1.Change We CanBelieve In Richard KarnManaging EditorThe Emerging Trends Report Anchorage, Alaska

2. What is the fundamental difference between these elements? 3. GEOLOGY FOR LIBERAL ARTISTS elements having a higher atomic number than iron (Z>26) cannot be formed by nuclear fusion processes in stars originate only by neutron or proton absorption of already existing bigger nuclei. these capture processes with extremely high fluxes of neutrons and protons occur exclusively in massive stars during the end of their life cycle a supernova explosion both creates these elements and distributes them through space as ash in an interstellar cloud solar system formed by condensation, contraction and subsequent collapse of an interstellar cloud > 99% of the matter of the solar system was concentrated in the sun the rest is contained in planets, meteorites and comets 4. Planetesimals were formed out of dust and ice particles; consequently, planets were built up by collisions of planetesimals.The material remaining outside the sun has undergone one or more of the followingprocesses: oxidation, accretion, melting, segregation, and fractional crystallisation. 5. Various transportation and concentration mechanisms over countless cyclescreate accumulations of these elements in compounds that sometimes areeconomic to minemost are notThe probability of elements > 26 forming then, is low--as is their relativeabundance 6. Source: USGS 7. Specialty Metals ExperiencingSupply Threat 8. 48 Specialty Metals Experiencing Supply Threat(number of threats)Sovereign Risk Scarcity No Substitute By-product Dissipative Use antimony (5)beryllium (3)bismuth (3)cobalt (3) fluorspar (2)gallium (3)germanium (3)graphite (3)hafnium (2) indium (3)lithium (2)magnesia (3)manganese (2)molybdenum (2) niobium (4) 6 PGMs (5)15 REEs (4)rhenium (3) scandium (3) selenium (4) silicon (2) silver (3) tantalum (2)tellurium (4) tin (3) titanium (2) tungsten (3) vanadium (2) zirconium (3)8 9. Specialty Metal Demand Drivers Endless pursuit of higher quality, ever more efficient devices at everlower prices Technology-enabled explosion in material science R&D Unique performance characteristics in tech alloys Limited substitution + trace amounts used = price inelastic Scarcity or byproduct sourcing = supply inelastic Many have dissipative uses but no recycling protocols Specialty metal demand trajectory is discovery-driven and largelyindependent of GDP (unlike oil, base metals, lumber etc) cycle back to top and repeatfaster.www.emergingtrendsreport.com 10. Ruthenium HDD exampleHDD Capacity GrowthThe Great Stabilizer:- 3G and 4G super alloys (Ni, Co, V, W, Mo + Re)- perpendicular bit stacking HDDs- artificial photosynthesis- nano-lattice for targeted drug deliveryNote that the vertical axis is logarithmic, so the fit to reflect growth in HDD capacity reflects exponential growth. 11. Scandium: Industry-Changing Potential Scandium (Sc) in aerospace: Scandium is the most potent grain-refining agent known for aluminium (Al) 98% Al : 2% Sc super-alloys have the highest strength-to-weight ratio in use today Significantly improves strength, durability, plasticity, and corrosion resistance Renders aluminium weldable without heat cracking (rivet-free aircraft) Reduces weight and build-cost, improving fuel efficiency and aerodynamics Scandium in Solid Oxide Fuel Cells > 12 Patents replace Y in Yttrium Stabilized Zirconium electrolytes with Sc Lower operating temperature extends fuel cell life and makes housings cheaper Critical for fuel cell dynamics and economics Scandium in Lighting Scandium combusting on the sun is what gives us sunlight Widespread use in film set and stadium lighting to replicate daylight New environmentally benign incandescent replacement Closest analogue is the Niobium market in 1970s (today worth US$5-7Bannually from single supplier) 12. Scandium: Demand is there, Supply is lacking Global Sc production +/- 8 tons per annum (tpa) sourced primarily as a by-product from China (REEs), Russia, Ukraine, Kazakhstan (U) Aerospace industry and Bloom Energy alone would like to see stable supplyof 300 and 30 tpa respectively of Sc production before retooling USGS-quoted price for Sc2O3 is US$1400/kg ($1.4M/ton); anecdotal marketprice is US$2,000 5,000/kgwhen you can get it Known Australian JORC-compliant Sc resources: Metallica Minerals Ltd: 16.8 Mt @ 130 g/t Sc (2175 t Sc metal/ 3200 t Sc2O3) Jervois Mining Ltd: 12 Mt @ 261 g/t Sc (3100 t Sc metal/4700t Sc2O3) Platina Resources Ltd: 10.1 Mt @ 340 g/t (3400 t Sc metal/ 5100 t Sc2O3) Combined, a 90% recovery rate indicates Australia has enough Sc to supplyglobal markets with 390 tpa of Sc metal, or 630 tpa of Sc2O3, for 20 yearswithout further exploration success 13. Why is the Bull Market in Specialty Metals Being Overlooked? Not easy to invest in: mis- & disinformation Murky pricing: few are traded on an exchange Off-exchange traded metals are unhedgeable Many are by-products and sold forward Pricing is discovery-driven, not GDP-correlated Free Marketeers in denial about Neomercantilist intentions Troubles in the EU, USA and Japanand increasingly in the BRICS www.emergingtrendsreport.com 14. Specialty Metals in ElectronicsHageluken, Christian:Sustainable metals recycling from waste electronics; South Pacific Regional E-waste Workshop; Brisbane, QLD, 21.07.2010.www.emergingtrendsreport.com 15. Underappreciated but Critical Driver:eWaste 321m computers sold globally in 2010-- 98m in US alone 1.3b cell phones sold globally in 2010; number in use surpasses 5.0b(Gartner) 123,000 computers are discarded every day in the US--19% are recycled 402,000 cell phones are discarded every day in the US--13% are recycled(EPA) 200 g/t Au in PC motherboard scrap; mobile phone scrap: 340 g/t Au, 3500 g/t Ag, 140 g/t Pd, 130 kg Cu (EPA) ...another is the US www.emergingtrendsreport.com 16. In 2011, the US... produced 23.0 trillion cubic feet of natural gas (#1) produced 5.67 million barrels of oil (#3) oil reserves worldwide have grown from 642 billionbarrels in 1980 to more than 1.3 trillion barrels in 2009 has the richest oil shale deposits in the worldestimates are there are about 1 trillion barrels ofrecoverable oil (4 x Saudi Arabia)...and now Canadianoil sands are considered the second largest 17. Paired Trade: long North American chemical and fertilizer companies, short everyone else 18. Combined crude and product pipelines: 148,622 miles/238,000 kmCombined nat gas transmission and gathering pipelines: 321,944 miles/515,000km(including distribution mains: 1,539,911 miles/2,463,850 km) Source: BTS, 2009 data 19. 1. less joy-riding/cruising + increasing use of public transit2. more on-line and purposeful shopping3. less gasoline stored in car gas tanks as people only buy for their immediate needs(254m cars & trucks averaging 20 gals per = 5 B mobile storage)4. improved fuel efficiency5. alternate energy fuels, esp. nat gas (Clean Energy Fuels), fleets of municipal buses anddelivery vehicles (UPS) and taxis are growing, far outpacing sales of hybrids and EVs...but since 1980, the population has grown from 234m to 313m: so a 34% increase inpopulation was attended by a 47% drop in retail gasoline deliveries--25% of the drop ofwhich occurred in the second half of 2011 alone.Sustained high price reflects refineries closing along the eastern seaboard 20. The addition and withdrawal of intermittent electrical generation tothe grid, such as that from solar and especially wind, have contributedto the decline in the reliability of the North American electrical grid. 21. "Beef prices have climbed about 30% over the past two years and roughly 10% from February2011 to February 2012," said J. Pawlak, restaurant research and consulting firm. (WSJ)...and then there is ethanol. 22. How sustainable is this? Since 1980, the US has created more than 160,000 laws but hasrepealed only 79 The longest document ever written is... The US Tax Code (85,000pages and growing annually) The number of US Federal government employees has doubledover the last decade (14:1 tax receipts: Fed employee salary) Small Business Administration (a government body): "regulationsin general add $10,585 in costs per employee per year." ...Peak Government ...the end of the Welfare State ...Thatcher Moment 23. "When you out-go exceeds you income, your upkeep becomes your downfall." 24. Something that cant go on, wont 25. "Only in America could the rich people who pay86% of all income taxes be accused of notpaying their fair share by people who dontpay any income taxes at all." 26. Change We Can Believe In Reform is in the air: 12 & 14 elections Smaller, less intrusive govt Just enforce the regs and laws we have Major O&G pipeline RR&E, electrical grid + storage, water& wastewater treatment Infra rebuild: cheap, creates jobs, expands productive sideof economy Spec Mets are leveraged to the massive demand on thehorizon