The demand for rare earths comes from these services:

Catalysts		petroleum cracking catalysts and autocatalysts, which use lanthanum and cerium
Glass		cerium is the major constituent of this sector where it is used in ultra-violet light filtering
Polishing		a rapidly growing sector that is based on the unique chemical and mechanical properties of cerium in the polishing of glass, including multi-level electronic components
Metal Alloys		lanthanum nickel hydride batteries is the key driver of demand and could put pressure on lanthanum supply
Magnets		currently, the most dynamic market for rare earths with growth in demand increasing at >15% for the past 5-10 years, which have driven the prices for neodymium and terbium to increase by more than 40% over the past 12 months
Phosphors		necessary for the production of phosphors for TVs and energy efficient lamps this the smallest sector by volume (only 6-8%), but the largest sector by value (30-40%) as europium and terbium are among the rare earths with the lowest abundance
Ceramics		yttrium stabilised zirconia is used throughout the resources industry where a material with high wear resistance is required
Other		many applications from RE use in the agriculture and textile industries in China to diagnostic equipment for the health industry

Looking forward to 2012, when consumption is forecast to be 180-190,000 tonnes, China will probably supply only 130-140,000 tonnes; sufficient to supply its own needs only. On this basis non-Chinese supply will need to be
40-50,000 tonnes if demand is to be satisfied; hence the Nolans Project is now viewed as an essential part of the
supply matrix early next decade. The shortage is highlighted in the figure below:   

As outlined above, the consumption of the individual rare earths that make up the total spectrum of demand is not in the same ratio as the mix in which they occur in the various deposits around the world. This is best illustrated by the figure below in which the relative abundance of the rare earths in the ‘new’ projects is compared with forecast demand in 2012. Nolans is well placed to take advantage of the high growth sectors of the market. The rare earths market in China is characterised by a high degree of fragmentation; the top 12-16 companies supply 80% of the market, which is home to 150-200 processors where the manufacturer of a given product can take place over four or more stages, each of which could be owned and operated by a separate company before it is sold to the final consumer.

For example, consider the production of a rare earth magnetic powder for use in the production of bonded neodymium iron boron magnets.

Company A will mine and beneficiate the rare earth ore to produce a rare earth mineral concentrate that is sold to

Company B. This latter company utilises a chemical leaching process to produce light rare earth and medium/heavy rare earth chemical concentrates, usually as chlorides, carbonates or nitrates.

Company C, who typically possesses separation facilities designed to process one or two types of chemical concentrate produces a range of rare earth chemicals (usually oxides) with a REO concentration of 99% from the mixed chemical concentrate.

Company D purchases neodymium oxide which it reduces to neodymium metal in a carbon arc reduction furnace, which is sold to

Company E who produces the rare earth magnetic powders. The production of a rare earth oxide for either a phosphor producer or an autocatalyst producer may go through a similar number of stages. It is Arafura’s intent that the Nolans Project will be a vertically integrated enterprise that will eliminate many of the inefficiencies of the fragmented supply chain in China.