Molycorp sold 3,050 tons of rare earth equivalents in 2011—most of which was from existing stocks, and hopes to successfully reach its Phase 1 annual target of 19,050 tons by the end of Q3 this year. Phase 2 of the expansion project is expected to be completed by the end of 2012 and increase production capacity to 40,000 tons per year.

Meanwhile, Molycorp is all set to purchase Toronto based Neo Material Technologies in a cash and share deal that will grant Molycorp access to the advanced rare earth processing abilities and patents of Neo. CEO Mark Smith of Molycorp said, “We are putting those two together (Molycorp’s massive production capacity and Neo’s abilities) and forming the best full supply chain capability known in the industry.” Commenting on the timing of the deal, he said, “By the time we get through the integration process, putting the two companies together, that should—timing wise—fit in right about the time that Phase 1 is ramping up.”

The Molycorp-Neo deal is very significant since Neo owns facilities in China, Germany, Thailand and North America and it will give Molycorp a foothold in China, the world’s largest consumer of rare earth metals. Australia’s Lynas Corporation Limited is Molycorp’s closest competitor but the company has been facing several permitting delays with its Lynas Advanced Materials Plant (LAMP) being set up at Pahang in Malaysia. However, the project has made progress on many other fronts. A temporary license was secured in February 2012 and at that time, construction was 96% complete, pre-commissioning test packs were 60% complete, and customer contracts for each type of product and market segment had been signed. The project is expected to be ready as per schedule for the first feed to kiln and for first production by Q2 this year.

Meanwhile, the company’s Mount Weld Concentration Plant in Western Australia is operating normally. The company’s Central Lanthanide Deposit (CLD) contains about 15 million tons of resources with about 1.5 million tons of contained rare earth oxides (REO). Feed to the plant was initiated in May 2011. The production rate of the plant will be synchronized with LAMP in Malaysia, which will refine the concentrates from Mount Weld. Lynas’ Duncan deposit is not far from the CLD and has a current reserve of 2.08 million tons with 15.5% REO. Metallurgical test work is currently underway at the site to check if the rare earths can be extracted economically.

Canada’s Montreal based Quest Rare Minerals Ltd. claims that once its project at the Strange Lake Deposit in Northern Quebec begins operations, it will be able to meet at least 10% of the global light rare earths demand and 30% of the heavy ones. Quest aims to largely produce heavy rare earths. Chief executive officer Peter Cashin recently said, “It’s a large resource that obviously will be able to deliver and satisfy a long-term shortfall.”

Quest expects to be ready to produce 15,000 tons per year of rare element oxides by 2016. A prefeasibility study is currently underway and is scheduled to be ready by the end of 2012. The feasibility report after that is slated for a Q3 2013 completion. Cashin said that the company is in discussion with possible customers in the US, Western Europe and Asia and once the prefeasibility report is ready, Quest is likely to release customer names.

Canada’s Saskatoon based Great Western Minerals Group Ltd. (GWMG) is another non-Chinese rare earth producer with ambitious plans. It currently holds five exploration projects located at Steenkampskraal, Red Wine, Hoidas Lake, Douglas River and Benjamin River.

The Steenkampskraal mine contains some of the richest grades of rare earths. It was abandoned in 1963 and contains a significant amount of radioactive waste because of the presence of thorium. The company aims to reopen the mine as soon as possible in spite of the risks involved during the process. Earlier this month, the company reported satisfactory progress with the mine refurbishment while a technical report preparation is currently underway.

GWMG raised $90 million through a bond offering and plans to use the funds to complete a Canadian National Instrument 43-101-compliant technical report and to develop the project. Assay results have revealed the presence of a higher concentration of REOs compared to other mines. Contracts to set up a mixed-chloride facility and separations plant have already been signed. Power supply facilities and mine design work are next on the company’s agenda.

There are several other companies vying to get ahead and become the first large-scale non-China based rare earth producer but as Jon Hykawy, an analyst with Byron Capital Markets in Toronto said, “There is room for maybe four or five heavy-rare-earth companies out there, producing up to the 5,000 to 10,000 tons per year level.”

China’s infrastructure market appears to be on the rise again and if the trend continues along with similar trends in India and other Asian nations, the manganese market could secure itself in the long-term. The growth of the Asian automobile market would also drive manganese prices upward. In fact, the growth of the infrastructure market in China and India, and thereby the demand for steel, is expected to trigger an average annual growth rate of 6% in the manganese market over the next five years. Prices, on the other hand, are expected to increase by about 20% over the same period in comparison to 2011 levels.

After the steel industry, the battery manufacturing industry is the largest user of manganese and is also expected to stimulate the manganese market. China and other south Asian countries are expected to show a high demand for manganese for primary batteries, especially lithium and alkaline batteries, while Europe, Japan and North America are expected to show a high demand for manganese for lithium-ion secondary batteries.

The growing demand for manganese will naturally require new supplies to enter the market. The main producers of manganese are China, Australia, South Africa, Gabon, India, Brazil and Ukraine. Although existing and projected supply of manganese ferroalloy from these countries are expected to meet the medium-term demands, China’s industry restructuring and power restrictions could cause supply problems in the short-term.

Africa is gearing up to begin development of about 10 million tonnes per year of new manganese mining capacity. About 6.3 million tonnes per year of that is planned for South Africa. Perth based Segue Resources has announced a maiden manganese resource of 13.9 million tons at its South African Emang project. Steven Michael, MD, said, “The inferred resource of 14 million tons is at the top end of our expectations and covers only 20% of the prospecting right area. More importantly, the high-grade resource could produce direct shipping ore at 500,000 tons/year for over seven years.”

Diversified mining giant BHP Billiton and the government of Gabon are working out the details of an agreement whereby BHP would develop a 300,000-tons-per-year manganese mine at a site that has enough resources to run for at least half a century. Gabon’s Mines Minister Regis Immongault told the Australia Africa Business Council (AABC) that Gabon was resource-rich enough to overtake South Africa as the world’s largest manganese producer by 2015.

In South America, Guyana is making plans to produce and export manganese ore after 50 years. The ore was last mined about 40 years ago but falling prices forced the closure of the industry. The current rising prices have encouraged the revival of the industry. Canada based Reunion Manganese, a subsidiary of Reunion Gold Corporation, was granted four prospecting licenses to explore and develop a manganese rich area in northwest Guyana. The company has announced that it expects to produce and export the metal from the Matthews Ridge site by Q4 2014. The pilot plant is scheduled to be up by April next year.

President Donald Ramotar said, “Guyana used to be an exporter of manganese in the ’60s, but at that time the technology wasn’t very well developed. It has become viable again. Next year the company will start commercial operations and will begin exporting around the same time.” Guyana hopes to boost its economy by investing in mining operations, not just manganese but gold and oil as well. 

China’s electrolytic manganese metal (EMM) industry is undergoing restructuring and that would mean fewer large operations. From 2011 to 2015, about 30 EMM units with capacities of over 30 kilo tonnes per year are being set up and planned. In an effort to modernize the industry, several small scale units have been shut down. However, in spite of any dip in numbers, China will most likely remain at the top of the EMM market for some more time since it produces almost 98% of the global EMM. Either way, China’s EMM production costs are rising, due to lower grades and depleting resources of carbonate manganese.

Meanwhile, American Manganese Inc. is focusing on completing and publishing it’s NI 43-101 prefeasibility study. The company aims to institute a patent-pending process whereby EMM, EMD (Electrolytic Manganese Dioxide) and CMD (Chemical Manganese Dioxide) will potentially be produced on site at it’s Artillery Peak Deposit in Northwest Arizona, USA. The company hopes to achieve this by reducing water and electricity consumption. Arizona’s lower electricity costs are an added bonus.

Speaking about the project, Larry W. Reaugh, President and Chief Executive Officer of American Manganese Inc. is excited by the potential opportunities of high purity EMD and CMD for use in the emerging battery industry. “Our process can produce a high purity EMD and CMD to service the growing demand coming on stream due to the electrification of the automotive industry and we are well positioned to potentially be the first producers of Electric Metals utilizing domestic resources.”

While announcing the move, President Barack Obama said, “We’ve got to take control of our energy future and we cannot let that energy industry take root in some other country because they were allowed to break the rules.”

US administration officials have been complaining that while China has access to large stocks at cheaper rates, the US is being forced to manage with small stocks at high prices. US officials claim that WTO forbids such unfair trade practices and since China is a member of the WTO, it must function within the WTO rules and regulations. In the absence of a resolution being found within 60 days, the dispute may be placed before a WTO panel for a ruling. Sanctions against China are a possible outcome of the process.

In spite of China’s repeated claims that restrictions on its export quotas since 2009 have been driven by environmental concerns and the need to conserve scarce resources, nobody has really been buying that argument. Chinese foreign ministry spokesman, Liu Weimin said at a briefing, “We think the policy is in line with WTO rules.”

He said that allegations of trade monopoly against China were groundless. It is a well-known fact that while China owns about 30% of the global rare earth deposits, it produces 97% of the global production. Liu said that sustaining that kind of production without damaging the environment is impossible. He added, “Despite such huge environmental pressure China has been taking measures to maintain rare earth exports. China will continue to supply rare earths to the international market.”

A major cause of friction between China and the US is the $295 billion trade deficit recorded last year. In fact, Obama issued an executive order in February this year to create a panel that would investigate unfair trade practices by various nations, including China. During a visit to the US in February, Chinese Vice President Xi Jinping requested the US to respect Chinese interests.

Co-incidentally, the rare earth complaint has come at a time of leadership transitions in both nations. While Obama will stand for re-election in November, Jinping is expected to take over the presidential reins in China in a power handover process within the communist party later this year.

Among other voices in both nations, China’s Xinhua News Agency said that the move by the US was rash and unfair and could damage trade ties. On the other hand, in the US, possible Republican presidential nominee Mike Romney said that Obama was not being tough enough on China. Vijay Vaitheeswaran, The Economist’s China business editor said, “The rhetoric over rare earths is overheated. There is no need for provoking a trade war over China’s stance on rare earths because simple economics and market forces will solve this problem.”

Analysts have pointed out that although the US has substantial rare earth deposits in Alaska and California, the nation appears to lack the political will to tap its own resources. However other countries have moved ahead and are seeking to become self sufficient in their rare earth supply. As Vaitheeswaran pointed out, “Restricted supply and higher prices have already spurred the development of big mines in Australia.”

Karel De Gucht, EU Trade Commissioner said that China’s restrictive policies gave the country a lot of advantage and its policies must be modified. The recent complaint follows the EU’s earlier challenge to China on nine other raw materials that included magnesium, silicon carbide and zinc. The WTO had ruled that export restrictions on these materials defied WTO rules. Since February, China has been increasing its supply.

In another development, on March 16, Obama signed an Executive Order (EO), titled “National Defense Resources Preparedness.” While the president claims the EO is a necessity to protect the country’s interest, analysts and bloggers have been creating quite a ruckus at the high handedness of the EO. Put simply, the EO empowers the president to control all civil energy supplies, which include oil and natural gas; limit and control all civil transportation, which clearly is almost 97% dependent on oil; and even re-enable a draft if the country’s military and non-military demands should require it.

Section 103C of the EO authorizes the president “in the event of a potential threat to the security of the United States, to take actions necessary to ensure the availability of adequate resources and production capability, including services and critical technology, for national defense requirements.”

The EO makes it clear that it covers “all forms of energy including petroleum, gas (both natural and manufactured), electricity, solid fuels (including all forms of coal, coke, coal chemicals, coal liquification, and coal gasification), solar, wind, other types of renewable energy, atomic energy, and the production, conservation, use, control, and distribution (including pipelines) of all of these forms of energy.”

In spite of all the criticism, it cannot be denied that this appears to be the first time that a concrete policy has been tabled should an energy crisis occur. For example, it’s a well-known fact that if Iran ever feels threatened by Israel or the West, the first step Tehran would take would be to block the Strait of Hormuz and cut off 40% of the world’s seaborne oil supply, which is about 20% of the total global supply and create a supply gap of about 20% in the US. Naturally, the results would be catastrophic for the US.

The EO does not mention rare earth metals as part of its scope but the possible effects of an oil-supply interruption are clear from the analysis of the EO. The similarity of the oil and the rare earth supply situation cannot be ignored. Should China feel threatened in any way, Beijing could very well cut off supply of rare earth metals to the western world thereby triggering a chain of catastrophic events in the global markets.

Section 303 of the EO permits the government to “enable rapid transition of emerging technologies,” which implies important technologies that have now been kept out of the market will be pushed into the market early if required. The same section states that the National Defense Stockpile could take control of strategic materials “if such transfers are in the public interest.” The provisions of the EO certainly imply that the president is well aware of the situations that could arise should the WTO complaint disfavor China.

Silver prices are expected to remain volatile in 2012 as well. Analysts expect the market to mirror last year’s performance with sharp rises and falls and in fact, Barclays Capital has predicted that silver will be the most unpredictable of the precious metals. Although price predictions vary from $32/oz to $52/oz, the consensus seems to be in the mid-$30s. Analysts have also pointed out that traditional supply and demand rules are unlikely to drive prices. Instead, the only factors that would affect the silver market are market sentiment and investor behaviour.

For example, China’s mega-sized demand for silver is well-known, but given that the country’s trade deficit has been at its highest in more than two decades, fears of a slowdown are high. A weak Chinese economy means a lower silver demand.

Egon von Greyerz, founder and managing partner at Matterhorn Asset Management, said that silver was not for the faint hearted this year. His advice to investors, “My view is people should hold more gold than silver, but from a profit potential point of view, silver looks very much like it’s going to have a bigger move.” He said that while silver corrected more easily than gold, the correction seen in February is rather mild. He believes that when silver turns, it will run positive very quickly.

Speaking about gold, he said that there is a major demand for physical gold that is growing rapidly. He is confident that institutional money will enter the gold market aggressively and transform the market. During an interview last week, he said, “We are seeing the low this week or we could be under pressure for another week.  But thereafter, in April, if I look at the technical picture, gold looks fantastic.  The next move will be a major move in both gold and silver.”

He said that the paper market is artificially manipulated and is not relevant to the physical gold market in the long-term. However, physical gold is what people should invest in now and protect themselves from the volatile 2012 markets. He added “The institutional investors are going to go heavily into gold and that will totally change the market.  As we know there isn’t enough physical gold around to satisfy an increase in demand, so that can only be satisfied by a higher price.”

Also speaking about gold, Caesar Bryan of Gabelli & Company said, “Well, there’s been a bit of a transfer from the paper players, those involved on the COMEX and in the futures market who have been liquidating.  On the other hand, the physical buyers, including central banks, are stepping in to accumulate gold.” He added, “The central banks have been accumulating a great deal of physical gold at these lower levels.  So there’s a bit of a tug of war going on between the futures market and the physical market.”

Among other opinions, Anne-Laure Tremblay, precious-metals strategist with BNP Paribas said, “Beyond the short term, we remain positive on gold’s outlook as the fundamentals are still solid.” The bank stated, “An improving macroeconomic outlook and high risk appetite should see silver outperform gold for most of H2’12 and 2013 although silver, like gold, remains vulnerable to waves of liquidation. As a result, the gold/silver ratio should decline to the low 40s by H2’13.”

BNP Paribas had forecast gold and silver prices in February and they stand by those predictions in March as well. The bank expects gold to sell at $1,850/oz in 2012 and $2,225/oz in 2013. Silver is expected to sell at $37.50 in 2012 and at $51 in 2013.

While the two nations are exchanging sharp words over rare earths, the Japanese government has announced plans to spend $65 million in subsidies over the next few years to help Japanese companies reduce their use of dysprosium and neodymium while encouraging recycling and development of alternate materials. The two metals are used by Toyota Motor Corp in wind turbines and hybrid cars, by Apple Inc. in iPads, by Raytheon Co. in missiles and by Boeing Co. in helicopter blades.

Kenichi Hasehira, an official at the Japanese ministry’s nonferrous metals division said, “After two years, we expect demand for dysprosium to be cut by about 200 metric tons and demand for neodymium by about 1,000 tons a year from this program.” He also said, “All domestic makers of high-power magnets that use dysprosium have applied for the scheme.”

Most of these efforts have been in response to China’s tight grip on the global rare earth market. China’s rare earth export quotas and other restrictions have come under a lot of flak from the international audience in recent times with the EU, Mexico and the US filing complaints with the WTO that China’s pricing policies on raw materials, including magnesium and bauxite, violate international trade agreements. While China continues to maintain that its export restrictions are necessary to meet the nation’s domestic demand and to protect the environment, the WTO considers the argument illegitimate and has stated that China has been “unable to demonstrate” the benefits of its policies on the environment. Although the ruling does not include rare earth metals, analysts hope to see China change some of its rare earth policies as well.

Michael Silver, CEO of American Elements, said the ruling “confirms the existence of the two-tiered price structure that has caused so much concern.” He expressed his belief that the ruling would force China to change its restrictions. However, many analysts involved in the rare earth market are not so hopeful and feel that with China’s strong hold over 95% of the global rare earth market, they could easily ignore any future decisions of the WTO.

On the other hand, rare earth stocks displayed uncharacteristic positive pricing trends in January and February in spite of a weak demand marking the end of 2011. In fact the Market Vectors Rare Earth/Strategic Metals ETF recorded a high 18.6% rise in January.

Meanwhile on February 2, Lynas Corp received approval for its advanced materials plant (LAMP) at Gebang in Malaysia. The facility, along with others expected to come onstream over the next few years, may bring about a ten-fold increase in non-Chinese rare earth output between now and 2016. Initial annual capacity of the Lynas plant is expected to be 11,000 tonnes of rare earth oxide (REO) and that is eventually expected to ramp up to 22,000 tonnes per year.

Other experts predict that non-Chinese REO production could reach 60,000 tonnes per year by 2016 while demand could be at 55,000 tonnes per year. Such a surplus could once again bring down prices and rock the boats of the hundreds of rare earth companies operating in the market.

David Willetts, UK’s Minister for Universities and Science, said, “This significant investment in graphene will drive growth and innovation, create high-tech jobs and keep the UK at the very forefront of this rapidly evolving area of science. With a Nobel Prize and hundreds of published papers under their belts, scientists in the UK have already demonstrated that we have real strengths in this area. The graphene hub will build on this by taking this research through to commercial success.”

EPSRC Chief Executive, Professor David Delpy, said, “The applications for commercial use of graphene are vast, including the creation of new materials and the manufacture of innovative electronics. The £50 million in additional funding is an important step in ensuring we can reap the benefits of those applications.” He added, “The race to be the first country to produce commercial products is well and truly on.”

The focus on graphene technologies is not a monopoly of the UK; several nations are spending millions of dollars to benefit from the extraordinary properties of the mineral and to develop viable techniques of producing graphene in the forms required to manufacture applications.

Researchers have been struggling to develop a scalable and simple technique to create graphene patterns for new electronic applications. Researchers from several institutes and universities in South Korea have jointly developed a technique whereby several steps involved in the long-used but complex method of lithography have been eliminated. This could result in the low-cost but large-scale production of graphene patterns for many types of electronic devices. Professor Kwang Suh of Korea University said, “This process provides a scalable and compatible methodology for the large-scale and roll-to-roll production of graphene patterns.”

Meanwhile, researchers at Sweden’s Chalmers University have developed a graphene-based transistor design that would allow more compact RF electronics leading to faster circuits. The university’s G-FET (graphene field-effect transistor) could result in applications operating in the terahertz range. Such a range is useful in radio astronomy, radar, and process monitoring.

Nashville’s Vanderbilt University researchers said that graphene is five times thinner than conventional anti-corrosion coatings while also being just as effective and transparent. Using the anti-corrosion properties of graphene is not very difficult either. It can be applied by just rubbing a piece of graphite over the surface to be protected. The research report notes, “nickel surfaces coated with four layers of mechanically transferred graphene corrode four times slower than bare nickel.”

The anti-corrosion strength of graphene was studied by growing a one-atom-thick layer of graphene on a copper piece, which corroded seven times slower than usual. This technique could be utilized in products that would benefit from graphene’s small size, weight and transparency such as copper interconnects in computer chips, designer goods, high-tech equipment (aerospace, super cars, etc.) and implantable medical devices.

The significance of this find is quite important since the anti-corrosion materials market is a serious market in the US. A 2002 study reported that the total corrosion cost across the US was $276 billion, almost equal to its military spend.

Among other research developments, researchers from the University of Wollongong (UOW) have shown that graphene can be used to toughen carbon nanotubes in polymer composites to obtain fibers that are exceptionally tough. The production method promises to be cheap and easy to up-scale. Other studies have proved that graphene oxide has a strong future in many biological processes such as DNA and protein analysis, drug and gene delivery, and also intracellular tracking.

Financial research company Technavio predicted late last year that investing in graphene will produce a CAGR of 58.7% during the 2015–2020 period. The challenge currently is in developing cheaper production techniques. The company listed graphene as a promising investment opportunity that would be difficult to beat over the next decade. The rapid developments indicate the industry is well aware of the potential of the material and is leaving no stone unturned to rapidly commercialize graphene applications.

Anthony David: How did an exploration company exploring for gold end up with a magnesium project?

Ed Lee: In 2007, the Company began drilling to test gold anomalies between the shale formations and intersected a large dolomite block. The results for the precious metals didn’t amount to much but there were consistent grades of magnesium listed in the assay sheets.

Anthony: Well dolomite is a common rock and can be found most anywhere. What differentiates the Tami – Mosi dolomite from others?

Ed: The Company sent samples to Teck Global Laboratories for assays and composition testing and the results returned a high purity form of dolomite almost identical to the national standards.

Anthony: So how did the Company identify the process?

Ed: We engaged Hazen research to provide a Phase 1 study identifying the different processes for producing magnesium. Molycor’s Consulting Team later confirmed the process path.

Anthony: How did a junior Company like Molycor manage to assemble such an impressive career magnesium Team?

Ed: We received a magnesium consultant to contact from Hazen and a relationship was established. From there contact was made to the various individuals describing the project and what it has to offer. Needless to say the project sold itself as the people involved now see the upside potential the project possesses.

Anthony: How was the process defined regarding the parameters and specifics agreed upon?

Ed: The project requirements were laid out and the Team collectively defined the design criteria to reflect the potentials for zero waste, reduced emissions, reduced footprint, steady cost controls, low capital risk and higher efficiencies.

Anthony: So what are the uses for magnesium?

James C. Sever: Magnesium is used to make high strength light weight castings in aerospace and automotive applications. The growth in consumption has developed as structural components for electronic cameras, computers and mobile phones. Without magnesium as the alloying agent to strengthen aluminum, structural applications ranging from I beams to extrusions would not be possible. Magnesium as an alloying element provides the strength for aluminum beverage containers. Magnesium is used in the steel industry to remove sulfur from the molten metal. Without this treatment, steel would be subject to brittle failure at low temperatures. Most of the things we take for granted in our modern world would not be possible without magnesium.

Anthony: Has the magnesium market changed over the years?

James: The world wide sale of magnesium has steadily increased from 170,000 metric tons in the late 1990’s to almost 700,000 metric tonnes today. If sufficient suppliers come on line over the next 10 years to meet the demand without driving the price up, the market is expected to continue to grow. One of the driving forces is the new CAFÉ standards for automobiles to meet by 2025.

Anthony: What sort of impact do you expect your project will have on the market?

James: Our predicted startup is 2016. At that time the automotive industry will be looking to increase the content of magnesium in cars in an effort to meet the new CAFÉ standards. All of our supply could easily be used for this purpose. In addition, it is our hope that we will be able to implement some of the predicted areas for improvement which would make our product competitive on the world market.

Anthony: How large is your proposed magnesium project?

James: We just completed a NI 43-101 Preliminary Economic Assessment study and by using a cost versus capacity model we determined that a facility producing 30,000 metric tons of 99.9% magnesium ingots per year would give us optimum productivity for scale of operation.

Anthony: Is your ore deposit capable of sustaining that level of production over an extended period of time – say 30 years?

James: We have inferred resources in excess of 412 million tonnes of high quality dolomite. The consumption of dolomite to satisfy the plants needs for 30 years continuous operation is approx-imately 9 million tons. This means we potentially have over 97% of the dolomite still be available for longevity and possible expansion.

Anthony: I noticed that your reduction facility is separated from your ore body by 120 miles. Isn’t it unusual to transport raw ore that far?

James: While performing the economic assessment it became evident that the quantity of raw materials needed to process the ore was much greater than the mass of ore itself. To reduce transportation costs it was necessary to locate the reduction facility on the I-80 corridor. This not only provides highway access but also main line rail access.

Anthony: Does your processing facility only produce magnesium ingot?

James: No this facility is actually three separate units that would normally stand alone. By generating our power through clean coal technology and making our primary raw material, 75% ferrosilicon, we are able to supply electric power at approximately half the cost of that available commercially. In addition we will have syn-gas (synthetic natural gas) and steam also available for use in the plant. Our reductant cost will also be significantly lower in cost and will be under our control to ensure the quality standards are met. By locating all three facilities adjacent to one another, we will be able to realize an increase in productivity. For example, in a conventional structure each plant would have a control room operator on duty 24 hours per day. That would actually require 12 people to do the job. By having a consolidated control room we should be able to operate with one operator reducing the man power requirement to 4 people. This concept applies to many other positions.

Anthony: We all know the market for commodity metals such as magnesium is subject to fluctuation and raising large capital can be a challenge. Do you have a strategic plan for operating the plant?

Ed: In the unlikely event that our production costs prevent or reduce the sale of the magnesium ingot under declining market conditions, the process used for making magnesium allows production to be cut back or even curtailed without incurring rebuild and restart costs when the market turns favorable. The interesting aspect is that we would have an economically viable ferrosilicon plant and a power plant. So in theory, if the magnesium price were to decline, the magnesium plant would be shut down and both the power and the ferrosilicon products could be sold into the market on a short term basis and the income used to cover our capital and fixed costs.

Anthony: Why are you using coal as a power source when there’s currently there an increasing supply of natural gas?

James: In the course of our economic assessment we made an analysis of utilization of natural gas. Yes the basic cost of the gas is favorable but the infrastructure necessary to deliver the gas to the plant is over subscribed. The resulting high transportation costs combined with the need for construction of a pipeline into the plant resulted in clean coal gasification being the most economic alternative.

Anthony: Are there other methods of producing magnesium?

James: Yes, historically two other approaches have been used:

1. The electrolytic method extracts the magnesium from the rock by leaching and conversion to magnesium chloride which is then electrolyzed, yielding molten magnesium and chlorine. This process is better suited to brucite or magnesite rather than dolomite and the issue of dealing with chlorine and chlorine compounds raise serious environmental issues.

2. Carbon can be used as a reductant of magnesium oxide but is very difficult to recover the magnesium from this process as the metal vapor generated in the reduction furnace has to be immediately quenched to a solid. If the magnesium is cooled during the liquid phase, the carbon monoxide present as a product of the reaction will immediately react with the magnesium producing magnesium oxide and soot. No commercial application of this approach exists today.

Anthony: Does your approach use new technology to produce magnesium?

James: On the contrary, to reduce risk we have designed our plant around a process that has been used since the late 1930’s. It is this process that was used to produce the magnesium formed into the engine block used in the VW beetle. Currently the process is in use in Brazil. Other than increasing the scale of the furnace and utilizing modern handling methods, the Brazilian plant is the same as the original Italian facility.

Anthony: So what are the next steps for Molycor?

Ed: Well, we are currently identifying manufacturers and vendors and drafting a detailed schedule for all the tasks needed to take the project through to complete the pre-feasibility report. This will assist us in keeping control of costs and timelines.

Anthony: How long will it take for you to complete the pre-feasibility report?

Ed: We are expecting approximately 14 months and it will begin as soon as the company raises the monies. Remember that we are building a vertically integrated facility. So we want to try and under-promise and over-deliver.

You can learn more about Molycor Gold Corp. and their Tami-Mosi project at: www.Molycor.com

In a statement, the DOE said, “The report found that several clean energy technologies use materials at risk of supply disruptions in the short term, with risks generally decreasing in the medium and long terms. Supply challenges for five rare earth metals may affect clean energy technology deployment in the years ahead.”

Prices of many of the 16 materials analyzed have been far from stable over the last 12 months and some have in fact seen ten-fold price rises. The pressure on supplies would be further heightened by laws that demand that incandescent light bulbs be phased out.
The 2010 report raised similar fears when China announced its decision to reduce its rare earth export quota. In its wake, the DOE developed the nation’s first critical materials research and development plan. The result is a $20-million amount in the 2012 spending bill towards advancing projects that develop alternate materials, diversify supplies, develop more efficient deployment of rare metals and enable recycling and reuse.

The report recommends that the US begin development of rare earth extraction, processing and manufacturing capabilities and also collaborate with Europe and Japan in attempts to reduce global scarcity.

PricewaterhouseCoopers (PwC) has also sounded an alarm about the possible supply shortage. The PwC report stated, “Demand for rare earth metals is currently expected to outstrip supply by 30,000–50,000 tons in 2012. This shortage is likely to result in a decline in production rate of devices and products such as mobile-phones, TVs, military equipment and wind turbines that require rare earth metal made components.”

In 2011, researchers at the University of Illinois used lithiated manganese to create an advanced prototype battery that can be recharged in just two minutes. This is an outstanding achievement given that recharging time is one of the major obstacles in the electric vehicle market.

Early last year, American Manganese Inc. expanded its research scope with British Columbia based Kemetco Research Inc. by including more high value products such as LMD, electrolytic manganese dioxide (EMD) and electrolytic manganese metal (EMM). Larry Reaugh, President and CEO of the company, said, “The company is positioned to take a leading role in providing products to the emerging rechargeable battery market. The manganese extraction process is well suited to produce any or all of the high value added manganese products including LMD.”

In a recent status report, Kemetco is reported to have successfully completed its pilot plant testing and is soon expected to begin production of EMD which will be used to produce lithiated manganese powder for the battery industry.

Earlier this month, General Motors signed a worldwide licensing agreement with Argonne National Labs to use the new advanced patented cathode material for lithium-ion batteries. The new material contains an oxide mix of lithium, manganese and cobalt. The unique feature of the material is that it can have a higher specific energy, which translates to lower cost per unit weight. The new material will be used in the next generation of Volt and make them less expensive.

Micky Bly, GM executive director – Electric Systems, Hybrids, Electric Vehicles and Batteries said, “Engineers and researchers at General Motors are working on next-generation battery systems that will reduce cost while providing improved performance, expanding the practicality and affordability of electric vehicles in the future.”

A report by IDTechEx estimates that 30 million electric vehicles were sold in 2011 and that number is expected to reach 50 million by 2021. The numbers forecast a golden period for the EMM market.

According to a report released by the CPM Group, a commodities research and consulting company, the global demand for EMM is expected to reach about 2.8 million tonnes by 2021 from the 1.5 million tonnes today. China controls 98% of the EMM market and its share of the demand is expected to increase from 87% to 89% over the next decade. And in the manganese market as a whole, the EMD segment for the battery industry is going to see the fastest growth.

The significance of graphene can be estimated from the fact that in 2010, Professors Andre Geim and Konstantin Novoselov of the University of Manchester were awarded the Nobel Prize in physics for their ‘groundbreaking experiments regarding the two-dimensional material graphene.’ Their work involved isolating graphene flakes using sticky tape.

Graphene is made from graphite, a mineral largely mined in China, India and Canada, with China producing 70–80% of the mineral. China has already taken steps to retain its graphite resources. In addition to restricting its export quota, China has imposed a 20% export duty and a 17% VAT making graphite prices rise. Depending on flake size, graphite flakes are now selling at $2,000–$3,000 per ton. High-purity, large graphite flakes are an integral part of lithium-ion batteries and in fact, these batteries have ten times more graphite than lithium. The demand for lithium-ion batteries is constantly rising with the rising evolution and demand for electric cars.

Graphite has not quite been the miracle mineral investors have been chasing about so far although its natural strength, stiffness, excellent heat and electricity conducting properties have been known features. However, the immense possibilities of graphene have piqued the interest of many. The demand and supply fundamentals of graphite are like those of rare earth metals. The British Geological Survey has listed both graphite and rare earth metals as those most likely to be in short supply globally.

A sheet of graphene is ultra-thin and is made up of one layer of carbon atoms bonded in a honeycomb pattern. So far, it is the thinnest and strongest known material. The potential applications of graphene include lighting panels and televisions that are wallpaper thin, mobile phones that can be folded away behind the ear, bendy electronic newspapers that could be folded into tiny squares, and a generation of even lighter aircraft. It could replace silicon in the manufacture of computer chips and bring new possibilities in medical advancements. The material could make solar panels more efficient and semiconductors faster. The potential of graphene in the manufacture of stealth military applications and electronic technology is probably still unimaginable. It is not for nothing that graphene is being increasingly referred to as the ‘miracle material.’

There are however, some chinks in this unbounded glory. It has been pointed out that making large sheets of graphene is not easy while IBM has mentioned that graphene replacing silicon in computer chips is not easy to ‘imagine’. Another practical problem is the high electricity conducting property of graphene. Devices such as transistors control the flow of electric currents but to manufacture these transistors, graphene would have to stop conducting electricity—so far a rather cumbersome problem. Certain analysts are of the opinion that commercial use of graphene would be feasible only after five years or so when prices are also likely to drop. The present problem is one of over capacity.