REE market value is projected to be $2 billion to $3 billion by 2014

The World’s NewRock Stars:

Mining Rare EarthElements is a

Growing InvestmentOpportunity

IN THE MANUFACTURING OF CELL PHONES, HIGH- tech televisions, wind turbines, UV-resistant sunglass-es, loudspeakers, microphones and guided missiles,

there are no substitutes for Rare Earth Elements (REE), agroup of 17 elements used in everyday, high-tech items.They are the building blocks of sustainable technology.For example, hybrid vehicles are manufactured using

myriad REE applications such as polishing powder forglass and mirrors, a hybrid NiMH battery, diesel fuel addi-tives, electric motors and generators, headlight glass,component sensors and UV-cut glass for the windshield. “After driving other producers out of business by

undercutting global prices, China now produces around97 percent of the world’s REE supply,” according toKPMG’s global publication, High Growth Markets. “Butrecently reduced export quotas mean that exploitingthe 63 percent of reserves that lie in North America,Australia, Africa and elsewhere is once again becomingboth desirable and economic.”In fact, the REE market value is projected to be $2 bil-

lion to $3 billion by 2014. To encourage the purchase ofcritical metal stocks, Murdock Capital Partners, a privateNew York City-based merchant banking firm, held a crit-ical metals symposium on June 19, 2012, at the 3 WestClub in Manhattan.

To address the virtual monopoly of China when itcomes to rare earths, several innovative North Americancompanies are taking the lead in successfully meetingthe processing challenges, while maintaining financialstability and creating solid investment opportunities.

American Vanadium (AVC:TSXv ) “The vanadium demand in the United States has grown

6 percent over the last 10 years,” states Bill Radvak, pres-ident and CEO of American Vanadium, a Vancouver-basedvanadium production company. Currently the companyis developing America’s only vanadium mine. TheGibellini Project, located in Nevada, is currently beingdesigned to produce vanadium pentoxide for the alloyand steel industries and vanadium electrolyte for theenergy storage industry. American Vanadium is unique in its process. There’s

neither grinding nor roasting, and the company utilizesorganic stripping, hopefully resulting in the highest sup-ply of vanadium at the lowest cost in the world. Ron MacDonald, the company’s executive chairman

has closely observed trends in China and warns that thecountry is a “place of great strengths that needs to bewatched.” Currently, 80 percent of vanadium supply inthe United States comes from countries with geopoliti-

120 COMMERCE • www.commercemagnj.com

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BY SAMANTHA J. WIENER

CONTRIBUTING EDITOR

Rare Earth Elements, a group of 17 elements usedin everyday, high-tech items, are the building

blocks of sustainable technology.

ENVIRONMENTAL BUSINESS



cal risk, and the United States currently imports 100 per-cent of its vanadium. “Vanadium is critical to the U.S.economy, which puts a lot of pressure on the supplychain,” explains MacDonald. “We hope to maximize every bit of vanadium to

investors over long periods of time while creating jobsin the United States,” states MacDonald. Ultimately,Gibellini could supply roughly 5 percent of currentglobal vanadium demand.

Malaga, Inc. (MLG:TSX) Eighty-five percent of global tungsten production is

controlled by the Chinese. With their share expected toexpand within the next few years, the pressure again ison the supply chain. The unique properties of this ele-ment make substitution unlikely, which makes it diffi-cult for nations whose industries depend on a stablesupply of this high-density metal, used in both the steeland automotive industries, as well as for the creation ofthe vibrating device in cellular phones. Montreal-headquartered Malaga is making successful

strides towards efficient tungsten production at a lowcost. Perched high in the Andes Mountains of Peru at3,200 meters to 4,299 meters above sea level, the PastoBuena Mine has been in operation since 1940 and is 100percent company-owned.The mine boasts a less expensive process with better

quality, as the wolframite is concentrated by gravimetricmethods which involve no chemicals. “The majority oftungsten ore deposits around the world contain only afew tenths of a percent while Malaga’s ore contains onaverage 0.7% WO3,” states Malaga Vice President andCFO Joey Trombino.

Besides this, the low content of impurities in Malaga’stungsten has gained it the reputation as one of the high-est quality concentrates in the world. The company alsoowns its hydroelectric power plant, which takes care of70 percent of its power needs with the remainder com-ing from the national grid.While there is a realization of the need to shorten the

gap between plant and mine capacity, this growing com-pany is confident it will continue to move forward andcontrol costs.

Orbite Aluminae, Inc. (ORT:TSXv) Thinking outside the ‘bauxite,’ Quebec-based Orbite,

Inc., has developed a unique process using low-cost eco-friendly technologies. A scientifically-oriented company,Orbite has successfully enabled the extraction of metal-lurgical-grade alumina and high-purity alumina, an ele-ment vital to the high-tech industry. The value behind Orbite’s innovative technologies is

displayed through previous attempts to extract aluminafrom claystone, which resulted in low quality alumina ata high expense. Because of the company’s “game-chang-ing” technologies, the creation of this high-purity alumi-na from claystone has come to life, replacing a large por-tion of higher-cost alumina that Quebec annuallyimports. “Orbite’s process has never been seen before in the

world,” states Chief Scientific Officer Joel Fournier. Andthe company is expected to become the lowest-costproducer of alumina. To aid in the reduction of costs andenvironmental footprints, Orbite plans to deploy theirtechnologies locally and license them to customers.


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“We hope to maximize every bit of vanadium toinvestors over long periods of time while creatingjobs in the United States,” says American VanadiumExecutive Chairman Ron MacDonald.

“The majority of tungsten ore depositsaround the world contain only a few tenths of a percent while Malaga’s ore contains onaverage 0.7% WO3,” states Malaga VicePresident and CFO Joey Trombino.



Globex Mining Enterprises, Inc. (GMX:TSX) Employing a different type of approach, Canadian com-

pany, Globex Mining Enterprises chooses not to focus itsattention on one particular element. “We don’t really carewhat the mineral is,” states Globex President and CEO JackStoch. “If there’s an opportunity, we’ll just jump on it.” Despite its mineral diversification approach, Globex

has managed to accumulate no debt. “Our challenge isthat the company is so diversified, analysts have a diffi-cult time finding what exactly to look at—it’s a compa-ny with a lot of intrinsic value,” explains Stoch. With mineral holdings in Quebec, Ontario, Nova

Scotia, and New Brunswick, Globex boasts availablefunds for exploration with a total of 111 properties.“Every single property has a reason—it’s not just a pieceof ground,” according to Stoch.Globex’s precious metal sector holds the most prop-

erties at 64 and consists of low capital and operatingcosts, global application of hydrometallurgical technolo-gy and environmentally friendly techniques (no finegrinding or recyclable reagents).Among its varied portfolio, the plastic industry holds

the most interest for this company. The most expensiveaspect of plastic production is coloring. The whiter thetalc, the less dye is needed. Globex’s Timmins Talc-Magnesite Project produces extremely white talc and is



“China now produces around 97 percent of the world’s Rare EarthElements supply,” according to KPMG’s global publication, High GrowthMarkets. “But recently reduced export quotas mean that exploiting the 63 percent of reserves that lie in North America, Australia, Africa and elsewhere is once again becoming both desirable and economic.”

“Orbite has successfully enabled the extraction of metallurgical-grade alumina and high-purity alumina, an element vital to the high-tech industry,”says Chief Scientific Officer Joel Fournier.

With mineral holdings in Quebec, Ontario,Nova Scotia and New Brunswick, Globexboasts available funds for exploration with a total of 111 properties. “Every singleproperty has a reason—it’s not just a pieceof ground,” states Globex President andCEO Jack Stoch.



currently the only North American producer of this min-eral. “The only place you can get talc with similar quali-ty is in China,” states Stoch.

Medallion Resources (MDL:TSXv) Rethinking conventional practices, Vancouver-based

rare-earth industry leader, Medallion Resources, targetsthe processing of the readily available mineral, mon-azite. Significant quantities of monazite are producedduring processing of heavy mineral sands, and the min-eral is generally discarded or stockpiled. Because thisphosphate mineral already contains 50 percent to 60percent of rare earths, the company saves both time andmoney in its production process, and is able to get themetal to market quickly and effectively.

Many larger companies question the rare earth indus-try with the mentality that it is too complex and Chinacontrols the majority of it. Medallion, however, has rec-ognized that a facility in the Middle East could emergeas a significant non-Chinese producer. “The interest in the Middle East is intense,” states

Medallion President and Director Don Lay. “There is recog-nition of the advantages of getting into this industry.” The Gulf States provide several benefits for develop-

ment of a rare-earth complex: proximity to monazite feed-stock, excellent ports and infrastructure, low-cost energyand chemicals, and industry-friendly governments.

The Bottom Line When you reflect on the current and projected imbal-

ances of supply and demand and consider all the manyother critical elements and their pivotal applications inmodern industrial processes, the outlook is quite alarm-ing. Washer machines couldn’t be built without chromi-um. You can’t make paint white without titanium.Uranium supplies 14 percent of the world’s electricity.Let’s not forget the importance of phosphate in foodproduction, platinum for exhaust gas or tin for alloys. As the population keeps growing and technology

advances, there is also the growing application of criticalRare Earth Elements in various types of cleantech andgreen technologies, in which the annual demand is fore-casted to rise to five million tons between 2015 and 2020.

Esteemed professional geologist Mickey Fulp offerssome hope with his cornucopian nature. “I believe theEarth has everything we need. We just need to developthe technology to recover it,” he says. From the looks ofit, we’re getting there everyday, one innovation at a time. “I don’t want revolution, I want evolution,” he says.

And in terms of what Fulp is interested in from aninvestment standpoint: “I am interested in buying thosestocks that are undervalued and unloved—the bargains.”He urges investors to learn as much as they can with asteadfast reminder that “every good geologist knowsthat grade is king.” After careful research, if you do decide to invest in these

often forgotten but critical metals, you may see some ofyour best returns over the next decade or so. While manystill continue to invest in base and common metals, thereal long-term “gold” may actually lie with the forgottenRare Earth Elements that are not so forgotten anymore. n

This article is not intended to provide stock or securitiesadvice or recommendations. Please consult your per-sonal investment advisor for the investments that bestfit your needs. The opinions stated here are those of theauthor and the interviewees—not of COMMERCE or theCommerce and Industry Association of New Jersey.



Rethinking conventional practices, Vancouver-basedrare-earth industry leader, Medallion Resources, targets the processing of the readily available mineral,monazite, according to Medallion President and Director Don Lay.

Hybrid vehicles are manufactured using myriad REE applications such as polishing powder for glass and mirrors, a hybrid NiMH battery,diesel fuel additives, electric motors and generators, headlight glass,

component sensors and UV-cut glass for the windshield.

Documents

REE market value is projected to be $2 billion to $3 billion by 2014