:: Issue Analysis

Strategic value of Indian rare earth minerals

R.N. Meshram Chief Mineral Economist at Indian Bureau of Mines

war on rare earths minerals is being reignited. Japan, who had problems with supplies of rare earth minerals owing to a friction with China last year, is trying to reduce its A dependency on China, which is taking up more than 90% of the world production of rare earth minerals. The Japanese government and Japanese companies plan to co-develop plans with Vietnam, Mongolia, Australia, and Toyota Tsusho Corporation, a Toyota affiliate, to set up a plant for rare earth minerals. On December 8, 2010, Toyota Tsusho Corporation announced to build a smelting factory for rare earth minerals in Orissa, India, which would begin producing in 2012. The new plant is scheduled to produce 3,000 to 4,000 tons a year. Indian state-owned Indian Rare Earths and JOGMEC (Japan Oil, Gas and Metals National Corporation) are said to be investing in the project. In addition, Shin-Etsu Chemical is interested in producing rare earth minerals.

103 Spring 2011�POSRI Chindia Quarterly ○● State-of-the-art industries need rare earth minerals Rare earths are a group of 17 elements composed of 15 lanthanides, scandium, and yttrium. Rare earths are characterized by high density, high melting point, high conductivity, and high thermal conduction. Rare earth elements (REE) are commonly found together in the earth’s crust, because they share a trivalent charge (+3) and similar ionic radii. The estimated average concentration of the rare earth elements in the earth’s crust ranges from around 150 to 220 ppm. However, rare earth elements are rarely concentrated into mineable ore deposits. The principal deleterious impurity in REE bearing minerals is thorium, which imparts an unwanted radioactivity to the ores. The cost of handling and disposing of radioactive material is a serious impediment to the economic extraction of the more radioactive REE rich minerals. REE have very specific uses Increasing demand for rare in a multitude of markets. For earths, due to economic growth, example, neodymium is the triggered the development of core magnetic component of rare earths. high strength high temperature magnets used in electric car batteries, wind turbines, and hard disk drives, and it cannot be substituted for many applications. Lanthanum is strategically important in its use as a catalyst for breaking down crude oil in order to produce gasoline, diesel, and jet fuel. Magnets are the driving market for rare earth mineral demand owing to the applications of magnets in critical environmental and defense technologies. Neodymium (Nd), Samarium (Sm) and Dysprosium (Dy) are being used in the magnet industry. Neodymium-iron-boron (Ni-Fe-B) has the highest strength of all magnets, and it is used in a variety of applications including computer hard disc drives, wind turbine motors, missiles, and

104 POSRI Chindia Quarterly�Spring 2011 :: Issue Analysis

Demand for rare earths by country (Unit: ton) Others 10,000

US 15,500

China 74,000 Japan, Northeast Asia 24,500

Source: Mineral Commodity Summary (2008), US Geological Survey (USGS) guidance systems. Samarium-cobalt (Sm-Co) is not widely used but is critical. Sm-Co can operate at higher temperatures (> 250¡ C) than Nd-Fe-B without losing its magnetic field, and as such, it is considered strategic for the production of ballistic missiles and stealth helicopters. The phosphorescent properties of rare earths—the ability to glow after exposure to energy—lights up energy saving bulbs, gives mobile phones their color and are central to plasma television and computer monitors. Eu is a phosphor, which gives red color to a digital picture. La phosphors are used in x-rays to reduce radiation exposure while Gd is used in color televisions. REE as catalysts provides the means to separate a number of petroleum products as gasoline, kerosene, and nephthas, jet fuel, and diesel—from the heavy crude oil. Lanthanum (La), Cerium (Ce), Prasodymium (Pr), and Neodymium (Nd) are rare earths that are generally used as catalysts. The present consumption of REE as a catalyst is around 25,000 tons. Metal alloys cover a wide variety of uses for metal products that contain a combination of rare earths and specific elements. The uses range from nickel and metal hybrid (Ni MH) rechargeable batteries for portable electronic, hybrid, and electric cars. Pr is consumed to the high strength

105 Spring 2011�POSRI Chindia Quarterly metals produced for air craft while Sc is used in aluminum alloys for aerospace and leisure goods (i.e., tennis rackets, golf clubs). Another application with growing interest is fuel cells, such as a rechargeable battery. Rare earth powders are used for polishing high value glass, such as flat glass and glass for CRI, LCD, TFT televisions. Use of rare earths as polishing agents depends upon total rare earth oxide (TREO). A higher value of TREO attracts more specialized uses. Consumption of REE in this sector is around 15,000 tons. The application of rare earths in the ceramic industry is as crucibles and pigments. Yttrium based ceramics are used for holding molten metal and as a refractory nozzle for jet casting molten alloys. As a ceramic pigment, the introduction of rare earth oxide (REO) to the ceramic melt gives the body the unique color—Nd (blue, lavender), Pr (green/yellow), Er (sharp pink).

Rare earth reserves by country (Unit: 1,000 tons)

Country Reserve Base

World Total 150,000 China 89,000 CIS 21,000 USA 14,000 Australia 5,800 India 1,300 Brazil 84 Malaysia 35 Other countries 23,000

Source: Mineral Commodity Summary (2008), USGS

106 POSRI Chindia Quarterly�Spring 2011 :: Issue Analysis

○● World production depending on China World demand for rare earth elements is estimated at 134,000 tons per year (tpy), with global supply around 124,000 tons. The difference is covered by previously mined above ground rocks. World demand is projected to range from 170,000 to 190,000 tons annually by 2012. In 2008, the industry-wise demand for REO was catalysts (25,000 tons), glass (12,000 tons), polishing (15,000 tons), metal alloys (22,250 tons), magnets (28,250 tons), phosphors and pigments (9,000 tons), ceramics (7,000 tons), and others (7,500 tonnes)

In 2009, the major monazite producing countries were China, Russia, Brazil, India, and Malaysia. The country-wise production is given below:

Rare earth production and primary product by country (Unit: ton)

Production Country Mine Primary Product By-product (2009, mt TREO)

Bayan Obo 55,000 Iron Ore Bastiasite conc.

China Sichuen 10,000 Bastnasite conc. -

South China 45,000 Rare earth element -

Heavy mineral India 2,700 Ilmenite conc Monazite conc. sands

Rare earth Russia Levozero 2,500 Loparite conc elements chloride

Brazil Buena Norte 650 Ilmenite conc. Monazite conc.

Malaysia Ipoh sand plant 380 Cassterite conc. Xenotime conc.

Source: Mineral Commodity Summary (2008), USGS

107 Spring 2011�POSRI Chindia Quarterly ○● Public companies are in charge There are two major types of rare earth deposits in India: endogenic and exogenic. The endogenic types include some carbonates, pegmatitic rock (Chhota Nagpur), and metamorphic-metasomatic veins. The exogenic types comprise coastal beach placer, inland placer, and offshore placer. The endogenic deposits do not appear to be very attractive from an exploitative point of view. Many beach placers are mined in India at present. Monazite is the principal ore mineral for REE in India, although xenotine is a prospect for the future. Of India’s estimated reserves of 11 million tons of monazite, 70-75% occurs in beach placer and the rest in the inland and off-shore areas.

Monazite reserves are estimated at 10.7 million tons. State-wise resources are as follows:

India’s Monazite reserves by state (Unit: million ton)

State Reserves

All India 10.70

Andhra Pradesh 3.74

Tamil Nadu 2.16

Orissa 1.85

Kerala 1.51

West Bengal 1.22

Bihar 0.22

Source: Indian Mineral Yearbook (2009)

108 POSRI Chindia Quarterly�Spring 2011 :: Issue Analysis

Indian Rare Earths Limited, and Kerala Minerals and Metals Limited are engaged in mining and processing beach sand minerals from placer deposits. IREL produced 22 tons of rare earths, namely, RE fluoride, cerium oxide, cerium hydrate from conversion of rare earths chloride in 2008-09 against the installed capacity of 4,500 tpy. IREL is setting up a 10,000 tpy monazite processing plant (MoPP) and the project is likely to be commissioned by the end of 2011. IREL has entered into an agreement with Toyota Corporation, Japan for supplying of over 50% of rare earth chloride that shall be produced at MoPP. As per the Mines and Minerals (Development and Regulation) Act, 1957, the minerals of the rare earth group containing Uranium and Thorium are categorized as atomic minerals, falling in the first schedule of the MMDR Act, 1957. Accordingly, the grant of Reconnaissance Permit, prospecting license or mining lease by the State Government, requires previous approval of the Central Government. This Act is under amendment in tune with National Mineral Policy, 2008. To obtain a license, the applicant must be an Indian national or a company as defined in sub-section (1) of Section 3 of the Companies Act, 1956. In India, rare earth elements are found with monazite, which is an atomic mineral. For atomic minerals and rare earth minerals, which are associated with atomic minerals, the provisions of the Atomic Energy (Radiation Protection) Rules, 2004, made under Atomic Energy Act, 1962, are applicable. The rare earth metals consuming industry in India is performing only on a moderate scale. Indian economy is growing, and by 2050, it is expected to be the third largest economy. Oil refineries, wind energy, high-tech industries consuming REE are expected to grow rapidly in India. The imports of REE have risen from 229 tons in 2004-05 to 10,622 tons in 2009- 10. This indicates that the domestic demand for REE is rapidly increasing.

109 Spring 2011�POSRI Chindia Quarterly Because the Indian Oil refinery is scheduled to increase its capacity from its present 179 MMT to 302 MMT and wind energy has a potential to generate 45,000 MW of wind power, the demand for REE in these industries will also grow exponentially. If the Indian government comes forward for the development of rare earths in earnest, it will draw more attention from foreign investors from Japan and the US.