Attack on Private Press & Publications; Alleged Junior Miner Fraud; NdYFeB magnets; The 3 Generals; Section 232, DEFARS et al: Cost Competitive?; Daikin Reduce NdFeB Use; Odd Price Rises;

2021 Rare Earth October 14

China’s National Development & Reform Commission, better known under its previous name State Planning Commission, released a proposal for a new negative list for public comment:

The new negative list is coming! Non-public capital shall not engage in news gathering, editing and broadcasting

Among them, it is clear that non-public capital shall not engage in news gathering, editing and broadcasting business. Non-public capital may not invest in the establishment and operation of news organizations, including but not limited to news agencies, newspaper publishing units, radio and television broadcasting organizations, radio and television stations, and internet news information collection, editing and publishing service organizations. Non-public capital may not operate the layout, frequency, channel, column, or public account of a news organization.

Non-public capital shall not engage in live broadcast services of activities and events involving politics, economy, military, diplomacy, major society, culture, science and technology, health, education, sports, and other related political directions, public opinion orientations, and value orientations. Non-public capital may not introduce news released by overseas entities. Non-public capital is not allowed to hold forum summits and award selection activities in the field of news and public opinion.

This may also attack China-based price and market information services. If this measure is adopted, even if not directly targeted, we would expect them to moderate news releases and market commentary even more, to the point of complete meaninglessness.


Column: Europe races to fix its rare earths import dependency: Andy Home

China is also struggling with its own rare earth dependency. Its dominance of the supply chain doesn't extend to raw material, particularly that of so-called heavy rare earths such as neodymium. It imports around half of its feedstock needs from neighbouring Myanmar, which has closed key border crossings several times this year due to the coronavirus, most recently in August.

He overestimates the EU’s political willingness to digest radioactive waste, which will inevitably occur (even if some companies desperately try to pretend that it just evaporates) and he grossly underestimates China’s resources, that can be used, if nothing else works.


Short-seller takes aim at Cadence’s DeepGreen bet

A Nasdaq-listed deep-sea mining project that Australia’s Cadence Capital had put a huge portfolio bet on has been accused by a short-seller of siphoning off tens of millions of dollars to undisclosed insiders by overpaying for an offshore mineral license.

The report into The Metals Company Inc, by activist short-seller Bonitas, also alleged expenses were inflated to divert funds to the so-called conspirators and convicted insider traders.

This is Bonitas page:

$TMC – LATEST IDEA – OCTOBER 6, 2021

We believe TMC siphoned US$ 43 million in cash and stock to undisclosed insiders by overpaying for Tonga Offshore Mineral License (“TOML”).

and, as certain as the Amen in church, some ambulance chasers are on it:

SHAREHOLDER ALERT: Pomerantz Law Firm Investigates Claims On Behalf of Investors of TMC the metals company Inc - TMC

The investigation concerns whether TMC and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.

On October 6, 2021, before markets opened, market researcher Bonitas Research released a report alleging multiple issues plaguing TMC. The report alleged: (1) overpayment on licenses to potential undisclosed insiders; (2) artificially inflated exploration expenses; (3) potentially unusable license for which TMC paid $43 million in cash and stock; and (4) a history of affiliating with bad actors. On this news, TMC's stock price dropped 4% before markets opened, opening at $4.28 on October 6, 2021 and trading as low as $3.98.

To date 4 more law firms announced their desire to go after TMC and its stock price has sunk to US$3.60 from US$10 a month ago.

The full report is quite interesting, but not uncontroversial.

We would agree, that currently the value of an ISA deep sea exploration “look, but don’t touch” license is not worth anything, as currently there is not even a long term perspective of any corresponding actual mining licenses being granted, if ever.


Very interesting:

A comparative study of NdY-Fe-B magnet and NdCe-Fe-B magnet

In this work, we systematically investigated the magnetic properties, thermal stabilities and service performances of (Nd0.8Y0.2)13.80FebalAl0.24Cu0.1B6.04 (at%, 20Y) and (Nd0.8Ce0.2)13.80FebalAl0.24Cu0.1B6.04 (at%, 20Ce) magnets. The results demonstrate that the μ0Mr, μ0Hc and (BH)max of 20Y magnet are respectively 1.325 T, 1.173 T and 343.467 kJ/m3, which are comprehensively higher than those of 20Ce magnet (μ0Mr = 1.310 T, μ0Hc = 0.948 T, (BH)max = 321.105 kJ/m3). Moreover, the 20Y magnet has higher thermal stability compared with 20Ce magnet which is favorable for the magnetic performances at elevated temperatures. The investigation of microstructure and elemental distribution indicates that the excellent magnetic performances of NdY-Fe-B magnet can be attributed not only to the preferable intrinsic properties 4πMs, Ha and Tc of Y2Fe14B, but also to the in-situ core-shell structure of the 2:14:1 matrix phase grain with Y-rich core and Nd-rich shell, along with the thicker grain boundary layer between the adjacent matrix phase grains in NdY-Fe-B magnet.


America Inc. finds together:

General Motors Signs MoU with GE Renewable Energy to Develop Supply Chain of Rare Earth and Other Materials to Support EV and Renewable Energy Growth

General Motors and GE Renewable Energy today announced they have signed a non-binding Memorandum of Understanding (MoU) to evaluate opportunities to improve supplies of heavy and light rare earth materials and magnets, copper and electrical steel used for manufacturing of electric vehicles and renewable energy equipment.

"A secure, sustainable and resilient local supply chain for electric vehicle materials is critical to the execution of GM’s vision of an all-electric future," said Shilpan Amin, GM vice president for Global Purchasing and Supply Chain. "Motors are one of the most important components of our Ultium Platform, and the heavy and light rare earth materials are an essential ingredient in our motor magnets. The combined scale of GM and GE will enable us to unlock the potential for securing low-carbon footprint, ESG-friendly, secure and cost competitive materials."

GE Renewable Energy Chief Technology Officer Danielle Merfeld said, “……Working with GM gives us another tool to obtain a reliable, sustainable, and competitive source of key materials going forward that will help us lower the cost of renewable energy and drive more electrification by making EVs a more viable option for consumers.”

“Cost competitive”, “lower the cost”, these are add-ons to an already challenging task, while “sustainable”, “local supply chain” could be viewed as cost drivers. Possibly the two giants may be leaning on the readiness of politicians in Washington DC to legislate substantial subsidies.

The combined capital might of GM and GE, however, removes one core ingredient of the continued pitiful state of largely conceptual rare earth and magnet supply chains outside China: Dearth of rare earth project finance.

The combined political clout of GM and GE may enable regulatory adjustments, which will be indispensable for any progress.

As one of our avid contributors points out, probably EU industries may want to seek similar arrangements in Europe.

We speculate, this “generals initiative” may possibly be benefitting another “General”, defence company General Atomics (GA), owned and chaired by the aged Blue(s) Brothers, Neal Blue and his brother Linden Blue.

GA, through its subsidiary Synchron, own 50.8 mio shares, 48%, of stock-listed Rare Element Resources Ltd (REEMF). REEMF are the owners of the Bear Lodge (Bull Hill) rare earth deposit in Wyoming.

Data source: Rare Earth Elements NI43-101

While not entirely without problems, at ~400,000 tons (avg. 2.78%) of TREO ore reserve (proven plus probable), a somewhat workable composition and a Th content of ~0.046%, U ~0.0085%, Bear Lodge is certainly a prospective, China-virgin rare earth deposit in the US.

Related:

RER confirms it's going ahead with Upton demo plant

Rare Element Resources (RER) has finally received the $21.9 million funding promised by the U.S. Department of Energy. The company announced last week that its next goal is to construct a demonstration plant in Upton that will process and separate rare earth elements from ore that was previously stockpiled at the Bear Lodge Project in Crook County.

“The award represents approximately 50% of the total estimated project costs. Securing the remainder of the funds is the responsibility of Rare Element Resources,” says George Byers, RER.

To raise this money, the company intends to launch a $25 million rights offering of common shares. As of the close of business on October 19, each holder of RER common shares will be issued one non-transferable subscription right for each common share they own.

At this time, RER is anticipating that design, permitting, licensing and construction of the demo plant will be finalised within 18 to 26 months. Processing the stockpiled ore will then follow for a 12 to 14 month period, creating a total timeline of 40 months.


Seemingly diametrically opposed to the above mentioned “cost competitive” and “lower the cost” would be trade action, the imposition of high tariffs:

U.S. Department of Commerce Announces Section 232 Investigation into the Effect of Imports of Neodymium Magnets on U.S. National Security

Critical national security systems rely on NdFeB permanent magnets, including fighter aircraft and missile guidance systems. In addition, NdFeB permanent magnets are essential components of critical infrastructure, including electric vehicles and wind turbines. The magnets are also used in computer hard drives, audio equipment, and MRI devices.

If the Secretary finds that NdFeB permanent magnets are being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security, the Secretary shall advise the President in her report on the findings of the investigation. By law, the Secretary of Commerce has 270 days from initiation, until June 18, 2022, to present the Department’s findings and recommendations to the President.

Why we say “seemingly”:

The imposition of tariffs in order to enable domestic production is a tool that also China used successfully in the past to replace imports and to build a domestic industry in some products.

The higher the tariff, the lower the subsidies the US-government may have to fork out.

However, tariffs and subsidies can be addictive, with a tendency to self-perpetuate. They may not be WTO compatible either. Therefore any such measure must include an exit strategy.

Neither China, nor the previous US-government seem to have shown much regard for WTO rules.


Related:

Defense Federal Acquisition Regulation Supplement: Restriction on the Acquisition of Certain Magnets and Tungsten (DFARS Case 2018-D054)

While rare earth ore deposits are geographically diverse, current capabilities to process rare earth metals into finished materials are limited mostly to Chinese sources. DoD has been studying this issue and the General Accountability Office provided a briefing in response to the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-84) (https://www.gao.gov/​products/​GAO-10-617R). Section 871, which was effective in August 2018, puts significant new restrictions at 10 U.S.C. 2533c on the use of foreign magnets in the military supply chain.

The new restriction in 10 U.S.C. 2533c is similar to the domestic source restrictions in the Specialty Metals Amendment (10 U.S.C. 2533b), though it differs in a few important respects. The Specialty Metals Amendment maintains a healthy and competitive U.S. specialty metals industry, especially for aerospace materials such as titanium and super alloys. 10 U.S.C. 2533c is meant to do the same for both rare earth magnets and tungsten. However, rather than limiting to domestic sources, 10 U.S.C. 2533c prohibits “covered material” that was “melted or produced” in China, Russia, North Korea, or Iran. While samarium-cobalt magnets have long been covered under the Specialty Metals Amendment (because cobalt is a specialty metal), 18157U.S.C. 2533c affects neodymium-iron-boron magnets for the first time.

Related, a little beat of meat on the bone of who consumes how much of what. It took years to produce this report:

U.S. STRATEGIC MATERIAL SUPPLY CHAIN ASSESSMENT: SELECT RARE EARTH ELEMENTS

DYSPROSIUM, ERBIUM, NEODYMIUM, TERBIUM, AND YTTERBIUM

One hundred twelve respondents (70 percent) indicated that they participated in defence-related market segments (see Figure II-8). Within the defence sector, ‘R&D’ was the most commonly reported market segment, with 71 respondents (44 percent) participating. ‘Aircraft’ and ‘C4ISR’ (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) were the defense-related sectors with the second and third most common participation by respondents.


In Wolfsburg, Germany, all hell is loose, because of electric vehicles.

VW CEO Diess apparently presented to the supervisory board, what consequences EV will have for employment at VW, envisioning a reduction of at least 30,000 employees, ~25%.

He did so without consulting anyone, shock and awe, unleashing a storm of indignation among the supervisory board members.

Diess benchmark is Tesla, who plan to produce 500,000 EV in Germany, employing 10,000. The main factory of VW in Wolfsburg turns out 700,000 vehicles, employing 25,000.

VW supervisory board ordered the CEO to calculate a concept, that will not necessitate the reduction of employment.

Germany Inc. at work, complacency rules supreme.

Eklat im VW-Aufsichtsrat: Konzernchef Herbert Diess bringt massiven Stellenabbau ins Spiel

Das Stammwerk muss auf Elektroautos umgestellt werden. Konzernchef Diess legt den Abbau von bis zu 30.000 Stellen nahe. Seine überrumpelten Aufsichtsräte protestieren energisch.


VITAL’S SASKATOON RARE EARTH EXTRACTION PLANT ON TRACK FOR FIRST FEED END 2021

Plant will have start up throughput capacity of 1,000t/yr excluding cerium (equivalent to 470t/yr of NdPr)

Vital has expanded Stage 2 capacity to 2,000t/yr ex. cerium (940t/yr NdPr) – representing 50% larger plant throughput capacity than initially planned

There is no mention of REEtec, nor is there any news regarding environmental compliance.


Appia change name to Appia Rare Earths & Uranium Corp. and also announced, that they will finally come up with a NI43-101 after all these long years. So we’ll look at that one, if it comes out before the early 22nd century.


Ucore and Alaska’s Southeast Conference Execute MOA for the Funding of Strategic Metals Complex

Southeast Conference is the State of Alaska’s (and federally designated) regional economic development organization for Southeast Alaska and it has the authority to access federal grant funding for economic development activities. Ucore is currently undertaking business, engineering and permitting activities for the development of the Alaska SMC REO production facility.

The Parties envision a joint venture opportunity to acquire and develop the Facility with a combination of Southeast Conference grant funding and Ucore funding; then establishing a long-term lease relationship between the Parties for the Facility resulting in Ucore’s subsequent development and long-term operation of the Plant (i.e., the Alaska SMC).

Ucore’s development plan for the Alaska SMC calls for substantial completion of construction by the end of 2023, followed by commissioning, product qualification testing with US-allied feedstock, and production of individual REOs in H1 of 2024.

Apparently, this will use imported third-party feedstock, perhaps mirroring what SRC plan to do in Canada.

In this announcement there is no mention that the Ucore daughter company’s IMC “RapidSX™” process may be used, even though the timelines for process development and the Alaska SMC are comfortably aligned, according to Ucore’s press release “Ucore Updates on Innovation Metals Corp.’s Successful Completion of Initial Extraction-Rate Testing of the RapidSX Technology for Rare-Earth Elements Separation”:

Source: Ucore press release June 30, 2021

Certainly a matter of prudence, until the process is provenly working for rare earths.

Ucore’s Bokan-Dotson Ridge deposit, according to the January 2013 NI43-101 technical report good for only ~20,000 t TREO over the life of mine, is being reassessed and a new NI43-101 seems to be in the pipeline, according to Ucore’s forward-looking statements.


Controversial:

The Rare Earth Myth

Part of it is the details we choose to talk about. In 1992, in an oft-quoted line, Dèng Xiǎopíng 邓小平 said that “the Middle East has oil; China has rare earths.” The sentence has gripped the internet and is used repeatedly to signal China’s own geopolitical calculations. But the words, uttered a year after the Gulf War, were not actually a boast, but a warning: Just as the Middle East could be a victim of the West’s resource-addled power games, so too could China.

At that point of time, no-one had an even remote idea about the potential future importance of rare earth, and that included the Great, Fearless Leader.

Obviously having only rather superficial knowledge of the matter, the author blunders on a couple of key points, which makes us wonder, what the motivation may have been to write the article in the first place.


Related:

Try to bypass China!Mongolia quietly exported rare earths to the United States, its idea was completely shattered

Although the United States is a major weapon country, rare earth resources have always been very dependent on foreign countries, especially China. With the development of the times, China's policies have gradually tightened, which means that it is difficult for the United States to import rare earth resources from China. If the United States wants to continue to develop advanced weapons, it needs to find new rare earth suppliers.

At this critical moment, a country took the initiative to show its favor to the United States and secretly sold rare earths to the United States. It is worth mentioning that this country has also accepted China's help. Therefore, the outside world is very confused about this country's approach. Can we successfully reach cooperation with the United States

This country is Mongolia, which is rich in rare earth resources.

While we could not find the source of this article, the website inf.news apparently transposes and translates posts from China’s WeChat social media platform, where a lot of nationalistic write-ups are carried, most of them fantasy, devoid of fact.

Talking about fact, Mongolia has essentially 4 carbonatite deposits:

  1. Khotgor, 40 mio t resource, grade 1.22%, TREO 490,000 t

  2. Lugiin Gol, 0.5 mio t resource, grade 2.67%, TREO 10,000 t

  3. Mushgai Khudag, 34 mio t resource, grade 1.36%, TREO 460,000 t

  4. Kalzhan Burged, 49 mio t resource, grade 0.6%, TREO 290,000 t

Documentation is scarce, and thanks to capricious politics and administration in Mongolia, there is no real interest anywhere.


Meanwhile, elimination and substitution of rare earth moves ahead, pulling the brakes on consumption of NdFeB rare earth magnets:

Daikin to build air conditioners free of rare earths

Daikin will almost completely phase out the use of rare-earth metals in its air conditioners by fiscal 2025 to avoid rising costs and potential procurement issues since China controls a large chunk of the world's supply of the materials.

The company has discovered a way to cut usage of rare earths by at least 95%. And it has prospects for completely eliminating the need for rare earths while maintaining motor performance by improving control of inverters. Some products it will launch in fiscal year 2022 will employ rare-earth-free motors.

Toyota Motor teamed up with the government-backed New Energy and Industrial Technology Development Organization to develop motors that sharply reduce the use of rare earths.

2009-2020 inverter air conditioners were the by far strongest growing application for NdFeB magnets. Consumption in that field grew 55% year on year.

Japan’s production of NdFeB magnets dropped 8% in 2020 to 12,400 t, however, that may have been due to COVID-19.


USA - ECK IMPERIAL DEVELOP SCANDIUM-MODIFIED EV ALLOY

US aluminium castings producer Eck Industries and Canada's Imperial Mining are building prototypes for a battery box for electric vehicles (EVs) made from a high-strength scandium-modified aluminium alloy, potentially opening up a significant new end-use market for scandium.

Imperial began working with Eck in May to investigate adding critical mineral scandium to a widely available commercial alloy known as AlMag, or alloy 535 — a lightweight aluminium alloy that contains 7pc magnesium. Eck already uses AlMag in several of its commercial products for the automotive sector. Adding scandium increases the yield strength, opening up new structural applications in the high-growth EV market.

Castings have not been seen as an obvious route for developing the use of scandium in alloys. "While this is true in some cast alloys it is not universally true," Eck vice-president for research and development David Weiss said. "This work, entailing innovative casting methods and heat treatment, lays the groundwork for additional improvement in cast alloys".


Christian Taylor-Wilkinson of Altona Rare Earths talks about the start of their drilling programme at its Monte Muambe Project

Christian Taylor-Wilkinson CEO of Altona Rare Earths #ANR talks about the start of their drilling programme at its Monte Muambe Project to evaluate the asset's value and potential.


Prices

Argus held a very good webinar on battery materials and rare earths on October 12. Their expectation for rare earth prices going forward is flat or orderly decline, specifically for magnet materials.

As if to mock Argus, rare earth prices actually rose post-national holiday. Of all rare earths, overproduced, overstocked lanthanum and cerium oxide prices literally jumped.

However, the related metal prices didn’t move, which tells us that this is the time of the year, when US-catalyst makers are active negotiating La and Ce oxide prices, so China rare earth makers want to show their flying colours and hike list prices. 8-10% higher prices for La and Ce won’t make a difference, considering freight rates for 40’ FCL across the Pacific of US$8,000 (contract) to US$15,000 (spot).

Unsurprisingly, magnet materials prices also rose post-holiday.

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.


Thanks for reading and have a great weekend ahead!