Japan Gambles on Rare Earth Elements in Kazakhstan – by John C. K. Daly (Silk Road Reporters – November 3, 2015)

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In the past year, China, India, Japan, and the U.S. have all “rediscovered” Central Asia. While U.S. Secretary of State John Kerry lectures the five “Stans” on human rights and democracy, Chinese President Xi Jinping, Indian Prime Minister Narendra Modi, and Japanese Prime Minister Shinzo Abe all focused on the more prosaic issues of increasing bilateral trade and seeking investment opportunities.

In Kazakhstan, Abe, accompanied by 50 high-level company executives, scored a deal that will benefit Japan’s high technology sector as well as lessen its dependency on China, with whom relations have been fraying. Japan is the world’s largest importer of rare earth elements (REEs).

Minister of Investment and Development Asset Issekeshev met Nipponese Oil, Gas, and Metals National Corporation (JOGMEC) executives during Abe’s visit. The Ministry subsequently issued a statement noting, “JOGMEC and Kazgeologiia National Geological Exploration Company are expecting to start exploration works in spring 2016, primarily in territories rich in yttrium in Karaganda and Kostanai regions.”

REEs are perhaps the most critical, if least-known, component of our electrical world, embedded as they are in ubiquitous elements of modern life, including smartphones, lasers, computer memory chips, DVD players, rechargeable batteries, catalytic converters, night vision goggles, magnets, and fluorescent lighting, to name but a few.

REEs consist of the lanthanide elements plus scandium and yttrium, which have similar physical properties and are often found in the same ores and deposits, including the light REEs (LREEs) such as lanthanum, cerium, praseodymium, neodymium, samarium, europium, and the heavy REEs (HREEs) gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium, and yttrium.

Among the most useful REEs is neodymium, an essential element of neodymium-iron-boron magnets used in hyper-efficient motors and generators with every wind turbine using up to two tons of neodymium.

Lanthanum is a major ingredient for hybrid car batteries, terbium is a key component of low-energy light bulbs and cerium is used in automobile catalytic converters. REEs have many important applications in modern technology for which there is no equal substitute, but an increasing demand for these elements is straining supply.

While most of the REEs are not actually “rare” in terms of general amount of these elements in the earth’s crust, they are rarely found in sufficient abundance in a single location for their mining to be economically viable.

In a cautionary tale, America’s Molycorp Inc., the Western Hemisphere’s only producer of rare earth oxides and the largest rare earth oxide producer outside of China, saw its market capitalization of $6 billion in 2011 plummet to less than $100 million by last June, forcing the company to declare Chapter 11 bankruptcy, with its stock at the time of the announcement trading at around 36 cents a share, 86 percent down from its price a year earlier, despite the fact that REE demand is expected to double by 2020.

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