Demand May Swell for REEs on Hybrid Cars, Hi-Tech

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"Neodymium and dysprosium are used in magnets in phones, hybrid cars and windmills."

Neodymium and dysprosium may have the biggest demand growth potential among rare earths as they are used in magnets in BlackBerrys, hybrid cars and windmills, industry executives said.

Rare earths are 17 chemically similar elements, including neodymium and dysprosium. Prices of neodymium oxide have surged four-fold to $80 a kilogram from $19.12 in 2009 because of rising demand and reduced supply from China.

"Currently, the most critical elements for the future are likely to be neodymium and dysprosium," commented Robert Mackay, president and chief executive officer of Toronto-based Stans Energy Corp. "The most threatened, according to our statistics are europium, terbium, dysprosium, and yttrium. It is likely that high-powered magnets will be a rare earth leader in terms of future growth rates."

Magnets mainly use the middle and heavy group of rare earths, including neodymium and dysprosium. Using iron- based magnets in a mobile phone would make it much bigger, "like a briefcase," Krebs said.

"What we are interested in are those mining companies which produce heavy rare earths. . .which probably have the highest growth," Stefan Steinemann, portfolio manager of REE Fund, said in an interview.

Surging prices are spurring companies to build rare-earth plants in Kazakhstan, Australia and other countries as China, the source of more than 90% of the world's rare earths, in July reduced its second-half export quota by 72% to ensure domestic supply and cut pollution.

There will be abundant supply of rare earths by 2015 after new plants and mines are built. Still, some individual rare earth elements, such as neodymium and dysprosium, will remain in shortage. Europium and terbium will also be in deficit.

"Resources of dysprosium are limited," said Yerzhan Ishanov, deputy director of general affairs at Summit Atom Rare Earth Co. "At the moment, the main supply is China."

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