Phosphor—a critical component
in fluorescent lamps
Navigating through market fluctuations
What are rare
earth oxides?
Global supply issue and the impact on phosphor
based fluorescent lighting
There are 17 rare earth elements (REEs). These elements, distributed in rare
earth oxide (REO) form, are critical to a variety of high-tech products and
manufacturing processes, including catalytic converters, petroleum refining, color
TV and flat panel displays, permanent magnets, batteries for hybrid and electric
vehicles, medical devices, and phosphor powders used in fluorescent lamps.
Light Rare Earths
(More Abundant)
Major End Use
Heavy Rare Earth
(Less Abundant)
Major End Use
Lanthanum
phosphors, hybrid engines,
metal alloys
Terbium
phosphors,
permanent magnets
Cerium
phosphors, auto catalyst,
petroleum refining, metal alloys
Dysprosium
permanent magnets,
hybrid engines
Praseodymium
magnets
Erbium
phosphors
Neodymium
auto catalyst, petroleum
refining, hard drives in laptops,
headphones, hybrid engines
Yttrium
red color, phosphors,
ceramics, metal alloy agent
Samarium
magnets
Holmium
glass coloring, lasers
Europium
phosphors, red color for
TV and computer screens
Thulium
medical x-ray units
Gadolinium
magnets
Lutetium
catalysts in petroleum refining
Scandium
aerospace components
Ytterbium
lasers, steel alloys
Promethium
nuclear batteries
U.S Department of Energy 2010 Critical Materials Strategy Summary. http://www.energy.gov/news/documents/Critical_Materials_Summary.pdf;
"GTSO: Goldman Sachs Analyst Predicts ‘Severe’ Rare Earths Deficit." BusinessWire.com. 6 May 2011.
2 Phosphor—A critical component in fluorescent lamps
Phosphor—A critical component in fluorescent lamps 3
“Over the past eight months,
FOB prices of various light
rare earth elements (LREEs)
have spiked by between
300% and 2500%.”1
Price trend of REO phosphors used in
fluorescent lighting in the last 3 years
Price vs. Time
1400
1200
Europium
1000
USD/kg
Terbium
REO phosphors in
fluorescent lighting
800
600
400
200
Apr 11
Apr 10
Oct 10
Apr 09
Oct 09
Apr 08
Oct 08
Apr 07
Oct 07
Apr 06
Oct 06
Apr 05
Oct 05
Oct 04
Apr 04
Oct 03
Apr 03
0
Price vs. Time
Terbium
Dysprosium
•
Holmium
Thulium
Lutetium
•
With manufacturing costs on the rise, Philips is forced to
implement pricing actions on all Fluorescent based lighting
products. Philips has executed global procurement programs
to insure sourcing and is undertaking all strategies to best
mitigate cost increases.
Ytterbium
Dysprosium
4
Source for chart: U.S Department of Energy 2010 Critical Materials Strategy Summary. http://www.energy.gov/news/documents/Critical_Materials_Summary.pdf
1) Chan,Vincent. "Baotou Rare Earth," Equity Research. Credit Suisse. 13 April 2011.http://doc.research-and-analytics.csfb.com.
2) U.S Department of Energy 2010 Critical Materials Strategy Summary. http://www.energy.gov/news/documents/Critical_Materials_Summary.pdf;
“GTSO: Goldman Sachs Analyst Predicts ‘Severe’ Rare Earths Deficit.” BusinessWire.com. 6 May 2011.
Jan 11
Critical
Near critical
3
2
Gallium
Lithium
Cerium
Lanthanum
Tellurium
Europium
Indium
Neodymium
Terbium
Yttrium
Not critical
Cobalt
Praseodymium
Samarium
1
1
4 Phosphor—A critical component in fluorescent lamps
Oct 10
All REO phosphors are near critical or in critical supply
Short Term Criticality (0–5 years)
Erbium
Yttrium
0
Jul 10
Promethium
20,000
As a result of REO shortages, the cost is increasing and is
having a direct impact on a global and industry wide scale.
Experts predict that these shortages will continue through
2014 until new sources of supply will be able to ease the
current situation.2
Apr 10
Scandium
40,000
Jan 10
Gadolinium
•
60,000
Oct 09
Rare Earth Elements
Europium
80,000
Jul 09
Samarium
Cerium
100,000
Apr 09
Neodymium
Linear fluorescent (TL), Compact Fluorescent Non–Integrated
(CFLni), and Compact Fluorescent Integrated (CFLi) phosphors
are all experiencing unprecedented shortages in global supply,
resulting in Philips price increases of over 300% as of July 2011.
Lanthanum
Jan 09
Praseodymium
Yttrium
120,000
Importance to clean energy (low to high)
Cerium
140,000
Oct 08
•
•
Jul 08
Lanthanum
160,000
Apr 08
Phosphors
180,000
Jan 08
Material
Rare Earth Oxides (REOs) are a critical component of
fluorescent based lighting systems. The global shortage of
these materials is currently having a direct impact on phosphor
availability and pricing.
(RMB/ton)
Lighting
2
3
Supply risk (low to high)
4
Source for top and middle charts: China Commodity Marketplace, Sealand Securities, Mar 2011.
Source for bottom chart: U.S Department of Energy 2010 Critical Materials Strategy. http://www.energy.gov/news/documents/criticalmaterialsstrategy.pdf
Phosphor—A critical component in fluorescent lamps 5
Rare earths: A dwindling resource
Since the 1990s, the low cost of mining operations in China, combined with costly environmental and
permit regulations in the US and other nations, has driven almost all non-Chinese rare earth operations
out of business. China mines and produces about 97% of the world’s supply of rare earth metals, and
announced it is cutting its exports because of its own rising demand and new environmental restrictions.1
• World demand for rare earth elements is estimated at 134,000 tons per year, with global production
around 124,000 tons annually2
• World demand is projected to rise to 180,000 tons annually by 2012, and by 2014 may exceed
200,000 tons per year2
• China’s output may reach 160,000 tons per year (up from 130,000 tons in 2008) in 2014, still a
capacity shortfall of 40,000 tons per year2
China controls 97% of the world supply of REO
Global demand is expected to exceed Chinese supply
Global rare earth oxide production trends
Supply/demand forecast (1000 tons/annum)
200
140
Bastnasite–Carbonatite Era
160
Bayan–Obo Mine, etc.
(China)
120
Market Transition
Output (kt of REO)
180
140
100
120
Mountain Pass Mine
(United States)
80
100
Monazite Placer Era
(South Africa, Brazil,
Australia, India)
60
80
60
40
40
20
20
0
0
1949
1959
1969
1979
Other Countries
1989
1999
United States
2009
China
Source of graph: Tse, Pui-Kwan. China’s Rare Earth Industry. US Geological Survey. U.S. Department of the Interior. 2011.
1) Hanson, David J. Concern Grows Over Rare-Earths Supply. Chemical & Engineering News, 89(20), May 16, 2011.
2) Congressional Research Service. Energy Policy. Rare Earth Elements: The Global Supply Chain. By Marc Humphries. CRS Report For Congress, 2010.
6 Phosphor—A critical component in fluorescent lamps
2008
2009
2010
2011
Global demand (1000 ton/a)
2012
2013
Chinese supply (1000 ton/a)
Source: Chan,Vincent. “Baotou Rare Earth,” Equity Research. Credit Suisse. 13 April 2011. http://doc.research-and-analytics.csfb.com
Phosphor—A critical component in fluorescent lamps 7
Media coverage of REO
global supply issue
“Supplies Squeezed, Rare Earth Prices Surge”
New York Times. May 2, 2011
“At the beginning of this year China reduced its rare earth export quotas to all countries, while raising export taxes on
some rare earths to 25 percent, from 15 percent previously.”
“China May Further Reduce Rare Earth Quotas, Goldman Sachs Says”
Bloomberg. May 4, 2011
“We suspect that export quotas will shrink further… The market will remain in ‘severe’ deficit this year and next…
We are of the view that rare earth prices have not yet peaked.”
“GTSO: Goldman Sachs Analyst Predicts ‘Severe’ Rare Earths Deficit”
BusinessWire.com. May 6, 2011
“The global rare earths market likely faces a 18,734 metric-ton deficit of the rare metals this year, equivalent to 13.2
percent of worldwide demand…. the market for rare earths will remain in severe deficit in 2011 and 2012, and that
prices will trend higher over the next 18 months.”
"Rising Demand for Rare Earth Elements Leads to Doubling of Prices |
Gadget Manufacturers See Soaring Costs for Rare Earth Minerals"
Tech News Daily. May 3, 2011
Phosphors utilizing REOs
are second in demand only
to magnets
“The doubling in rare earth prices over the past four months comes on top of a fourfold price increase in 2010—
and the pressure won’t lift anytime soon.”
U.S Department of Energy 2010 Critical Materials Strategy Summary
www.energy.gov/news/documents/Critical_Materials_Summary.pdf
“Several components of the clean energy technologies…depend on materials at risk of supply disruptions in the short
term (0–5 years). Those risks will likely decrease in the medium (5–15 years) and long term.”
Global value of REMs by applications
Other
Glass
Ceramics
Polishing
Catalysts
Metal Alloys
Phosphors
Magnets
Source: 2008—Chan,Vincent. “Baotou Rare Earth,“
Equity Research. Credit Suisse. 13 April 2011.
http://doc.research-and-analytics.csfb.com
0
100
200
300
400
500
Consumption value (USD/year)
8 Phosphor—A critical component in fluorescent lamps
Phosphor—A critical component in fluorescent lamps 9
Many analysts believe current
shortages may be either eased
or alleviated by 2013–2015 as
new mines and processing
facilities come online, but there
is no certainty to this prediction.1
A quick recap
• Technology-driven companies such as Philips are dependent on Chinese export decisions,
as there are few other main suppliers
• Severe supply deficits are expected to occur over the next few years as China increasingly
lowers export quotas
• As a result in supply deficit concerns, prices of these needed minerals have skyrocketed and
has led to increases in product costs
The Future Outlook
Many analysts believe current shortages may be either eased
or alleviated by 2013–2015 as new mines and processing
facilities come online, but there is no certainty to this prediction.1
As a world leader in lighting, Philips continues to lead the way in
making improvements in areas that remain within our control.
With this commitment in mind, Philips makes every effort to
aggressively pursue optimization of designs which require REO,
reduce waste in the manufacturing process, recycle various
materials, and explore additional opportunities intended to
defray cost increases experienced from REO materials.These
vigorous initiatives continue to deliver improvements, but are
not enough to offset the ongoing and substantial cost impact
resulting from the current global REO supply and escalating
demand pressures.
1) U.S Department of Energy 2010 Critical Materials Strategy Summary.
http://www.energy.gov/news/documents/Critical_Materials_Summary.pdf
10 Phosphor—A critical component in fluorescent lamps
How does this affect you?
• Expert opinions vary, however, market conditions will remain
unstable for the near future
• Fluorescent based lighting products will have continued
price fluctuations
• Philips Lighting is working diligently to relieve the current
supply issues on phosphors
• Philips Lighting is committed to:
— Sound supply chain practices on a global scale in order
to secure materials
— Keeping you updated and informed on all market
conditions and changes
• Philips Lighting highly values you, our customer, and
appreciates your patience as we together work through
these market conditions
• Please stay in contact with your local Philips Lighting
Account Manager for any questions and updates, or for more
information please visit http://www.philips.com/phosphor
Phosphor—A critical component in fluorescent lamps 11
© 2011 Philips Lighting Company, A Division of
Philips Electronics North America Corporation.
All rights reserved.
Printed in USA 7/11 P-6281
www.philips.com
12 Phosphor—A critical component in fluorescent lamps
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1-800-555-0050