As Hybrid Cars Gobble Rare Metals, Shortage Looms

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"Worldwide demand for rare earths is expected to exceed supply by some 40,000 tons annually in several years. . ."

The Prius hybrid automobile is popular for its fuel efficiency, but its electric motor and battery guzzle rare earth metals, a little-known class of elements found in a wide range of gadgets and consumer goods.

That makes Toyota's market-leading gasoline-electric hybrid car and other similar vehicles vulnerable to a supply crunch predicted by experts as China, the world's dominant rare earths producer, limits exports while global demand swells.

Worldwide demand for rare earths is expected to exceed supply by some 40,000 tons annually in several years unless major new production sources are developed.

Among the rare earths that would be most affected in a shortage is neodymium, the key component of an alloy used to make the high-power, lightweight magnets for hybrid cars' electric motors, as well as in wind turbine generators.

Close cousins terbium and dysprosium are added in smaller amounts to the alloy to preserve neodymium's magnetic properties at high temperatures. Yet another rare earth metal, lanthanum, is a major ingredient for hybrid car batteries.

Toyota has 70% of the U.S. market for vehicles powered by a combination of an internal-combustion engine and electric motor. The Prius is its No. 1 hybrid seller.

Jack Lifton, a strategic metals expert, calls the Prius "the biggest user of rare earths of any object in the world."

Each electric Prius motor requires 1 kg (2.2 lb) of neodymium, and each battery uses 10 kg to 15 kg (22 lb–33 lb) of lanthanum. That number will nearly double under Toyota's plans to boost the car's fuel economy, he said.

Toyota plans to sell 100,000 Prius cars in the U.S. alone for 2009 and forecasts sales of 1 million units per year starting in 2010.

As China's industries begin to consume most of its own rare earth production, Toyota and other companies are seeking to secure reliable reserves for themselves.

Japanese firms are showing strong interest in a Canadian rare earth site under development at Thor Lake.

Although Toyota would not comment on its resource development plans, media accounts and industry blogs have reported recently that Toyota has looked at rare earth possibilities in Canada and Vietnam.

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