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1 Rare Earth Metal Market Shares, Strategies, and Forecasts, Worldwide, 2011 to 2017 Rare Earth Metal Not So Rare, But Not So Easy to Mine Either Torrie The Cat in the Tulips Picture by Susan Eustis WinterGreen Research, Inc. Lexington, Massachusetts

2 rare earth REE RE REO rare earth metal rare earth mineral rare earth elements rare earths neodymium Nd-Fe-B Terbium CHECK OUT THESE KEY TOPICS Dysprosum Europium heavy rare earths communications rare earth radar systems Rare Earth Mineral Water Pollution Stockpiles Of Rare Earth Minerals Black Market Earth Resources Strategic Reserves Base Hybrid Electric Vehicles Water Purification Heavy-Mineral Sands Deposits Re-cycling Rare Earth Minerals m m/reports/rareearth.htm Rare Earth Elements Support Modernization of High Tech Devices Rare Earth Elements: Market Shares, Strategies, and Forecasts, Worldwide, LEXINGTON, Massachusetts (March 2, 2011) WinterGreen Research announces that it has a new study on Rare Earth Elements: Market Shares and Forecasts, Worldwide, The study has 246 pages and 66 tables and figures. The rest of the world was asleep as China grew to become a goliath in the rare earth industry. It took the rest of the world 20 years to wake up to the realization that the future of high technology could be in the hands of this one supplier. While there may be ample rare earth elements in the earth s crust, the challenge is in locating reserves worth mining and putting into place the infrastructure and processes necessary to mine and process them. China produces 96 percent of the world s rare earth metals. Industrialized countries have realized that with a monopoly position, comes responsibility. China reduced its second-half rare earth metal export quota for the minerals by 72 percent in July It is now further restricting exports Repercussions and strategic implications are likely if rare earth elements supply were to be disrupted..actions by China have drawn criticism from U.S. lawmakers and officials in Japan and Germany. After discovering a potential site and conducting a feasibility study, this type of mining operation requires permits, financing, building of infrastructure. Infrastructure includes roads, railways. The acquisition of mining technology, transportation for the materials, making mining machinery available, and processing of the raw materials is difficult.

3 According to Susan Eustis, lead author of the study, All of these steps to rebuild the industry outside China could take up to ten years. In the meantime, China has a huge lead in educating engineers and scientists and in all aspects of the rare earth metal industry. This is a topic that has been neglected in the US and the western world until now. It has not been glamorous or interesting to professors, universities, and most of all students. It is set to become more significant in many countries. One potential threat is that, while China s reduction in export quotas is currently causing prices to go up, if China were to turn that around and bring prices back down, this could potentially put these and other companies out of business even before they become fully operational. Hybrid vehicles are one of many technologies that use rare earth elements. Global demand for hybrid vehicles is projected to be 14 to 16 million vehicles per year by 2017 so the impact to the rare earth market could be staggering. Additional Rare Earth supply sources must come on line to support this growing industry. China has major plans to build a national rare earth resources strategic reserves base. The tentative plan is to store up the raw materials that were not used up from the annual excavation at Baosteel. China uses that to stabilize prices. Efforts are underway in Northern China to realize this goal. The fundamental aspect of rare earth metals implementation relates to efficient extraction of the minerals forms deposits in the earth. Markets at $1.4 billion in 2010 are anticipated to reach $4.1 billion by Market growth comes as energy efficient units are built using rare earth elements. Companies Profiled Market Leaders Baotau Steel Rare Earth High Tech Baotou League, East Mine, Bayan Obo Darhan Muminggan United Banner Main pit, Bayan Obo (Bayun-Obo) East Mine, Bayan Obo Inner Mongolia Baotou Steel Rare Earth High-Tech Co Market Participants 5. Rare Earth Company Profiles 90 Chinese Companies Alkane Arafura Molycorp Lynas

4 Rare Earth Elements: Market Shares, Strategies, and Forecasts, Worldwide, 2011 to 2017 Report Methodology This is the 468th report in a series of primary market research reports that provide forecasts in communications, telecommunications, the Internet, computer, software, telephone equipment, health equipment, and energy. Automated process and significant growth potential are a priorities in topic selection. The project leaders take direct responsibility for writing and preparing each report. They have significant experience preparing industry studies. Forecasts are based on primary research and proprietary data bases. The primary research is conducted by talking to customers, distributors and companies. The survey data is not enough to make accurate assessment of market size, so WinterGreen Research looks at the value of shipments and the average price to achieve market assessments. Our track record in achieving accuracy is unsurpassed in the industry. We are known for being able to develop accurate market shares and projections. This is our specialty. The analyst process is concentrated on getting good market numbers. This process involves looking at the markets from several different perspectives, including vendor shipments. The interview process is an essential aspect as well. We do have a lot of granular analysis of the different shipments by vendor in the study and addenda prepared after the study was published if that is appropriate. Forecasts reflect analysis of the market trends in the segment and related segments. Unit and dollar shipments are analyzed through consideration of dollar volume of each market participant in the segment. Installed base analysis and unit analysis is based on interviews and an information search. Market share analysis includes conversations with key customers of products, industry segment leaders, marketing directors, distributors, leading market participants, opinion leaders, and companies seeking to develop measurable market share. Over 200 in depth interviews are conducted for each report with a broad range of key participants and industry leaders in the market segment. We establish accurate market forecasts based on economic and market conditions as a base. Use input/output ratios, flow charts, and other economic methods to quantify data. Use in-house analysts who meet stringent quality standards.

5 Interviewing key industry participants, experts and end-users is a central part of the study. Our research includes access to large proprietary databases. Literature search includes analysis of trade publications, government reports, and corporate literature. Findings and conclusions of this report are based on information gathered from industry sources, including manufacturers, distributors, partners, opinion leaders, and users. Interview data was combined with information gathered through an extensive review of internet and printed sources such as trade publications, trade associations, company literature, and online databases. The projections contained in this report are checked from top down and bottom up analysis to be sure there is congruence from that perspective. The base year for analysis and projection is With 2010 and several years prior to that as a baseline, market projections were developed for 2011 through These projections are based on a combination of a consensus among the opinion leader contacts interviewed combined with understanding of the key market drivers and their impact from a historical and analytical perspective. The analytical methodologies used to generate the market estimates are based on penetration analyses, similar market analyses, and delta calculations to supplement independent and dependent variable analysis. All analyses are displaying selected descriptions of products and services. This research includes referencde to an ROI model that is part of a series that provides IT systems financial planners access to information that supports analysis of all the numbers that impact management of a product launch or large and complex data center. The methodology used in the models relates to having a sophisticated analytical technique for understanding the impact of workload on processor consumption and cost. WinterGreen Research has looked at the metrics and independent research to develop assumptions that reflect the actual anticipated usage and cost of systems. Comparative analyses reflect the input of these values into models. The variables and assumptions provided in the market research study and the ROI models are based on extensive experience in providing research to large enterprise organizations and data centers. The ROI models have lists of servers from different manufacturers, Systems z models from IBM, and labor costs by category around the world. This information has been developed from WinterGreen research proprietary data bases constructed as a result of preparing market research studies that address the software, energy, healthcare, telecommunicatons, and hardware businesses.

6 YOU MUST HAVE THIS STUDY Table of Contents Rare Earth Elements Executive Summary RARE EARTH ELEMENTS EXECUTIVE SUMMARY China Becomes A Goliath In The Rare Earth Industry Actions by China Rare Earth Elements Market Shares China Major Plans To Build A National Rare Earth Resources Strategic Reserves Base Rare Earth Elements Market Forecasts Chinese Rare Earth Elements Companies Reduced Rare Earth Elements Market Description and Market Dynamics ES-1 ES-1 ES-1 ES-2 ES-4 ES-4 ES-9 1. RARE EARTH ELEMENTS MARKET DESCRIPTION AND MARKET DYNAMICS Term Rare Earth Is A Misnomer. They Are Not Rare At All Discovery Of Rare Earth Elements Mountain Pass Molybdenum Corporation of America Rare Earth Elements Definition of Rare Earth Elements NdFeB Has Superior Permanent Magnetic Properties Rare Earth Elements Rare Earth Minerals Key In Growth Of Renewable Energy Technologies Producing Rare Earth Oxides: No Small Task China s Clampdown On Exports Dramatic Shift Is Beginning To Take Place U.S. Rare Earth Deposits Educational Awareness Of Rare Earth Elements Rare Earth Minerals Industry Global Consumption Of Rare Earth Elements Chinese Consumption Of Rare Earth Elements Demand for Rare Earth Products 1-17 Rare Earth Elements Market Shares and Market Forecasts 2. RARE EARTH ELEMENTS MARKET SHARES AND MARKET FORECASTS China Becomes A Goliath In The Rare Earth Industry Actions by China 2-1

7 2.1.2 Finding and Mining More Rare earth elements Mountain Pass Mine in California Competing with China Rare Earth Curbs May Prove a Windfall for Molycorp, Lynas as Prices Surge Rare Earth Elements Market Shares China Major Plans To Build A National Rare Earth Resources Strategic Reserves Base Chinese Rare Earth Elements Companies Reduced Molycorp Mountain Pass California Alkane Rare Earth Market Rare Earth Mineral Mining Market Shares Rare Earth Mineral Market Production Shares China Glencore International AG Lynas Mt. Weld Molycorp s Mountain Pass Rare Earth Curbs Spur Opportunities for Molycorp, Lynas Rare Earth Elements Market Forecasts Rare Earth Mineral Molycom Market Forecasts Global Rare Earth Market Profile Rare Earth Elements Applications, Including Magnets Rare Earth Mineral Applications Military Communications Hybrid Electric Vehicles Clean Drinking Water Aircraft Incandescent bulbs Rare-Earth Displays Rare earths Radar Systems Gamesa Corp. Tecnologica SA Windmills Rare Earth Elements Prices Factors That Could Influence Demand For Rare Earth Products and Push Prices Upward: Molycorp Price of Rare Earth Products Chinese Rare Earth Mineral Quotas Costs of Rare Earth Mineral Water Pollution And Discharge Standards Chinese Pay Toxic Price for a Green World Japan And South Korea Have Built Up Stockpiles Of Rare Earth Minerals Japan Gets 20 Percent Of Its Rare Earth From China s Black Market Costs of Rare Earth Mineral Water Pollution And Discharge Standards Rare Earth Elements Regional Analysis Chinese Rare Earth Mineral Quotas China Export Quota For The Second Half Of 2010, Which Reduced Rare Earth Exports by 72% Chinese Pay Toxic Price for a Green World Japan And South Korea Have Built Up Stockpiles Of Rare Earth Minerals Japan Gets 20 Percent Of Its Rare Earth From China s Black Market German Government Adopted A Strategy To

8 Secure Supply Of Raw Materials Including Rare Earths Japan Kyrgyzstan 2-67 Rare Earth Elements Product Description 3. RARE EARTH ELEMENTS PRODUCT DESCRIPTION China s Rare Earth Elements Industry: Rare Earth Elements Industry Severe Environmental Damage in China China Pollutant Discharge Standards Rare Earth Deposits In China Two Key State Rare Earth Elements Laboratories In China Two Other Laboratories In China Dedicated To Rare Earth Elements China Pursues Rare Earth Resources Issues Facing China s Rare Earth Resources China Continually Worries About Depleting Rare Earth Reserves China Dominates Magnet Industry China Major Plans To Build A National Rare Earth Resources Strategic Reserves Base Chinese Rare Earth Elements Companies Reduced Bayan Obo Geology And Tectonic Setting Carbonate Rocks of Bayan Obo Mineralogy of the Bayan Obo Orebodies Bayan Obo REE Bayan Obo Deposits in China Mianning Deposits in China US Rare Earth Elements Industry One Potential Threat to US REE From China Molycorp Minerals Molycorp Purchased Mountain Pass in Molycorp Mothballed Mine Molycorp Minerals Expects To Produce 3,000 Metric Tons Initially Molycorp Deposits Of Rare-Earth Elementss Molycorp Hybrid Electric Vehicles Molycom Water Purification Molycorp Minerals Arsenic Sequestration Industrial Process Waste Streams Molycomp Rare Earth Elements Enable A Wide Variety Of Defense Technologies Lynas Corporation, Australian Mining Company Lynas Corp, Mount Weld Lynas Australian Block Avalon / Thor Lake Great Western / Hoidas Lake Great Western, Rareco Steenkampskraal Mt. Weld Carbonatite India s Heavy-Mineral Sands Deposits In The States of Kerala, Orrisa, and Tamil Nadu Re-cycling Rare Earth Minerals Arafura Resources Ltd Alkane Resources Ltd. 3-47

9 3.13 Glencore International AG German Government Adopted A Strategy To Secure Supply Of Raw Materials Including Rare Earths 3-47 Rare Earth Elements Technology 4. RARE EARTH METAL TECHNOLOGY Rare Earth Ore Technology Description Rare Earth Ores MolyCorp Rare Earth Minerals Rare Earth Elements Uses La Lanthanum Ce Cerium Pr Praseodymium Nd Neodymium Pm Promethium Sm Samarium Eu Europium Gd Gadolinium Er Terbium Dy Dysprosium Ho Holmium Er Erbium Tm Thulium Yb Ytterbium Lu Lutetium Y Yttrium Sc Scandium Loparite Xenotime REE REE Supply Rare Earth Elements Sources La Lanthanum Ce Cerium Pr Praseodymium Nd Neodymium Pm Promethium Sm Samarium Eu Europium Gd Gadolinium Er Terbium Dy Dysprosium Ho Holmium Er Erbium Tm Thulium Yb Ytterbium Lu Lutetium Y Yttrium Sc Scandium Dictionary Disposal Of Rare Earth Metal Tailings Rare Earth Minerals: US Environmental Regulations Mine Health and Safety Laws Molycorp Mountain Pass Facility 4-37 Rare Earth Elements Company Profiles

10 5. RARE EARTH ELEMENTS COMPANY PROFILES Alkane Alkane Dubbo Project New Revenue Numbers Alkane Cudal New Gold And Base Elements Discovery Alkane Light Rare Earth Concentrate And A Heavy Rare Earth Concentrate Arafura Baotou League, East Mine, Bayan Obo Bayan Obo Aeschynite-(Nd) : (Nd,Ce,Ca)(Ti,Nb)2(O,OH) Darhan Muminggan United Banner Main pit, Bayan Obo (Bayun-Obo) East Mine, Bayan Obo Inner Mongolia Baotou Steel Rare Earth High-Tech Co Lynas Corporation Molycorp Molycorp Mine Process and Development Plans Molycorp Non-Binding Letter Of Intent With Hitachi Molycorp Products and Markets Molycorp Modernization and Expansion of Mountain Pass Facility Molycorp Acquired the Mountain Pass Facility on September 30, Molycorp Revenues Molycorp Revenues Molycorp Mountain Pass Location Rare Earth Reserves and Non-Reserve Deposits Molycorp Customers Molycorp Ore Processing Molycorp Mine-to-Oxides Molycorp Processing Technologies Molycorp Oxides-To-Elementss/Alloys Molycorp Alloy and Magnet Production Joint Ventures Molycorp Decision to Double Original Planned Production Capacity Molycorp Sumitomo Investment 5-39 List of Tables and Figures Rare Earth Elements Executive Summary Figure ES-1 Rare Earth Elements Market Driving Forces Figure ES-2 Rare Earth Elements Market Shares, Dollars, 2010 Figure ES-3 Rare Earth Elements Market Forecasts Dollars, Worldwide, Figure ES-4 Samples of Rare Earth Compounds Displayed In The Showroom At Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. in Baotou, Inner Mongolia, Figure ES-5 Close Up showing Bayan Obo, the world s Largest Rare Earth Mine, located north of Baotou, Inner Mongolia, China ES2 ES-3 ES-6 ES-8 ES-10

11 Rare Earth Elements Market Description and Market Dynamics Figure Rare Earth Elements Table Table Rare Earth Elements Existing And Emerging Applications Table April 2010 U.S. GAO Briefing Conclusions Rare Earth Elements Market Shares and Market Forecasts Table Steps to Starting New Rare Earth Elements Mine Table Rare Earth Elements Mine Time Consuming Step By Step Processes Figure Rare Earth Elements Market Driving Forces Figure Rare Earth Elements Market Shares, Dollars, 2010 Table Rare Earth Market Shares, Dollars, Worldwide, 2010 Table Rare Earth Market Shares, Production of Ore, Worldwide, 2010 Table Light Rare Earth Market Shares, Production of Ore, Worldwide, 2010 Table Heavy Rare Earth Market Shares, Production of Ore, Worldwide, 2010 Table Rare Earth Element Markets, Segments of Ore Use Table Rare Earth Elements Regional Market Segments, Dollars, 2010 Table Rare Earth Market Shares, Production of Ore, Worldwide, 2008, 2009, 2010 Figure Rare Earth Elements Market Forecasts Dollars, Worldwide, Figure Rare Earth Elements Market Forecasts Tons of Ore Shipped, Worldwide, Table Rare Earth Elements Reserves Table REEs Critical Materials To Existing Applications Because Of Unique Properties Table Rare Earth Elements Market Segment Forecasts Tons of Ore, Worldwide, Table Rare Earth Elements Market Segment Forecasts Percent,

12 Worldwide, Table Rare Earth Mineral Applications Table Factors That Could Influence Demand For Rare Earth Products And Push Prices Upward Table Rare Earth Project Variables Table Rare Earth Products Prices Table Rare Earth Products Prices Table Rare Earth Elements Regional Market Segments, Dollars, 2010 Table Rare Earth Market Shares, Production of Ore, Worldwide, 2008, 2009, 2010 Rare Earth Elements Product Description Figure Samples of Rare Earth Compounds Displayed In The Showroom At Inner Mongolia Baotou Steel Rare-Earth Hi- Tech Co. in Baotou, Inner Mongolia, Figure Close Up showing Bayan Obo, The World s Largest Rare Earth Mine, Located North of Baotou, Inner Mongolia, China Figure Bayan Obo Mining Area Figure Geologic Map of Bayan Obo Figure Bayan Obo, the World s Largest Rare Earth Mine, Located North of Baotou, Inner Mongolia, China Figure Bayan Obo REE Ore Outcropping Figure Bayan Obo Outcrop of Bodies Of Massive Magnetite (MT) And Hematite (HE) Figure Molycorp Rare-Earth Elementss Used for Wind Mills Figure Molycorp Deposits Of Rare-Earth Elements Used to Make Wind Mills Figure Molycorp Hybrid Electric Vehicles Use of Rare Earth Minerals Figure Battery Pack for Toyota Prius Figure Molycorp Minerals Portable Clean Drinking Water Device

13 Table Molycomp Rare Earths Critical To Many Defense Related Applications Figure Rare Earth Mineral Night Vision and Optics Applications Rare Earth Elements Technology Figure Rare Earth Ores Figure MolyCorp Rare Earth Minerals Figure Bastnasite Rare Earth Mineral Weight % of Total Figure Monazite Rare Earth Mineral Weight % of Total Figure Laparite Weight % of Total Figure Xenotime Rare Earth Metals Weight % of Total Figure Lateritic Rare Earth Ore Weight % of Total Figure Lateritic Rare Earth Mineral Weight % of Total Table Molycorp Sample Environmental Permits Rare Earth Elements Company Profiles Figure Rare Earth Elements Mine Samples from East Mine Bayan Obo China Figure Dolomite, Bastnasite, Parisite, and Magnetite Figure Rare Earth Elements Crystals Figure East Mine, Bayan Obo Table Molycorp Rare Earth Elements Development Goals Table Molycorp Initial Production of Rare Earth Elements Figure Molycorp Mountain Pass Location Figure Molycorp Open Pit Mine Figure Molycorp Rare Earth Mine-To-Magnets Production Supply Chain

14 ABOUT THE COMPANY WinterGreen Research, research strategy relates to identifying market trends through reading and interviewing opinion leaders. By using analysis of published materials, interview material, private research, detailed research, social network materials, blogs, and electronic analytics, the market size, shares, and trends are identified. Analysis of the published materials and interviews permits WinterGreen Research senior analysts to learn a lot more about markets. Discovering, tracking, and thinking about market trends is a high priority at WinterGreen Research. As with all research, the value proposition for competitive analysis comes from intellectual input. WinterGreen Research, founded in 1985, provides strategic market assessments in telecommunications, communications equipment, health care, Software, Internet, Energy Generation, Energy Storage, Renewable energy, and advanced computer technology. Industry reports focus on opportunities that expand existing markets or develop major new markets. The reports access new product and service positioning strategies, new and evolving technologies, and technological impact on products, services, and markets. Innovation that drives markets is explored. Market shares are provided. Leading market participants are profiled, and their marketing strategies, acquisitions, and strategic alliances are discussed. The principals of WinterGreen Research have been involved in analysis and forecasting of international business opportunities in telecommunications and advanced computer technology markets for 30 years. The studies provide primary analytical insight about the market participants. By publishing material relevant to the positioning of each company, readers can look at the basis for analysis. By providing descriptions of each major participant in the market, the reader is not dependent on analyst assumptions, the information backing the assumptions is provided, permitting readers to examine the basis for the conclusions. About The Principal Authors Ellen T. Curtiss, Technical Director, co-founder of WinterGreen Research, conducts strategic and market assessments in technology-based industries. Previously she was a member of the staff of Arthur D. Little, Inc., for 23 years, most recently as Vice President of Arthur D. Little Decision Resources, specializing in strategic planning and market development services. She is a graduate of Boston University and the Program for Management Development at Harvard Graduate School of Business Administration. She is the author of recent studies on worldwide telecommunications markets, the top ten internet equipment companies, the top ten contract manufacturing companies, and the Top Ten Telecommunications market analysis and forecasts. Susan Eustis, President, co-founder of WinterGreen Research, is a senior analyst. She has done research in communications and computer markets and applications. She holds several patents in microcomputing and parallel processing. She has the original patents in electronic voting machines. She has new patent applications in format varying, mulitprocessing, and electronic voting. She is the author of recent studies of the Stationary Fuel Cell Market, Portable Fuel Cell Market, Solar Technology Market, Thin Film Battery, Wind Energy, Regional Bell Operating Companies' marketing strategies, Internet equipment, biometrics, a study of Internet Equipment, Worldwide Telecommunications Equipment, Top Ten Telecommunications, Digital Loop Carrier, Web Hosting, Web Services,Services Oriented Architecture (SOA), Business Process Management, Application Server, Rare Earth Elements, and Application Integration markets. Ms. Eustis is a graduate of Barnard College.

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