Antique RE Prices; Current Prices Level Off; Chinalco Pick Up Makutuu; Peak's License Part VI; Q1 Rare Earths Stocks Performance;
2021 Rare Earth April 8
Collectors item: Rare earth prices from 1963 - 2003.
China rare earth exports 2021:
Most of it is cheap and oversupplied lanthanum and cerium, as the average export price of ~US$ 8.80/kg shows.
Monthly swings in quantity are utterly normal, but swings are getting larger. China keeps emphasizing, that the talk of export curbs is nonsense.
Prices are leveling off and we should see a bit of a correction.
Much of the price drive in heavy rare earth may have been also related to the State Material Reserve taking some stock to intervene in markets when wanted:
In an analysis earlier this year China Rare Earth Industry Association assumed that a price correction will happen sooner or later, on the assumption of additional supply from abroad.
That certainly did not include consideration of the situation in Myanmar, which used to be good for 10% of China’s NdPr output.
Which brings us to the question, what else is out there that China could tap into, in terms of rare earth, 92% ionic clay-based mixed rare earth concentrate.
Perhaps, among others:
Minacu (Serra Verde)
Penco (Hochschild)
Makuutu (Ionic Rare Earth)
2 much more junior deposits and another one, that needs 3rd party on-site verification of its substantial paper work.
And, as certain as the Amen is in church, here we go:
Ionic Signs Milestone MOU With Chinalco
A similar deal like Noble hedging Mkango’s output with another Chinalco company in 2019.
This deal probably is for supplying Chinalco’s Funing facility, capacity 5,000 t per year:
For good measure, this is Ionic’s proportional TREO profile:
It is not a complete match to what Chinalco want to produce, but, as the Chinese say, 差不多 - Chàbùduō - not much of a difference, implying “it does not really matter”.
Three things Ionic should focus on:
Chinalco, same as Minmetals, recently got publicly rapped by China’s government for Chinalco’s rather casual approach to environmental compliance. In terms of Africa, they may be as casual. In this regard Ionic must be strong, especially as a public company they run a big risk when condoning non-compliance.
Ionic shouldn’t sell what they don’t fully own yet, owing to the lingering “Africa risk”.
Not get rainbowed, i.e. exporting concentrate below cost, just for making a point.
It is things like these, that may keep NdFeB demand growth within manageable limits: Taking switched-reluctance motors out of the shadow of permanent magnet machines
The HDSRM has a number of advantages. It can run much hotter and at peak performance for much longer than a permanent magnet machine because there’s no risk of demagnetisation through overheating for the simple reason that it does not have any magnets to demagnetise.
Rather than rare earth metals, the motor works using electromagnetic steels and highly innovative control systems. That means for hybrid systems it makes the design much less complex because it removes the need for a separate cooling loop for the motor, which frees up space and reduces cost. The motor also works as a generator, meaning that it does not pose any challenges in terms of regeneration or energy storage.
Meanwhile, China’s rare earth company Rising Nonferrous Metals Share Co., Ltd. announced, that they are going to establish a NdFeB production with a capacity of 8,000 t in China, in addition to recently announced 8,000 t NdFeB capacity expansion by JL Mag. Rising aim for start of production in mid 2023.
Xiamen Tungsten and China Northern Rare Earth Group are already invested in NdFeB magnet production.
We can see an ultimate lose-lose situation emerging:
If all principal rare earth makers in China should have their own permanent magnet production, will they still want to export NdPr, dysprosium and terbium competitively, if at all (apart from the 13% VAT cost difference)?
Which nascent ex-China magnet maker in his right mind will take on the Chinese NdFeB magnet juggernaut?
On the bright side: Except Japan, who holds Lynas for NdPr and now needs to make sure it also gets the heavy rare earths elsewhere in Namibia, the rest of the world won’t need the rare earth for application in NdFeB anymore in near absence of own NdFeB manufacturing.
The Chinese Society of Rare Earths published this news:
Source: Chinese Society of Rare Earths
On March 18, 2021, Yang Jianlong, Deputy Minister [read: deputy general manager] of Industry Department of the Development Research Center of the State Council [abbreviated “DRC”, a highly influential think-tank], and Shi Hongwei, Deputy Secretary-General of China Iron and Steel Industry Association (CISA) visited the society for exchanges and discussions.
This learned society is one of a handful of China’s national rare earth associations, each seemingly with its own specific function.
Professor Shi Hongwei works at Economic Development Research Center of Metallurgical Industry and one of the projects there is to use rare earth alloy in steel so to make steel corrosion resistant.
China has a crude steel capacity of 1.2 billion tons and last year the output of crude steel was 1.05 billion tons.
If, say, lanthanum alloy should offer a sufficiently effective corrosion resist effect on steel, even if it is used in only a fraction of that enormous steel output, China would make a giant leap in solving the oversupply problem of lanthanum.
In addition a lot of environmental hog steel coating operations could become obsolete.
We had a look at Peak Resources half year report 31. December 2020.
In July it will be 4 years since Peak’s prospecting license for the Ngualla deposit in Tanzania was invalidated, in an abrupt change of the Mining Act, currently in its Revised Edition of 2018, induced by an apparently thoroughly fed-up parliament. The nation is bitterly poor, 89th on the 107 countries Global Hunger Index, and it needs to move forward and it needs investors to walk the talk.
DLA Piper discuss the changes introduced by the Tanzanian parliament:
Source: DLA Piper Mining in Tanzania: Effects of the mining legal framework overhaul
Perhaps the Peak need to discuss the impact these changes may have on Peak’s overall concept. As regards the impact of the 16% free carried, non-dilutable government interest, Peak suggest a new operating company on the ground, reflecting the government interest.
Peak keep Ngualla in the books at AU$53,376,651:
Source: Peak Resource Ltd Half Year Report 31. December 2020
The original application for a special mining license for the area containing the mineral resource (why should anyone care about the other two?) had been last reviewed on the ground in Tanzania during October 2019.
A year ago the company said in a special update that due diligince by the government had been completed.
In October 2020 the company talked about “finalising the receipt of the Special Mining License.”
The news in November 2020 was “The government is in the final stages of awarding a special mining license to PR NG Minerals for it’s Ngualla Rare Earth Project”.
Then, the status of end of December:
“The Tanzanian Mining Act provides that the PL will remain valid until grant or refusal to grant an application for a licence is made. The Company expects the SML [special mining license] to be granted in due course.“
A year after having passed “due diligence” one may wonder, what “due course” is still supposed to mean?
There are some concerns, which may be the real reason for the blockage. Among other conditions in the Mining Act there is:
“50.-(1) The Commission shall grant an application for a mining licence for minerals which has been properly made under section 49 and a successful application for a mining licence made under section 71 unless- …
(v) financial and technical resources available to the applicant are not adequate for the conduct of mining operations;”
It is obvious that the company currently, i.e. during the period relevant to the license process, won’t be able to credibly demonstrate having the financial resources for a ~US$206 mio investment.
Peak also successfully rid itself of its technical expertise in form of Rocky Smith and of its formidable marketing, sales and business development manager, Michael Prassas.
A license for Peak would have implications for another rare earth project up in the air: Montero say to have entered international arbitration against the government of Tanzania regarding the very same license issue as Peak’s, for its Wigu Hill project (TREO: 26,000 t), which Montero had sold for CDN 1.2 mio to Vital Metals’ Cheetah Resources - subject to proper licensing.
One thing for sure, Peak Resources won’t survive if it has to write off $53 mio for an asset that may well be described as virtual at this point of time.
After an accumulated ~AUS$ 50 mio net losses over the past 10 years and an unpublished bankable feasibility study, except for bits and pieces in the 2017“executive summary”, it would be tragic if the project would be laid to rest.
Only directors, executives and employees can smile, having received an accumulated AU$ 13.3 mio in “remuneration” and ~AU$ 10 mio in accumulated “employee benefits” respectively during the past 10 years - which were partly capitalised as exploration cost.
Stock price development in Q1 2021 (click on the image for the Google sheet):
The decline of Greenland Minerals’ share price is due to the government having fallen apart over the previous administration’s support for GGG.
Even if the chairman, previously with Hastings, grabs into the falling knife (one of the inofficial duties of non-executive directors), it won’t change much.
Greenland election: Opposition win casts doubt on mine
Greenland's main opposition party has won an election which could have major consequences for international interests in the Arctic.
The left-wing Inuit Ataqatigiit, which opposes a mining project in southern Greenland, secured 37% of votes.
Its leader said on Wednesday that the Kvanefjeld mine, home to major deposits of rare minerals, would not go ahead.
If, as it seems, worse comes to worst, we assume Shenghe Resources will probably need to replace GGG in their startegic portfolio.
Certain companies in neighbouring Canada would come to mind, if foreign relations between Canada and China were not so thoroughly wrecked.
Thanks for reading! In a few hours it is TGIF, enjoy, whereever COVID-permitted.
//Science
Platform supports the original global rare earth hydrogen storage technology
Low self-discharge four series of new generation lanthanum-yttrium-nickel rare earth hydrogen storage alloys, after testing, the life span can reach more than 500 weeks in the half-cell state, and can be used normally in the range of minus 40 degrees to minus 60 degrees.
//Mining
Land grabs for rare earth metals continue outside the South American Lithium Triangle
Flying under the radar of Canadian media, Mongolia has long been one of Canada’s closest partners in Asia as a source of strategic metals and minerals, while occupying a fulcrum point between Southeast Asia, Russia and the Middle East. Canada has played a key role in shaping the extractive industry and policy reform in Mongolia, yet this receives minimal scrutiny against the broader background of post-Soviet states that have been carved out over the past decades. Little light is shed on the bleak implications of the increasing demand for lithium, and other strategic resources found across Central Asia that are essential to the energy transition.
Comment: There is rare earth in Mongolia. However, one should do more than “due” diligence when planning to acquire rights to a deposit in Mongolia.