KUALA LUMPUR -- Malaysia's nuclear power plans will be delayed by the pall over the industry from Japan's atomic disaster, along with domestic anger at a controversial rare earths plant, an official said Tuesday.

The government had said in December 2010 that it planned to build two nuclear power plants to meet rising energy demand, one by 2021 and the second a year later.

But Mohamad ZamZam Jaafar, chief executive of Malaysia Nuclear Power Corp., said a feasibility study for the construction of the plants had been pushed back by six months.

“Our plan is delayed slightly,” he said, adding the study might not be ready until late 2014, while construction of the first plant “may be later than 2021.”

ZamZam spoke at the Nuclear Power Asia conference in the capital Kuala Lumpur, where industry figures and atomic experts have gathered to discuss the future of nuclear energy in the region.

ZamZam said the delays were due in part to the nuclear power industry's lingering public relations woes in the wake of the 2011 Japan disaster, in which a huge earthquake triggered a tsunami that knocked out a nuclear plant.

The meltdowns at Fukushima released large amounts of radiation and laid bare to the world the risks of nuclear power.

“Fukushima happened soon after we were set up. That put a damper on what we are trying to do,” he told conference attendees.

He said the feasibility study was being delayed in part because authorities were unable to visit proposed sites, fearing it would spark protests.

ZamZam also cited the rare earths processing plant built on Malaysia's east coast by Australian miner Lynas Corp., which has galvanized a nascent green movement in the Southeast Asian country.

Opponents of the plant, which began operating in recent weeks, had sought to block its opening, fearing it would lead to contamination by nuclear waste created during processing.

Lynas insists the plant is safe.

Malaysia has significant reserves of oil and gas but has mooted the nuclear plan amid fears that its fossil fuels will one day run out.

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African Consolidated Resources on tuesday announced that the Zambian authorities have confirmed the validity of the Nkombwa large scale prospecting licence number.

The licence is held by the company’s subsidiary, Fisherman Mining, and it encompasses the Nkombwa Hills rare earth project. It has effectively been approved as the sole existing exploration licence over the area which is recognised by and authorised by the Zambian ministry of mines.

The Nkombwa project is being advanced via a venture with Galileo Resources, which has also now confirmed that it has finalised its legal due-diligence.

Galileo is financing African Consolidated's farm-in partner, which is committed to spending US$1.35mln on defining an indicated rare earth resource estimate.

"We are delighted with this news from the Ministry in Zambia which removes any uncertainty as to the validity of our Nkombwa licence,” said chairman Roy Tucker.

“With Galileo's formal confirmation that it has finalised its legal due diligence on the Nkombwa Hills Rare Earth Project, we are now well placed to advance this valuable asset up the development curve.

“Underpinning this, Galileo has reiterated its commitment to developing the project, which has to date reported enriched outcrop samples of up to 23.6% total REE [rare earth elements] oxide over a strike length of at least 350 metres, stating that it intends to advance the project to resource definition stage in as short timeframe as practicable."

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The markets have been abuzz with rumors that Molycorp’s recent fall below its net asset value is turning the high-potential firm into a prime takeover target.

Earlier this year, the company, which boasts the largest rare earth element (REE) deposit in the western world, increased its proven and probable reserves of rare earth minerals at its Mountain Pass, California facility by 36 percent. The updated estimate expands Molycorp’s reserves to 18.4 million short tons of rare earth ore. An independent verification estimates that the proven and probable component of Mountain Pass’ ore body contains approximately 1.3 million metric tons of contained rare earth oxide equivalent.

However, the company had its fair share of trouble in 2012, including slumping prices, exorbitant costs at its flagship mine and a regulatory probe; it also recorded its lowest ever share price. Those factors ensured that Molycorp’s investors experienced a torrid time in the markets, with circumstances eventually snowballing to the point that the company’s CEO, Mark Smith, resigned in what the board of directors described as “a natural inflection point” as the firm transitions its focus from development to ongoing operations.

Even after rebounding from a record low in November, Molycorp shares are still trading at a 19-percent discount to their book value, according to data compiled by Bloomberg. With the company currently trading well off its one-year high of $35.79 per share, many are of the impression that its currently depressed valuation could jumpstart interest from potential takeover candidates.

Potential candidates

While Molycorp has so far declined to comment on whether there is any truth to the rumors, most investors will be looking to historical market sentiment for guidance.

The company’s current valuation could very well result in manufacturers, such as Nissan putting in a bid, according to a Bloomberg article that cites information from Byron Capital Markets. On a different note, Robert W. Baird & Company’s recent analysis outlines that after expanding its refining and processing operations with the purchase of Neo Material Technologies, Molycorp may even appeal to private-equity firms.

A Roland Berger Strategy Consultants rare earth study, published last year, also supports the idea that a manufacturer may put in a bid. It notes that more and more manufacturing companies are implementing a wider range of measures to counteract volatile REE prices. It adds that while some manufacturers are seeking alternatives, others are going directly to the source; in fact, half of all enterprises surveyed have already set up task forces dedicated to designing strategies aimed at securing supplies of raw materials. This mindset gained even more credibility when Toyotsu Rare Earth Canada, a subsidiary of Toyota Tsusho moved closer to securing its own REE supply by paying Matamec Explorations for an interest in the company’s Kipawa deposit.

Any manufacturer involved in a takeover of this scale would ensure its own REE supply for the foreseeable future and in doing so would give itself a massive boost in relation to its competitors.

However, while a guaranteed supply of raw materials is appealing, another mining company might be better positioned to take over the project.

Luisa Moreno, an analyst at Euro Pacific Capital, told Bloomberg that Molibdenos y Metales, Molycorp’s largest shareholder, and also the world’s largest molybdenum processor, could seek to increase its holding.

However, Michael Gambardella, an analyst at JPMorgan Chase & Company who is also quoted in the Bloomberg article, argues that potential acquirers within the space might hold off because Molycorp’s new plant is employing a refining technique that differs from that of most other mining companies.

One step forward, two steps back

While the company has come up against a number of issues, Molycorp is twice as sophisticated as it was two years ago, when its share price was six times the level it is today.

The company provides a unique buying opportunity in that its shares are currently trading at 0.77 times their actual book value, while one of its largest competitors, Lynas Corporation — which has been involved in a long and drawn out regulatory battle — is trading at a price-book multiple of about 2.1 times.

Despite these factors, the company’s near-term future was once again brought into question last week when its shares plummeted on the back of confirmation that its 2013 revenue will come in lower than previously expected. That’s the result of a drop in selling prices and a delay in achieving full production at its California processing plant.

In a press release, Molycorp noted that all key production components of its new manufacturing complex at the Mountain Pass mine are operational and that the facility has begun ramping up to its full-scale “Phase 1” run rate. However, concerns mounted when it added it will not proceed with the next planned phase of development until it sees an improvement in rare earth demand and prices, in addition to easier access to capital.

As much risk as opportunity

In a market rife with rumors, there will never be a shortage of both bears and bulls, but investors will do well to realize that Molycorp is far from the finished product. It is still developing its mine, has not proven capable of producing heavy rare earths and is still experimenting with a new processing technology. In other words, the stock presents as much risk as it does opportunity.

At the same time, if prices are to rebound, the company remains uniquely poised to ride a wave of opportunity. The fact remains that this project boasts astounding potential, and while investors focused on the short term may be against Molycorp’s decision to hold back on its second phase of development, its willingness to hold out for a more attractive market environment is a plus for long-term investors.

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In order to deal with domestic shortages of rare earth metals, The Department of Energy (DOE) has established a research hub that will develop strategies and find solutions to preserve the depleting resources.
 
The rare earth elements are 17 in total and include scandium, yttrium and the 15 lanthanides (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium and lutetium). They are called ‘rare’ because they are never part of easily exploitable deposits, due to their specific geochemical properties.
 
These elements are of a crucial significance to the U.S energy security. They are used in a number of devices that contribute to the national security and high-tech economy. These include computer components, high-power magnets, wind turbines, solar panels, mobile phones, electric vehicle batteries, LCD screens,  among others.
 
The hub is expected to take into account the entire cycle of these elements in order to establish new sources, improve the existing ones, optimize material development and deployment, suggest strategies to improve the efficiency of the manufacturing process, and accelerate recycling and reuse.
 
The initiative was established in 2010 by Lawrence Livermore from the Ames Laboratory in Iowa, together with Ed Jones and Adam Schwartz. In year 2011, DOE reported that problems with the supply of  dysprosium, terbium, europium, neodymium and yttrium, might affect the development of clean energy projects.
 
A new research center will be set up, called  the Critical Materials Institute (CMI), which will bring together researchers from academia, four DOE national laboratories and members of the private sector.
 
According to David Danielson, assistant secretary for Energy Efficiency and Renewable Energy, the new initiative will work to find technology solutions to prevent the supply shortage and protect the clean energy industry and security interests.

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Polish copper and silver mining group KGHM Polska Miedź plans to undertake activities to explore and extract rare earth elements. The company's chief executive Herbert Wirth announced that KGHM plans to purchase attractive exploration licenses in different countries.

Currently the bulk of KGHM's profits come from mining copper (the company is in the top 10 of copper producers in the world), and silver (in 2011 it was the world's biggest producer), but it wants to diversify its production.

“We want to be a multi-metal company, one that focuses not only on copper and silver but also on other metals,” said Mr Wirth to newseria.pl. Rare earth metals, such as scandium and yttrium, are used in wind-farm construction, as well as in electronic and electrical equipment. Mr Wirth said that KGHM feels it has a responsibility to supply these materials for the Polish and European industry.

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JOHANNESBURG – London-listed Galileo Resources on Friday said it had completed due diligence at the Nkombwa Hill rare-earth project, in Zambia, after confirming tenure.

The emerging rare-earth exploration and development company intended issuing 5.25-million shares at 5p or $0.08 a share to Rare Earth International (REI) following the findings that the large-scale prospecting licence was the sole existing exploration right over the Nkombwa Hill deposit.

Last year, Galileo entered into a heads of agreement with joint venture partner REI to earn an interest in the rare-earth project, but delays in the completion of due diligence ensued when the Zambian Mines Development Department’s administration centre declined to release key licensing documentation, owing to a moratorium on licences held.

A Zambia-based legal practise, contracted by Galileo, also found that the licence was in “good standing” with, and recognised by, the Zambian Ministry of Mines and Mineral Development.

"We are extremely pleased that the due diligence report is now finalised and that it confirms that the Nkombwa prospecting licence is in good standing and unencumbered,” said Galileo executive chairperson Colin Bird.

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The U.S. Department of Energy (DOE) has launched a research hub that focuses on solutions to the domestic shortages of rare earth metals and other materials critical for U.S. energy security.

Housed at Ames Laboratory in Iowa, Lawrence Livermore National Laboratory (LLNL) has been involved in establishing this Energy Innovation Hub since its conception more than two years ago. In 2010, on behalf of DOE, LLNL hosted the first U.S.-Japan workshop on rare earths elements. Ed Jones and Adam Schwartz have been closely tied to the initiative.

The initial team, made up of Ames, LLNL, Colorado School of Mines, and Molycorp Inc., established a 'national network' that eventually resulted in the proposal team; helped DOE on its critical materials strategy; and continued interactions on behalf of DOE at the international level.

The rare earths comprise 17 elements in the periodic table—scandium, yttrium, and the 15 lanthanides (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium). Despite their name, the rare earths (with the exception of promethium) are not all that rare, but are actually found in relatively high concentrations across the globe. However, because of their geochemical properties, they seldom occur in easily exploitable deposits.

Rare earth elements are essential for American competitiveness in the clean energy industry because they are used in many devices important to a high-tech economy and national security, including computer components, high-power magnets, wind turbines, mobile phones, solar panels, superconductors, hybrid/electric vehicle batteries, LCD screens, night vision goggles, tunable microwave resonators—and, at the Laboratory, NIF's neodymium-glass laser amplifiers.

A DOE report said in 2011 that supply problems associated with five rare earth elements (dysprosium, terbium, europium, neodymium, and yttrium) may affect clean energy development in coming years.

The new research center, which will be named the Critical Materials Institute (CMI), will bring together leading researchers from academia, four DOE national laboratories, as well as the private sector.

"Rare earth metals and other critical materials are essential to manufacturing wind turbines, electric vehicles, advanced batteries and a host of other products that are essential to America's energy and national security, " says David Danielson, assistant secretary for Energy Efficiency and Renewable Energy. "The Critical Materials Institute will bring together the best and brightest research minds from universities, national laboratories and the private sector to find innovative technology solutions that will help us avoid a supply shortage that would threaten our clean energy industry as well as our security interests."

The hub will address challenges across the entire life cycle of these materials. This ranges from enabling new sources; improving the economics of existing sources; accelerating material development and deployment; more efficient use in manufacturing; recycling and reuse; and developing strategies to assess and address the life cycles of new materials.

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Its reports that a new research institute for rare earths is to be built in Ames, Iowa. The US Department of Energy will provide $120m for the Critical Material Institute.

The US wants to reduce its dependency on China, which produces more than 95% of the world's rare earth elements, and address local shortages.

According to the US Geological Survey, there may be deposits of rare earths in 14 US states.

"The Critical Materials Institute will bring together the best and brightest research minds from universities, national laboratories and the private sector to find innovative technology solutions that will help us avoid a supply shortage that would threaten our clean energy industry as well as our security interests," he said in a statement.

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In an age where cell phones, car radios and fluorescent lighting reign supreme, the world starts to look a bit bare without the aid of rare earth materials to build many modern technologies.

“You wouldn’t have very much of anything,” said Alex King, director of U.S. Department of Energy Ames Laboratory.

King received a phone call on Tuesday informing him that Ames Laboratory had received part of a $120 million grant over a period of five years to fund the hiring of 60 personnel and purchasing of equipment to advance research in the area of rare earth materials.

The grant is part of the U.S. Department of Energy Hubs, or a large series of projects to ensure sustainable energy in the future, announced to the public on Wednesday.

The funding will add an additional 20 percent to U.S. Department of Energy Ames Laboratory’s $40 million annual budget, with King estimating receiving about $8 million a year over the five-year period. With the funding of the Critical Materials Institute, a virtual institute collaborating between several national labs and universities, King is hoping to have an impact on the rare earths industry, saying the institute will be “ready to hit the ground running on day one.”

“We’ve always done rare earth research at Ames Lab; we’re kind of rare earths central for the [United States] if not the world,” King said. “All the best rare earth specimens come from the Ames Lab; we purify them better than anybody else.”

The opportunity to gain federal money for rare earth research had been on King’s radar for two years. When the U.S. Department of Energy formally gave the funding opportunity announcement last spring, Ames Laboratory staff pulled together a 1,600-page proposal within a period of 90 days.

Bill McCallum, senior material scientist at U.S. Department of Energy Ames Laboratory and co-principal investigator of the grant, anticipated the funding announcement in a few more months.

“I didn’t expect to hear the announcement for quite some time yet,” McCallum said. “It was very pleasing and very surprising when we got the announcement.”

After the paperwork is filed, Ames Laboratory will begin the arduous task of what King describes as “starting up a $25 million dollar a year business from scratch.”

Nearly as important as hiring personnel is the purchasing and upgrading of research equipment. Brandt Jensen, assistant scientist at Ames Laboratory, stresses the importance of finding the right balance of materials to create rare earth products.

“The basic form of the magnet is three metals, so we have to carefully weigh them in the right ratio,” Jensen said. “It’s a long process. To get a magnet you first have to melt them all together ... but it’s not complete yet, the atoms aren’t in the right location on the atomic level.”

In order to create a rare earth magnet to fit in a simple earphone, the magnet needs to go through several processes and characterizations to make sure it is just right.

Producing alternatives to and conservative use of rare earth materials is just one side of Ames Laboratory’s research. A new field called the economic forecasting and life cycle management of materials will give a holistic view of how different materials are being used and when scientists can start expecting those materials to be scarce.

“What we’re looking for is trying to understand the supply and demand dynamics of the rare earths ... but also using the economic analysis to try and predict what other materials are going to go critical suddenly without our being ready for it,” King said. “Today we’re dealing with the rare earths; tomorrow we’ll be dealing with something else.”

The economic analysis will take into account the political atmosphere in which materials are being produced in addition to predicting which areas are more at risk for large scale natural disasters.

Although he hasn’t had much time to himself since the announcement, King is enjoying the atmosphere of excitement that has overtaken the Ames Laboratory staff.

“We were all very excited,” Jensen said. “There’s going to be a lot more research opportunity, there’s going to be staff we train with, it’s going to open up a lot of doors.”

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Chinese price manipulation has taken its toll on the U.S. economy

Rare earth metals are an increasingly integral part of everything from automobiles to television sets.  But the precious metals are tightly controlled by China, with an excess of 95 percent of current suplly coming from Chinese-owned mines and refineries.  The degree of control has allowed China to manipulate prices, cutting back on demand to sell less material for the same amount of profit, any businessperson's dream.

I. New Private-Public Partnership Sets Aim on Chinese Mineral Hegemony

The problem is that it takes several years or more to bring rare earth metal mines and refineries online; and the capital costs of such facilities are very high.  It took China decades of clever planning to set itself in its current peachy position of rare earth hegemony.  Now the U.S. is racing to try to recover, before Chinese price manipulation deals too much of a blow to the U.S. economy.

The U.S. Department of Energy has committed a relatively large investment of $120M USD to establish an Energy Innovation Hub under the supervision of Ames Labs to research ways to expand domestic rare earth production and otherwise cut reliance on Chinese rare earth supplies.

The new lab, dubbed the Critical Materials Institute (CMI), will be a joint effort between a number of large domestic firms in the private sector, universities, and top government research labs. 

Corporate partners include General Electric Comp. (GE), OLI Systems Inc., Spintek Filtration, Advanced Recovery, Inc., Cytec Industries, Inc. (CYT), Molycorp Inc. (MCP), and Simbol, Inc. (Simbol Minerals).

II. Attacking the Problem From All Angles

Among the research projects will be:

    Improve rare earth recycling/reuse
    Improve extraction processes
    Develop rapid deployment mining techniques
    Develop rare earth material substitutes
    Study and optimize supply chains to minimize waste

Top targets for domestic rare earth production include neodymium -- used in neodymium iron boron (NeFeB) hard drive magnets and cell phone components -- and samarium -- used in samarium cobalt (SmCo) drive magnets.  Currently the U.S. has no domestic neodymium producers and only one domestic samarium producer.

The Government Accountability Office (GAO) in a 2011 research report [PDF] suggests that the U.S. rare earth supply chain, phased out in the 1980s at a time when the 17-element family looked non-critical, will take approximately 15 years to rebuild.  The new lab aims to assist in that slow and arduous recovery.

The U.S. also will continue to purse action against China before the World Trade Organization (WTO) where it has filed complaints about the Chinese price manipulation.

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