Rare earth elements are used extensively in high tech products. Many of these products are in industries experiencing exponential growth. For instance, rare earths are key components in electric and hybrid vehicle motors and wind turbines.
The problem with soaring demand for rare earths is, well, they’re rare. And the vast majority of supply comes out of China – who needs those rare earth deposits for their own manufacturing needs.
So in a nutshell, there’s a huge, fast growing market for rare earth elements and a limited supply controlled mostly by China.
*Used as a steel alloy, stainless steel, high strength steel for bridges, buildings and car bodies.
*Vanadium is a direct competitor; however twice as much Vanadium has to be used to achieve the same results Niobium does.
*10% annual growth in demand per year for the past 10 years.
*2/3 of new growth will come from the intensity growth of Niobium on steel and 1/3 of new growth will come from steel growth in general.
*90% of Niobium is produced in South America while roughly 10% is produced in other countries, mainly Canada.
*The US has to import 100% of the Niobium that is used as a sufficient domestic supply has yet to be found.
Niobium (Nb) is an alloying agent, which when added to another material creates a material with substantial benefits. It is a rare and a soft transition metal used in the production of high grade steel. Steel containing niobium has many properties making it stronger, lighter in weight and corrosion resistant. Ferroniobium, (66% Niobium 34% Iron) represents over 90% of world niobium production.
Molybdenum and Vanadium can be substituted for niobium in some applications, but a performance or a cost penalty may outweigh substitution. For many applications there are no substitutes for Niobium such as some super alloys and oil and gas pipelines where Niobium allows for the extreme pressures.
•High Strength Low Alloy (HSLA) steel – Bridges, Buildings, Car Bodies, Oil & Gas Pipelines, Rail Tracks, Ships Hulls
•Super Alloys used in the aerospace industry
•“Green” technologies – Wind Turbines, Electric Engines
•U.S. imports 100% of supply – South America (84%), Canada (9%) and Germany (2%)
•Niobium is considered a “strategic metal” by U.S. essential for National Security
•European Union classify Niobium as a “critical metal” – lack of substitutes, no European production
Niobium Market and Reasons for Growth
•“Niobium demand has grown at a 10% compound annual growth rate over the last 10 years and is forecast to increase steadily going forward.” Carol Banducci, CFO, IAMGOLD (May 4, 2011)\
•Only 10% of worldwide steel production contains niobium – expected to rise to as much as 20%
•Developed countries utilize roughly 100 g/t of steel – while China only utilizes 40 g/t
• China produces almost 40% of world steel, but currently consumes a much smaller percentage of world Niobium production than their steel production would suggest, but they are expected to grow their Niobium consumption to match steel production
•10% of steel is hardened with Niobium, that percentage is expected to increase to 20%
Who Produces Niobium and Where
Brazil has two of the largest niobium deposits in the world, the Araxá and the Catalão
deposits. The Araxá mine is operated by CBMM, decreasing grades are increasing operating costs at the mine. The Catalão owned by Anglo American Brazil, may run out of ore if the deposit size can not be increased. The third-largest producer is the Niobec deposit in Quebec, owned by IAMGOLD Corp. Niobec’s grade of Niobium is falling the deeper they are being forced to mine.
Niobium prices are negotiated between buyers and sellers and does not have a spot price like most commodities. Prices have risen steadily since the year 2000 from $13.50 a Kg to around $45 a kg in 2010. With only a few producers, the lack of new supply expected to come on stream anytime soon and increasing demand niobium prices are expected to remain high.