The London REE Report: The Wizard of Oz.

Japan is looking to trade pacts to pull its economy out of nearly two decades of stagnation, and recently announced plans to start consultations on joining negotiations on the Trans-Pacific Partnership. That multilateral free-trade pact aims to integrate Asia-Pacific economies, including the U.S., Singapore, Chile, Australia and Peru, along with Malaysia, New Zealand, Brunei and Vietnam.

In a positive development yesterday, Reuters reported on Australia offering to become a reliable future supplier of rare earth elements to Japan. Below, how the Wall Street Journal covered the development. Australia’s Foreign Minister left out a few details like the pricing mechanism, and exactly when this new Australian supply is expected to flow. Supply and demand ruling all, I suspect he was trying to get some Japanese investment into Australian mining firms.  Without that, any and all Australian REE firms will be free to simply supply the highest bidder, who may or may not turn out to be Japanese. We all have aspirations, and this report was heavy on aspiration and light on practicality.

NOVEMBER 23, 2010
Australia Commits Rare-Earth Supply to Japan

CANBERRA—Australian Foreign Minister Kevin Rudd vowed Tuesday to clear the way for the long-term supply of the country's rare-earth metals to Japan amid supply worries surrounding China, the world's biggest producer of the metals.

"Australia stands ready to be a long-term, secure, reliable supplier of rare earths to the Japanese economy," Mr. Rudd told reporters following meetings with Japanese Foreign Minister Seiji Maehara in Canberra.

China produces some 97% of the world's supply of rare-earth elements, used in an increasing range of electronic gadgets, electric cars, wind turbines and military equipment. It has priced out producers in other nations, including the U.S. and Australia, in the past two decades.

But Chinese officials are signaling greater efforts to tie the export of rare-earth metals to tougher environmental standards. That move is forcing Japan, the world's largest user of the metals outside of China, to scramble for alternative supplies.

Last year, Canberra blocked plans by China Non-Ferrous Metal Mining (Group) Co. to invest 252 million Australian dollars (US$249 million) in Lynas Corp., an Australian miner of rare-earth metals.

"The Australian government understands the strategic significance of rare earths globally," Mr. Rudd said. "We recognize that within our country we possess a range of these rare earths."

Mr. Maehara told reporters Japan is "extremely grateful" to Australia, a stable supplier of a range of resources. "We're very pleased that Australia is able to give us a long-term commitment in relation to rare earths," he said.

The question of Australia's foreign-investment plan wasn't raised in Tuesday's talks, Mr. Rudd said, amid signals Japanese companies could look to invest in Australian rare-earths mines.


Also crossing my path yesterday was a report from one of the consulting industry’s better “Mystic Megs.” The future is almost here, according to The Boston Consulting Group, at least for alternative energy. They’ll get no quibbles from me for I agree. I also think we are reaching the tipping point in so many technologies. While in economics the year has been one dismal science crisis after another, in REE related technology it has been one stunning development after another.

The future is closer than you think for some forms of alternative energy, says The Boston Consulting Group
Tue November 23, 2010

UAE. Several alternative-energy technologies are approaching inflection points in their development, and the day when they could have a profound impact on the global energy landscape could come far sooner than is commonly assumed, says a new report from The Boston Consulting Group (BCG).

The report titled What’s Next for Alternative Energy?, examines the state of seven of the most significant alternative-energy technologies—advanced biofuels, electric vehicles (EVs), concentrated solar power (CSP), solar photovoltaic (PV), onshore wind, offshore wind, and clean coal through carbon capture and sequestration (CCS).

Among the report’s key findings:

• Advanced biofuels, CSP, and solar PV will see accelerating adoption and growth. They are on track to change the global energy mix far earlier than is often assumed. Their costs are falling rapidly, and they are on the path to becoming largely cost competitive with both CSP and solar PV Levelized Cost Of Energy (LCOE) potentially falling to less than US$0.10 per kilowatt-hour by 2020.

• Onshore wind power will see steady adoption and continued growth. It is already cost competitive with conventional energy sources in prime sites, where it can deliver an LCOE of $0.09 or $0.10 per kilowatt-hour, and its cost will continue to fall. In contrast, offshore wind will likely struggle to move beyond purely subsidy-driven growth and will only grow in a few countries willing to continue heavy subsidies.


As if to prove BCG correct in their assessment of offshore wind farms, this also crossed my desk yesterday. My guess is that only integrated wind and wave projects will eventually be truly cost competitive. Now someone else will probably go and prove me wrong with a new offshore wind breakthrough.

Fred Olsen Abandons 450MW Scottish Offshore Wind Farm Project
November 22, 2010

Fred.Olsen Renewables (FOR) has announced that following a strategic review of its portfolio of onshore and offshore wind farm sites its main focus would be on onshore wind farm development.

Nick Emery , Managing Director of the company’s UK operations said: “Fred.Olsen Renewables has undertaken a thorough and complete review of all of our potential wind farm developments. As an independent power producer we have concluded that the most efficient use of our development resource is in our onshore portfolios, where historically we have had considerable success. Crystal Rig Wind Farms I and II, for example, provide almost 10% of Scotland’s operational wind capacity.”


When it comes to 2010  in our REE related  technology, "Rarely have so many people been so wrong about so much," to quote President  Nixon, although he wasn’t thinking of rare metals using technologies.  From our blog perspective, 2010 has been a year of great renewable energy advance. The same will happen with EVs. More on that on Friday.

Graeme Irvine, London.