Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Rare Metals Summit III (October 2010)
17 slides from Lynas Rare Earths's conference presentation, Oct 25, 2010
Slide 1: Rare Earth Metals Supply and Price Outlook
Rare Metals Summit III For personal use only RARE EARTH METALS SUPPLY AND PRICE OUTLOOK LYNAS CORPORATION 25 O October t b 2010
Slide 2: Disclaimer
Disclaimer For personal use only • The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe
Slide 3: Rare Earths cannot be substituted in many applications
Rare Earths cannot be substituted in many applications For personal use only RARE EARTHS EARTHS: LANTHINIDES PLUS YTTRIUM – UNIQUE PROPERTIES • Chemical Unique electron configuration • Catalytic Oxygen storage and release • Magnetic g High magnetic anisotropy and large magnetic moment • Optica
Slide 4: Rare Earths underpin new materials technology required to sustain the needs of today's society
Rare Earths underpin new materials technology required to sustain the needs of today’s society For personal use only Energy efficiency through Environmental protection Smaller yet more powerful lower consumption through lower emissions digital technology • Compact Fluorescent Lights • Wind turbine •
Slide 5: Demand for Rare Earths is driven by the underlying applications
Demand for Rare Earths is driven by the underlying d l i applications li ti For personal use only 2010 DEMAND FORECAST BY APPLICATION Application Demand (%) Demand (t) Distribution by Value • Magnets M t 26% 35 000 35,000 Others, 5% Phosphors, • Battery Alloy 14% 18,600 10% • Metallurgy ex batt 9% 1
Slide 6: Magnets and battery alloy are forecast to be the growth drivers for Rare Earths demand to 2014
Magnets and battery alloy are forecast to be the growth drivers for Rare Earths demand to 2014 For personal use only 2014 GROWTH RATE AND DEMAND FORECAST BY APPLICATION Application Growth rate p.a. (%) Demand (t) Distribution by Value • Magnets 12% 55 100 55,100 Other, 5% Phosphors, • Battery Alloy
Slide 7: Looming crisis - Rare Earths supply will be outstripped by demand
Looming crisis - Rare Earths supply will be outstripped t ti d by b ddemand;d 115kt REO iin 2010 For personal use only CHINESE SUPPLY SOURCES NON CHINESE SUPPLY SOURCES (2010 CAPACITY, REO) (2010 CAPACITY, REO) Baotou 55,000t India 3,000t Byypproduct of iron ore mine Subsidiary y of Indian AEA
Slide 8: Our assumptions show global supply at 170kt by 2014 compared to demand of 190kt
Our assumptions show global supply at 170kt by 2014 compared 2014, d tto d demand d off 190kt For personal use only 2014 FORECAST SUPPLY ASSUMPTIONS SUPPLY SOURCES KEY UNDERLYING ASSUMPTIONS • B t Baotou 60 000t 60,000t • Sichuan 20,000t • Baotou – 10% production increase 2010 / 2014 • Ionic Clay Re
Slide 9: Prices are returning to historic levels
Prices are returning to historic levels For personal use only HISTORIC SUPPLY, SUPPLY DEMAND AND PRICING Tonnes REO US$51.03/kg US$/Kg 11 Oct 2010 US Inflation adjusted Actual Price 9
Slide 10: Prices drop continuously as China supply output increases substantially
Prices drop continuously as China supply output increases substantially For personal use only PRICE DRIVERS 1992 – 1999 Tonnes REO US$/Kg • “The Middle East has oil, China has Rare Earths” • Rare Earths investment at State State, Provincial and local level as China dominates market • Buyers in Japan
Slide 11: 2000-2006 prices unlikely to be seen again
2000-2006 prices unlikely to be seen again For personal use only PRICE DRIVERS 2000 2000-2006 2006 Tonnes REO • High levels of competition within China US$/Kg • Handful of p powerful buyers y in Japan, p , USA and Europe p • More than 600 producers in China, reducing to 150 • No investment in enviro
Slide 12: Prices increased in 2007-2008 due to changing market conditions in China
Prices increased in 2007-2008 due to changing market conditions in China For personal use only PRICE DRIVERS 2007-2008 2007 2008 Tonnes REO US$/Kg • Temporary crackdown on environmental standards resulted in the temporary closure of multiple producers • Costs increasing in China due to the start of
Slide 13: Limited price drop in 2009 to Chinese cash cost of production
Limited price drop in 2009 to Chinese cash cost of production For personal use only PRICE DRIVERS 2009 Tonnes REO US$/Kg • Demand sharply dropped due to the GFC • Limited price drop to Chinese cash cost of production 13
Slide 14: The shortage of Rare Earths has the world currently thirsting for these vital elements
The shortage of Rare Earths has the world currently thirsting for these vital elements For personal use only PRICE DRIVERS 2010 Tonnes REO US$/Kg • Consolidation of production and marketing channels • Chinese policies restricted supply • Demand recovering strongly • Prices starting to grow inside Ch
Slide 15: Future outlook – structural change in industry has commenced
Future outlook – structural change in industry has commenced For personal use only FUTURE PRICE DRIVERS Supply vs Demand Other impacts on cash costs: • Wage increases • Energy and Chemical cost increase • China CPI • Environmental operating costs including energy and chemicals $4 to $6 per kg • Cons
Slide 16: Rare Earths prices respond like most commodities to particular market conditions
Rare Earths prices respond like most commodities diti tto particular ti l market k t conditions diti For personal use only ANTIMONY 99% FOB CHINA USD/mt USD/ t 1/1/01 – 30/09/10 16
Slide 17: China is seeking sustainability, the chaos is coming to end
China is seeking sustainability, the chaos is coming to end and prices will respond to market For personal use only demand and supply from a sustainable base CHINA IS BRINGING SUSTAINABILITY “We aim for the world’s sustainable development ….What What we pursue is to satisfy not only domestic demand