Strategies for More Effective Critical Materials Use

3 December 2010Trans-Atlantic Workshop on Rare Earth Elements and Other Critical Materials

for a Clean Energy Future

Peter C. DentVP Business DevelopmentElectron Energy Corporation

924 Links Avenue, Landisville, PA 17538www.electronenergy.com

Real World Views

“The purpose of a business is to serve a customer” Peter F. Drucker • “Effective” – “Do the Right Thing”• Provide customer value

– Fulfill a need– Better Performance– Lower Cost– Realistic expectations

• Solutions MUST make sense commercially• Sustainable manufacturing & supply chains• Environmentally responsible

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EEC’s Beginnings• Marlin Walmer - innovator and pioneer in magnet materials Founded

Electron Energy Corporation in 1970• First non-captured commercial Samarium Cobalt (SmCo) producer in the

world• Last US Rare Earth magnet producer (Samarium Cobalt or Neodymium

Iron Boron - NdFeB)

Marlin Walmer

1/11/29 – 12/12/99

About EEC• Landisville, PA – 40,000 sq ft single site• 118 employees • Small Business• One Modern Manufacturing Site• Samarium Cobalt magnet producer• ISO 9001:2000 Certified• Compliance with DOD Domestic Preferences of Specialty

Metals (DFARS 225.252-7003, 7008, 7009)• Defense Directorate of Trade Controls Registered

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Real World View of Magnet Materials Production

WW Total Market Size $7B 2010, $15B by 2020

NdFeB magnets 72%

Rare Earth Oxide Ore production 97%

Rare Earth pure Metals nearly 100%

Hard ferrites 66+ %

Alnico ½

SmCo 63%

Japan, US, European producers close plants, move production

CHINA

5/18/2010 IVEC 201004/20/23 5

Typical Manufacturing Process for SinteredRare Earth Magnets – Labor is predominant cost

Magnetizing & Testing

Induction Melting or co-

reduction

Ball milling or Jet milling

To m scales

Sintering, Solution and

Heat treatment

~ 200 - 500 m

Crush into

Pressing

Grinding, lapping, honing, Or wire EDM

Machining

Raw MaterialsSm, Co, Fe,Cu, Zr (SmCo)

Nd, Pr, Dy, Fe, Co, B (NdFeB)

Crushing

Criticality Matrix (US National Academies, 2008)This matrix was devised by the U.S. National Academies and published in 2008 in Minerals, Critical Minerals, and the U.S. Economy (2008). The matrix preceded by a detailed explanation of the conclusions from which it was created is (free) on the Internet at http://books.nap.edu/openbook.php?record_id=12034&page=165#p200140369960165001

-Increase use of periodic table of elements

-Semiconductors- 24 plus new elements used in 2000 and beyond

-11.3 Tons/year per person non-fuel minerals in USA, - ? T/yr developing world

-New inventions

-Changing demographics

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Magnet Sales Worldwide• Market is growing due to automotive &

more uses, miniaturization• People pay lots more for better magnet

performance ($5.4/kg Ferrite, $90/kg Nd)• Smaller magnets make smaller less costly

systems• Lower systems costs will increase market• “More electric” means more magnets

Data courtesy of Webmagnetics.com

Permanent Magnet Material Sales by Type

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

1985 1990 1995 2000 2005 2010 2015 2020

Year

US

Do

llars

(in

mill

ion

s)

AlNiCo Rare Earth Ferrite Total

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Material Usage

• Perspective 30 years ago?

• Mother nature’s gifts

• Unique properties• Benefits vs. cost of

replacement

9IVEC 20105/18/2010 Light Rare Earths (LRE’s)

Heavy Rare Earths (HRE’s)

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Item 2008 Mine Prod.

(Metric Tonnes)

Item 2008 Mine Prod.

(Metric Tonnes)

Raw Steel 1,360,000,000 Uranium (2007) 41,279

Pig Iron 958,000,000 Lithium 27,400

Aluminum 39,700,000 Silver 20,900

Copper 15,700,000 Cadmium 20,800

Manganese 14,000,000 Bismuth 5,800

Zinc 11,300,000 Boron 4,100

Lead 3,800,000 Gold 2,330

Nickel 1,610,000 Selenium 1,590

Magnesium 808,000 Zirconium 1,360

Strontium Materials 512,000 Tantalum 815

Molybdenum 212,000 Yttrium (2001) 600

Antimony 165,000 Indium 568

Rare Earths (mixed, oxides)

124,000 Palladium 206

Cobalt 71,800 Platinum 200

Vanadium 60,000 Rhenium 45

Niobium (Columbium) 60,000 Rhodium 30

Tungsten 54,000 Hafnium 25

Global Metal Production 2008 - Record Year

Courtesy:

Jack Lifton04/20/23 10

-A steel world

-Recycling effectiveness of large vs. small,

mid size -expectations

-Large users volume, mature

recycle

-Rare metals have high price

and big incentives

Rare Earth Mineral Production

• China REE worldwide reserves– 2 years ago over 50% – today substantially less– Reason, more discoveries

• 100 plus potential sites for REE’s discussed for development worldwide

• 5-6 new non-Chinese mining operations will likely be developed

• Lots of investment is flowing to major REE producers – well funded– Downstream supply chain needs– Non-Chinese customers, OEM’s

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Rare Earth Oxide Demand Supply/Production REO Tonnes % REO Tonnes %

Lanthanum 51,050 28.40% 54,750 26.90%Cerium 65,750 36.50% 81,750 40.20%Praseodymium 7,900 4.40% 10,000 4.90%Neodymium 34,900 19.40% 33,000 16.30%Samarium 1,390 0.80% 4,000 2.00%Europium 840 0.50% 850 0.40%Gadolinium 2,300 1.30% 3,000 1.50%Terbium 590 0.30% 350 0.20%Dysprosium 2,040 1.10% 1,750 0.90%Erbium 940 0.50% 1,000 0.50%Yttrium 12,100 6.70% 11,750 5.70%Ho-Tm-Yb-Lu 200 0.10% 1,300 0.50%Total 180,000 100% 203,500 100.00%

Forecast Global Demand for Individual Rare Earths in 2014 (±15%) (Im)balance of Supply-Demand

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Source: Dudley J KingsnorthIMOCA 2009

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- Air Products O2, N2 -steel

-Reduce use of higher demand

-Increase use of lower demand (Ce, Sm) – unsold material = cost, wildcard

-Thorium?

Rare Earth Supply-Demand

Source: Industrial Minerals Company of Australia

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Rare Earth Prices

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-Fe, Co, Tb, Ce, Au, Re price comparisons

-REE price disparities ($3/kg-$500/kg pre July 8, 2010, $10-12/kg avg.)

Core Issues• What will be impact of new RE applications

(wind power, Li vs. NiMH batteries, lighting, MCE refrigeration, To Be Invented) ?

• 1000’s of REE applications, how many can be helped?

• Who will make it to market profitably & sustainably grow over time?

• What will China do? –Wildcard factor, SEO’s• Can private sector fix problems alone?

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REE Supply Core Strategies-Market Driven-

• Stockpile raw materials – price/availability disruptions• Mitigate/Replace REE usage (short-medium term)

– Incremental Process improvements (Kaizen – Japan NdFeB)– Better magnet technology (same flux with less material) => mitigate

• Hi electrical resistivity NdFeB, SmCo (DOE)• Nanocomposites (NdFeB, SmCo) add 30% Fe• New magnet systems (non REE)

– Leapfrog, disruptive technologies • Develop / Adopt Recycling with ROI• Develop applications for Ce, Sm, Pr and others in over supply – grow business• Secure long term reliable, sustainable supply• Develop & recruit people to innovate• Engage with US government to affect appropriate REE policies • Move from Studies => Resource Allocation & Action• Multi faceted, balanced, realistic public policy approaches & expectations• Be EFFECTIVE

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Peter C . Dent(717) 459-1001 direct(610) 349-5525 cellpcd@electronenergy.com

Electron Energy Corporation

924 Links Avenue

Landisville, PA 17538

(717) 898-2294

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www.electronenergy.comwww.usmagnetmaterials.com

Questions

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