Cobalt

Wind turbine manufacturers are scrambling to find alternatives to a key element used in direct-drive permanent magnet generators (PMGs), thanks to skyrocketing prices and diminishing supplies of crucial rare earths. China currently provides 94% of the world's rare earths, including neodymium and dysprosium, which are used in the magnets for direct-drive wind turbine motors. However, the Chinese government has put new restrictions on rare-earth mining that have resulted in lower supply levels, according to a report from research firm Roskill Information Services (RIS).

The prices of rare earth elements, which have enjoyed a three-year run, are dropping rapidly, reports New York Times. The reason, says The Times, is on the manufacturing side, as big companies in the US, Europe and Japan that use REES in manufacturing move operations to China, draw down inventories, and look for lower-cost substitutes: International prices for some light rare earths, like cerium and lanthanum, used in the polishing of flat-screen televisions and the refining of oil, respectively, have fallen as much as two-thirds since August and are still dropping. Prices have declined by roughly one-third since then for highly magnetic rare earths, like neodymium, needed for products like smartphones, computers and large wind turbines.

A new European study says supply shortfalls of rare-earth elements over the next two decades put at risk the EU's ambitious plans to expand the production of solar, wind and green transport technologies and implement carbon-capture systems. According to the EU's Joint Research Centre, solar will require half the current world supply of tellurium and 25% of the supply of indium, while Europe’s wind energy programme which is supposed to power all of the continents 240 million households within 20 years need a steady supply of neodymium and dysprosium. China controls 95% of the globe's rare earth output in 2010 produced more solar panels than the rest of the world combined.

TORONTO, ONTARIO--(Marketwire - Nov. 15, 2011) - Frontier Rare Earths Limited (TSX:FRO)(TSX:FRO.WT) is pleased to provide an update on operational progress at its Zandkopsdrift rare earth element project in South Africa and related corporate activities. "We are very encouraged by the progress of work on the preliminary economic assessment for our flagship Zandkopsdrift project, and expect to announce the results early next year," said Mr. James Kenny, President and CEO of Frontier Rare Earths. "We believe that the PEA will clearly demonstrate the significant economic potential of Zandkopsdrift and this will leave Frontier well positioned to become one of the major producers of rare earths globally commencing in 2015."

Katanga Mining announced on Friday it has secured $635.5 million in new loan facilities from parent Glencore International to fund the expansion of its Democratic Republic of Congo copper-cobalt mine. The Toronto-listed firm wants to bump copper production to 270,000 tonnes per annum and thereafter bump it up to 310,000 tonnes from cash flow. The company is already ramping up copper production with financials results also out on Friday showing year to date copper in ore mined was 157,658 tonnes, a 96% increase over 2010. Cobalt produced fell 30% to 593 tonnes, but that was in line with expectations. Katanga says with the expansion the DRC complex it could become Africa's largest producer of copper and the world's number one cobalt mine.

A temporary production stoppage by China's largest rare earth exporter makes the creation of an American rare earth stockpile more likely, according to a report by dealReporter that appeared in yesterday's FT. The stoppage was a "wake-up call" for the US Department of Defense because the rare earth elements are needed for a variety of defense applications, writes dealReporter, citing a congressional source. The article quotes congressional sources and three rare earth companies saying that "the creation of a US rare earth strategic reserve is more likely to get the go-ahead after (Inner Mongolia Baotou Steel Rare-Earth (SHA:600111)) halted production. Such a move would create another source of demand for the metals, likely aiding a rebirth of the US rare earths industry."

Stock in Formation Metals (TSE:FCO) plunged 13% today after a European bank decided to terminate its loan agreement with the Vancouver-based company. The $79.5 million loan from BNP Paribas was to go towards construction of Formation's Idaho cobalt mine. Formation said the credit facility was terminated without the closing of the subject financing.

Freeport-McMoRan Copper & Gold Inc. has approved a US$850 million expansion to the Tenke Fungurume mining operations in the Democratic Republic of Congo. Lundin Mining, a partner at the mine with FCX, made the announcement in a press release on Tuesday night. The phase two expansion, targeted for completion in 2013, will increase copper production by 50% to about 195,000 tonnes of copper cathode and 15,000 tonnes of cobalt in hydroxide. Funding will be split 70:30 between the mines two partners, FCX and Lundin Mining. The companies expect that capital costs will be funded by surplus cash from Tenke Fungurume operations.

A mining industry consultant says the high processing costs and level of expertise required in bringing rare earth mines into production means most of them will fail. In an interview with Reuters, Jack Lifton, founder of Technology Metals Research, said of the 244 companies hoping to extract REEs, less than 4% will be profitable: "The choke point for all the companies is the question of what they can do with the concentrated REM ore once it's above ground. You can extract the rare earths together, but then you have to separate them...the world's REM separation capacity is 99 percent Chinese and they have unused capacity," Lifton said. "The Chinese overwhelmingly control this and that is the key to the rare earth industry. Without separation capacity, all you have is a loss-making ore concentrate company."