Canada on fire; Myanmar, again; Bad signals from PRC economy; USA RE ask Hatch for help; Shenghe's plans for Peak; Lynas go for IAC; Reenova saga continues; More 0.x% TREO companies;
Rare Earth August 21, 2023 #127
Canada fires overview
Northwest Territories overview
Yellowknife’s evacuation was all over the news. This is the current map of wildfires in NWT:
And this is a map of exploration/mining sites in Northwest Territories:
As far as one can tell, among rare earthlings who may be affected are:
Vital Metals’ Nechalacho site, east-southeast of Yellowknife,
Northern Critical Minerals Corporation’s Tharsis site north-northeast of Yellowknife, and
Appia Rare Earths & Uranium Corp. in neighbouring Saskatchewan, east-northeast of Uranium City.
We hope all of their staff are safe and sound.
The US are restricting high technology exports to China further. Following the executive order of the US president the Department of the Treasury has floated
Provisions Pertaining to U.S. Investments in Certain National Security Technologies and Products in Countries of Concern
for public comment until 28 September 2023.
China will have to respond within its means, after already having published its intention to prohibit and restrict rare earth and rare earth permanent magnet related export of know-how from China. Here the link to our post of 4 February 2023, two months ahead of western mainstream media finally picking it up:
Typical for an Asian nation, China views itself purely as a victim, baring any form of self-reflection and self-analysis.
The truth is, that substantially rare earth mining and production know-how has already been on China’s “negative list” since the year China was admitted to the World Trade Organisation in 2001.
All promises and assurances China made at the time of WTO accession were not meant to be implemented immediately, but also within the more than a decade of grace period after WTO entry China’s promises remained just that, promises. Until this day China remains in substantial non-compliance with its self-negotiated WTO accession terms.
The past is not the past
China deems itself within its rights to claw back everything that it deems having been taken from it by large world powers during the past 200 years. Generation after generation of Chinese learn about the Century of Humiliation and the blatant disregard of China’s interest shown by all world powers including its direct neighbours at critical junctures of history, e.g. the new orders at the end of the world wars.
Feeling humiliated is not limited to China’s domestic population. For a certain period of strongman Xi Jin Ping’s reign also overseas Chinese developed a sense of ‘finally we are somebody’.
Now there would not be a problem in addressing these grudges in this day and age, if it was not the Chinese Communist Party making China more and more incompatible with the even most fundamental universal values. Values, which the CCP-governed Chinese people actually also aspire to.
Rare earth relevance
The West believes that China purposefully monopolised rare earths, the main point of reference being a single quote of Deng Xiao Ping, which he may have parroted after picking it up during a visit to Baotou.
Curiously, China’s version of the rare earths story is the diametrical opposite.
Namely, the West would have purposefully offloaded all the detriments of rare earth production to China and that the West forces China to export rare earths cheap for all the added value to occur in the West.
There is precedence. Upon depletion of some non-ferrous metal mines they had a closer look and realised that most of the resources had been exported to the West and China had not earned a dime from it.
Raw materials policy
The Chinese side’s thinking may be misguided, considering that the roots of the problem may rather lie in China’s industrial policy for raw materials. The principle is that raw materials must cater to a substantially state-owned socialist market economy like a utility would (gas/water/electricity). Concretely, focus of policy is on cheap and abundant, not on maximising profit in a free and open market.
The road ahead
China and the free world will continue staring down a deep, dark pit and we really don’t want to know what is at the bottom of it.
One man’s ambitions are preventing a return to happier days.
Xi wants to achieve, what Mao Zedong couldn’t achieve and had to give up on.
An unexpected turn of history kept Mao and his generals from putting their Taiwan invasion plan into action. On June 25, 1950, North Korea invaded South Korea, and U.S. President Harry Truman swiftly decided to save South Korea’s friendly government, while also ordering the U.S. Seventh Fleet to prevent a possible Chinese invasion across the Taiwan Strait.
The National Interest, October 16, 2017
Xi wants Taiwan, and that at all cost, to complete Mao’s unfulfilled mission.
The related risk of war is acute and present, and so is the risk of related lasting supply chain disruptions.
Therefore de-risking of China must be the default mode of operation of any rational captain of industry for the foreseeable future.
Interim results of de-risking
We don’t want to join in with China doom-porn, but:
The Nikkei carried this:
Todays GDP can’t be compared to the one of 1990 and the absolute numbers will be enormously different, therefore such comparison is not suitable.
But it adds to the gloomy picture.
Build America, Buy America Act
The guidance states that Part 184 is intended to be high-level coordinating guidance for federal agencies to use in their implementation of BABAA—ensuring that “none of the funds made available for a federal financial assistance program for infrastructure may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States
A lot of bridge components, earth quake proofing and of course construction steel like H-beams and reinforcement bars are made in China according to foreign standards.
Mongolia and the US said recently that cooperation on rare earths and key minerals will be deepened under the Memorandum of Understanding signed between the two countries in June. Some people reckon that the Mongolia-US rare-earth cooperation may undercut China's rare-earth industry. In fact, a comprehensive analysis shows that these concerns are unwarranted.
The global rare-earth production maintained an overall upward trend from 2018 to 2022. In 2022, the global rare-earth production was 300,000 tons, up 3.4 percent year-on-year. According to estimates, the existing rare-earth reserves could supply the world for 400 years, much higher than 43 years for oil and 63 years for natural gas, indicating that rare-earth resources are not scarce compared with major mineral resources.
It is impossible for the US to directly import large quantities of rare earths from Mongolia. China is the world's largest rare-earth country, with rare-earth reserves of 44 million tons, accounting for 29 percent of the world's total rare-earth reserves. Mongolia's rare-earth reserves are second only to China, reaching 31 million tons. Although Mongolia's rare-earth reserves are much higher than that of the US, the former also lacks a complete rare-earth processing industry chain and can only export rare earth ores. But the rare-earth minerals mined by the US under its own high subsidies are all exported to China, so how can it be possible to import a large amount from rare-earth mines in Mongolia?
Mining investment in Mongolia is difficult, mildly speaking. Ask Rio Tinto.
Apart from the difficulties experienced by Rio Tinto in copper, there are two ways of exporting from landlocked Mongolia: Either through China’s Tianjin (Xingang) harbour, or through Russia’s Far East. Brilliant options for metals of strategic importance (yes, this is sarcasm).
Someone is whistling in the dark here. After complaining about having depleted ⅓ of its historical rare earth resources China had originally reported 27 mio t RE reserves. Then suddenly 10 years ago the reserves jumped to 44 mio t.
Fact is, that much of China’s RE resource is monazite, mining of which has been banned many years ago. Only in Bayan Obo monazite is legally mined. Certain Chinese experts have been calling for years for a re-assessment of China’s rare earth resources - to no avail. Go figure.
More shared wisdom of Goldman Sachs
Ore is first extracted from an open pit or underground mine, crushed and moved to a plant, usually near to the mine site.
Certain types of ore, such as monazite, have to undergo another step to remove radioactive thorium or uranium from the ore, often using acid.
One of the most difficult steps is separating the individual rare earths from each other.
Goldman Sachs are slowly advancing their knowledge, very good!
An increase in the illegal mining of rare earth metals in northern Myanmar is being driven by demand from neighboring China for terbium and dysprosium – elements that are used in the production of electric vehicles, area residents and environmental activists said.
The practice is rampant in Kachin state, where successive governments have failed to regulate mining for gold, jade and other rare metals for generations. The number of unsanctioned operations ballooned after the military’s Feb. 1, 2021, takeover amid conflict between junta troops and armed resistance forces in the region.
In the first six months of 2023, the value of rare earth minerals exported from Myanmar to China reached nearly US$773 million, according to Chinese customs data.
“The surge is primarily due to the paramilitary militias, known as phithusit, engaging in mining because they lack other sources of income,” the resident said.
Because of the depletion of mining areas in Pang War, people have started mining in the Chan Maw Khone area of Chipwi township and in the vicinity of the town of Chipwi, which previously had not been mined, he said.
At least 4,000 Chinese nationals work at more than 200 mining sites in the area around Pang War. They transport chemicals used in the mining industry nearly every day, according to a person close to immigration officials in Pang War, who also declined to be named for safety reasons.
The Chinese nationals are believed to have entered the country illegally, but Myanmar officials cannot take action against them because only the Border Guard Force and the pro-junta Pyi Thu Sit militia operate in the area, the local said.
The Chinese embassy in Yangon didn’t immediately respond to RFA’s emailed requests for comment.
RFA have the same problem as everybody else has: Lack of access. Foreign journalists tried to access the locations, but failed. So they have to rely on local sources.
China always says it has a long-standing policy of non-interference in other countries’ internal affairs. We are not sure how to relate the mining-rape of Myanmar and the arming of Myanmar militia to this noble principle.
Meanwhile, Singapore departs Myanmar
In a confidential note sent to Myanmar banks last week, United Overseas Bank said it would restrict all incoming and outgoing payments to and from Myanmar accounts, allowing funds to be moved only between accounts held with the bank. It also announced tough new curbs on Visa card and Mastercard transactions for Myanmar individuals and banks, which would restrict their dealings only to accounts within UOB. In addition, UOB said it would close Myanmar banks' "nostro" accounts at its Hong Kong branch -- foreign currency accounts banks hold at overseas counterparts to facilitate trade.
A Yangon-based foreign financial expert said the impact of UOB's latest decision would be "huge."
JPMorgan declined to clarify its withdrawal from clearing Myanmar transactions.
Many are bracing for similar action by the two other of Singapore's big three banks -- OCBC and DBS. An executive with one Myanmar bank said there were indications that OCBC was preparing for such a move, although an OCBC spokesperson declined to comment.
China Daily/People’s Daily (Beijing)
The United Nations Conference on Trade and Development, or UNCTAD, launched the Economic Development in Africa Report 2023 on Wednesday in Nairobi, Kenya's capital. The report said Africa holds 48 percent of global cobalt reserves and 47.6 percent of global manganese reserves, both of which are vital metals for producing batteries and electric vehicles.
Africa also produces chromium, lithium, natural graphite, nickel, rare earth metals, silver, tellurium and titanium, which are important for the low-carbon transition.
"Geopolitically, countries and businesses are seeking diversification because reliance on one supplier is as risky as commodity depending on one raw material," she said. "Diversification and diversification of risks is something that is happening in the trade dynamics."
Hear, hear! Do we read “de-risking” in a heavily censored and guided Chinese Communist Party-owned publication?
Made in Germany
New development combines the strengths of different electric motor concepts in one product
Advantages in terms of costs, resource security, and environmental compatibility by avoiding the use of rare earth elements
High overall efficiency of 95%, previously only achieved by Formula E racing cars
Wear-free thanks to inductive power transmission
Suitable for use in all vehicle classes
So it is a conceptual induction motor.
The number of NdFeB-free options is growing
In the age of speed limits, traffic jams and limited parking, realistically people don’t need EV with 400 horse powers.
Output exceeding 100 kW applicable for traction motors for BEVs and PHEVs verified on actual ferrite magnet motor
Proterial, Ltd. (hereinafter referred to as "Proterial") announced in December 2022 that it has verified, in simulations, that an optimally designed motor using our high-performance ferrite magnets NMFTM-15 *1 (hereinafter referred to as "ferrite magnet motor") is able to achieve the same level of output as an xEV*2 traction motor using neodymium magnets (hereinafter referred to as "neodymium magnet motor"). Based on results from these simulations, we have built and evaluated an actual ferrite magnet motor prototype, and as a result have verified that it can produce output in excess of 100 kW which would be applicable for BEVs and PHEVs — types of vehicles that are expected to become mainstream going forward.
As one of the leading rare earth permanent magnets, John Ormerod of JOC Inc, remarks, the torque of the Proterial motor is lower than the NdFeB motor. However, as we keep emphasising, there is no need for Formula 1-like acceleration on the world’s congested roads.
Stan Trout’s “The Magnet Industry Newsletter” picked up that Bain Capital are carving up Proterial, formerly known as Hitachi Metals:
Less than a year after closing on the 817 billion yen ($5.84 billion) purchase of Japan’s Hitachi Metals Ltd., Bain Capital LLC is already hard at work pruning the platform, The Deal has learned.
The private equity and credit giant is planning to carve out one of the U.S. subsidiaries of Hitachi Metals, now known as Proterial Ltd., three sources with knowledge of the discussions said. The auction has not kicked off and is in the information gathering and preparation phase, the sources said.
Bain has retained KeyBanc Capital Markets to run an auction process for the Proterial unit that makes stainless steel tubing and cast iron pipe fittings, Ward Manufacturing LLC, two of the sources said. The Blossburg, Pa.-based business generates around $35 million in Ebitda, one of the sources estimated, adding that it has not grown much over the past several years.
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