Again: Only 2 RE Companies Quotas Increase; Hostages Exchanged; China RE-Organisation to ONE Company?; Power-Cuts; Ionic out of Focus; Rainbow Pick K-Tech; Arafura & The Bloomberg Daimler Hoax;

2021 Rare Earth October 5

Oct 5, 2021

We had actually planned to offer a closer look at Appia Energy Corp, but we’ll postpone that one a bit.

China 2021 Full Year Rare Earth Quota

At the beginning of the fourth quarter it is late and safe for the MIIT ministry officials to publish the numbers, so that there will be no surprises.

And it is early enough for radical changes, if necessary to fulfill the full year plan. Age of Compliance in China.

A 20% increase, and this is, what it looks like:

We note, that the only changes over previous years are the quotas of China Southern Rare Earth Group and China Northern Rare Earth Group.

All others remain the same.

You don’t believe it? Compare 2020 here: https://giti.sg/markets/markets_files/REquota2020.html

The crisis over the CFO of Huawei, who happens to the the daughter of Huawei’s founder, a company that grew up nursed by supply contracts for the People’s Liberation Army:

Huawei’s Meng Wanzhou flying back to China, after striking deal with US over fraud charges

“Meng Wanzhou is free to leave Canada,” the Canadian Department of Justice said in a statement.
Two hours later, she did just that, boarding an unscheduled Air China 777 that took off from Vancouver International Airport at 4.29pm local time, bound for China, an airport source said.
At the same time that Meng took to the air, a flight carrying Kovrig and Spavor took off from China, Trudeau announced. The men, who were arrested days after Meng, were accused by China of espionage, but were regarded by Ottawa as hostages.

and:

Two American siblings allowed to return from China after three years following lifting of exit ban

In June 2018, Chinese authorities imposed an "exit ban" on Victor and Cynthia Liu, both American citizens, as they were visiting family in China. A State Department spokesperson said they "welcome Cynthia and Victor Liu's return to the United States on Sunday."
The lifting of the exit ban on Victor and Cynthia Liu, both American citizens, follows an agreement between the US Department of Justice and Huawei executive Meng Wanzhou to defer prosecution of US charges against her until late 2022. That agreement allowed Meng, who had been detained in Canada, to return to China. Beijing also released two Canadian citizens, Michael Kovrig and Michael Spavor, following Meng's release.
China's foreign ministry spokeswoman Hua Chunying said Victor and Cynthia Liu had returned to the US after Chinese police lifted restrictions on their travel movements, insisting the ban was an "independent judicial act" based on China's "rule of law."

The Trump government pursued a case against an individual for corporate violation of US-laws abroad, said to be a procedure without precedence, while China, living up to all expectations one would have in a communist government, took two Americans and two Canadians hostage.

We are less than convinced, that there were valid cases. The whole affair casts doubts over the “rule of law” - on both sides of the Pacific Ocean.

While the hostage crisis would not have been important enough to prevent a hot conflict, it was important enough to prevent a meeting of the the Communist Party’s general secretary with the US president.

This certainly is a detente move.

Impact on Rare Earths

Currently, China is running low on rare earth raw materials. For a number of reasons, one of them being environmental, China would not like to further exploit its own rare earth resources and would rather import rare earth raw materials.

While current import options seem to be maxed out, the question is, what next?

One option is, to invest in foreign rare earth resource projects. Already beginning of the year China’s Minister of Industry & Information Technology had called for sino-foreign cooperation in rare earth raw materials.

This, however, requires a minimum of political goodwill between China and the rest of the world. And that could now be created, with the hostage situation out of the way.

However, there is the new obstacle, called AUKUS:

Another option is…. read on.

China RE-Organisation

Last week Minmetals issued a release on the stock exchange late on September 23, which announced consolidation talks among the major rare earth groups:

The ultimate controller of the listed Minmetals Rare Earth Co., Ltd,
China Aluminium, and
Ganzhou People’s Government, who is the ultimate controller of China Southern Rare Earth Group.

The announcement cautioned, that whatever plan has not yet been approved.

This of course unleashed a lot of speculation.

Our take is, that this particular incidence is the re-organisation of Minmetals Rare Earth Co., Ltd. to fold it into China Southern Rare Earth Group.

Two China Rare Earth Companies?

The “two group” approach is ages old and any increase in rare earth production quota is imited to China Southern and China Northern rare earth groups.

The two state-owned company approach would be similar to dividing up economic sectors among two instead of one state-owned enterprises in the early stages of China’s reform, to create competition.

From today’s point of view, in terms of much promised reform in China, such a two-company arrangement would be a giant leap backwards.

Hardly anyone noticed that this was preceded by a “cooperation agreement” between China Aluminum’s China Rare Earth Co., Ltd. and China Northern Rare Earth Group on September 10, published just a day ahead of the Minmetals announcement.

We found this explainer in Chinese and give you the full text translation here, to put everyone on the same page:

Chinalco, China Minmetals and Ganzhou are planning the strategic reorganization of rare earth assets. What rare earth assets do they have?

Chinalco itself has listed rare earths as one of the seven major business sectors, and currently holds China Rare Rare Earth Co., Ltd.
Minmetals Group owns Minmetals Rare Earth Group, one of the six largest rare earth groups, and sits on the A-share listed company platform-Minmetals Rare Earth.
Ganzhou City is my country's "Rare Earth Town". In 2010, the state-owned assets of Ganzhou also jointly established Ganzhou Rare Earth Group Co., Ltd.
Minmetals Rare Earth (000831, SZ) announced on the evening of September 23 that the company had received notice from China Minmetals Corporation (hereinafter referred to as China Minmetals , Ganzhou Municipal People's Government and others are planning the strategic reorganization of related rare earth assets. The relevant plan has not yet been finalized and needs to be approved by the relevant authorities.
Both China Minmetals and Chinalco are wholly-owned by the State-owned Assets Supervision and Administration Commission of the State Council, and both are large state-owned enterprises with assets of hundreds of billions of yuan. As soon as the news came out, investors immediately drew heated discussions, "rare earth aircraft carrier is about to be born", "rare earth take off"... However, some investors believe that in the case where the stock prices of Minmetals Rare Earth and other related stocks have risen sharply, investors Should be rational.
Chinalco Group sits on China Rare Earth Co., Ltd.
According to the official website of Chinalco Group, the group is mainly engaged in the development of mineral resources, non-ferrous metal smelting and processing, related trade and engineering technical services. It is currently the world’s largest supplier of alumina and electrolytic aluminum. One of the registered large rare earth enterprise groups.
Chinalco has a long history of developing the rare earth industry. On the company's official website, rare earths are listed as one of the seven major business sectors. The "Daily Business News" reporter noted that Chinalco currently also holds a controlling stake in China Rare Rare Earth Co., Ltd. (hereinafter referred to as China Rare Rare Earth).
According to the official website of China Rare Rare Earths, the company currently has 9 directly affiliated secondary entity enterprises, of which 5 are rare earth business enterprises. The company is mainly engaged in the development of rare earth metal mineral resources, smelting and separation, deep processing and trading. The main business covers Guangxi, Jiangsu, Sichuan, Shandong, Tianjin, Henan, Guizhou, etc. The company’s main products are rare earth mineral products, separation products, rare earth metals, catalytic products, magnetic products and metal gallium, including 6 categories and 131 varieties, including high-purity and ultra-high-purity rare-earth materials, high-purity semiconductor materials, and new rare-earth alloys. The materials are at the international or industry leading level.
Many listed companies also directly or indirectly hold equity in China's rare earths.
According to Qixinbao, as of May 28, 2020, Aluminum Corporation of China (601600, SH) directly holds 14.62% of the China Rare Earth Co., Ltd. shares, and Jiaozuo Wanfang (000612, SH) directly holds 13.17% of the shares (according to the 2020 annual report of Jiaozuo Wanfang, then it should directly hold 11.73% equity of China Rare Rare Earth Co., Ltd.), and Grinm Advanced Materials (600206, SH) indirectly holds a small part of the equity through its subsidiary, Grinm Rare Earths New Materials.
What "good brands" does China Minmetals and Ganzhou have?
The Minmetals Group was formed by the strategic reorganization of the former China Minmetals and China Metallurgical Group's two Fortune 500 companies. It is an important state-owned backbone enterprise with metal minerals as its core business and directly managed by the central government. Minmetals Group owns Minmetals Rare Earth Group, one of the six major rare earth groups. Minmetals Rare Earth Group invests in Minmetals Rare Earth (Tengchong) Co., Ltd., Minmetals Rare Earth Jianghua Co., Ltd., Fujian Sanming Rare Earth Materials Co., Ltd., and Heyuan Guoye Rare Earth Smelting Co., Ltd. and a number of rare earth-related companies, and sitting on the A-share listed company platform-Minmetals Rare Earth.
At present, Minmetals Rare Earth is mainly engaged in the production and operation of rare earth oxides and other products, as well as rare earth technology research and development and consulting services. The company conducts separation and processing through outsourcing of rare earth raw materials. Its leading products include high-purity single rare earth oxides and rare earth enrichments. It is one of the largest southern ion-type rare earth separation and processing enterprises in China.
Minmetals Nonferrous Metals Co., Ltd., a subsidiary of China Minmetals Corporation, also holds an 8.6% stake in Xiamen Tungsten (600549, SH).
In addition, the announcement of Minmetals Rare Earth also mentioned the People's Government of Ganzhou City. As we all know, Ganzhou City is my country's "Rare Earth Town".
In 2010, the state-owned assets of Ganzhou City jointly established Ganzhou Rare Earth Group Co., Ltd. (hereinafter referred to as Ganzhou Rare Earth Group). The group has a registered capital of approximately RMB 2.073 billion, and is mainly engaged in the investment and management of the rare earth industry within Ganzhou and the operation and management of state-owned assets in the rare earth industry within the scope of authorization.
According to the official WeChat account of Ganzhou Rare Earth Group, the company's total assets exceed 10 billion yuan, and it owns more than 70 wholly-owned, holding and equity companies including China Southern Rare Earth Group, Ganzhou Industrial Investment Group, and Ganzhou Rare Earth Mining.
At present, Ganzhou Rare Earth Group's business covers three major sectors: rare earths, rare metals, and financial assets. Among them: the rare earth sector is centered on China Southern Rare Earth Group.

Or only ONE China Rare Earth Company?

If taking a giant leap backwards, why not go all the way?

An article by Li Jin, that calls for even reducing the number of rare earth companies in China to only one. Who Li Jin is:

Li Jin, born July 1952, from Yancheng, Jiangsu. Editor-in-chief of "China Enterprise News", vice president of China Enterprise Reform and Development Research Association, chief expert of the State-owned Assets Supervision & Administration Commission News Center, chief researcher of China Enterprise Research Institute, senior reporter of Xinhua News Agency.
Served as a member of the 11th Youth League Central Committee, deputy director of Xinhua News Agency Tibet Branch, and deputy director of Shandong Branch.

He won Won the 1998 "Five Ones" Project Award from the Central Propaganda Department, and this is, what he has to say:

Why should China Rare Earth reorganize again? Because of the price of cabbage

Vicious competition and competitive price reduction have given the United States a chance to "buy the bottom"
Although six major rare earth groups have been formed, their operations have been "terrible".
In the next two years, there is a high probability that there will be a surge in demand for rare earths in the world
It is recommended to establish a rare earth central enterprise directly under the State-owned Assets Supervision and Administration Commission of the State Council.

Generalist Li Jin is obviously neither an expert, nor has he done his homework, as the cabbage prices are history and that 70% of China rare earth exports are by-products of limited use, whose demand lives and dies with fossil fuels.

But he does not need to do his homework, as this is purely ideological in nature and therefore facts don’t matter so much.

This leads us to

Socialist Re-Distribution

The two pre-existing groups China Southern Rare Earths and China Northern Rare Earths are certainly not new.

As noted above, they were the only ones, whose official quotas increased in recent years.

The objective here seems to follow through with the pre-existing original plan to establish a less complicated, more responsive network of state-owned rare earth assets:

Already now rare earth demand for NdFeB permanent magnets exceeds supply;
By 2025 China will have added 183,000 t of NdFeB capacity to the currently existing 300,000 t capacity (Roskill), resulting in 483,000 t NdFeB capacity 2025;
There is a lack of rare earth raw materials, persistent for the foreseeable future;
As yet, except for Myanmar, China has no direct access to additional, substantial foreign rare earth resources for political reasons, and even if it had, no shipments would come out before 2025 (with perhaps one or two glorious exceptions);
Up to now the price of rare earth finished products was determined by supply and demand, however, only a small fraction of demand being traded on the rare earth exchanges;
Given a supply-demand based pricing, rare earth magnet material prices would go through the roof on continued short supply, rendering downstream permanent magnet production and further downstream from there non-feasible;
Hence, in our view, China takes the socialist redistribution approach: Rare earth would be distributed evenly among endusers, everyone in the supply chain would be allowed an operating profit, and domestic rare earth prices would quite possibly be determined on a cost-plus method, no longer on a supply-demand base;
To do so, a strict top-down control needs to be established with a minimum number of players;
Naturally this means strict production and price controls.

This approach would be a classic socialist commodity-deficit management, like we know it from the Council for Mutual Economic Assistance in the past, short: COMECON:

Source of image: Wikia.com

The 7-person leadership in Beijing, also known as the Standing Committee of the Political Bureau of the Central Committee of the Chinese Communist Party, has held extensive study sessions in order to learn about the demise of the Soviet Union.

They may have missed the chapter about the economic detriments of COMECON.

The Alternative for China

China could move to allow exploitation of currently untapped domestic resources to resume at large scale, however, this will include recurrence of environmental issues, as, for example, to date there are no better, environmentally feasible and commercially viable methods for rare earth extraction from ionic clay, than the old-reliable.

The current Chinese government’s approach to environmental matters appears to be iron-fisted and non-compromising, so the chances of this alternative to kick-in are low, but may serve in case of emergency.

Impact on ROW

What this means to the rest of the world, in our opinion:

Lanthanum and cerium products are 70% of China’s export volume. This will continue;
While there will always be a price, there won’t neseearily be physical product available for export as far as neodymium, praseodymium, terbium, dysprosium, holmium and gadolinium are concerned;
Foreign importers may have to pay a hefty premium price for insufficient supplies of magnet raw materials, making an NdFeB magnet supply chain outside China even more improbable.

And the Decade of “Effort” outside China?

Given the aforementioned situation, no matter what the subsidies, US and EU based NdFeB production, if any, would die on the lack of relevant rare earths availability.

The US and the EU are pussy-footing around the issue of radioactive waste from rare earth production, while Japan has outsourced all to India, Vietnam, Malaysia and China:

Norra Kärr in Sweden don’t get a mining permit on hair-splitting environmentalism;
The largest iron ore mine in the EU, Kiruna, also Sweden, a potential mini-Bayan Obo, don’t separate rare earths from the tailings, also on environmental, say radioactive waste concerns;
Fensfjeld, Norway, keep apologizing for having thorium and uranium content and won’t develop;
Silmet, Estonia, are stuck with ca. 660 t of radioactive waste with no solution in sight (What are they thinking in Brussels? That it would evaporate and not recur?);
Germany, the potentially largest consumer of NdFeB and beneficiary of rare earth friendly policies, chose to quickly excuse itself from all and every consequences of its very own initiatives, by announcing closure of its last permanent disposal facility for radioactive waste at Gorleben;
Bear Lodge, USA, sits under the double hammer of environmental protection and radioactive waste output;
Mountain Pass may be able to eventually set up a processing facility in some other state, as in California environmentally impossible. Even if they do, they lack the heavy rare earths needed for NdFeB;
Energy Fuels, USA, can proceed with monazite from Georgia, however, under environmentalists’ protest;
Processing US monazite in Estonia, at a place 30 km from the Russian border with an ethnic Russian share population of 85%, won’t really cater to relieving US national security concerns;
Anyway the US government is still trying to find its way through the thick fog of deceptive industry lobbyism;
The UK still dreams the junior-rare-earth-miner-induced dream of no-nuclear waste rare earth production, while potentially inundating certain African countries with the radiating undesireables. Post-colonial entitlement and imperial arrogance at work?

In spite of a passionate call for action of an EU-funded debating club, containing facts that so far only The Rare Earth Observer has been repeating over and over, this leaves only Australia and Canada open for business in rare earths, foremostly Australia’s Lynas and their small-output Texas separation plans, and Iluka with their monazite concentrate.

We do agree with Gaius King, that the likelihood of a mining giant taking on rare earth has increased, however, Rio Tinto, the elephant in the room, already a supplier of monazite to China, have a highly valuable China iron ore business, that they may not want to endanger.

While US/EU military needs will be met via certain arrangements, who shall produce the large quantities of additional NdFeB needed outside China remains a mystery.

Perhaps a potential detente between the US and China should include talks about rare earths and NdFeB, bilateral investments and such. Not for friendship, but for the necessity of striving for carbon neutral.

Towards the EU, China ~8 years ago offered to include EU demand for rare earth in China’s production plans. Of course back then the EU did not understand what China’s MIIT was saying. Now the EU does.

Needless to say, if the EU now wants to pick up on the offer, the political cost for doing so will have increased substantially.

The rare earth sector rose during intraday trading on the 24th. As of press time, Huahong Technology and Minmetals Rare Earth have soared by more than 7%. After the opening, the two stocks once rose by their daily limit; Mindong Electric Power , Huayang New Materials , and Beijing Mining Technology have increased by more than 4% .
News side, China Minmetals Rare Earth September 23 evening announcement, access to China Minmetals set Group Limited, notify, China Aluminum Group Co., Ltd., China Minmetals Group Co., Ltd., Ganzhou people people government is planning a rare earth-related assets Strategic reorganization.
It is reported that the rare earth resources of the three parties involved in this announcement are mainly medium and heavy rare earths, accounting for 85.9% of the first batch of rare earth mining total control indicators in 2021. This may mean that a "super" medium and heavy rare earth group will be established. .
At present, the domestic rare earth mining, smelting and separation indicators are mainly controlled by the six major rare earth groups. If subdivided according to the types of rare earths, Southern Rare Earth Group and China Rare Rare Earth Co., Ltd. both hold light rare earth resources and medium and heavy rare earth resources. Minmetals Rare Earth belongs to China’s heavy rare earths companies, and Northern Rare Earth is under the umbrella of light rare earths.
The research report of Guojin Securities pointed out that in 2020, China's rare earth reserves will account for 37% of the world, and rare earth production will account for 58% of the world, ranking first in the world. 98% of the total rare earth resources in the country are distributed in Inner Mongolia, Jiangxi, Guangdong, Sichuan, Shandong and other regions, forming a distribution pattern of north, south, east, and west, and has the characteristics of light distribution in the north and heavy in the south. Light rare earth mines are mainly Baiyun Obo rare earth mine, Sichuan Mianning rare earth mine and Shandong Weishan rare earth mine, and heavy rare earth mines are mainly rare earth mines in the seven southern provinces.
The agency stated that rare earths have benefited from the continued growth in demand for permanent magnet materials in the fields of new energy vehicles, wind power, and inverter air conditioners in recent years. The superimposed supply side is limited by capacity indicators. The supply and demand structure is expected to continue to be optimized, and the industry is ushering in the next wave of prosperity. The value needs to be reassessed.

Remark: We are less than convinced that China really has 37% of the world resources of rare earths.

China’s Power Problem

This whole thing is about price control and state-planning.

Price Control

As we have written before, China’s government is very attentive to inflation, ever since the national uprising in the spring of 1989, which also was a result of upwards spiralling inflation at stagnant salaries.

In the course of reform, China never did away with its price bureau under the State Planning Commission, now called National Development & Reform Commission.

Fuels, power and food are very inflation relevant and have the undivided attention of the price bureau. Changes of gas prices at the pump are subject to approval, while the electricity price is fixed.

As a power company, if coal prices rise in your back, you can’t pass the increase on to the market at will. The only way to minimize financial losses is to reduce output.

And that is, what they are doing currently.

State Planning

For the 12th 5-Year Plan 2011-2015 China had the following hard targets for energy consumption reduction per unit of GDP:

Source: China National Development & Reform Commission - 13th 5-Year Plan, Box 1

These targets of the 12th %-Year Plan were fulfilled. And here are the targets for the 13th 5-Year Plan, 2016-2020, that followed:

Source: China National Development & Reform Commission - 13th 5-Year Plan, Box 2

These 2016-2020 targets were not met, even though obligatory, hard targets.

China’s energy intensity remained stable in 2020 (+0.4%, compared to a 2.9%/year improvement over the 2000-2019 period). In 2020, its energy intensity stood 43% below its 2000 level, still 27% above the world average.

(Global Energy Statistical Yearbook 2021)

In August the National Development & Reform Commission put the worst offenders among the provinces on notice to reduce energy consumption. The provinces obliged and passed the measure down the command chain to their cities and towns, who in turn informed the industries in their respective areas.

Strict power rationing was ordered in Xinjiang, Qinghai, Yunnan, Ningxia, Shaanxi, Hubei, Guangxi, Guangdong, Fujian and Jiangsu.

In another nine provinces some power rationing was enacted, however, there will also be rolling blackouts elsewhere, notably in Beijing and in Shanghai.

In our view, the current power-shortage is a result of the a.m. two factors, price controls and state planning (with cross province capacity shortages being a result of state planning).

The Consequences

First of all, it is a lesson for all those in China, who thought that obligatory targets were optional in Xi Jin Ping’s “Age of Compliance”, as we like to call it.

Not necessarily helpful is, however, that the core decision making body in China, the 7 member Standing Committee of the Political Bureau of the Central Committee of the Chinese Communist Party, is manned exclusively by idealistic ideologists, who, according to Kevin Rudd, former Prime Minister of Australia, sinologist and eminent China expert, “don’t know the first thing about economics.”

However, there seems to be the realisation, that allowing electricity prices to increase may be part of the solution.

And Rare Earths?

We know positively that several rare earth production facilities had stopped following instructions from Beijing to the provinces to do something about energy consumption outside the plan.

How the power situation will affect rare earths and permanent magnets, is anybody’s guess. Suppliers, customers, service providers strewn across the huge country make a determination impossible.

Given the tight coal supply, related policies have been introduced to increase production and guarantee the supply of coal. However, industry participants expect the coal supply shortfall this winter to remain severe because coal inventories are too low.
According to an employee of a thermal power plant in Liaoning province (Shenyang), given the low coal inventory of thermal power plants in northeast China, the National Development and Reform Commission (NDRC) has allocated more than 10 million tons of coal to Liaoning’s power plants. “Our power plant is expected to receive 200,000 tons of coal, but this can only sustain our power plant for 20 days. At present, our coal inventory can only sustain our power plant for two days in the case that the load factor just stays at 50% or so.” He added that currently, their power plant loses 0.07 yuan per kilowatt-hour.
From July 2021, the NDRC put a series of measures in place to guarantee coal supply, including providing reserve coal to the market, encouraging qualified coal mines to increase capacity and allowing some coal mines to extend their trial run period for one year. However, these measures have yet to deliver any good results. It is very hard to increase coal production and supply in a short time because complicated procedures need to be managed and the interests of related parties need to be coordinated.

and

Volatility in Chinese Power Supply

Over the last month, and especially in the last two weeks, many Chinese provinces have adopted mandatory “ordered power supply” measures. In lay terms, this means power curbs and power rationing for electricity customers. Certain classes of power customer (particularly large industrial power users) have had their power disconnected entirely for stretches of 4 to 10 days, while others have faced curbs on their power usage during certain times of the day. This has primarily affected steel, cement, aluminium, and chemical fibres manufacturers. Some provinces have experienced power shortages so severe that residential consumers have had their power cut. By Monday afternoon, 27 September, Chinese media were reporting as many as 19 provinces had been affected by some form of power rationing.

Silicon makes up around 28 percent of the Earth's crust by weight, making it the second-most abundant material on the planet. However, the ongoing energy crunch in China has had a huge impact on the production of high-purity silicon, sending prices through the roof in the span of just two months. This further compounds the negative effects of other material and component shortages and is similarly expected to lead to higher prices for a wide variety of consumer and industrial products.

Ionic’s Focus?

Ionic sees potential for scandium market growth

A scoping study by the company has found that it can produce between 20 t/y and 25 t/y of scandium oxide in the first year of production, ramping up to between 90 t/y and 100 t/y by year ten.
While the scandium market currently demands between 15 t/y and 20 t/y, the global transportation industry has the potential to turn scandium into a billion-dollar market, Ionic states.

In spite of carbon-neutral, world aluminium smelter output will multiply, in order to accommodate Ionic’s and a handful of other scandium hopefuls’ market entry? Seriously?

Source: Ionic corporate presentation, Page 8

Pistons? Cylinders and engine parts? Radiators? That is internal combustion engine stuff, whose production in future will be greatly reduced in favour of electric vehicles.

Our take: Scandium is a secondary theater.

Here is, what Ionic should demonstrate, how they technically and feasible will achieve it:

Source: Ionic corporate presentation, Page 14

Concretely, the core question for Ionic is, how to extract the (indicated + infered) 200,000 t TREO rare earths from the 0.065% TREO ionic clay in Uganda, if in-situ leaching should be out of question.

Heap leaching works commercially for gold with a value of ~US$56,000/kg, but it does not work commercially at Ionic’s rare earth basket value of ~US$26/kg (incl. optimistic recovery losses) or ~US$42/kg (excl. recovery losses).

Without a specific, definitive answer to that key question, there is really no need to engage in any other (costly) activities.

Rainbow’s Projects

Rainbow have two projects, the one in Burundi, the historical lanthanum and cerium deposit, and another in South Africa, phosphgypsum waste from fertilizer production.

Rainbow Rare Earths to use special tech in South African project

The deal, which covers the use of the method across Southern Africa for an initial four-year period, will see Rainbow pay a licensing fee of $5.5 million on each project where the tech is deployed.
Rainbow said K-Tech’s system achieves the separation of rare earth oxides in fewer stages than other and with greater flexibility. This leads to significant capital and operating expenditure savings compared to traditional technology, which uses numerous solvent extraction steps to achieve the same results, it said.

There have been a number of attempts to separate rare earths from phosphogypsum, unsuccessful. If this one with K-Tech should be successful, it would be a giant leap forward.

Shareholders seem to concur:

Rainbow have a new corporate presentation out.

Gakara remains a headache for Rainbow:

Burundi wants new Rainbow Rare Earths mining convention

Bennett says he has “no idea” about what political motives may lie behind the government’s change of stance, but suspects that resource nationalism may be at work.

There seems to be a pattern across several African nations, who may feel they may be short-changed by foreign mining companies.

DRC has been throwing out non-compliant Chinese miners, with an approving nod from Beijing, and put the entire resources against Belt-and-Road projects under review.

It seems that a number companies hope to use SRC’s processing facility, that may eventually have a 3,000 t capacity for self-procured monazite:

CONSTRUCTION UPDATE ON SRC'S RARE EARTH PROCESSING FACILITY

SRC continues to source additional preconcentrated monazite globally prior to the MPU commissioning. SRC’s Facility will require 3,000 tonnes per year of monazite concentrate on a 90 per cent basis (equivalent to 60 per cent Total Rare Earth Oxide). However, SRC would like to secure a stockpile of feed in advance of commissioning.

Find the fact sheet here (click on the image for the PDF):

We wonder: Are SRC over-promising, in order to please everyone?

Saskatchewan Research Council apparently suffered a ransomware attack recently.

Arafura and the Bloomberg Daimler-Benz Hoax

Arafura published the following on the ASX:

ARAFURA RESOURCES LIMITED (THE COMPANY) - RESPONSE TO ASX PRICE AND VOLUME QUERY

The Company is aware of a Bloomberg article titled “Automakers Look to Hedge Against China Rare Earth Dominance” dated 23 September 2021 (Bloomberg Article) that may be an explanation for recent trading in the securities of the Company. In relation to the Bloomberg Article, while the Company regularly engages with European manufactures to discuss offtake and supply, no formal or binding agreements have been entered into and negotiations are incomplete.

Arafura’s share price development year-to-date:

Defense Metals to Mobilize Second Drill to Wicheeda Rare Earth Element Project

Defense Metals Corp. is pleased announce plans for the mobilization of a second diamond drill to expedite its ongoing Wicheeda Rare Earth Element (REE) deposit resource expansion and delineation diamond drill program.
Defense Metals is currently advancing the road accessible Wicheeda Critical Rare Earth Element (REE) Property, which is located close to infrastructure approximately 80 kilometres northeast of Prince George, British Columbia (BC). The Wicheeda project has indicated mineral resources of 4,890,000 tonnes averaging 3.02% LREO (Light Rare Earth Elements) and inferred mineral resources of 12,100,000 tonnes averaging 2.90% LREO.

Pushing to be a light rare earth concentrate supplier for export, to where it can be used: China.

University project reclaims rare earth magnets from loudspeakers and flat panel displays

Loudspeakers account for approximately 20% of rare earth magnet use, and represent a significant opportunity for rare earth magnet recycling, particularly in the UK, which has no domestic source of primary rare earth metals.
The analysis showed that the flat screen television sector holds significant promise for recycling, with approximately 85% of the products containing NdFeB. REAP confirmed the quantity of scrap available from this market, the commercial viability, the suitability of material for HPMS, the properties of the magnets in this sector and provides a strong platform to initiate access to the wider loudspeaker market in the future.
Scrap from end of life vehicles showed a relatively low quantity (~5%) of NdFeB containing components, but given the increase in rare earth use in hybrid and electric vehicles, it is clear that the potential for capturing NdFeB from this sector will increase significantly with time.
Despite the differences between the two sectors, the average magnet grade remained fairly consistent. Following extraction and processing, the resulting powders were analysed to confirm the feasibility of using waste from flatscreen televisions as feedstock for recycled magnet making.

The current approach apparently focusses on what is covered under “others” here:

This, however, includes bonded magnets, which have a very low recycling potential.

Generally, NdFeB magnets are manufactured to meet the respective customer’s required physical properties. Meeting these physical properties can be a variety of chemical compositions of different rare earth metals, not only neodynium, praseodymium, terbium and dysprosium.

Efficient recycling, however, requires a consistent chemical composition.

For example: In low temperature application NdFeB magnets, up to 40% of the neodymium-praseodymium can be replaced by cerium.

It is highly likely, that the chemical composition of low-temperature application NdFeB magnets varies greatly and the chemical composition is usually not documented, which impedes recycling.

Another issue is, that all NdFeB magnets are coated. There is no standard coating of NdFeB magnets, everyone uses whatever is cheap and lasting. Even recyclers don’t want to have a rusted NdFeB magnet. Removal of the coating is essential to recycling of the magnet, and every lot of spent magnets may have a different coating, requiring different removal methods.

A couple of headaches for magnet recycling and perhaps something, researchers and developers may wish to address with those, who manufacture ~90% of world NdFeB magnets.

Even rare earth recycling depends on cooperation with China.

Search Minerals Providing 80 Tonnes of Bulk Sample Material for Magnetic Pilot Plant Testing

The bulk sample from our Critical Rare Earth Element District in SE Labrador will consist of 40 tonnes each from our Deep Fox resource and from our Foxtrot resource. The bulk sample will be used to scale up our successful bench scale results using Low Intensity Magnetic Separation (“LIMS”) along with Wet High Intensity Magnetic Separation process (“WHIMS”) to produce a Rare Earth Element concentrate for further testing of the Direct Extraction Process.

Hastings Technology Metals Ltd Annual Report to Shareholders

Hastings' flagship Yangibana project, in the Gascoyne region of Western Australia, contains deposits with a NdPr:TREO ratio of up to 52%, unmatched anywhere in the world. The company aims to produce concentrate at the Yangibana mine site which then gets trucked 500 km away to the Pilbara coast where we plan to build a downstream Hydromet plant to produce a mixed rare earth carbonate (MREC).

The company has secured a major offtake contracts with Thyssenkrupp for 60% of its production (in the first 5 years) and a signed a Master Supply Agreement with Schaeffler. In February 2021, Hastings successfully raised A$100m in equity. Hastings has now established a robust execution team and is working with external partners in a lending consortium for the project debt. Groundwork and early infrastructure programs are anticipated to commence in 2021 ahead of the first production.

We are not convinced, that Hastings can be successful, too many question marks.

Hastings seek validation from a ThyssenKrupp offtake, a German steel industry household name, which has been under heavy restructuring for almost 10 years, making a disappearing act like chemical giant Hoechst AG did 20 years ago.

However, thyssenkrupp Materials Services GmbH with their raw materials trading are the sales-wise largest part of the group.

Rare Earths Prices

Compared to our previous post Sept 18, only dysprosium, terbium and holmium oxides moved up in RMB terms by 1.5% - 2%.

NdPr 75/25 oxide lost 0.75% and cerium oxide is down 2% in RMB terms.

As ever, these are ex works China prices incl. 13% VAT for the most common qualities of rare earth oxides/metals, converted at the official onshore RMB/USD exchange rate. Actual offer prices will differ.

Since there is national holiday in China, these prices stay unchanged until October 8.

Thanks for reading, have great rest of the week.