and more than dribble the amount

sold in the United States.

The global electric car stock surpassed 3.2 million

vehicles in 2017 after crossing the 2 million mark in

2016.

China is aggressively driving the E-mobility agenda,

aiming to take the global lead for this technology

and to make it a fundamental part of its transition

strategy for its domestic industrial from a low

technology spectrum, and to become the leader of

the technology solution of future mobility.

The Chinese government has identified the early

phase of this new technology as an opportunity to

pursue a leadership position. China aims to become

in E-mobility what Germany is today in the domain

of combustion engines.

Therefore, it's expected that China will increase its

efforts regarding legislation, indirect- or direct-

subsidies, financing, governmental expenditures or

any other measure required to become the global

E-Mobility industry leader be it in infrastructure,

industrial foot print, R&D or sales.

https://www.iea.org/publications/freepublications/publication/GlobalEVOutlook2017.pdf




55 55

For example, in 2017 China has released a new

NEV policy to accelerate the market adoption for E-

mobility and the overall industry development. The

government has set the new energy vehicle (NEV)

quota ratio at 10% and 12% for 2019/20

respectively. The policy aim to accelerate the

vehicle electrification process. The NEV credit

points are set at 2/5/5 for plug-in hybrid, fuel cell

and pure electric vehicles respectively.

Furthermore, the Chinese market has to comply

with more stringent fuel consumption standard by

2020. 2018-2020 is a critical period for all the

automakers to implement their NEV strategies to

meet the stringent 2020 fuel requirement.

Source: GlobalEVOutlook2017

By then, automakers are required to meet the

average fuel consumption of 5L/100km. In view of

this, several major foreign automakers have formed

NEV JVs with their local partners to accelerate the

electrification process. On the other hand, the

traditional car market remains important, as the

economic benefits are significant while NEV takes

time to gain traction.

The aforesaid positive developments in total cost of

ownership (TCO), country targets, governmental

incentives and announcements of the car

manufacturers themselves indicate that there is a

very good chance that the electric car stock will

grow from today’s levels of 3,2 million globally to

approx. 9 -12 million by 2020, and between ~30

million and ~60 million by 2025.






56 56

Source: NDRC, MIIT, Ministry of Environment, Exane

BNP Paribas estimates

Source: IEA, Orocobre, Exane BNP Paribas Auto.team IEA.org




57 57

Source: I IEA.org




58 58

E-mobility Sales Forecasts

VW Group 2016 2m -3m BEV by 2025;

30 new e-models by 2025 representing 25% of their

revenues

Hyundai-Kia's 2016 26 new models by

2020; The 26 vehicles = 12 hybrids, 6 plug-in

hybrids, 2 EVs and 2 Fc

Nissan 2015 10% electric car

sales in Europe by 2020. Nissan with Datsun sold

737,501 vehicles in FY2015

Volvo 2016 1m e-cars

cumulative by 2025. 2015 = 503.127 cars +8%;

after “19 only HEV or BEV

Ford 2016 Ford announced to

launch 13 new electrified cars by 2021

Daimler 2016 10 E-cars + goal e-

mobility will represent 25% ww-sales by 2025. 2016

= 2.23m cars (incl. Smart)

Toyota 2016 Appointed CEO and

VP to head e-mobility activities + dep. Target: 1st

100% BEV by 2020

BMW 2016 Sold 2.37m cars

2016 incl. MINI & Rolls-Royce. Goal is 15% - 25%

of sales with e-cars by 2025

Honda 2017 Thirds of all sales to

come from electrified models by 2030 incl

PHEV,BEV and FCEV

Chinese OEMs 2017 4.52 million annual

electric car sales by 2020

ACEA 2016 Forecasts all e-cars

(incl hybrids) of up to 8% of annual sales = approx.

8 million by 2025

California/USA 2016 Accounts 12.2% of

USA sales has the target of 3.3m EVs on their

roads by 2025

China 2017 The Government aims to

implement NEV sales quota 2018=8 % 2019=10%

and 2020 =12%.Overall objective is to achieve a

NEV stock of 5 million by 2020

UBS 2017 2025 = 14% = 14.2m;

EU= 30% of sales e-cars by 2025

IHS: 2016 Predicts fivefold

growth of electric cars by 2025 reaching 7 million

annual sales

BNP Paribas 2016 By 2025 they predict

that e-mobility reaches 11% global market share =

11m-13m p.a

Bloomberg 2016 2025 = 7-8 million

and by 2040 = 41m vehicles p.a.

Bloomberg update 2017 2025 = ~8 million and by

2040 = 64.8m vehicles p.a

Deutsche Bank: 2016 16m e-cars by 2025.

Of which 3m are BEV. By 2025 sales = 112m pa.

16% HEV, PHEV, BEV (3%)

Goldman Sachs: 2015 25m HEV&BEV by

2025 –10x more gaining a market share of 22%

of 113m global vehicle sales.

https://www.volkswagenag.com/en/group/strategy.html

http://www.autonews.com/article/20160404/OEM05/304049949/hyundai-kias-grand-electrification-plan

http://ecomento.com/2015/10/22/nissan-predicts-10-electric-car-sales-by-2020/

http://www.autonews.com/article/20160421/OEM05/160429976/volvo-sets-goal-to-sell-1-million-electrified-cars-by-2025

http://www.businessinsider.com.au/ford-ceo-mark-fields-interview-2017-1?r=US&IR=T

https://www.bloomberg.com/news/articles/2016-09-29/mercedes-plans-10-electric-cars-under-eq-brand-to-take-on-tesla

http://fortune.com/2016/11/30/toyota-president-electric-cars/

http://europe.autonews.com/article/20161204/ANE/161209946/bmw-accelerates-ev-self-driving-strategy

http://news.honda.com/newsandviews/article.aspx?id=9463-en

https://translate.google.com/translate?hl=en&sl=zh-CN&tl=en&u=http%3A%2F%2Fwwww.chinanev.net%2Fnews%2Fnewscontent%2Fid%2F9582&sandbox=1

http://www.acea.be/news/article/message-from-the-secretary-general-september-2016

http://www.autoblog.com/2013/10/25/california-leads-8-state-coalition-shooting-for-3m-evs-by-2025/

http://www.peakresources.com.au/news/china-upholds-strict-electric-car-sales-quotas-despite-industry-protests/

http://www.asahi.com/ajw/articles/AJ201611230007.html

http://www.economist.com/news/business/21717070-carmakers-face-short-term-pain-and-long-term-gain-electric-cars-are-set-arrive-far-more

https://www.bloomberg.com/features/2016-ev-oil-crisis/

https://data.bloomberglp.com/bnef/sites/14/2017/07/BNEF_EVO_2017_ExecutiveSummary.pdf

http://www.belmontresources.com/LithiumReport.pdf

http://www.goldmansachs.com/our-thinking/pages/new-energy-landscape-folder/report-the-low-carbon-economy/report.pdf



59 59

Morgan Stanley: 2016 Old forecast 7m p.a.

by 2025. Updated forecast 10-15% p.a. of annual

sales = 11-17m p.a and 35% by 2040

BP: 2017 Car fleet ‘15 = 0.9b

will grow 1.8b by 2035. ‘15 = 1.2m e- cars, 2035=

100m = 6% of ww fleet

Exxon: 2016 2040, 1 of every 4

cars =hybrid; 1.75b LDV by 2040, 25% = 437 million

fleet vehicles electrified

Exxon 2017 Car fleet 2015 1b will

grow 1.8b by 2040. Hybrids=15%; E-cars ~5%

together 20% = 360m ww

Total: 2017 Chief energy economist,

Joel Couse, forecasted EVs 15-30% of ww sales

vehicle sales by 2030

Source: Faurecia 2017 investor day

Statoil ASA 2017 By 2030 the EV share of

the global fleet has grown to around 12% and 10%

for Busses and Trucks

IEA.org 2017 electric car stock of

approx. 9-20 million by 2020 and between 40 million

and 70 million by 2025

World Bank 2017 2DS, IEA [2016a]),

there are 140 million electric vehicles in operation

by 2030, versus approximately 25million units in the

more pessimistic 4DS and 6DS scenarios

Wood Mackenzie 2017 issued a report this year

in which the base case had EVs reaching almost

100 million in sales by 2035 (which, it notes,

displaces about 2 million barrels of oil a day).

http://www.forbes.com/sites/neilwinton/2016/11/18/electric-cars-will-get-big-boost-from-rules-curbing-conventional-ones-report/#73bb23154f61

https://electrek.co/2017/05/05/electric-vehicle-sales-vs-gas-2040/


https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-er-rob-gardner-exxonmobil-energy-outlook.pdf

http://corporate.exxonmobil.com/en/energy/energy-outlook/2017-highlights

http://www.peakresources.com.au/news/big-oil-betting-on-electric-vehicles/

http://www.faurecia.com/files/corporate/widgets/documents/investor_day_final.pdf

https://www.statoil.com/content/dam/statoil/documents/energy-perspectives/energy-perspectives-2017.pdf


https://www.woodmac.com/news/editorial/2035-electric-vehicles-oil-demand/

https://www.woodmac.com/news/editorial/2035-electric-vehicles-oil-demand/

https://www.woodmac.com/analysis/2035-electric-vehicles



60 60

Automotive - What is the Impact

on the Global Demand of NdPr?

If we translate this projection into average, annual

incremental demand of NdPr, taking into account

that each new energy vehicle engine represents an

incremental demand of 1kg NdPr pure oxide per

vehicle and ignoring any additional needs for

standard automotive accessory applications as

shown on page 101 (irrespective of whether it’s an

ICE or NEV vehicle), our simplified demand model

projects from 2017 onwards ~1,750 to ~2,500t p.a.

in 2020. After that it is anticipated that from 2020-

2025 the average incremental annual demand will

increase to ~4,200 to ~9,600t p.a.

This represents an annual demand equivalent to

what 2 to4 Ngualla projects could produce annually.

Even if we consider that our assumptions may be

too high due to exceptional progress in the

development of new electric driveline technologies

and our assumption of 1 kg of pure NdPr oxide

demand per electric vehicle was reduced by 65% to

0.33 kg per vehicle, the automotive market for

passenger cars alone would still require an average

annual incremental demand of NdPr of ~583 to

~833t p.a. until 2020. Following this, it is projected

that between 2020 - 2025 the average incremental

annual demand will increase to ~1,400 to ~3,200t

p.a.

Moreover, it is important to highlight that the above

NdPr volumes do not consider any demand from

other electric mobility applications such as:

1. Electric bikes, scooters, motorbikes

2. Electric commercial Trucks, Vans or Busses

3. Electric boats market

4. Electric drones or airplanes

5. Automotive accessories and additional vehicle

equipment/features like electric steering (See

p.107)

It’s clear that these additional applications represent

further substantial demand for NdPr but rather than

make any assumptions, we will leave it up to the

market observers to decide what their true impact

will be.

http://www.peakresources.com.au/news/electric-bikes-could-grow-from-200-million-today-to-2-billion-in-2050/

https://news.metal.com/newscontent/100740584/world-e-cycling-market-worth-us%24-76-billion%2b-by-2022

https://www.slideshare.net/EMBARQNetwork/chris-cherry-tt-2015-44088743

https://en.wikipedia.org/wiki/Electric_bicycle

https://visedo.com/2016/11/08/commercial-electric-vehicles-future-forecast-and-trends/

https://www.slideshare.net/MohamedHussien27/the-electric-propulsion-systems

http://www.peakresources.com.au/news/norway-is-building-the-first-autonomous-electric-freighter-2/

http://www.prnewswire.com/news-releases/global-electric-boats-and-ships-market-2017-2027-100-manufacturers-with-a-20-billion-market---research-and-markets-300436108.html

http://www.grandviewresearch.com/industry-analysis/consumer-drone-market

https://www.theverge.com/sponsored/goldman-sachs-drones/mobile

https://www.siemens.com/press/en/feature/2015/corporate/2015-03-electromotor.php?content%5b%5d=Corp



61 61

NdPr Price Elasticity / Price

Sensitivity and Replacement

Risks

In the UBS report published in May 2017, it is

estimated that the NdPr and dysprosium content in

the GM-Bolt motor is approximately 1kg, which

represents ~$100 unit cost or ~8-9% of the total e-

motor cost. Below we have prepared a breakdown

of the price sensitivity for NdPr and its contribution

to the overall vehicle cost as well as the standalone

components. For this exercise, we have made the

assumption that UBS has already taken the valid

mineral price at the time the report was compiled

into consideration.

We have assumed the following raw material prices

for the base case:

NdPr oxide 2N = 42 USD per Kg

Dy oxide 2N = 180 USD/ Kg

With today’s NdPrDy base case scenario at cost

price of US $100 per vehicle, rare earth minerals

represent 12.5% of the motor cost or 0.23% of the

total vehicle cost. Taking the projected reductions

for the vehicle manufacturing cost into account, this

would increase to 13.89% on the engine level and

to 0.34% on the vehicle level by 2025.

Considering the likely scenario that the NdPrDy

cost will double and reach US $200, which would

represent an NdPr price of US $84/kg, the rare

earth minerals would represent 25.0-27.8% of the

motor cost or 0.47- 0.70% of the total vehicle cost.

Supposing that the NdPrDy cost would increase

threefold and reach US $300 by 2025, the impact

on a component level is considerable representing

37.50%-41.67% of the motor cost. This could cause

trouble for engine suppliers if they have not

protected themselves and signed contracts with the

OEM’s based on a raw material index formula. But

in the grand scheme of things, even if the price of

NdPr oxide triples and reaches ~US $126/kg, rare

earth minerals of the motor would still contribute

only 0.7%~1.02 % to the total vehicle cost.

Therefore, our understanding is that NdPrDy price

elasticity in automotive applications remains low,

even after the tripling in the NdPr price!

This is due to the fact that the car manufacturers

understand that the permanent magnet engine

technology offers them significant advantages

compared to other technologies from a holistic

perspective. It provides them with the advantage of

lower after sales costs and, in particular warranty

costs due to less engine design complexity

compared to traditional internal combustion engine.

The permanent magnet technology has only 3

moving parts in its engine compared to 113 in a

traditional internal combustion engine.

In the area of emission control systems, this new

technology is indisputably superior. It has an

undeniable advantage in light of the impending

stricter legislations (e.g. real driving emission

standards) and the trend that ICE vehicles are

intended to become prohibited from urban areas,

especially considering the aftermath of the VW

scandal including the financial impact and brand

damage this caused for the VW-Group.

We believe that it is not a question of whether e-

mobility will happen, but merely when.

For further information on the automotive segment,

please refer to the following sources and reports:

ACEA_Pocket_Guide_2016_2017

Electric car use by country

The Quiet rEVolution + 2017 update

GlobalEVOutlook2017

Source: UBS

https://www.acea.be/uploads/publications/ACEA_Pocket_Guide_2016_2017.pdf

https://en.wikipedia.org/wiki/Electric_car_use_by_country

https://s3.amazonaws.com/liberum/Electric_Vehicles_The_quiet_rEVolution_73_pgs__1.pdf?AWSAccessKeyId=AKIAICKLXNJJPOVS4TPQ&Expires=1499321788&Signature=rZQsGajXsD56vpM7e8CIqrqBTI8%3D




62 62

Peak Resources Extrapolation Based

on the UBS Report May 2017

UBS ANALYSIS

PEAK Resources extrapolation:

Chevrolet BOLT May 2017 2025E Vehicle cost (VC) 42,585 USD 29,358 USD Car purchase price 37,074 USD 37,074 USD

EBIT - 5,520 USD -14.9% 7,716 USD 20.8% Total Drive line cost (TDLC) 1,200 USD 1,080 USD Engine Cost (EC) 800 USD 720 USD

Gear box 400 USD 360 USD Engine weight 35 kg Gearbox weight 41 kg

Scenario: A 100 USD NdPrDy 1kg cost 100 USD 12.5 % EC 100 USD 13.9 % EC 8 % TDLC 9.2 % TDLC

0.23 % VC 0.3 % VC

NdPr oxide dom price 42 USD 285 RMB Dy oxide dom price 180 USD 1220 RMB

Scenario B: Double price scenario NdPrDy 1kg 200 USD 25 % EC 200 USD 27.8 % EC 15 % TDLC 18.5 % TDLC 0.47 % VC 0.7 % VC


Scenario C: Dribble price scenario NdPrDy 1kg 300 USD 37.5% EC 300 USD 41.67 % EC

25 % TDLC 27.70 % TDLC 0.7 % VC 1.02 % VC




63 63

The Different Engine

Technologies

The AC Induction Engine Without

Permanent Magnets

Unlike direct current (DC) voltage, which has

constant polarity (like a AA battery with a positive

and a negative end), alternating current (AC)

changes from positive to negative several times a

second (it alternates the polarity from + to -). AC is

measured as an oscillating sine wave. To take

household wiring as an example, the voltage goes

from zero to a positive 120 volts and then ramps

down to again to zero volts. It then repeats the

cycle, only with the polarity reversed. This occurs

60 times a second in the US and 50Hz in Europe.

Here’s an image of an AC sine wave:

So each time the voltage rises and

falls, an electromagnetic field is created

the change in voltage levels creates a magnetic

field. Instead of using coils or magnets, it instead

uses a casting of conductive material such as

aluminum or copper for the rotor which energizes

opposing pairs of coils in the stator with alternating

current instead of direct current. A pair of coils (180°

apart) in the stator are wired in series, much like

Christmas tree lights. A wire is wrapped around a

steel core in a clockwise manner, which is then

extended to the opposing coil and wrapped in a

counter-clockwise manner.

When an AC voltage is applied to the pair of coils,

an electromagnetic field of opposite charges is

created. The fields extend to each other across a

plane of the conductive rotor, creating an

electromagnet with a north and south pole. This

activity induces a current to flow on the rotor. The

induced current ebbs and flows along with the

electromagnetic field from the AC source as the

rotor current rises and falls. For the same reason

current flowing in the coils produced an

electromagnetic field, the current flowing on the

rotor does the same. The rotor is creating a

magnetic field in tune to the cycling of the AC

current feeding the stator coils resulting in having

two opposing magnetic fields that make a motor

spin. So paired coils on the stator > apply an

alternating current to the coils > an electromagnetic

field is created that spans the rotor > a current is

induced to flow on the rotor > the rotor emits an

opposing electromagnetic field > the rotor turns in

response to the magnetic pull.

The earlier animation demonstrates a 2-pole motor.

Just two opposing coils are wired together (in

series). Thus, two poles, or a 2-pole motor. The

animation has two sets of those paired coils (blue

and red), and real motors will have several more

around the circumference of the stator, but it is still

considered a 2-pole motor.

A refined version of this design uses 4 coils wired in

series. One paired set of poles still face opposite

each other, but another pair is added 90° apart.

Thus, the 4-pole motor. Doubling the number of

poles in the circuit increases torque. Picture an

apple pie cut in four slices. That gives you an idea

of the topography of the coils, which sit at the fat

end of each slice. As noted with 2-pole motors,

there will be multiple sets of these 4 coils, wired in

the same manner. You can just keep slicing that pie

up in your head or look at this fully wired stator:

https://c1cleantechnicacom-wpengine.netdna-ssl.com/files/2016/05/sinewave.png

https://c1cleantechnicacom-wpengine.netdna-ssl.com/files/2016/05/2_pole_single_phase_basic.jpg

https://c1cleantechnicacom-wpengine.netdna-ssl.com/files/2016/05/windings.jpg



64 64

It’s hard to tell how many poles this stator has as it

all depends on how the coils were wired together.

What you’re looking at is insulated copper wire

wrapped around the length of the stator. The coils

of wire are referred to as windings for obvious

reasons.

3 phase AC is just three sources of AC power. It

takes the form of three separate power cables.

Think of AC phases as cylinders in a conventional

ICE. The more cylinders (power sources), the

smoother the engine runs. Right? A V8 engine runs

smoother than a 4 cylinder engine and has more

power.

But how best to apply the extra power? The earlier

image of a sinewave was of a single phase circuit.

Let’s look at a sinewave again before continuing:

Notice that power starts at zero volts, drops to zero

volts as the cycle transitions from positive to

negative, and then drops to zero volts again. No

voltage = no current flow in that instant. No current

flow equals no electromagnetic field.

So, with our example 60Hz power, there is no

power 120 times each second.

The solution to this “problem” is to apply a separate

AC source to power an adjacent set of coils. But

you don’t power both circuits at the same time.

Instead, you time it so that the second AC source is

producing an electromagnetic field when the first is

not. Thus, the motor is always powered. And if two

AC legs are good, three must be better (3 phase is

the industry standard). So, now, three separate AC

sources are each powering a separate set of 4 coils

(4 poles, at 4 opposing points on the compass) at

any given moment, each out of phase with the

other.

To continue our ICE analogy, do the pistons in the

engine all have their combustion cycle occur in the

same instant? No. The combustion cycles are

staggered (phased) to maximize torque and smooth

the operation of the engine. It’s the very same

principal for electric motors. The below diagram

illustrates 3 phase AC in action. Notice that, at any

point in time, voltage is present… thus current

flow… thus an electromagnetic field… thus a force

pulling on the rotor.

Add it all up and, in effect, you have what designers

term a rotating magnetic field progressing around

the circumference of the rotor. The rotor is

constantly being dragged around in a circle, never

quite catching up to the rotating field. The action is

orchestrated by an electronic controller.

So, there it is. The 3-phase 4-pole induction motor.

In an induction motor, the rotor always turns at a

lower speed than the field, making it an example of

what's called an asynchronous AC motor. The

difference in speed of both elements is called slip

(also influenced of the load on the motor).

Source: Cleantechnica.com

https://cleantechnica.com/2016/05/30/nikola-teslas-19th-century-induction-motor-ideal-choice-21st-century-electric-car/

https://c1cleantechnicacom-wpengine.netdna-ssl.com/files/2016/05/sine_wave_2.jpg

https://c1cleantechnicacom-wpengine.netdna-ssl.com/files/2016/05/3_phase_diagram.jpg



65 65

The DC Brushed Permanent Magnet

Engine

A conventional DC motors work by surrounding a

rotating shaft with windings of copper wire that are

energized by a DC power source (termed

an armature because the wires are wrapped around

the arms of a metal frame). The rotor is then

surrounded by another magnetic field from a fixed

position, which is accomplished with permanent

magnets attached to a metal case encircling the

rotor (this sort of rig is called a stator because it is

stationary).

The challenge is how to get power to the coil on the

rotor since it will be spinning (to make the wheels

on the car go round and round). This is where

brushes come in. Pressing a conductive material

against the rotor does the job, as illustrated here:

As you can see, a pair of carbon brushes are

connected to the DC power leads. The brushes

make physical contact with a designated area near

the end of the rotor that distributes the voltage to

the armature (it’s called a commutator because

it commutes the current across). The weakness of

this design is that you have two parts rubbing

against each other and the (softer) brushes

eventually wear down to a nub and must be

replaced. You don’t want that happening in traffic,

which is why a brushed motor is a non-starter in an

EV.

Source: http://fweb.wallawalla.edu

The DC Brushless Permanent Magnet

Engine

The DC motor evolved some time ago into a version

not requiring brushes. They moved the permanent

magnets from the stator to the rotor, and moved the

coils of wire from the rotor to the stator. With this

advance, the DC leads could easily be attached to

the coils on the stationary part of the motor. There

was no longer a need to get electricity to the rotor.

So the brushes and the commutator were no longer

required.

Source: Cleantechnica.com + others

https://cleantechnica.com/2016/05/30/nikola-teslas-19th-century-induction-motor-ideal-choice-21st-century-electric-car/



66 66

Megatrend No.2: Wind Energy

A megatrend in itself, but also an accelerator

and amplifier of the upcoming NdPr shortage

Wind turbines are one of the largest applications for

NdFeB magnets and represent the second pillar for

incremental sustainable growth of NdPr. Among all

NdPr applications Wind Turbines represent the

biggest demand driver with the largest consumption

of NdFeB magnet per produced turbine/ unit.

Wind is one of the fastest growing energy sources

in the world. With the accelerating electricity

consumption and increasing demand for clean

energy without greenhouse effect and

consequential environmental degradation, the

global deployment of wind farms is increasing year

by year. Wind power has become one of the most

significant methods of renewable power generation

and it is commercially utilized by more than 80

countries.

China’s electricity mix in 2016 in TWh

Source: China Energy Portal

In 2016, China was again the biggest single wind

market, representing 43% of the global incremental

new installed wind capacity. To understand the

magnitude of opportunity for renewable energy and

in particular for wind, we only need to look at

China’s current electricity mix. In 2016, China

acquired 65% of its electricity from coal- a solution

which is not infinitely sustainable. This issue has

been addressed by the Chinese government with a

commitment to invest a further 2.5 trillion yuan

($361 billion USD) into the renewable energy sector

by 2020. 700 billion yuan of this investment will be

directed solely towards wind farms. The NEA's job

creation forecast differs from the NDRC's released

in December that predicted an additional 3 million

jobs, bringing the total in the sector to 13 million by

2020. Despite the latest commitments to increase

the market share of renewables, China still has a

long way to go until it will reduce coal consumption

significantly, reflecting the massive market potential

for wind applications over the coming decades in

China alone.

According to Bloomberg’s Energy Outlook 2017,

onshore wind levelized costs will fall 47% by 2040

thanks to cheaper, more efficient turbines and

advanced OPEX regimes. In the same period,

offshore wind costs will slide a whopping 71%,

helped by experience, competition, and economies

of scale.

Bloomberg expect $10.2 trillion to be invested in

new power generation capacity worldwide by 2040.

Of this investment, 72% or $7.4 trillion, is allocated

to renewables whilst solar will receive $2.8 trillion

and wind $3.3 trillion.

Investment in renewable energy increases to ~$400

billion per year by 2040, a 2-3% average annual

increase. Investment in wind grows faster than solar

–increasing 3.4% and solar 2.3% per year on

average. Wind and solar account for 48% of

installed capacity and 34% of electricity generation

world-wide by 2040.

This is compared with just 12% and 5% today.

Installed solar capacity increases 14-fold and wind

capacity fourfold by 2040. The Global Wind Energy

Council are even more optimistic projecting a

fivefold increase by 2040.

Bloomberg anticipate that by 2040, renewable

energy will reach 74% penetration in Germany, 38%

in the USA, 55% in China and 49% in India as

batteries and new sources of flexibility bolster the

reach of renewables. Onshore wind costs fall fast

but offshore falls faster. Bloomberg expect the

levelized cost of offshore wind to decline 71% by

2040, helped by development experience,

competition, reduced risk and economies of scale

resulting from larger projects and bigger turbines.

Source: Bloomberg’s Energy Outlook 2017

http://chinaenergyportal.org/en/2016-detailed-electricity-statistics/

http://www.peakresources.com.au/news/china-to-plow-361-billion-into-renewable-fuel-by-2020/?preview_id=2173&preview_nonce=e0c4cb3641&_thumbnail_id=1903&preview=true

http://www.peakresources.com.au/news/china-to-plow-361-billion-into-renewable-fuel-by-2020/?preview_id=2173&preview_nonce=e0c4cb3641&_thumbnail_id=1903&preview=true

https://en.wikipedia.org/wiki/National_Energy_Commission

https://en.wikipedia.org/wiki/National_Development_and_Reform_Commission

https://data.bloomberglp.com/bnef/sites/14/2017/06/BNEF_NEO2017_ExecutiveSummary.pdf?elqTrackId=431b316cc3734996abdb55ddbbca0249&elq=2eeeb2104c0a47f3b6a08d72024a759e&elqaid=7785&elqat=1&elqCampaignId=

http://thegrid.rexel.com/en-us/energy_efficiency/w/solar_renewable_and_energy_efficiency/92/the-levelized-cost-of-electricity-definition-and-example




67 67

Technology trends in the industry were traditionally

using doubly fed induction geneators (DFIGs) with

gearbox-operated wind turbines.

To be used in wind turbine, these generators

required excitement (generation of magnetic field)

through external power sources. Windfarm owners

are supposed to buy electricity from the grid in order

to start electricity generation from a wind turbine.

PMGs do not require excitement through external

power sources, as a magnetic field is generated by

permanent magnets.

PMG can minimize nacelle weight and offers

superior efficiency under partial load when

compared with doubly fed induction generators

(DFIGs).

The gearbox represents the highest-maintenance

part and error source of breakdowns of a wind

turbine as it consists of multiple wheels and

bearings; which are exposed to tremendous stress

by wind turbulence. While wind turbines are

designed to have a lifetime of around 20 years,

existing gearboxes have exhibited failures after

about 5 years of operation. The costs associated

with securing a crane large enough to replace the

gearbox and the long downtimes associated with

such a repair affect the operational profitability of

wind turbines.

A simple gearbox replacement on a 1.5 MW wind

turbine may cost the operator over $250,000

(Rensselar, 2010). The replacement of a gearbox

accounts for about 10 percent of the construction

and installation cost of the wind turbine and will

negatively affect the estimated income from a wind

turbine (Kaiser & Fröhlingsdorf, 2007). Additionally,

fires may be started by the oil in an overheated

gearbox. The gusty nature of the wind degrades the

gearbox and unfortunately, this is unavoidable

This is why Direct Drive Wind Turbines (DDWT),

which do not operate with a gearbox, are year by

year gaining more market share with their less

complex design, higher efficiency and better return

of investment.

For this technology, the rotor is directly connected

to a low-speed multi-pole generator, which rotates

at the same speed as the rotor. This mechanism

allows for the slow movement of all parts of the

wind turbine systems and therefore reduces wear

and tear in the system. This system is considered

more reliable as it contains fewer parts compared

that which uses a gearbox.

As this technology uses multipole PMG, the size of

the generator is larger than both an induction

generator and a permanent magnet generator that

uses a gearbox.

Source: researchgate.net/publication/224137242

The adoption of gearless wind turbines is strongest

in Asia Pacific – led by China. Globally, China is

expected to remain the most attractive market for

DDWT. DDWT are generally preferred over geared

turbines owing to advantages such as less

downtime, noise-reduction and longer equipment

life. Direct drive wind turbines can be classified on

the basis of mode of operation and capacity.

On the basis of mode of operation, these turbines

are categorized into permanent magnet

synchronous generator and electrically excited

synchronous generator. Among these, demand for

permanent synchronous generators is higher, owing

to high energy output achieved through them.

On the basis of capacity, the direct drive wind

turbine market is segmented into small-sized (less

than 1MW), mid-sized (1MW to 3MW), and large-

sized (over 3MW).

Region-wise, Asia Pacific and North America are

the largest markets, both in terms of installation

base and revenues. Europe, Germany and Spain

are expected to witness a spate of installations in

the near future. China, India, US, Germany and

Spain collectively account for nearly 50% revenues

of the global direct drive wind turbine market.

It is anticipated that the trend in the industry will

continue towards larger wingspan, utilization of light

weight material and design, longer product life

cycles, adaptability of lower wind speeds and

onshore systems adopting more and more offshore

system development. NdFeB permanent magnets

are key components in meeting all these

requirements. This is why the global direct drive

(gearless) wind turbines market, and in particular

direct drive permanent magnet generators, are

expected to witness substantial, sustained growth in

the next decade driven by enhancing operational

efficiency and reducing maintenance costs.

Although figures vary by manufacturer and product,

the direct-drive permanent-magnet generator

(DDPMG) design typically requires the largest

amount of NdFeB magnets at 600-830kg per 1MW

of capacity installation. Hybrid designs use much

lower amounts of NdFeB magnets- around 100-

200kg per megawatt. One third of this is pure NdPr.

Therefore, the outlook for NdPr growth resulting

from wind turbines has the potential to be

https://www.researchgate.net/publication/224137242_Wind_Turbine_Gearbox_Technologies



68 68

impressive. Even the World Bank has

acknowledged in its report ”The Growing Role of

Minerals and Metals for a Low Carbon Future

(English)” published in June 2017, that Neodymium

is one of the raw materials which will most likely

experience a significant growth due to the upcoming

technology shift.

Source: 2017 World Bank






69 69

The Market - Status Quo

According to the JRC report 2016, the global wind

energy capacity reached 430 GW in 2015, more

than doubling from 5 years earlier. All EU's wind

energy capacity, about a third of the global capacity

or 140 GW, is connected to the grid which makes

Europe a global leader in supplying wind energy.

Thanks to the rapid expansion in new installations,

China was overtaking the EU in total capacity for

the first time, although not all is connected to the

electricity grid at this stage.

2015 was another successful year with 63 GW of

new wind turbines installed around the world. This

was a 20% increase from 2014. The EU has been

adding 10-13 GW of new wind capacity annually

since 2010 and advancements in offshore wind are

likely to push this figure to 15 GW in the next 4-6

years.

According to the 2015 GWEC report, worldwide

capacity reached 432,883 MW. Out of this,

63,467MW (3,443 MW Offshore/ total 12,167MW)

were added in 2015. China alone installed

30,753MW in 2015. In 2016 the worldwide capacity

reached 486,790MW, out of which 54,642MW

(2,219MW Offshore / total 14,384MW) were added

in 2016. Also in 2016, China represented the

biggest single market with 23,370MW incremental

new capacity.

According to BP, global wind power generation

reached 960 TWh in 2016, or 4% of total world

electricity generation. That is almost equivalent to

the total power generation of Japan, the world’s fifth

largest power generator. In its Global Wind Energy

Outlook 2016 Report, the GWEC projects that Wind

energy’s global market share will grow to 7-9% by

2020, 11-18% by 2030, 14-26% by 2040 and 18-

36% by 2050.

The JRC 2016 report shows that in 2015 the global

market share of permanent magnet wind turbines

reached a market penetration of 13% among the

total global installed base of the onshore wind

turbines and 17% of the total global installed

offshore wind capacity with a steady tendency of

growth.

In 2015, PMG among the new installed capacity

onshore reached 32.5% market share in Europe,

20% in Asia, 5% in USA and 15% in ROW. During

2015, PMG reached a market share of 50% in

Europe and 32% in Asia in the offshore

business. These market share percentage growths

among the additional annual new installations

proves the potential of PMGs and confirms the

positive outlook.

The global trend towards bigger turbines and

medium to low wind speeds will contribute to future

growth of permanent magnet wind turbines. A good

example for this is the fact that out of the global top

10 biggest wind turbines, 7 are based on PMG

technology.

MHI Vestas 9MW + 9.5MW

Siemens 8 MW SWT-8.0-154

Siemens 12 MW

Adwen AD-180 - 8 MW Platform + 5MW

Platform

Ming Yang SCD 6.0MW

GE’s Haliade* 150-6MW

Samsung’s 7 MW (SHI 7.0-171)

https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/jrc-wind-energy-status-report-2016-edition

http://www.gwec.net/publications/global-wind-report-2/global-wind-report-2015-annual-market-update/

http://files.gwec.net/files/GWR2016.pdf

http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/renewable-energy/wind-energy.html

http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/renewable-energy/wind-energy.html

http://files.gwec.net/files/GlobalWindEnergyOutlook2016


https://en.wind-turbine-models.com/turbines/1568-mhi-vestas-offshore-v164-9.0-mw#datasheet

http://webcache.googleusercontent.com/search?q=cache:Vd37eIxj2u0J:www.rechargenews.com/wind/1274654/mhi-vestas-launches-95mw-offshore-wind-turbine+&cd=3&hl=en&ct=clnk&gl=au

https://www.siemens.com/global/en/home/markets/wind/turbines-and-services/swt-8-0-154.html

http://www.rechargenews.com/wind/1443296/ge-unveils-market-changing-12mw-offshore-wind-turbine

http://www.adwenoffshore.com/products-services/products/8-mw-turbines/

http://www.thewindpower.net/turbine_en_1049_adwen_ad-5-135.php

http://www.thewindpower.net/turbine_en_1049_adwen_ad-5-135.php

http://www.thewindpower.net/scripts/fpdf181/turbine.php?id=841

https://www.gerenewableenergy.com/content/dam/gepower-renewables/global/en_US/downloads/brochures/wind-offshore-haliade-wind-turbine.pdf

https://en.wind-turbine-models.com/turbines/285-samsung-s7.0-171



70 70

Latest Technological

Developments

Low speed wind turbines are growing!

In the global market, wind turbines for high wind

speed locations (class I) have progressively lost

share in the recent years in favour of wind turbines

for medium and low wind speed locations (class II

and class III). The Asian market has been

dominated by class III wind turbines during the last

decade, mainly due to the low-wind conditions

experienced in most of China and India.

Class II wind turbines (for medium wind speeds)

predominated in North America over the years;

however low wind turbines (class III) have shown a

strong development starting from 2010. In the rest

of the world, class I and II wind turbines prevailed.

On the contrary, high wind speed turbines have

gradually lost share in favour of class II and III wind

turbines. The reason may be that higher wind speed

locations were preferred during the first years.

Therefore, the lower the speed of an electricity

generator, the larger its size. A medium speed

generator has a larger diameter than a high-speed

one but induction (asynchronous) machines are

generally less attractive with low speeds and large

diameters [Jamieson, 2011]. Therefore only

synchronous machines, especially PMGs, are

considered at medium and low speeds.

As wind energy technology evolves towards larger

wind turbines with longer blades, taller towers and

more powerful generators, PMG’s will gain more

market share. These large machines will help the

industry reduce capex/opex on a one-turbine, one-

foundation basis by offering an even higher output

per square metre of swept area.



71 71

The Market Players

The wind turbine market continues growing and

attracting new entrants, particularly in China and

India. The recent mergers and acquisitions among

Western OEMs (Original Equipment Manufacturers)

such as Siemens and Gamesa in 2017 and Alstom

and GE in 2015, suggest a desire or need for

Western companies to become stronger in order to

face the expected expansion of Chinese

manufacturers abroad.

The Chinese role as a forerunner in new installed

capacity is accompanied by a strong local market

for turbines. Chinese OEMs supply 97.3% of

Chinese wind power plants with turbines whilst their

participation on foreign markets remains minor so

far. Nevertheless, the strong Chinese home market

has for the first time resulted in a Chinese company

– Goldwind – leading the ranking of turbine

manufacturers in terms of installed capacity.

Source: JRC Report 2012

European turbine manufacturer, Vestas ranked

second, with European companies Siemens,

Gamesa and Enercon also found in the top 15.

Xinjiang GoldWind uses only permanent magnet

direct drive technology, whereby the generator

speed required is much lower than that required by

the DFIG system. Siemens and GE have introduced

Permanent Magnet Direct Drive (PMDD) turbines

during the last few years as well.

Enercon has taken a different approach by using

electromagnets.

https://setis.ec.europa.eu/system/files/LDNA25647ENN_2012_JRC_wind_status_report_FINAL.pdf

https://www.siemens.com/content/dam/internet/siemens-com/global/market-specific-solutions/wind/brochures/onshore-dd-plattform-brochure-landscape-web4.pdf

https://www.siemens.com/content/dam/internet/siemens-com/global/market-specific-solutions/wind/data_sheets/d3-plattform-datasheet-3.15-142.pdf



72 72

Market Forecast

Overall, the general forecast for Wind energy looks

positive with a steady increase of the total

installation base. The latest GWEC update

published in 2017 is showing that the process is

already accelerating, now forecasted to reach an

installation base of 741.7 GW by 2020, and

projecting an average new installation base per

year 61.9 MW.

Considering 2015 as the baseline, the GWEC

Global Wind Energy Outlook 2016 predicts that the

installed base will increase by 50% by 2020, by

2030 it will increase by threefold, by 2040 it will

increase close to fivefold and by 2050 it will

increase sevenfold reaching a total of 2,869 GW

capacity.

The wind industry is at a critical juncture due to the

subsidies that have cradled and underpinned its

business model since its inception in the early

1990s disappearing as politicians enact a long-

planned push to make the industry more

commercially viable and competitive with other

energy sources.

And based on the latest industry news regarding the

recent auction outcomes in Germany and Australia,

we have no doubt that this will be accomplished.

Although the overall outlook is already very

promising, we believe it will actually be surpassed

by the reality.

As wind energy is a long cyclic, investment

intensive B2B business, we perceive this

technology segment as a steady robust growth

industry which will contribute to and amplify the

supply demand imbalance of NdPr- but we do not

expect it to be the initiator. Our belief is that this role

will be claimed by B2C (Business to Consumer)

industries such as E-Mobility through its

developments with passenger cars, bikes, vans,

trucks and drones. The B2C segment is far less

predictable when it comes to projecting the future

demand and technology adoption by the customers.

Source: GLOBAL WIND REPORT ANNUAL MARKET

UPDATE 2016 issued 2017 by GWEC



http://www.peakresources.com.au/news/wind-power-blows-through-nuclear-coal-as-costs-drop-at-sea/

http://www.peakresources.com.au/news/dong-energy-awarded-three-german-offshore-wind-projects/

http://reneweconomy.com.au/origin-stuns-industry-with-record-low-price-for-530mw-wind-farm-70946/

http://files.gwec.net/files/GWR2016.pdf?ref=PR

http://files.gwec.net/files/GWR2016.pdf?ref=PR



73 73

Source: GWEC GlobalWindEnergyOutlook2016 issued

October 2016




74 74

Wind – The NdPr Demand

Wind turbines that contain rare earth permanent

magnets most commonly use them in the electricity

generator. Here, rare earths make up 30 to 32% of

the mass in the magnets. During 2015, wind

turbines with permanent magnet electricity

generators (PMG) covered approximately 13-17%

of the world market. The other 83-87% were

electromagnet generators which use copper

windings and an electricity current to generate

magnetism. The amount of magnets used in PMG is

quite diverse and depends heavily on the speed of

the generator.

Extending the data in below Table, taking as a

reference a 3-MW PMG, if it is low-speed it would

use approximately 650kg of magnets per MW;

being medium speed it would need some 160-200

kg/MW, and the high-speed version approximately

80 kg/MW.

Source: above JRC Report 2012;

Based on our interaction with the established

industry players, we understand that their latest

large permanent magnet offshore wind turbines

require 333 kg NdPr oxide per Megawatt.

Furthermore, in 2011 the German research Oeko

Institute published additional information on this

subject as did the 2012 report published by JRC,

see below.

We anticipate a trend of moving towards a larger

variety of generator designs with a higher share of

PMG. PMG are more efficient at partial loads than

the traditional doubly-fed induction generators

(DFIG) which is crucial considering that turbines

generate electricity at partial loads most of the time.

PMG have fewer moving parts than DFIG and it’s

the moving parts that require the most

maintenance. Thus the evolution from DFIG to PMG

is expected to continue, consequently reducing

operation and maintenance costs.

Source: Oeko – Institut e.v - wind turbine supply chain & logistics

https://setis.ec.europa.eu/system/files/LDNA25647ENN_2012_JRC_wind_status_report_FINAL.pdf

https://www.oeko.de/oekodoc/1296/2011-421-en.pdf






75 75

The below table illustrates the growing demand for

NdPr resulting from this trend. We have assumed

that across all hybrid and direct drive permanent

magnet wind turbines, an average deployment of

200kg of NdPr per Megawatt is required.

Our projection is that the permanent magnet wind

turbines will achieve a market share of 20% by

2020 and will continue to grow thereafter. The blue

highlighted boxes indicate the range that we believe

will most likely be achieved. Regardless of which

scenario is chosen, the incremental NdPr demand

from this application will be substantially higher than

today’s consumption levels.

For further information regarding the Wind energy

market share and outlook, please refer to the

following sources and publications:

Bloomberg Energy outlook 2017

BP - Energy outlook 2035 + BP - Energy

Outlook 2017

Exxon - 2017 Outlook for Energy: A View to

2040 2040

Statoil - Energy Perspectives Long-term macro

and market outlook 2017

200

Year

2015 432,656 63,467 1904.01 2538.7 3173.4 3808.02 4442.69 5077.4 5712

2016 486,790 54,642 1639.26 2185.7 2732.1 3278.52 3824.94 4371.4 4917.8

2017 546,190 59,400 1782 2376 2970 3564 4158 4752 5346

2018 607,090 60,900 1827 2436 3045 3654 4263 4872 5481

2019 671,790 64,700 1941 2588 3235 3882 4529 5176 5823

2020 741,790 70,000 2100 2800 3500 4200 4900 5600 6300

2021 817,090 75,300 2259 3012 3765 4518 5271 6024 6777

2015-2020 639,478 879,466 41,364 61,827 1,241 1,855 1,655 2,473 2,068 3,091 2,482 3,710 2,896 4,328 3,309 4,946 3,723 5,564

2020-2030 1,259,974 2,110,161 62,050 136,837 1,861 4,105 2,482 5,473 3,102 6,842 3,723 8,210 4,343 9,579 4,964 10,947 5,584 12,315

2030-2040 2,052,583 3,720,919 79,261 161,076 2,378 4,832 3,170 6,443 3,963 8,054 4,756 9,665 5,548 11,275 6,341 12,886 7,133 14,497

2040-2050 2,869,611 5,805,882 81,703 208,496 2,451 6,255 3,268 8,340 4,085 10,425 4,902 12,510 5,719 14,595 6,536 16,680 7,353 18,765

150

Year

2015 432,656 63,467 1428.01 1904 2380 2856.015 3332.02 3808 4284

2016 486,790 54,642 1229.45 1639.3 2049.1 2458.89 2868.71 3278.5 3688.3

2017 546,190 59,400 1336.5 1782 2227.5 2673 3118.5 3564 4009.5

2018 607,090 60,900 1370.25 1827 2283.8 2740.5 3197.25 3654 4110.8

2019 671,790 64,700 1455.75 1941 2426.3 2911.5 3396.75 3882 4367.3

2020 741,790 70,000 1575 2100 2625 3150 3675 4200 4725

2021 817,090 75,300 1694.25 2259 2823.8 3388.5 3953.25 4518 5082.8

2015-2020 639,478 879,466 41,364 89,362 931 2,011 1,241 2,681 1,551 3,351 1,861 4,021 2,172 4,692 2,482 5,362 2,792 6,032

2020-2030 1,259,974 2,110,161 62,050 123,070 1,396 2,769 1,861 3,692 2,327 4,615 2,792 5,538 3,258 6,461 3,723 7,384 4,188 8,307

2030-2040 2,052,583 3,720,919 79,261 161,076 1,783 3,624 2,378 4,832 2,972 6,040 3,567 7,248 4,161 8,456 4,756 9,665 5,350 10,873

2040-2050 2,869,611 5,805,882 81,703 208,496 1,838 4,691 2,451 6,255 3,064 7,819 3,677 9,382 4,289 10,946 4,902 12,510 5,515 14,074

Source: Wind forecast data is from the Global Wind Energy Outlook 2016

worse case optimal case mid case

35%

45%

MW installation projections in

MW

Incremental new

capacity in MW p.a.

15% 20% 25%Permanent Magnet Wind Turbine Marketshare

1 Mw = NdPr oxide 2N in kg

30% 35% 40%

GW

CE

up

dat

e

Fore

cast

Oct

2016

GW

CE

up

dat

e

Fore

cast

Oct

2016

Actuals

Actuals

Estimate of the annual demand of NdPr consumption for the new installed Wind capacity in tonnes

40% 45%

1 Mw = NdPr oxide 2N in kg

MW installation

projections in MW

Incremental new

capacity in MW p.a.Estimate of the annual demand of NdPr consumption for the new installed Wind capacity in tonnes

Direct drive PM wind turbine marketshare 15% 20% 25% 30%


http://www.bp.com/en/global/corporate/energy-economics/energy-outlook-2035.html


http://corporate.exxonmobil.com/en/energy/energy-outlook/2017-highlights

https://www.statoil.com/content/dam/statoil/documents/energy-perspectives/energy-perspectives-2017.pdf



76 76

Overview of Existing Drive Line

Technologies

Source: Technological evolution of onshore wind

turbines—a market-based analysis

Type A. Fixed-speed generator. The rotational

speed of the electric (asynchronous) generator

squirrel cage induction generator (SCIG) is

usually employed in this configuration because its

constructive simplicity and robustness is

constrained by the spinning speed of the blades

with very limited range response to variations in

wind speed. Neither power converter nor other

speed regulation techniques are employed in this

configuration. NEG Micon N48 and Vestas V27 are

some examples of type A wind turbines. (Geared

and high speed SCIG)

Type B. The speed of the asynchronous generator

is controlled by a variable resistance that enables

modifying the current circulating in the rotor. As a

consequence, wounded rotor induction

generators (WRIG) are employed in this

configuration. This solution provides higher control

flexibility than type A. However, the electrical losses

are relatively high and the response to grid

requirements is very limited. Vestas V52 and

Suzlon S82 are the main representatives of this

configuration in the market. (Geared and high

speed WRIG)

Type C. This configuration is known as a doubly-

fed induction generator (DFIG). The current in the

electric generator’s rotor is controlled by a power

converter. Thus, electrical losses are lower and the

response to grid requirements is enhanced. Since

the power converter is only connected to the rotor of

the generator, the converter only covers around

30% of the energy generated by the wind turbine.

Vestas V90, Gamesa G80 and General Electric GE

1.5 are some representative models of this

configuration. (Geared and high speed DFIG)

Type D. A full-power converter enables decoupling

the generator from the grid frequency so that the

frequency (and hence the rotational speed) of the

generator can be fully controlled and the use of a

gearbox can be avoided. Additionally, the full

converter provides enhanced grid services. Enercon

is the dominant manufacturer in direct drive wind

turbines based on electrically excited synchronous

generators (EESGs) = D-EE; whereas Goldwin has

manufactured most wind turbines in the market

employing direct drive combined with permanent

magnet synchronous generators (PMSG) = D-

PM. (DD and low speed PMSG)

Type E. A gearbox-equipped (one, two or three

stages of gearing) wind turbine with a full converter

and medium-/high-speed synchronous generator

(EESG or PMSG). In practice (with exception of the

old model Made AE-52), all type E wind turbines

use permanent magnets. Gamesa G128-4.5 MW

and Vestas V112-3.0 are some examples of this

configuration.

(Medium and high speed Turbines)

Type F. A gearbox-equipped wind turbine with a full

converter and high-speed asynchronous generator.

Thanks to the use of the full converter, a simpler

generator (SCIG) can be used, which is the case

for the most popular turbines under this

configuration, the Siemens SWT-2.3 and SWT-3.6

series. (Geared and high speed Turbines)

In summary, types A, B and C are geared high-

speed wind turbines, type D corresponds to

direct drive configuration and types E and F are

hybrid arrangements.

https://www.researchgate.net/publication/295918972_Technological_evolution_of_onshore_wind_turbines-a_market-based_analysis?enrichId=rgreq-9dc6284fccb29d0085b0dae34aba9814-XXX&enrichSource=Y292ZXJQYWdlOzI5NTkxODk3MjtBUzozMzM0MzAxNTI4MTA0OTZAMTQ1NjUwNzM1MjQ3OA%3D%3D&el=1_x_3&_esc=publicationCoverPdf

https://www.researchgate.net/publication/295918972_Technological_evolution_of_onshore_wind_turbines-a_market-based_analysis?enrichId=rgreq-9dc6284fccb29d0085b0dae34aba9814-XXX&enrichSource=Y292ZXJQYWdlOzI5NTkxODk3MjtBUzozMzM0MzAxNTI4MTA0OTZAMTQ1NjUwNzM1MjQ3OA%3D%3D&el=1_x_3&_esc=publicationCoverPdf



77 77

Overview of Today’s Established

Drive Line Configurations



78 78

How Do DFIG Turbines Work?

In a high-speed DFIG drivetrain, a slow-turning

shaft from the rotor (10-20 rpm) drives a gearbox

whose output shaft, rotating at up to 2,000 rpm,

drives the generator. In a DFIG, both rotor and

stator use electrically excited copper windings to

create magnetic fields. As the rotor spins,

interaction between these fields generates

electricity. DFIGs must spin at 750-1500 rpm to

operate, hence they are restricted to high-speed

applications.

The rotor circuit is controlled by a power electronics

converter, while the stator is connected directly to

the grid. This converter controls voltages and

currents, keeping the DFIG synchronised with the

grid while turbine rotor speed varies (typically the

range is +/- 30% of the synchronous speed or 60%

to 110% of the DFIG’s rated speed).

The great advantage of the DFIG is that it only

requires a ‘partial’ - roughly 35% of the generator’s

rated capacity - converter because only 25%-30%

of the input mechanical energy is fed to the grid

through the converter from the rotor, the rest going

directly to the grid from the stator. The efficiency of

the DFIG is very good for the same reason; little

power is lost via the converter.

Controlling the rotor circuit in this way also allows

the generator to import and export reactive power to

support the grid during outages - Low Voltage Ride-

Through (LVRT). However, today’s more

demanding grid codes stretch this to the limit and

many existing DFIGs have had to be retrofitted with

extra electronics to cope.

In PMGs and in other synchronous designs like the

EESG where the electrical energy is generated at a

variable frequency related to the rotational speed of

the rotor, the output must be converted to match the

frequency of the grid. Here the electronics must

deal with the full power output, demanding full

power converters which are considerably more

expensive than partial converters – around three

times as much according to Indar - and which also

have greater electrical losses. But as turbines

become larger and more advanced, vendors are

looking to these PMG designs to enhance reliability

and serviceability, reduce weight and comply with

grid codes. For those manufacturers looking to

eliminate the gearbox, compact PMGs are

particularly attractive. Slow rotation speeds typically

demand much larger diameter generators to

accommodate the increase in the number of

magnetic poles on the rotor for direct drive

applications.

PMGs operate in much the same way as EESGs

except, as their name suggests, they employ

magnets in the rotor instead of windings to create

the magnetic field required. This means no slip

rings or brushes, and so reduced maintenance and

greater reliability. The high energy density of

permanent magnets (a 15 mm-thick segment of

permanent magnets can generate the same

magnetic field as a 10-15 cm section of energised

copper coils) also helps to deliver a lighter, more

compact unit.

PMGs are almost as efficient at full-load generation

as standard DFIGs, but are more efficient at part-

loads – the most common conditions that wind

turbines operate in. DFIGs are more efficient in

high, steady winds, but must have electrical current

injected into the rotor at low speeds, resulting in

lower efficiency. Companies such as GE and

Vestas have used PMGs for some years in various

models and have more recently been joined by the

likes of Alstom and Siemens.

A key attraction for manufacturers is that a full

power converter (FPC) confers greater ability to

comply with the latest grid codes, of which LVRT is

the main element. To support grid voltage during a

voltage dip, the turbine drive train and its power

converter must inject reactive current.

Because it is completely decoupled from the grid,

full power converters can support longer, lower dips

than a standard DFIG whose otherwise efficient

partial converter works against it here. This full

decoupling between a PMG and the grid can also

potentially lengthen gearbox life due to reduced

loads on the drivetrain and does away with the

parasitic currents found in DFIGs which can

damage generator bearings.

Source: Which Tec Will Win?

http://www.renewableenergyworld.com/articles/print/special-supplement-wind-technology/volume-2/issue-3/wind-power/which-wind-turbine-generator-will-win.html



79 79

Advantages of Permanent

Magnet Generators (PMGs)

Permanent magnet generators (PMGs) have

distinct advantages over conventional double-fed

machines. They are able to produce efficiency

levels up to 98% at the rated point. When used in

low-speed, direct-drive applications, generator

efficiency is not quite as high but the need for a

gearbox is eliminated, creating excellent overall

drive train efficiency better than a DFIG, WRIG or

an EESG. The true strength of PMGs is in partial

load situations – the state in which turbines most

often operate due to wind inconsistency. In

particular along with a PMG allows easier

compliance with the most demanding grid “fault

ride-through” capabilities required by recent grid

codes. PMG efficiencies remain very high – close to

nominal value – over a wide range of speeds,

thereby producing much higher energy yields. With

low-speed, direct drive applications, the need for a

gearbox is eliminated, creating excellent overall

drive train efficiency.

The design life assumption is an important driver for

a levelized cost of electricity (LCOE) and this has

improved with the market moving towards a 25-year

design life up from the previous 20 years. The

Siemens’ direct drive permanent magnet turbine

SWT -6.0- 154 has been certified for a 25 lifetime.

The advantage of not having a gearbox as a part of

the drive line is important considering that existing

gearboxes are already experiencing failures after

only 5 years in operation. These repairs are

extremely costly and difficult to engineer, therefore

having no gearbox is the superior solution. This is

especially the case for offshore operations where

maintenance can only be carried out during specific

seasons as allowed by weather circumstances.

The PMG is a simple form of synchronous

generator that requires no connections and energy

feed to the rotor. Depending on the application,

permanent magnets are placed on the rotor, for low-

or medium-speed generators, or embedded in the

rotor for high-speed generators. The magnet

arrangements create excitation, a major factor in

delivering greater efficiency, as this concept virtually

eliminates rotor losses.

By driving the generator with an optimal power

factor using PMG technology, stator-side losses are

also minimized. PMGs do not require excitement

through external power sources, as a magnetic field

is generated by permanent magnets, thereby

reducing cost, simplifying the system, and

improving system efficiency. Further, no slip rings

are used, greatly reducing maintenance needs.

By allowing a wide range of speeds, a drive train

based on PMG technology can run at the optimized

operation point for the turbine. Control is based on

the optimum turbine curve and is not limited by the

drive train, thereby providing better partial load

rates. PMG can minimize nacelle weight and offers

superior efficiency under partial load, when

compared with doubly fed induction generators

(DFIGs). A double-fed machine, conversely, has a

limited speed range that does not allow the turbine

to fully adapt to actual site conditions.

Another benefit is that the optimized PMG electro-

magnetic circuit reduces cogging and thus

vibrations. This extends the lifetime of the turbine

and reduces the need for service. PMGs easily

meet the needs of modern wind farm turbines with

ranges from 500 kW to 5 MW and higher.

Therefore, Direct-driven PMGs have fewer moving

parts than EESGs and wound rotor induction

generators, being more robust, reliable and

requiring less maintenance. With overall reduced

maintenance time, production time increases, which

provides improved returns.

Because of these advantages we believe that this

PMG technology will continue to take over market

share in the coming years.

Source: the Switch & renewableenergyworld.com & Wind

Turbine Gearbox Technologies and others

https://en.wikipedia.org/wiki/Low_voltage_ride_through

https://en.wikipedia.org/wiki/Low_voltage_ride_through

https://www.siemens.com/content/dam/internet/siemens-com/global/market-specific-solutions/wind/data_sheets/data-sheet-wind-turbine-swt-6.0-154.pdf

http://theswitch.com/2010/04/09/more-energy-from-optimized-permanent-magnet-generator-and-full-power-converter-drive-train/

http://www.renewableenergyworld.com/

https://cdn.intechopen.com/pdfs-wm/16248.pdf




80 80

Source: windpowerengineering.com

http://www.windpowerengineering.com/design/electrical/generators/driving-down-the-cost-of-wind-power-with-permanent-magnet-generators/



81 81

Replacement Threats for DD-PM

Turbines

The technologies we will discuss below are

potential threats to replacing PMG in the future,

however so far they are still in R&D stages and field

testing stadium. It’s difficult to predict or anticipate

the likelihood and timing around if and when these

products will enter the market. In this high capital

intensive, long cyclic investment environment with

lifecycles of +25 years, we expect that any potential

replacement technologies would need to first prove

their superior OpEx and CapEx long-term

performance through field testing prior to any roll-

out taking place. Once the new technology has

been launched, previous examples would suggest

that it may take 5-10 years for the new technology

to gain noteworthy traction in sales and market

share.

In today’s wind industry, customers already have

alternative solutions for PMGs by using geared

systems or direct drive synchronous generators with

electrical excitation. Ultimately it comes down to

timing and what the best package and solution is for

the individual site for which deployment of the wind

turbine is planned.

From today’s perspective, we are not aware of any

imminent threat which could replace NdPr

permanent magnet wind turbine technologies.

PMGs are “the clear choice for optimizing all factors

affecting the cost of energy of the installed turbine.”

Electromagnets

As previously highlighted, it is possible to substitute

PMG with electromagnets, however their main

weakness is the much larger size resulting in a

greater space requirement within the final

application. This becomes more and more

problematic as trends lean towards more powerful

wind turbines.

Ferrite-based PMSG

Progress is being made to reduce the content of

rare earths (in particular dysprosium which is the

scarcest, costliest and most used rare earth

element) in permanent magnets employed in

PMSGs. The most recent technological advances

aim to push this boundary even further by sourcing

alternate materials to substitute for rare earths

entirely. In this sense, the world´s first ferrite-based

PMSG has been developed by GreenSpur

Renewables. Unlike rare earths, ferrite has no

supply-chain restrictions or market monopolies and

therefore a lower CapEx may be achieved, which is

especially relevant for larger electric generators.

Currently, 3 MW and 6 MW ferrite-based PMSGs

are being deployed and a 15 MW PMSG is

expected to be tested by 2021. New magnetic alloy

alternatives to dysprosium are also being

investigated. An alloy of cerium co-doping with

cobalt to substitute cerium for dysprosium without

losing desired magnetic properties could become

an alternative in the future.

High-temperature superconductor (HTS)

generators

The ongoing research project EcoSwing, funded by

the EU Framework Programme for Research and

Innovation H2020, aims to achieve the world´s first

demonstration of a low-cost and lightweight

superconductor-based generator in a modern 3.6

MW wind turbine to be installed in Denmark by

2019. This superconducting generator is expected

to achieve a weight saving of more than 40%

compared to conventional generators and to

drastically reduce the use of rare earths in

permanent magnet generators (from 200 kg/MW to

less than 2 kg/MW).

The replacement of permanent magnet generators

in wind power plants with ceramic high-temperature

superconductors has the potential to become a

reality however as they will still contain other rare

earths such as yttrium, it simply substitutes of one

critical material for another. This is not so much a

solution as postponement of the core issue.

Modular Strategy

As wind turbines evolve towards more powerful

electric generators, modular designs also start

emerging with the target of achieving weight

reduction and more compact dimensions. In a

modular design, the electric generator is

constructed in sections, reducing costs for

transportation and installation processes.

Furthermore, if any stator module fails, either it can

be easily replaced by facilitating the maintenance

process or alternatively, the wind turbine can

continue to operate at reduced power output.

Modular generators also better satisfy the grid

codes.

Some recently deployed generators are the modular

prototype Flux-Switching PMSG (also known as

Permavent) developed by Jacobs Powertec and the

modular EESG for the 4.2 MW E-126 wind turbine

model developed by Enercon.

http://www.windsystemsmag.com/article/detail/626/pmg-vs-dfigthe-drivetrain-technology-debate

http://www.greenspur.co.uk/renewables/technology

https://ecoswing.eu/

http://www.windpowermonthly.com/article/1396547/windtech-concepts-eliminate-reduce-pmg-use

http://www.windpowermonthly.com/article/1396547/windtech-concepts-eliminate-reduce-pmg-use



82 82

For further information on technology and

technology trends in the wind sector, please refer to

the below publications and sources:

Wind Turbine Gearbox Technologies

Advanced Wind Turbine Drivetrain

concepts

Review of Generator Systems for Direct-

Drive Wind Turbines

Comparing_AC_and_PM_motors.pdf


http://www.nrel.gov/docs/fy11osti/50043.pdf

http://www.nrel.gov/docs/fy11osti/50043.pdf

https://www.researchgate.net/publication/228641031_Review_of_generator_systems_for_direct-drive_wind_turbines

https://www.researchgate.net/publication/228641031_Review_of_generator_systems_for_direct-drive_wind_turbines




83 83

Onshore – The Market Share of

Individual Drive Trains

The graphs below show the evolution of the ratio of

installed capacity categorised by drive train

configuration in onshore wind turbine business

globally, separated by geographical zone.

Type E-Pm and Type D-Pm are NdPr base

solutions. In Type D and E, the type of generator

PMSG or EESG has not been identified. Siemens

supplies all turbines of the type F segment.

The 2016 report published by JRC shows that the

global market share of permanent magnet wind

turbines reached a market penetration of 13%

among the total global installed base of the onshore

wind turbine installations in 2015.

In 2015, newly installed capacity onshore PMGs

reached 32.5% of the market share in Europe, 20%

in Asia, 5% in USA and 15% in the rest of the world.

During 2015, the offshore business PMG in Europe

reached a market share of 50% and 32% in Asia.

The track record of PMGs demonstrates that the

technology enjoys steady continuous growth since

2006

Source + Note: JRC Wind Energy Report 2016

https://setis.ec.europa.eu/sites/default/files/reports/wind_energy_status_report_2016.pdf



84 84

Onshore – Drive Train

Configuration Depending on the

Nominal Power of the Generator

Below Graphs indicate the Drive train configuration

according to nominal power in onshore wind

turbines installed during 2015 and different

geographical zones. As it can be observed the drive

train configuration is closely related to nominal

power of wind turbines. Most wind turbines below 2

MW use type C configuration however DFIG loses

market share as nominal power increases.

In 2-3 MW wind turbines, direct drive configuration

had a similar share than type C in the European

market (45 %) in 2015 and it was mainly supplied

by Enercon. In turn, type D configuration was

mainly dominated by EESGs versus PMSGs,

representing 35 % and 10 % respectively. The

hybrid arrangements type E-PM and type F only

represented 8 % and 1 %, respectively.

Conversely, type F configuration displayed the most

prominent role in North America in 2015 and

overcame type C configuration by representing 51

% versus 32 %. Siemens supplied all turbines of the

type F segment. Unlike Europe, Type D only

represented 11 % in North America.

In wind turbines above 3 MW, the hybrid

arrangement Type E-PM was the preferred solution

in all markets in 2015. It covered the whole market

share in Asia, North America and the rest of the

world and it represented 60 % in Europe.

Moreover, manufacturers vary across drive train

configurations, as not each OEM offers the entire

range of drive train configurations. The Top 10

OEMs in the global onshore wind market show

some technological differences in their product

portfolio. Vestas, the leading manufacturer of total

onshore wind turbines installed, has historically

supplied geared designs, mainly type C

configuration. Nevertheless, in 2015 it covered 75

% of type E-PM and 23 % of type C configuration.

General Electric supplies similar configurations

although it led type C in 2015 representing 28 % of

this configuration. Enercon has historically covered

almost the entire supply of EESGs for direct drive

con-figuration while hybrid arrangement type F is

exclusively supplied by Siemens. Gold-wind's

technology is mainly based on PMSGs for type D

configuration.

The 2016 JRC reports shows that the global market

share of permanent magnet wind turbines reached

in 2015 a market penetration of 13% among the

total global installed base, with the robust outlook

for further growth

Source: JRC Wind Energy Report 2016 and Note: P

represents the wind turbine nominal power (MW)




85 85

Pie chart Source: JRC Wind Energy Report 2016 Note:

Drive train configuration across the Top 10 OEMs in terms

of total installed capacity of onshore wind energy in the

world; Source: JRC Wind Energy Database.

Additional Note: Inner doughnut represents the share of

each drive train configuration in the global onshore wind

market while outer doughnut displays the share of the Top

10 OEMs according to each drive train configuration. The

capacity installed with unknown drive train configuration in

the JRC Wind Energy Database is not included in the

figure. Type D and E configurations without

subcategorization according to type of electrical generator

(i.e. either EE or PM) are included in the category of drive

train configuration named "Others".Please note that only

the Top 10 OEMs (in terms of global cumulative installed

capacity) are represented in the figure. Thus, other OEMs

that represent a higher share in some specific drive train

configurations are displayed in the category "Other

OEMs".

For further information we would like to refer to

following publications:

Technological evolution of onshore wind

turbines—a market-based analysis


https://www.researchgate.net/publication/295918972_Technological_evolution_of_onshore_wind_turbines-a_market-based_analysis

https://www.researchgate.net/publication/295918972_Technological_evolution_of_onshore_wind_turbines-a_market-based_analysis



86 86

Offshore – Market Share of the

Individual Drive Trains

Above: Evolution of nominal power of offshore wind

turbines in the world Source: JRC Wind Energy Database

Above Evolution of the share of installed capacity by drive train configuration in offshore wind turbines by geographical zone Source: JRC Wind Energy Database Note: According to JRC analysis, Siemens modified type C (DFIG) drive train configuration of some wind turbines models to type F

Currently, 2.5-5.5 MW wind turbines are commonly

installed in offshore wind projects. The average

nominal power has grown from almost 3 MW in

2006 to 3.6 MW in 2015 representing an increase of

20%. Unlike onshore, the evolution of nominal

power of offshore wind turbines is less

homogeneous because the offshore market is much

smaller and it is dominated by a few wind turbine

models. The largest machine was installed in 2014

in the United Kingdom in the Levenmouth

demonstrator permanent magnet turbine with 7 MW

(SHI 7.0-171).

The offshore wind market has evolved from a

dominant type C configuration (geared high-speed

DFIG) towards both direct drive (type D) and hybrid

arrangements (types E and F). In the European

market, the hybrid configurations type F and type E-

PM have reached a prominent role in recent years.

On the contrary, in Asia, type C configuration is

losing ground in favour of type D-PM, although this

evolution is not homogenous.

The three largest OEMs Siemens, MHI Vestas and

Senvion dominate the global off-shore wind market,

accounting for 85% of cumulative installed capacity

at the close of 2015. Siemens leads all main drive

train configurations used in the off-shore market

and covers all supplies of the hybrid arrangement

type F (as in onshore wind market).

In 2015, PMGs in the offshore business reached a

market share of 50% in Europe and 32% in Asia

among the new installed capacity. This resulted in a

global market share of 17% of installed offshore

wind capacity permanent magnet wind turbines

installed globally with a steady growth tendency





87 87

Figure xx Evolution of nominal power of offshore wind turbines in

the world Source: JRC Wind Energy Database

Above: Evolution of the share of installed capacity by

drive train configuration in offshore wind turbines by

geographical zone

Source: JRC Wind Energy Database

Note: According to JRC analysis, Siemens modified type

C (DFIG) drive train configuration of some wind turbines

models to type F

Pie chart above Drive train configuration across the Top

10 OEMs in terms of total installed capacity of offshore

wind energy in the world

Source: JRC Wind Energy Database

Note: Inner doughnut represents the share of each drive

train configuration in the global offshore wind market while

outer doughnut displays the share of the Top 10 OEMs

according to each drive train configuration.

The capacity installed with unknown drive train

configuration in the JRC Wind Energy Database is not

included in the figure.



88 88

Price Elasticity / Price Sensitivity

of NdPr in the Wind Turbine

Business

The wind turbine is the most expensive component

of most wind farms. The below picture represents

the indicative cost breakdown for a large offshore

wind turbine. The reality is that a range of costs

exist, depending on the country, maturity of the

wind industry in that country and project specifics.

The two most expensive components are the

towers and rotor blades, with these contributing

around half of the total cost. After these two

components, the next largest cost component is the

gearbox. But this underestimates the importance of

gearboxes, as these generally

are an important part of the O&M costs, as they can

require extensive maintenance Onshore wind

turbines, with their smaller sizes, will tend to have

slightly lower cost percentages for the tower and

blades.

We have chosen to use the UK's 630MW London

Array, the world's largest operating offshore project,

as an example. The total project cost approximately

EUR 2.2 billion. Considering that turbines usually

account for 64% of the total cost, we can assume

that around EUR 1.4 billion was spent on turbines.

That would indicate a price of EUR 4.2 million for

each of the 175 Siemens 3.6MW turbines, or EUR

1.17 million per megawatt.

According to Siemens they require per megawatt

nominal performance ~333kg of NdPr, we add 20%

for the losses occurring in the conversion process to

alloy/metal and magnets and receive as a result the

demand of 400 kg NdPr per megawatt. Below we

have prepared a simplified extrapolation to

breakdown the ratio represented by NdPr in the

total sales price.

In the overall context of the sold turbine, NdPr

represents a correspondingly small part, so it can

be assumed that price elasticity for REEs is

relatively small (USDE 2010).

From our understanding, a NdPr price in the range

of US $85-100/kg is totally acceptable by the

industry and will not represent a trigger point to

initiate replacement initiatives. Long term (1-2

years) price levels above US $170-250/kg represent

a risk that the industry will kick off serious R&D

budgets to investigate alternative technologies.

We also believe that long term price levels above

US $100/kg will encourage NdPr recycling

businesses to receive more attention and the

reusing of materials will start to ramp up. Peak

Resources recognises this scenario is a logical

outcome and have decided to integrate recycling

into the strategy for our UK site.

For further information on the cost of windturbines,

please refer to the following publications and

sources:

www.irena.org

RE_Technologies_Cost_Analysis-

WIND_POWER

NdPr price/kg 400kg Total cost contribution

42.50 17,000 0.40%

85.00 34,000 0.80%

127.50 51,000 1.20%

170 68,000 1.60%

212.5 85,000 2.00%

255 102,000 2.40%

https://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8&ved=0ahUKEwj8rerElb3VAhWDv7wKHQlpDlQQFgg2MAU&url=http%3A%2F%2Fwww.mdpi.com%2F1996-1073%2F10%2F3%2F276%2Fpdf&usg=AFQjCNEVL88-i23xiR9Yi6UeTOA9eYuQ0Q

http://www.windpowermonthly.com/article/1228426/unmasking-turbine-prices

http://www.windpowermonthly.com/article/1228426/unmasking-turbine-prices

http://www.irena.org/

https://www.irena.org/DocumentDownloads/Publications/RE_Technologies_Cost_Analysis-WIND_POWER.pdf

https://www.irena.org/DocumentDownloads/Publications/RE_Technologies_Cost_Analysis-WIND_POWER.pdf



89 89

Other NdFeB Applications

NdFeB magnets are used in a wide range of

applications in addition to the two megatrends we

highlighted earlier. We merely chose Automotive

and Wind as examples to explore in greater detail

because we believe they will disrupt the supply-

demand balance for NdPr most significantly and

therefore have a more severe effect on the market

as a whole. However there are already many

established NdFeB reliant applications exhibiting

continuous growth in the market today.

We will categorise these technologies as “Potential

Megatrends” and “Others”. Potential megatrends

are technologies which if to succeed in becoming

mainstream, would greatly amplify the shortages of

NdPr. Those that fall into the “other” category are

technologies which are already in existence, have

achieved moderate growth and/or are nearing the

end of their product lifecycle and therefore likely to

be replaced by more sophisticated technologies in

the imminent future.



90 90

Potential Megatrends

Robotics

Magnetocaloric Fridges

Drones, planes and other electric flying

objects

Flying Cars, Air-Taxis, Passenger Drones,

electric airplanes

Marine Propulsion Solutions

Electric Bikes

Electric Scooters

Automotive accessories



91 91

Robotics

Factories worldwide are replacing human workers

with robots in a new automation-driven industrial

revolution with a CAGR in the two digit range

predicted until 2020. Robots are ultimately a

cheaper, more precise and more reliable solution

compared with people, which in turn improves the

overall productivity of the producers. This trend will

be even further amplified once artificial intelligence

becomes commonplace in labour solutions

available to the consumer, allowing robotics to take

over from roles that require real-time learning and

reactive responses.

Source: FT

In a government-backed, robot driven industrial

revolution the likes of which the world has never

seen, China has again taken the reins. In each year

since 2013, China has purchased more industrial

robots than any other country, including high-tech

manufacturing giants such as

Germany, Japan and South Korea. According to

industry lobby group, the International Federation of

Robotics (IFR), China will overtake Japan in

becoming the world’s largest operator of industrial

robots by the end of 2016. Currently China has just

36 robots per 10,000 manufacturing workers,

compared with 292 in Germany, 314 in Japan and

478 in South Korea. Roughly 100 million people

work in the Chinese manufacturing sector which

contributes ~36% of China’s gross domestic

product. With a workforce of around 100 million

people, China would need about 13-15 million

robots by 2025 in order to make it into the top 10

countries with the highest robot density. This would

drop to 7-10 million robots within the same

timeframe should the manufacturing workforce be

halved to 50 million. The automation could boost

production and revenue from manufacturing by

25%.

China’s 13th five year plan includes a Made in

China 2025 Plan” which endeavours to make China

an advanced manufacturing power within a decade.

The Chinese example shows this vast growth

opportunity for robotic solutions worldwide without

including the other Asian markets or Central and

Eastern Europe or other regions in the world.

Another good industry example for the growth

opportunity of robots is the agricultural market.

Source: www.tractica.com

Robotic solutions are developing at a rapid pace

with a large number of established and startup

agricultural technology companies developing,

piloting, and launching an innovative range of

robotic systems to tackle a wide variety of tasks.

Key application areas for agricultural robots include

driverless tractors, unmanned aerial vehicles

(UAVs), material management, field crops and

forest management, soil management, dairy

management, and animal management, with a

diverse set of subcategories emerging within each

of those areas.

According to a new report from Tractica, developed

in collaboration with The Robot Report, shipments

of agricultural robots will increase significantly in the

years ahead, rising from 32,000 units in 2016 to

594,000 units annually in 2024, by which time the

market is expected to reach $74.1 billion in annual

revenue.

Source: market_overviewWorld_Robotics 2016

https://ifr.org/img/uploads/Executive_Summary_WR_Industrial_Robots_20161.pdf

http://www.peakresources.com.au/news/robots-changing-the-world/

https://www.tractica.com/newsroom/press-releases/agricultural-robot-revenue-to-reach-74-1-billion-worldwide-by-2024/

https://www.therobotreport.com/

https://ifr.org/downloads/press/02_2016/Presentation_market_overviewWorld_Robotics_29_9_2016.pdf



92 92

Other strong growth areas are service robots for

professional and personal domestic use, logistics,

hospitals, medical surgery, rehabilitation support,

ergonomic support for reducing loads, diagnostic

and robot assisted surgery or therapies.

The International Federation of Robotics (IFR)

projects double-digit growth between 2016 and

2019 and forecasting following sales:

~1.4 million Industrial robots will be

installed in the factories to increase

productivity

~333,000 service robots for professional

use will be sold to non-manufacturing and

to manufacturing sectors

~42 million service robots for personal

and domestic use (consumer robots) will

be used in our private life

We estimate that on average, industrial robotic

solution requires ~15kg NdFeB permanent magnets

which is equivalent to ~5kg NdPr oxide (4.16kg +

20% losses). We assume that NdFeB will represent

~50% market share among these robotic solutions.

According to the IFR, 1.4 + 0.333 million

incremental service and industrial robots will be sold

between 2016 and 2019. This represents an annual

incremental demand of NdPr oxide of ~1,083t

(8,665 /2 = 4,333/4) from this segment alone.

In addition, sales in the private sector are

forecasted to reach ~42 million robotic solutions.

Due to miniaturization being key for these

technologies, it is likely that NdFeB will have a

higher market share of ~70%. We estimate an

average demand per sold unit of ~0.6kg NdFeB

which is equivalent to ~0.24kg NdPr oxide. This will

result in an annual average incremental demand of

~1,764t per year between 2016-2019.

To put this in perspective, Ngualla’s annual output

of NdPr suffices for a maximum ~484,000 Industrial

Robots.

For further information, please refer to the following

sources and publications:

Presentation_market_overviewWorld_Robotics

_29_9_2016

Website of the International Federation of

Robotics (IFR)

Business Insider: Almost half of all US workers

are at risk of losing their jobs to robots

Mc Kinsey: Disruptive technologies

Forbes: Killer cars and robotic teddy bears

Daily Express (UK): Fears of killer robots

increase as machine revolution now firmly

underway

The Guardian Robot revolution: rise of 'thinking'

machines could exacerbate inequality

nextbigfuture.com China will spend trillions for

automation, robotics, 3D manufacturing and

research

AI combined with robotics the next industrial

revolution Interesting defence article + forecast from

Siemens on the topic: http://www.robotics

Siemens forecast

Mr MAs perspective on things + university of

oxford projections on the topic: Mr Ma: Ai and

Robotics

Elon Musk on Ai and robotics

https://ifr.org/downloads/press/02_2016/Presentation_12_Oct_2016__WR_Service_Robots.pdf



https://ifr.org/free-downloads/

http://www.businessinsider.com/almost-half-of-all-us-workers-could-lose-their-jobs-to-robots-2015-11?r=UK&IR=T

http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/disruptive-technologies

https://www.forbes.com/sites/jonmarkman/2015/11/07/killer-cars-and-robotic-teddy-bears/#791d8e14579e

http://www.express.co.uk/finance/city/617250/Rise-of-Robot-revoltion-machines-take-over-third-UK-jobs-2035

https://www.theguardian.com/technology/2015/nov/05/robot-revolution-rise-machines-could-displace-third-of-uk-jobs

https://www.nextbigfuture.com/2017/02/chinas-manufacturing-cost-advantage-is.html

http://www.peakresources.com.au/news/ai-combine-with-electrification-is-the-next-industrial-revolution-and-i/

http://www.peakresources.com.au/news/ai-combine-with-electrification-is-the-next-industrial-revolution-and-i/



http://www.peakresources.com.au/news/alibaba-ceo-declares-artificial-intelligence-and-robots-will-kill-our-jobs/

http://www.peakresources.com.au/news/alibaba-ceo-declares-artificial-intelligence-and-robots-will-kill-our-jobs/

https://youtu.be/72LUUZrQqEw



93 93

Magnetocaloric Fridges

Magnetic refrigeration is a cooling technology based

on the magnetocaloric effect. This technique can be

used to attain extremely low temperatures, as well

as the ranges used in common household

refrigerators. Compared to traditional gas-

compression refrigeration, magnetic refrigeration is:

safer, quieter, Less noise and vibrations:

environmental comfort

More compact,

High Coefficient of Performance

(COP):reduce energy consumption by up

to 20-30%

More environmentally friendly because it

does not use harmful, ozone-depleting

coolant gases. Instead they use

substances such as water-based coolant

liquid / glycol water.):Eliminate harmful

emissions - Meet F-gas regulations

No gas leakage: reinforced safety and

eliminate CO2 emissions

Low pressure system, no gas: reinforced

safety, reliability and reduced maintenance

costs

These state-of-the-art cooling refrigerators use a

newly developed material that changes temperature

based on how strongly magnetized it becomes. GE

researchers predict the cooling refrigerators could

reduce energy consumption by 20-30%, in addition

to being a quieter and greener alternative for

consumers. Magnetocaloric materials will one day

replace the conventional compressor technology

The magnetocaloric effect, like vapor-compression

refrigeration (the method used in all modern cars,

fridges, etc.) was discovered a very long time ago

but there have always been large barriers

preventing its commercial adoption. Basically, some

metals get warmer when exposed to a magnetic

field, and then cool down again when the magnet is

removed. By doing this repeatedly, you can create a

heat pump that moves thermal energy from one

place and deposits it elsewhere. (This is exactly

what your AC unit does, incidentally.)

Developed over the past decade, these new

magnetocaloric materials have the potential to

revolutionize refrigerators and other products that

require efficient cooling technologies. It will also

provide new technology that helps to meet the

increasing regulation of greenhouse gases.

Therefore, the next generation of refrigerators and

air conditioners will be even more environmentally

friendly thanks to this innovative technology. Some

of the future applications are:

Magnetic household refrigeration

appliancesMagnetic cooling and air

conditioning in buildings and houses

Central cooling system

Refrigeration in medicine

Cooling in food industry and storage

Cooling in transportation

Cooling of electronic equipment’s

Today we have approximately 7.5 billion people on

the planet. Assuming that there is one fridge for

every 7 people and that each fridge is replaced

every 10 years, we would estimate that 107 million

refrigerators are sold annually. Under the

assumption that each NdPr magnetocaloric fridge

represents 0.40kg incremental NdPr oxide demand

then for every 1 million Magnetocaloric Fridges

sold, this would create 400t of incremental demand

of NdPr oxide per year. We believe that this

technology has significant market potential for

NdPr, especially considering commercial spaces

such as grocery and hospitality chains where the

reduction of electricity consumption and cost could

be significant.



Wikipedia: Magnetic refrigeration

BASF: NdPr refrigerators can save up to 35%

electricity + video

GE high-tech fridge magnets that could save

the world billions of energy cost

GE Global Research: NdPr can change the

way how you will keep things cool

GE: How does it work + video 2

Cooltech: announces commercial availability of

its MRS systems + PP

https://en.wikipedia.org/wiki/Magnetic_refrigeration

http://www.peakresources.com.au/news/ndpr-refrigerators-can-save-up-to-35-electricity/

https://youtu.be/jnl9m0rSE7U

http://www.peakresources.com.au/news/the-magnetocaloric-effect/

http://www.peakresources.com.au/news/the-next-big-thing-how-ndpr-can-change-the-way-how-you-will-keep-things-cool-in-the-future-part-2/

https://youtu.be/WlKKKMTA7XM

https://www.youtube.com/watch?v=uDF_COU1OJI&t=79s

https://www.racplus.com/news/worlds-first-magnetic-refrigeration-system-for-commercial-refrigeration-launches/10007504.article

http://www.cooltech-applications.com/downloads.html



94 94

Source: http://www.cooltech-applications.com

Sources: GE + BASF + eramanagrawal - magnetic-

refrigeration-

http://www.cooltech-applications.com/products-range.html

https://www.slideshare.net/eramanagrawal/magnetic-refrigeration-18561826

https://www.slideshare.net/eramanagrawal/magnetic-refrigeration-18561826



95 95

Drones, Planes and Other

Electric Flying Objects

Drones will become a part of our daily lives. They

are already increasingly used for many different

applications such as aerial cinematic photography

and video photo footage (media), surveillance

(police), inspections (construction) and surveying

(agricultural applications and mining) and perhaps

eventually even for delivering special goods to

remote areas in case of emergency (medicine

deliveries). We predict that one of the first human

passenger drone applications will be unmanned

ambulances. Such solutions are already technically

possible however do not yet have the required

legislation framework to embark.

Drones enable spectacular high-resolution footage

and data collection which could otherwise only be

achieved with immense effort and considerably

higher cost. The convenience with which drones

operate in comparison to their competitor

technologies has revolutionised several industries,

therefore driving further improvements to

performance aspects such as speed, payload, flight

time, intelligence, sensory features and cost of

ownership.

.

The range of applications drone technologies can

be used for is limitless and will continue to

skyrocket and with it, NdPr. NdFeB Permanent

magnets are clearly the best suitable solution when

it comes to flying objects with an electric motor. This

is mainly due to their advantages of producing

maximum power and efficiency whilst maintaining

minimum weight which is critical for any application

that’s main assignment is to navigate the air.

According to Goldman Sachs report, the drone

market will experience tremendous growth between

2016 and 2020, representing a $100 billion market

opportunity of which the military represents 70%,

consumers 17% and commercial applications 13%.

GoldmanSachs forecast sales of 78 million drones.

Assuming that each NdFeB permanent magnet

used for the drone’s motor will weight an average of

200g, each drone would require 80gr NdPr oxide.

This totals an incremental demand of 6,240t or

1,040t p.a. over 6 years and refers only the demand

of the drones for consumer electronics.

http://www.goldmansachs.com/our-thinking/technology-driving-innovation/drones/



96 96

Consumer Electronic Drones

These drones are becoming a professional tool

used in our daily work. More and more dedicated

software applications will develop to capitalize on

the hardware which a drone already poses in

industries like mining, construction, agriculture,

mapping, exploration, Insurance Claims, Offshore

Oil and gas Refinery, Fire, Coast Guards,

Journalism, Boarder protection, Pipelines, Clean

Energy to name a view.

Among all analyst, the tenor is the same they all

have a bullish outlook for this segment with the

expectations to see year by year CAGR between

15-20% over the next coming years.

For further information we would like to refer to

following sources and publications:

grandviewresearch.com

marketsandmarkets.com

www.gminsights.com

www.embedded-vision.com

http://www.grandviewresearch.com/industry-analysis/global-commercial-drones-market

http://www.marketsandmarkets.com/PressReleases/commercial-drones.asp

https://www.gminsights.com/industry-analysis/agricultural-drones-market

https://www.embedded-vision.com/platinum-members/embedded-vision-alliance/embedded-vision-training/documents/pages/drones



97 97

Flying Cars, Air-Taxis, Passenger

Drones & Electric Airplanes

Companies around the world, including giant

aerospace manufacturers, are working on products

to serve the transport drone market. Regulatory

issues are the biggest roadblock on the way to

mass market adoption however once they are

overcome, this mode of transportation represents a

huge growth potential for NdFeB magnets. As in

aviation, the weight reduction and performance

capabilities of NdFeB magnets are the undisputed

leading motor technology predesignated to serve

this industry.

The chart below shows some of the current air-taxi

projects, capabilities and individual progress. The

next 5 to 10 years are going to an incredible time for

the roll-out of this technology. It is estimated that

this sector of 2 seater drones represents an NdFeB

consumption per produced unit of approximately ~3

- 4 kg on average, or ~1.2kg -1.6kg of pure NdPr.

A snapshot of ongoing projects world-wide:

Source: https://www.droneii.com/flying-cars-an-industry-

snapshot

In additional to the latest developments discussed

before, in 2015 Siemens announced that it has

developed a Powerful Ultralight Motor for

Electrically Powered Flight with an exceptional

electric motor that combines high power with

minimal weight. So overall, it is clear that

electrification will not stop on the streets and drone

passenger transportation may very well evolve to

the airspace also. It’s merely a matter of time until

this technology enters the mainstream.

https://www.droneii.com/flying-cars-an-industry-snapshot

https://www.droneii.com/flying-cars-an-industry-snapshot

https://www.siemens.com/innovation/en/home/pictures-of-the-future/mobility-and-motors/electromobility-electrically-powered-flight.html



98 98

Marine Propulsion Solutions

Due to positive developments in battery cost and

performance, electrification doesn’t stop on the road

but continues on the water. More and more

developers are using NdFeB technologies to create

alternative transportation solutions that are an

entirely new concept in comparison to the historical

options we are used to.

Siemens developed the first emission-free, electric

“car and passenger ferry” in the world! Christened

Ampere, it was developed by Siemens in

cooperation with Norwegian shipbuilder Fjellstrand.

Find the full story here.

Pod propulsion solutions based on Permanent

magnet technology are gaining higher market share

as this application becomes more popular due to

the known advantages such as low maintenance

requirements (no lubrication) and a nearly vibration

free operation. Examples of applications are cruise

ships, drilling rigs, submarines and other

conventional ships.

For example, Azipod is an electric podded azimuth

thruster produced by ABB Group. This configuration

of marine propellers placed in pods that can be

rotated 360° to any horizontal angle (azimuth),

making a rudder unnecessary. These give ships

better manoeuvrability than a fixed propeller and

rudder system. The assumed consumption for one

MW performance is approx. 160-200kg of NdPr

oxide.

Established suppliers of these solutions include

Siemens Schotte, GE, Voith, Trustmaster and Rolls-

Royce.



Publications.lib.chalmers.se

Rolls-Royce | Permanent Magnet Technology

Siemens Permasyn (PMG) Motor: The

propulsion solution for today's submarines

SKF Permanent Magnet Motor and Magnetic

Bearings

https://www.siemens.com/innovation/en/home/pictures-of-the-future/mobility-and-motors/electromobility-electric-ferries.html

https://www.youtube.com/watch?v=PzjFEe47bzA

https://en.wikipedia.org/wiki/Azipod

https://en.wikipedia.org/wiki/Azimuth_thruster

https://en.wikipedia.org/wiki/Azimuth_thruster

http://www.industry.siemens.com/verticals/global/en/marine/products-and-solution/propulsion/pages/sishipesipod-pod-drive.aspx

https://www.schottel.de/marine-propulsion/srp-rudderpropeller/

http://www.gepowerconversion.com/product-solutions/pods/large-pods

http://voith.com/en/products-services/power-transmission/voith-radial-propeller-10010.html

https://www.thrustmaster.net/azimuth-thrusters

https://www.rolls-royce.com/products-and-services/marine/product-finder/propulsors/podded-azimuthing-propulsors.aspx#section-product-search

https://www.rolls-royce.com/products-and-services/marine/product-finder/propulsors/podded-azimuthing-propulsors.aspx#section-product-search

https://www.youtube.com/watch?v=3pTCjAy-pIU

http://publications.lib.chalmers.se/records/fulltext/64477/64477.pdf

https://www.youtube.com/watch?v=PzjFEe47bzA

https://www.youtube.com/watch?v=UOVIgC-GqQ0

https://www.youtube.com/watch?v=UOVIgC-GqQ0

https://www.youtube.com/watch?v=_Ed2tG22MlU

https://www.youtube.com/watch?v=_Ed2tG22MlU



99 99

Electric Bikes

China is dominating the electrical bicycle space. In

2016, the global stock of electric two wheelers

reached 200-230 million units with a minority stake

outside of China. According to the EVI data

submission, in 2016 China alone sold in approx.

~26 million. More information at EBIKE -Executive-

Summary

Worldwide, this figure was 35 million bikes

according to research by Navigant, making China

the global leader by a long shot.

The high growth rate in electric two-wheelers is

partially due to the country implementing policies

designed to limit air pollution hazards, such as a

ban on gasoline-powered motorcycles, limits on the

issuing of licences, and the division of lanes.

Additionally, two-wheelers have reached cost parity

with ICE models, making them both attractive and

affordable to consumers.

In comparison to cars, E-bikes are much more

affordable, smaller, easier to park and are a perfect

fit for city commutes. E-bikes don’t require a license

or any additional infrastructure to operate. With

lithium battery technology continuously improving,

this lower cost, superior performance alternative is

steadily moving into a position to take over the two

wheeler segment. We expect this growth to

continue to increase, both inside and outside of

China, particularly in urban areas where E-bikes are

designed to thrive.

Excluding China’s contribution, global E-bike sales

are expected to grow from 3.3 million units annually

to some 6.8 million units by 2025, with the majority

of this growth coming from Western Europe,

followed by Japan and Vietnam.

The overall share of E-bikes in the bicycle market is

expected to remain at a steady 22% over the

coming decade due to the projected decline of e-

bike sales in China. However this is expected to

increase significantly in all markets outside of China

through to at least 2025. The overall e-bike market

is forecast by Navigant to grow from an estimated

$15.7 billion in 2016 to somewhere in the range of

$24.3 billion by 2025.

Assuming that each electric bike using the latest

technology requires 300gr of NdFeB, this would

result in a need for 120gr NdPr oxide per unit.

Therefore for each 1 million e-bikes that are sold,

there will be an incremental demand of 120t NdPr

oxide per year.

Source: Clean Technica and Navigant Research



Report: European bicycle market analysis 2015

Forbes: Riding A 2 Billion Bike Market By

Building A Better Electric Bike: Bosch eBikes

Wikipedia: Electric bikes,

Website: The Light Electric Vehicle Association

(LEVA)

http://www.pedegoelectricbikes.com/wp-content/uploads/2016/07/MF-EBIKE-16-Executive-Summary-w-Pedego.pdf


https://cleantechnica.com/2016/07/13/global-e-bike-sales-expected-reach-24-3-billion-annually-2025/


https://ecf.com/sites/ecf.com/files/CONEBI%20market%20report%20analysis%202016.pdf

https://www.forbes.com/sites/tjmccue/2016/09/29/riding-a-2-billion-bike-market-by-building-a-better-electric-bike-bosch-ebikes/#3e9b02661f0e

https://en.wikipedia.org/wiki/Electric_bicycle#China

https://www.levassociation.com/



100 100

Electric Scooters

Based on figures from monitored markets, the two-

wheeler sector (scooters and motorcycles) recorded

sales of over 46 million vehicles globally in 2016.

Compared to 2015, this was an overall increase of

0.6% and had different geographic dynamics of

purchases per country than the previous year.

India, the largest two-wheeler market, continued its

growth trend in 2016 concluding the year with just

over 17.7 million vehicles sold, up by 9.7% from

2015.

In contrast, China recorded decreasing volumes in

2016, down by 12% compared to the previous year,

ending the period with nearly 8 million units sold.

The Asian area, termed Asean 5, reported a slight

increase in 2016 (+0.9% compared to 2015) ending

the year with 12.3 million units sold. Indonesia, the

chief market of this region, continued its downturn in

2016 with total volumes of over 5.9 million units and

a decrease of 8.5% compared to the previous year.

Growth in Thailand picked up with 1.7 million units

sold; +6.4% compared to 2015. Malaysia continued

its negative trend from the previous year with unit

sales of 373 thousand; -1.9% compared to 2015.

The sales trend in Vietnam remained buoyant in

2016 with 3.1 million units sold; +9.5% compared to

2015. The Philippines recorded the strongest

growth trend in the area, with first-time sales of over

1 million units (1.1 million units sold; +34.1%

compared to 2015).

Overall, the volumes of other Asian countries

(Singapore, Hong Kong, South Korea, Japan,

Taiwan, New Zealand and Australia) increased from

the previous year with 1.4 million units sold (+8.5%).

Japan was still affected by a downturn (380

thousand vehicles sold, -6.6% compared to 2015),

while sales in Taiwan went up considerably, with

788 thousand units sold (+18% compared to

2015).The North American market reported a

decrease of 1.9% compared to 2015 (547,100

vehicles sold in 2016) reversing its positive trend of

previous years.

Brazil, the leading market in South America,

recorded a strong downturn (- 28%), with 858

thousand vehicles sold in 2016.

Europe, the reference area for Piaggio Group

activities, confirmed its positive growth trend in

2016 as well, reporting an 8.7% increase in sales

overall compared to 2015 (+15.2% for the

motorcycle segment and +3.4% for scooters),

ending the period with 1.3 million units sold. Source:

piaggiogroup.com

Cost and range improvements to the battery sector

will have a positive effect on sales in the electric

scooter segment. Superior operations such as the

batteries’ extremely quiet performance, low

maintenance, environmental positives and simple,

convenient charging will all contribute to this

technology conquering urban markets around the

world.

Electric scooters and motorcycles are cheaper to

purchase and run than electric cars, giving them a

strong advantage that would suggest that their

current market sales will only increase as time goes

on.

Assuming that each electric bike of this technology

generation requires 450gr of NdFeB, 180gr NdPr

oxide would be used for each application.

Therefore, the incremental demand of PrNd oxide

per year would equal 180t for every 1 million e-

scooters sold.



Wikipedia: Electric motorcycles and scooters

Autoblog.com: Annual e-motorcycle, e-scooter

sales will reach 6 million by 2023

boltmobility.com: Bolt the electric Scooter

http://www.piaggiogroup.com/en/group/market

https://en.wikipedia.org/wiki/Electric_motorcycles_and_scooters

https://en.wikipedia.org/wiki/Electric_motorcycles_and_scooters

https://www.autoblog.com/2014/05/22/annual-e-motorcycle-e-scooter-sales-will-reach-6-million-by-202/

https://vimeo.com/225657929



101 101

Automotive Accessories

Today, approximately 30 individual applications

which use NdFeB permanent magnets are

incorporated in combustion engine vehicles. A basic

breakdown of these applications can be seen

below.

The usage of NdFeB varies between the different

applications. Please see below examples for

reference;

Simple sensors = 5gr of NdFeB (2gr NdPr

oxide),

Power window motors = 10gr NdFeB (4gr

NdPr oxide),

Electronic braking system drives = 25gr

NdFeB (11gr NdPr oxide)

Electric power steering applications= 70gr

NdFeB (28gr of NdPr oxide)

Cooling Fan Motor = up to 150gr NdFeB

(60gr NdPr oxide)

The total vehicle weight is both a key factor and a

challenge in the new mobility era, leading to the

conclusion that the NdFeB technology will likely see

a much wider utilisation as new car models hit the

market.

Assuming that in average a vehicle today is using

200gr NdFeB permanent Magnets respectively 60gr

NdPr oxide for additional accessories, this would

result in an annual incremental demand of 60t NdPr

oxide for every 1 million vehicles sold.

Sunroof Motor Windshield Wiper Motor

Windshield Washer Pump Mirror Motors

Economy and Pollution Control Heat/ ventilation +

Air conditioning Control Unit Ignition System + Starter Motor

Climate con., Coolant Fan Motor E turbo, Cruise Control

Defogger Motor Headlights Motor

Heat Air Conditioner Motor Liquid level indicator

Anti Skid Sensor and Motor

Tailgate Motor Speakers Four Wheel Steering Electric Power Steering Fuel Pump Motor Door Lock Motor Seat Belt Motor Seat Adjust Motor Lumbar support Gauges Window Lifter Motor Suspension System Throttle and Crankshaft position sensor Traction Control



102 102

Others

1. Consumer electronics:

We expect that this segment will continue to grow at

a moderate pace.

NdFeB permanent magnets are used in a variety of

different applications such as small motors,

actuators and sensors. A few technologies that use

these magnets are;

1. Solid state devices (SSD): a digital

document storage solution which has no

moving mechanical parts and also use less

energy than its predecessor, the

historically popular hard disk drive.

2. Headphones and Loudspeakers: NdFeB

permanent magnets are used to generate

sound for these devices

3. Mobile devices: Vibration functionality uses

NdPr permanent magnets

2. Air conditioning Systems

It is predicted that the middle class of our global

society will experience tremendous growth over the

next two decades. Due to this promotion to the

general living standard, installation rates of air

conditioning systems are projected to grow,

predominantly in regions like India and China.

NdFeB PMs are used in some inverter air

conditioning units to control the compressor speed

by regulating temperature. Automotive applications

will represent a significant market share in the air

conditioning sector.

3. Cordless power tools

4. Elevators and Escalators

5. Magnetic Lifts

6. MRI



103 103

The General Substitution Risk

for NdFeB

From today’s perspective and understanding, we do

not see any new technologies which show the same

quality performance as NdFeB magnets but do not

use NdPr. In terms of size, weight and energy

efficiency, there are currently no existing,

acceptable substitutes.

Overall we see three work streams in the NdFeB

market:

1. Substitution– obtaining an alternative material

with a lower supply risk

2. Increased efficiency – to get more of the

desired effect from less material

3. Reuse and recycling – creating a circular

economy

Replacing the original materials with alternatives

that pose just as much risk (e.g. Sm-Co magnets)

doesn’t make any sense.

So far, there are none on the horizon and we

believe due to product qualification processes and

lifecycle constraints in the high-volume applications

like wind and automotive, it will be many years

before a potential candidate could have a significant

impact.

Some producers have succeeded in reducing the

amount of rare earths used in their applications on a

per unit basis, for example Wind turbine

manufacturers like Siemens have developed

solutions without dysprosium by implementing a

better design which solves an improved solution in

regards to cooling the overall system.

Due to the laid out global growth scenario for low

carbon technologies and the overall supportive

macroeconomic elements, we expect tremendous

growth for NdFeB technologies on a per-unit basis

and in consequence, for neodymium and

praseodymium.

NdFeB Magnets are the best performing magnets in

the world.

NdPr Magnet’s Cost Represents a Small

Proportional Cost to an Electric Vehicle

Because the proportional cost of the Permanent

Magnets in the majority of Electric Vehicles

represents only less ~1% of the overall vehicle,

prices will need to increase to beyond $ 300 kg of

NdPr before manufacturers will begin to look to

alternatives.



104 104

Substitution

1. SmCo Magnets

SmCo magnets are traditionally more expensive

than NdFeB magnets and have only been used in

high temperature applications. Two different alloys

are used for samarium cobalt magnets- SmCo5 and

Sm2Co17. Approximately the rare earth content for

Samarium is between 23% and 34%. SmCo5 (1:5)

alloy is an energy product of 180 kJ / m3. Sm2Co17

(2:7) achieves 225 kJ / m3 and can be used in

applications which manage temperatures of up to

350 ° C. With the addition of other elements, the

Alloys can be further optimized so that energy

products of up to 260 kJ / m3 can be achieved.

Compared to NdFeB magnets, SmCo magnets are

more suitable for high temperatures (200-350°C).

Moreover, they are significantly more corrosion-

resistant. But on the other hand they are much

more costly in manufacturing compared to NdFeB

magnets and, considering the cost for the raw

material today, not a low risk solution. Furthermore,

the availability of the necessary volumes of the

required raw materials is not given and is therefore

not a sustainable alternative to replace NdFeB

magnets. They also have the disadvantage of being

considered to be very brittle and fracture-prone

which is why SmCo magnets represent a niche

segment in the permanent magnet industry.

Comparison of NdFeB and SmCo Magnets

Material Energy

Products

Mechanical

Strength

Density

(lbs/in3-

gm/cm3)

Corrosion

Resistance

Temperature

Stability Cost

NdFeB 10 to 48 Medium 0.275 - 7.5 Low Low to Medium Lower

SmCo 15 to 32 Low 0.300 - 8.3 High High Higher

Source: magnet sales.com

Source: cermag.co.uk and other sources patents/US4664723

Compositions weight example

2a – SaCo

1:5 – 18 MGO

2b – SaCo

1:5 – 20 MGO

2c – SaCo

2:17 – 45

MGO

2d – SaCo

2:17 – 26

MGO

2e – SaCo

2:17 – 28

MGO

2f – SaCo

2:17 – 30

MGO

SM 15% 15% 26% 26% 26% 26%

Pr 15% 15% `

Co 70% 70% 50% 50% 50% 50%

Fe 17% 17% 17% 17%

Cu 5% 5% 5% 5%

Zr 2% 2% 2% 2%

http://www.magnetsales.com/smco/smco1.htm#general

http://www.cermag.co.uk/Samarium%20Cobalt%20rev%203.pdf

https://www.google.com/patents/US4664723



105 105

2. Ferrite magnets

In less critical applications, as the rising cost of

production is passed on to magnet customers, other

types of permanent magnet systems such as ferrite

magnets have become more competitive. They are

a much cheaper alternative but are larger in size

and offer less temperature resistance than NdFeB

magnets. So in cases where the customer can

accept the trade-off effects, ferrite magnet solutions

tend to be used.

3. Drive trains without rare earth usage

In January 2015, it was reported that UQM

Technologies had been granted a US patent for an

electric and hybrid electric vehicle motor design

using non-rare earth magnets. The patent covers

the unique magnet geometry and the method of

manufacturing the motor. Many electric and hybrid

electric vehicles use permanent magnet motors with

rare-earth magnet materials because of the high

coercivity of the rare earths. Coercivity is a measure

of the reverse field needed to drive magnetization to

zero after being saturated; a measure of the

resistance to demagnetization. The new UQM

design enables the use of low coercivity magnets,

such as Aluminum Nickel Cobalt (AlNiCo) or Iron

Cobalt Tungsten (FeCoW), in permanent magnet

motors.

From our understanding this application is quite in

its early R&D stage and it’s not clear if and how it

will perform in a real driving conditions of a vehicle.

4. Ce doped Nd-Fe-B Permanent magnets

The addition of cost effective light rare earth

elements, such as Ce, to sintered Nd-Fe-B magnets

is acceptable for applications with lower magnetic

requirements.

Cerium is a light rare earth element, the most

abundant among the rare earth elements.

Consequently, the price of Ce is much lower than

that of Nd. In the last couple of years, the subject of

Ce substitution for Nd in 2:14:1 magnets has

attracted more attention in the magnetics

community due to cost concern of raw materials.

Leaving small amounts of Ce coexist with Nd and /

or Praseodymium (Pr) would significantly reduce

the complexity of the refining process. Test have

been performed and the substitution of Nd with

La/Ce is inevitably accompanied with magnetic

dilution due to inferior intrinsic magnetic properties

of La/Ce. The industry sometimes uses Ce

substitution in low grades of Nd-Fe-B magnets for

applications where the trade-off for the customer

and application are acceptable, such as N35 and

N38.

For further information on substitution we like to

refer to following Article:

Recent developments and trends in Nd-Fe-B

magnets

Improved thermal stability of Nd-Ce-Fe-B

sintered magnets by Y substitution

Growth and Characterization of Ce- Substituted

Nd2Fe14 11B Single Crystals

5. High-temperature superconductor

See wind turbine chapter page 81

6. Heavy Rare Earth Free NdFeB Magnets

Dy is commonly used to increase intrinsic coercivity

(withstand an external magnetic field without

becoming demagnetized). Which is important for

many industrial applications such as motors and

generators. Dy can cost as multiple times more than

Nd, which makes it one of the important cost drivers

for the Nd-Fe-B magnets. Nearly all grades of Nd-

Fe-B magnets with intrinsic coercivity less than 20

kOe can be made without heavy rare earths, which

can satisfy the majority of requirements for

industrial applications. The need for heavy rare

earth has also been significantly reduced for Nd-Fe-

B magnets with intrinsic coercivity of 25 to 30 kOe.

For example, one approach has been to reduce the

grain size in sintered NdFeB magnets from a typical

5–10 μm to around 80 nm. Movement of the

magnetic domains is reduced by the larger number

of grain boundaries increasing the thermal stability.

This has allowed the demonstration of magnets

suitable for traction motors without adding any

dysprosium demand for dysprosium will also grow

from the use of magnets in high temperature

applications (including NEVs) but manufacturers are

actively trying to reduce dysprosium-containing

magnet consumption wherever possible and to

develop new ways to reduce intensity of dysprosium

use.

http://www.green-energy-news.com/nwslnks/clips115/jan15003.html

http://www.green-energy-news.com/nwslnks/clips115/jan15003.html

http://www.magneticsmagazine.com/main/articles/recent-developments-and-trends-in-nd-fe-b-magnets/

https://www.researchgate.net/publication/311978446_Improved_thermal_stability_of_Nd-Ce-Fe-B_sintered_magnets_by_Y_substitution#pf4

https://arxiv.org/pdf/1508.07792.pdf

https://arxiv.org/pdf/1508.07792.pdf

https://en.wikipedia.org/wiki/Magnetic_field

https://en.wikipedia.org/wiki/Magnetization



106 106

We received the market feedback that customers

prefer the Dy solution and therefore the none DY

solution is a fallback, evasion -strategy in case the

market prices for Dy is eroding their margins too

much.

Little to zero dysprosium is consumed in wind

turbines. The industry developed a solution to

maximizing the airflow what allows them to achieve

lower operating temperature and thus a lower need

for Dy.

In addition the market has established solutions

where Dy in some application is replaced with Tb.

Another discovery recently reported by Oak Ridge

National Laboratory, USA, was that dysprosium

could be replaced with cerium co-doped with cobalt.

Since cerium is the most common rare earth

element and dysprosium one of the scarcest, there

is potential to reduce the cost of high performance

NdFeB magnets by 20%–40%. Cerium on its own

does not work as it reduces the temperature at

which the magnetism is lost, but the new alloy with

cobalt maintains its performance to temperatures

higher than dysprosium doped magnets.



107 107

Increased Efficiency

There have been new developments in recent years

including high energy Nd-Fe-B grades, heavy rare

earth free high intrinsic coecivity Nd-Fe-B grades,

radially oriented anisotropic rings, and improved

manufacturing processes.

With the exception of N46SH, nearly all Nd-Fe-B

magnet grades with intrinsic coercivity less than 20

kOe can be made without heavy rare earths, which

can satisfy the majority of requirements for

industrial applications. The amount of the heavy

rare earth elements has also been significantly

reduced in Nd-Fe-B magnets with intrinsic coercivity

of 25 to 30 kOe, by employing grain boundary

engineering.

Radially oriented Nd-Fe-B magnet rings can be

used for multipole rotors, which reduces rotor

assembly time and cost, and ultimately, a better

motor performance.

3D printing to create precise magnet

Oak Ridge National Laboratory has performed

research work with this technology which showed

positive results. This Technology shows advantages

creating precise magnet forms with minimal

material. A magnet can be designed by computer

modelling to provide the precise field strength and

distribution using as little magnetic material as

possible. 3D printing can then produce these forms

with negligible waste. Watch for more information

the video

https://www.ornl.gov/news/3d-printed-permanent-magnets-outperform-conventional-versions-conserve-rare-materials

https://www.youtube.com/watch?v=-GJ2R9V93Eo



108 108

Recycling

There are a couple of factors which contribute to the

currently low recycling rate of rare earth elements

from permanent magnets: technological difficulties,

lack of regulations and inefficient scrap collection.

Development of an economical recycling process to

produce pure rare earth elements or magnet alloys

using scrap precursors is contingent upon solving

problems related to the process scalability,

efficiency and product quality.

The biggest challenge for the recycling business is

the diversity of designs and that the material

composition is unknown and may be different from

unit to unit, which creates significant problems in

achieving good quality from the recycled product

due to a wide range of impurities.

If a circular economy in rare earth elements is to be

made possible, products need to be designed for

reuse and recycling, and business models need to

allow the efficient recovery of consumer products

containing the rare earth. Improved methods to

recover of NdPr are of little use if there is no stream

of consumer products to process. Therefore, we

believe with NdPr application in e-mobility and wind

energy becoming mainstream there will be chance

for a first successful implementation at a certain

stage of the lifecycle of these overall 2 application.

The expected end-of-life event for an off-shore wind

turbine is approximately achieved after being 20 to

30 years in service and for an electric car

(depending of the average driven mileage per year)

approx. reached after 10 years. We anticipate that

between 10-15 years after the first high annual

sales volume have been realized that the critical

end-of-life volumes are in the market that a

sustainable recycling business can be established.

There are a number of processes for recycling rare

earth magnets, varying in cost, efficiency and

environmental risk. The simplest cost effective

recycling case is, direct use of end-of-life magnets

recuperated in proper condition (with eventually

intact plating). Other methods includes remelting to

yield alloys, hydrogen decrepitation to yield powder,

and liquid metal extraction to yield pure rare earth

elements. There are also chemical routes that result

in rare earth oxides which need to be further

reduced to recover the pure rare earth elements.

Depending on the raw material cost the magnet

manufacturing industry is activating their recycling

activities from production waste. It is estimated that

in a typical magnet manufacturing facility, about

20% to 30% of the magnets are wasted as scrap,

mostly as leftovers from machining blocks into

particular geometries, chipping, cracking, sludge

and swarf. However, to date, only small quantities

of magnet material, estimated to be less than 1

percent, are being recycled from pre-consumer

scrap.

Overall at present, no commercial operation has

been identified for recycling the end of life NdFeB

permanent magnets. Most of the processing

methods are still at various research and

development stages. Recycling and recovery of

REEs from EOL magnets are challenging due to

their relatively small sizes used in the final

applications. The recycling industry also face

difficulties in identifying the individual different kind

of permanent magnets from each other when they

get collected in the market. Also pre-dismantling to

access the magnets represents a challenge for

itself. All aspects which needs to be addressed by

companies and governments to secure that a viable

circular industry can be established.

Therefore we have not identified an immediate

threat from the recycling activities which could

significantly impact the supply side.

At Peak, we have identified this as a business

opportunity for our UK plant. We intend to take full

advantage of our UK industrial facilities and the

expertise of our labor force, to enter the recycling

business and to become one of the leading NdFeB

recycling operators in the western hemisphere.

To recap we have encountered following 4 major

challenges for the NdFeB permanent magnet

recycling business:

Due to the fact that the recovery of rare

earths from end-of-life applications (EoL) is

not yet realized on an industrial scale,

there is currently no functioning market for

magnetic scrap. Currently, nor the time

horizons for the establishment of such a

market neither the price levels are

predictable. This uncertainty naturally has

a negative impact on the readiness to

invest in such separation facilities. The

Permanent magnet recycling face here a

classical chicken and egg problem.

Furthermore it is observed that the

established industry practice is that used

industrial equipment is often not scrapped

in the developed countries, but sold and

exported abroad to less developed

countries with less strict environmental

requirements or at least not as firmly

controlled as in the developed countries.



109 109

This highlights the existing problem and

practice where the industry is delegating

the scrapping topic to second or third world

countries to avoid the cost.

Rare earth magnets are mostly installed in

their application so that these are really

difficult to be identified as such at the end

of life of a device. Experts have suggested

establishing a recycling law that requests

the producers of magnets and the OEM's

of the final applications to mark them in a

way that it is easy to identify them when

they reach EOL.

The currently established pretreatment

technologies for industrial equipment are

unable to separate according to single

origin and therefore today a lot of

permanent magnets get lost in the steel

separation process. Without solving these

issue it is expected that it will be quite

difficult, even if a magnetic scrap market

has been established, to collect significant

volumes from the market. Impurities are a

headache in any recycling activity because

the aim is to prepare a consistent quality of

the feed material for the established

recycling process.

For further details on this substitution subject we

like to refer to following published papers:

Recent developments and trends in

NdFeB magnets in regards of alternatives

2010 Rare Earth Crisis Case Study &

replacement scenarios for NdFeB

Materials Challenges for a Transforming

World

“REE Recovery from End-of- Life NdFeB

Permanent Magnet Scrap: A Critical

Review “



http://pubs.acs.org/doi/full/10.1021/acs.est.6b05751

http://pubs.acs.org/doi/full/10.1021/acs.est.6b05751

http://www.technology.matthey.com/article/61/2/126-132/#b1

http://www.technology.matthey.com/article/61/2/126-132/#b1

https://www.researchgate.net/publication/308386665_REE_Recovery_from_End-of-Life_NdFeB_Permanent_Magnet_Scrap_A_Critical_Review

https://www.researchgate.net/publication/308386665_REE_Recovery_from_End-of-Life_NdFeB_Permanent_Magnet_Scrap_A_Critical_Review



110 110

Corporate Business

Development Strategy

The future of the REEs business is dependent upon

the market developing and expanding beyond

China. Industrial companies will be more

comfortable developing new products and

technologies that incorporate REEs as the market

becomes deeper and broader. This profound and

important notion is something that is consistent with

Peak’s perspective and approach in developing its

corporate business development strategy.

We believe that NdPr is a commodity with attractive

supply-and-demand fundamentals driven by the

rapidly growing electric vehicle and wind energy

market. The idea is to expand Peak‘s activities

beyond the development of Ngualla Project and

expanding our scope with following additional

activities:

Expanding in further Downstream activities

Acquisition, processing and trading of high

purity REE material

Route to Market - The Hybrid Model

Service Provider

Peak’s objective is to achieve appreciation in the

value of its physical NdPr position and aggressively

grow its NdPr exposure.



111 111

Appendix

Praseodymium Applications

As an alloying agent with magnesium to create

high-strength metals that are used in aircraft

engines; yttrium and neodymium are also

viable substitutes

Praseodymium compounds give glasses and e

namels a yellow colour

Praseodymium is used to colour ceramics

yellow

Praseodymium is used as a dopant in ceramic

capacitors

Praseodymium is a component of didymium

glass, which is used to make certain types

of welder's and glass blower's goggles

Doping praseodymium in fluoride glass allows it

to be used as a single mode fiber optical

amplifier

Praseodymium oxide in solid solution

with ceria, or with ceria-zirconia, have been

used as oxidation catalysts

Pr3+ ions are used as activators in some red,

green, blue, and ultraviolet phosphors

Praseodymium is present in the rare earth

mixture whose fluoride forms the core

of carbon arc lights which are used in

the motion picture industry for studio lighting

and projector lights

Praseodymium alloyed with nickel (PrNi) has

such a strong magnetocaloric effect that it has

allowed scientists to approach within one

thousandth of a degree of absolute zero In

general, most alloys of the cerium group rare

earths (lanthanum through samarium) with

3d transition metals give extremely stable

magnets that are often used in small equipment

Silicate crystals doped with praseodymium ions

have been used to slow a light pulse down to a

few hundred meters per second.

Source: Wikipedia and others


https://en.wikipedia.org/wiki/Magnesium

https://en.wikipedia.org/wiki/Aircraft_engine

https://en.wikipedia.org/wiki/Aircraft_engine


https://en.wikipedia.org/wiki/Chemical_compound

https://en.wikipedia.org/wiki/Glass

https://en.wikipedia.org/wiki/Vitreous_enamel


https://en.wikipedia.org/wiki/Didymium

https://en.wikipedia.org/wiki/Welding

https://en.wikipedia.org/wiki/Glass_blowing

https://en.wikipedia.org/wiki/Goggles

https://en.wikipedia.org/wiki/Fluoride_glass

https://en.wikipedia.org/wiki/Optical_amplifier

https://en.wikipedia.org/wiki/Optical_amplifier

https://en.wikipedia.org/wiki/Ceria

https://en.wikipedia.org/wiki/Ceria-zirconia

https://en.wikipedia.org/wiki/Oxidation

https://en.wikipedia.org/wiki/Catalyst

https://en.wikipedia.org/wiki/Carbon_arc_light

https://en.wikipedia.org/wiki/Movie_studio

https://en.wikipedia.org/wiki/Studio

https://en.wikipedia.org/wiki/Image_projector

https://en.wikipedia.org/wiki/Nickel

https://en.wikipedia.org/wiki/Magnetic_refrigeration#The_magnetocaloric_effect

https://en.wikipedia.org/wiki/Absolute_zero

https://en.wikipedia.org/wiki/Transition_metal

https://en.wikipedia.org/wiki/Slow_light



112 112

Neodymium Applications

Neodymium oxide is used to dope glass,

including sunglasses, to make solid-state

lasers, and to color glasses

and enamels.[3] Neodymium-doped glass turns

purple due to the absorbance of yellow and

green light, and is used

in welding goggles.[4] Neodymium oxide is also

used as a polymerization catalyst



https://en.wikipedia.org/wiki/Sunglasses

https://en.wikipedia.org/wiki/Solid-state_laser

https://en.wikipedia.org/wiki/Solid-state_laser


https://en.wikipedia.org/wiki/Neodymium(III)_oxide#cite_note-inorg-3

https://en.wikipedia.org/wiki/Welding

https://en.wikipedia.org/wiki/Goggles

https://en.wikipedia.org/wiki/Neodymium(III)_oxide#cite_note-nate-4

https://en.wikipedia.org/wiki/Polymerization




113 113

Lanthanum Applications

Various compounds of lanthanum and other

rare-earth elements (oxides, chlorides, etc.) are

components of various catalysis, such

as petroleum cracking catalysts.[53]

Especially Fluid catalytic cracking (FCC) is a major

application for Lanthanum.

According to BASF the use of rare earths in FCC

catalysts was driven by the need for more active

and hydrothermally stable products with better yield

performance. Rare Earth Oxides (REO) achieved

these goals by enhancing catalytic activity and

preventing loss of acid sites during normal unit

operation. To address the specific needs of each

FCC unit, catalyst manufacturers formulate

catalysts with various rare earth levels that allow for

optimal unit performance. The level of REO in a

specific catalyst formulation is determined by

operational severity and product objectives. As the

need for increased amounts of gasoline grew over

time, refiners tended to increase the level of rare

earths in their catalyst formulation to meet their

profitability targets. Rare earths gradually increased

over the years and at the end of 2010, the average

was 3%, with several refineries running in excess of

the average.

La is used for anodic material of nickel-metal

hydride batteries (Ni3.6Mn 0.4Al 0.3Co 0.7).

Due to high cost to extract the other

lanthanides, a mischmetal with more than 50%

of lanthanum is used instead of pure

lanthanum. The compound is

an intermetallic component of the AB

5 type.[39][40]

As most hybrid cars use nickel-metal hydride

batteries, massive quantities of lanthanum are

required for the production of hybrid automobiles. A

typical hybrid automobile battery for a Toyota

Prius requires 10 to 15 kilograms of lanthanum. As

engineers push the technology to increase fuel

efficiency, twice that amount of lanthanum could be

required per vehicle.[41][42]

Despite the fact that full battery vehicles and lithium

batteries will dramatically increase their

Markets share it is anticipated that hybrid vehicles

will appreciate a sound growth as well. In

addition to that a steady, continues consumption for

rechargeable NiMH single batteries in the consumer

electronics is anticipated.

Hydrogen sponge alloys can contain lanthanum.

These alloys are capable of storing up to 400 times

their own volume of hydrogen gas in a reversible

adsorption process. Heat energy is released every

time they do so; therefore these alloys have

possibilities in energy conservation systems.[12][43]

Mischmetal, a pyrophoric alloy used in lighter

flints, contains 25% to 45% lanthanum.[44]

Lanthanum oxide and the boride are used in

electronic vacuum tubes as hot

cathode materials with strong emissivity

of electrons. Crystals of LaB6 are used in high-

brightness, extended-life, thermionic electron

emission sources for electron

microscopes and Hall-effect thrusters.[45]

Lanthanum trifluoride (LaF3) is an essential

component of a heavy fluoride glass

named ZBLAN. This glass has superior

transmittance in the infrared range and is

therefore used for fiber-optical communication

systems.[46]

Cerium-doped lanthanum

bromide and lanthanum chloride are the recent

inorganic scintillators, which have a

combination of high light yield, best energy

resolution, and fast response. Their high yield

converts into superior energy resolution;

moreover, the light output is very stable and

quite high over a very wide range of

temperatures, making it particularly attractive

for high-temperature applications. These

scintillators are already widely used

commercially in detectors

of neutrons or gamma rays.[47]

Lanthanum oxide (La2O3) improves the alkali

resistance of glass and is used in making

special optical glasses, such as infrared-

absorbing glass, as well as camera

and telescope lenses, because of the

high refractive index and low dispersion of rare-

earth glasses.[12] Lanthanum oxide is also used

as a grain-growth additive during the liquid-

phase sintering of silicon nitride and zirconium

diboride.[49]

Small amounts of lanthanum added

to steel improves its malleability, resistance to

impact, and ductility, whereas addition of

lanthanum to molybdenum decreases its

hardness and sensitivity to temperature

variations.[12]

Small amounts of lanthanum are present in

many pool products to remove the phosphates

that feed algae.[50]

Lanthanum oxide additive to tungsten is used

in gas tungsten arc welding electrodes, as a

substitute for radioactive thorium.[51][52]

https://en.wikipedia.org/wiki/Petroleum_cracking


https://en.wikipedia.org/wiki/Lanthanum#cite_note-54

https://en.wikipedia.org/wiki/Fluid_catalytic_cracking

http://www.catalysts.basf.com/p02/USWeb-Internet/catalysts/en/function/conversions:/publish/content/microsites/catalysts/prods-inds/process-catalysts/BF-9626_US_REAL_Technical_Note.pdf

https://en.wikipedia.org/wiki/Nickel-metal_hydride_battery

https://en.wikipedia.org/wiki/Nickel-metal_hydride_battery

https://en.wikipedia.org/wiki/Mischmetal

https://en.wikipedia.org/wiki/Intermetallics



https://en.wikipedia.org/wiki/Toyota_Prius

https://en.wikipedia.org/wiki/Toyota_Prius



https://en.wikipedia.org/wiki/Lanthanum#cite_note-CRC-13


https://en.wikipedia.org/wiki/Mischmetal

https://en.wikipedia.org/wiki/Pyrophoric

https://en.wikipedia.org/wiki/Lanthanum#cite_note-CRC2-45

https://en.wikipedia.org/wiki/Lanthanum_oxide

https://en.wikipedia.org/wiki/Lanthanum_hexaboride

https://en.wikipedia.org/wiki/Vacuum_tube

https://en.wikipedia.org/wiki/Hot_cathode

https://en.wikipedia.org/wiki/Hot_cathode

https://en.wikipedia.org/wiki/Electron

https://en.wikipedia.org/wiki/Lanthanum_hexaboride

https://en.wikipedia.org/wiki/Electron_microscope

https://en.wikipedia.org/wiki/Electron_microscope

https://en.wikipedia.org/wiki/Hall-effect_thruster


https://en.wikipedia.org/wiki/Lanthanum_trifluoride

https://en.wikipedia.org/wiki/ZBLAN

https://en.wikipedia.org/wiki/Lanthanum#cite_note-rutg-47

https://en.wikipedia.org/wiki/Lanthanum(III)_bromide



https://en.wikipedia.org/wiki/Scintillator

https://en.wikipedia.org/wiki/Neutrons

https://en.wikipedia.org/wiki/Gamma_rays


https://en.wikipedia.org/wiki/Lanthanum(III)_oxide


https://en.wikipedia.org/wiki/Camera

https://en.wikipedia.org/wiki/Telescope

https://en.wikipedia.org/wiki/Lens_(optics)

https://en.wikipedia.org/wiki/Refractive_index


https://en.wikipedia.org/wiki/Sintering

https://en.wikipedia.org/wiki/Silicon_nitride

https://en.wikipedia.org/wiki/Zirconium_diboride

https://en.wikipedia.org/wiki/Zirconium_diboride


https://en.wikipedia.org/wiki/Steel

https://en.wikipedia.org/wiki/Malleability

https://en.wikipedia.org/wiki/Ductility

https://en.wikipedia.org/wiki/Molybdenum



https://en.wikipedia.org/wiki/Gas_tungsten_arc_welding

https://en.wikipedia.org/wiki/Radioactive





114 114

Lanthanum-barium radiometric dating is used

to estimate age of rocks and ores, though the

technique has limited popularity.[54]

Lanthanum carbonate was approved as a

medication (Fosrenol, Shire Pharmaceuticals)

to absorb excess phosphate in cases of end-

stage renal failure.[55]

Lanthanum fluoride is used in phosphor lamp

coatings. Mixed with europium fluoride, it is

also applied in the crystal membrane of fluoride

ion-selective electrodes.[8]

Like horseradish peroxidase, lanthanum is

used as an electron-dense tracer in molecular

biology.[56]

Lanthanum-modified bentonite (or phoslock) is

used to remove phosphates from water in lake

treatments.[57]

PVC stabilizer


https://en.wikipedia.org/wiki/Radiometric_dating


https://en.wikipedia.org/wiki/Lanthanum_carbonate

https://en.wikipedia.org/wiki/Shire_Pharmaceuticals

https://en.wikipedia.org/wiki/Phosphate

https://en.wikipedia.org/wiki/Hyperphosphatemia

https://en.wikipedia.org/wiki/Hyperphosphatemia

https://en.wikipedia.org/wiki/Lanthanum#cite_note-fosrenol-56

https://en.wikipedia.org/wiki/Fluoride_selective_electrode

https://en.wikipedia.org/wiki/Fluoride_selective_electrode

https://en.wikipedia.org/wiki/Lanthanum#cite_note-patnaik-9

https://en.wikipedia.org/wiki/Horseradish_peroxidase

https://en.wikipedia.org/wiki/Molecular_biology

https://en.wikipedia.org/wiki/Molecular_biology


https://en.wikipedia.org/wiki/Phoslock




115 115

Cerium Applications

A major use of cerium is in polishing powder to

finish surfaces for electronic components such

as hard disc drives and silicon wafers, display

screens, mirrors and optical glass.

Cerium is used in catalysts and catalyst

support, in particular in catalytic convertors that

reduce automobile emissions. Cerium is also

used in fuel additives for use with diesel

particulate filters. Other catalysts which use

cerium include FCCs (where cerium increases

thermal stability of the zeolite, and reduces

sulphur and nitrogen oxide emissions) and in

catalysts for the production of styrene from

ethylbenezene (to improve styrene formation).

Ceric ammonium nitrate is used as an oxidant

in organic chemistry and in etching electronic

components, and as a primary standard for

quantitative analysis.[5][49]

Cerium additives, or mischmetal alloy

containing cerium, are used in the steel

industry as a desulphuriser and to improve

corrosion resistance, and in the iron industry to

encourage the precipitation of graphite

precipitation nodules and to help bind

undesirable trace elements which inhibit

graphitisation.

Cerium is used in aluminium alloys to improve

strength and corrosion resistance.

Cerium-rich mischmetal alloy is used as a

lighter flint.

Cerium is used as an oxidising agent in glass

to decolourise any intense discolouration

caused by the iron content of the glass.

Glass can be stabilised against the effects of

UV by adding cerium. This is useful for optical,

medical and vehicular glassware, and for glass

bottles that contain foodstuffs. Cerium is also

used in glass to prevent browning from high

energy radiation in CRT glass, as well as glass

exposed to X-rays and gamma rays. Use of

cerium oxide in UV-resistant vehicle glass is a

market specific to Japan, where the glass is

required by law to be used in vehicle front

windscreens. Domestic demand for cerium

oxide in this use was estimated at 500-700t

REO in 2014.

Cerium is used in a variety of engineering

ceramics, including ceramic capacitors and

refractories.

Cerium is used in water purification technology.

Cerium can be added to magnet alloys in order

to replace other rare earths (such as

neodymium). This results in a loss of

magnetism but is feasible in low power

magnets

PVC stabilizer


End of the document

https://en.wikipedia.org/wiki/Cerium#cite_note-CRC-5

https://en.wikipedia.org/wiki/Cerium#cite_note-appl-49