On May 4-7 in the windy city of Chicago there will be held a conference entitled "Wind Power 2009." I have some comments to make, and I am issuing a simple challenge to the organizers and participants in this conference.
Investors in mining pay special attention.
My question is this: Are you, the wind power industry, buying the permanent magnets for manufacturing the lightest weight most reliable and low-service electric generators turned by the force of the wind from American companies, employing American workers in the United States? I believe that the large magnets for the generators you have already used and are planning to buy and use are made in the People's Republic of China (PRC). I further believe that these magnets are of the neodymium iron boron type, which can only be made from the rare earth metal "neodymium," which today is only produced in the PRC.
If it is the case that you are having these magnets made in the PRC and that you intend to increase your purchases of them as you build more wind turbines, then I would like to know how you plan to address the fact that the supply of all of the rare earths, including neodymium, from the PRC is being reduced each year by the Chinese as China's domestic demand for rare earth metals increases steadily, and is, in fact, expected to exceed China's production levels by 2013 at which point there could be no rare earth metals available for export or for use in products made in China to be exported.
I would like to also know why your industry does not support the production, by financing it, of rare earth metals, including neodymium, by the reopening of the world's largest single-point rare earth element (REE) mine, Molycorp's Mountain Pass mine in San Bernardino, County, Calif.? I would also like to know why your industry does not invest in developing North America's largest so-far undeveloped rare earth ore body in the Lemhi Pass District of Idaho and Montana, owned by Thorium Energy Inc., or the two proven substantial rare earth deposits in Canada at Hoidas Lake, Saskatchewan (owned by Great Western Minerals Group) and at Thor Lake, NWT (owned by Avalon Rare Metals).
The total investment in all of these REE mining operations taken together to bring them to a total yearly production of as much as 40,000 metric tons per year of REEs more than twice the current use of REEs by all American industries and the military combined would be around 750 million, of which two thirds would be spent within the United States, creating jobs and ensuring the continuation of industries such as yours without the possibility of interruption of their critical REE supplies by either the growth of southeast Asia's demand for REEs or by an unfriendly action to cut off exports for political reasons. Developing domestic sources of these critical raw materials would create wealth, not simply distribute what we have to workers in Southeast Asia.
The power of the wind from your combined voices will not produce a single gram of neodymium toward the one metric ton per megawatt of production capacity that you need for each new installation. Only the logical development and prioritization of your value chain beginning with mining your critical natural resources in the United States and Canada can make your proposed green solution to the production of electricity without burning fossil fuels anything more than pissing in the wind.
We cannot have energy security and independence without first having secure production of natural resources to insure the independence and security of our manufacturing industry and military.
Jack Lifton is a featured contributor to the new Resource Investor. With 35 years experience in the OEM electronics and automotive supply industries, he is today a metals sourcing consultant for OEM heavy industry and offers due diligence analysis for institutional investors. Lifton is a prominent speaker on the market fundamentals of minor metals and their end-uses and travels the world on behalf of Fortune 500 and Global 1000 corporations. Reach him directly at JackLifton@aol.com.