China at RE Limits?; Minmetals' Jianghua Open; Shenghe invest in Peak; Steenkampskraal go for IPO; Departures at Ucore's IMC; Hitachi Metals Delay; Jim Kennedy Presents; Quebec supports Geomega;
Rare Earths 2022 February 21
China at the rare earth limits?
Lets start off with some fun math!
According to China’s Eastmoney Network, NdPr oxide output in China in the period Jan-Oct 2021 was 56,000 t (+30% year on year). If we annualise that to 12 months (China has no Christmas vacations, wrong deity), then we arrive a 67,200 t NdPr output for the full year of 2021.
We know that ca. 25% of NdPr supply in China comes from recycling, so the NdPr production from primary raw materials should have been 50,400 t in 2021.
You will certainly remember, that the full year production quota set by the Ministry of Industry & Information Technology for 2021 was 162,000 t as rare earth oxides.
By and large it is fair to say, that the proportional NdPr content in relevant primary raw materials is around 20%.
If China’s NdPr output 2021 basing on primary raw material was 50,400 t, representing 20% of total rare earth oxide output, then China total output of rare earth oxides from primary materials could have been as much as 252,000 t as rare earth oxides in 2021. That is 90,000 t (55.6) % above the quota.
That would mean, the utilisation rate of China’s ~300,000 t rare earth processing capacity in 2021 was ~84%.
The production quota for H1 2022, published by the Ministry of Industry & Information Technology, suggests that the full year quota will be 20% higher than 2021. If we then assume the same percentage overshoot as in 2021, China’s processing capacity will have to run at a >100% utilisation rate in 2022.
As anyone who ever ran a raw material processing factory knows, it is close to impossible to run at consistent utilisation rates above 90%, for a number of good reasons.
We may assume, subject to the a.m. projections being somewhat within the ballpark, China’s rare earth industry is at the limits of what it can process and processing capacity will need to be increased significantly.
Or foreign processing capacity kicks in - but that remains a wet dream in view of self-defeating regulation and unsupportive politics in the potential countries.
Minmetals Rare Earth Jianghua Co., Ltd. currently has key projects such as rare earth mine, Xinghua rare earth separation plant, and rare earth mineral product roasting plant in Jianghua. Among them, the rare earth mine has been put into operation in May 2020, and taxes and fees of more than 200 million yuan [US$ 31.5 mio] have been paid; the Xinghua rare earth separation plant with a total investment of about 600 million yuan [US$94.5 mio] is expected to be put into operation in the second half of this year. The unification and separation of smelting will further help the economic development of Jianghua. The rare earth roasting plant put into operation this time is an important supporting project between rare earth mines and separation-smelting. It can convert the rare earth concentrate produced by the mine into rare earth oxides , and then send it to the separation plant for smelting and processing. The seamless connection of downstream separation and smelting is conducive to building a complete rare earth industry chain of mining, beneficiation, smelting and deep processing in Jianghua, and will also make Jianghua bigger, stronger and better. "Provide new support, add new vitality, and inject new kinetic energy.
Which part of the processing chain they are talking about:
So far Minmetals have maintained that they don’t do any mining, only procure raw materials from the outside. That statement is correct for the listed company.
It is the mother company of listed Minmetals Rare Earth to own and control the Jianghua project.
Of course it seemed slightly odd that listed Minmetals Rare Earth would possibly need to compete with an entity owned by its very own actual controller. An agreement was made between listed Minmetals Rare Earth and its controller Minmetals Rare Earth Group Co., Ltd. that as soon Jianghua break even, the ownership would be transferred to listed Minmetals Rare Earth. In the light of the recent merger of listed Minmetals Rare Earth assets into China Rare Earth Group, however, we don’t know if this agreement still stands.
Strictly speaking, if you currently invest in listed Minmetals Rare Earth shares, you invest in the ~20% they hold in China Rare Earth Group and their ~9% share in Xiamen Tungsten.
Minmetals Jianghua is the only company with a rare earth mining license in Hunan province.
However, the mining project they are talking about here is Guposhan in Guangxi Province, 190 km from Yongzhou, Hunan, where Jianghua is located. Guposhan is supposed to deliver the feed for the Jianghua factory.
The Guposhan area of Guangxi is located in the western section of the Nanling Metallogenic Belt (tungsten, tin, molybdenum, beryllium, rare earth, lead, zinc and gold).
Within the Nanling Metallogenic Belt there are 9 (nine) large- and medium-sized rare earth ionic clay deposits, plus several small ones.
Basing on information pieced together from several publicly accessible sources we have come to believe Guposhan ionic clay deposit should have a TREO of ~0.18% (one source claims it should be 0.11%) and 104,300 t TREO (uncontested number), with the following proportional rare earth, Th and U contents:
Scandium was not measured.
Comparing Guposhan with Longnan, Heling and Pingyuan deposits, Guposhan has an overall higher rare earth content throughout the different layers.
Looking at the Th and U content we begin to wonder, if IAC containing only insignificant amounts of NORM could be a myth (unless one considers ca. 7% being insignificant). If so, what are operations in Myanmar leaving behind?
The development of this project until now has taken 11 years, in China, while financing was never even an issue. This gives you an idea, what timeline to look at regarding ex-China junior rare earth miners.
The investment amounts of Jianghua look small, however, please remember infrastructure in China is first class, not too much to worry about, whereas in many other areas of the world with rare earth deposits infrastructure and logistics are non-existent.
China's Monopoly on Rare Earth Metals
James Kennedy has been lobbying the US-government and many associations on countless occasions for ca. 15 years, in order to get some common sense into US resource and energy politics. An expert with grit and dedication.
Unfortunately, the presentation slides are not contained in this YouTube video of the Iowa Renewable Fuels Association.
For a video with the slides, which Jim kindly provided, please do click this link.
Guangzhou Futures Exchange is accelerating the research and development of industrial silicon, polysilicon, lithium, rare earth and other metal futures to complete relevant listing preparations as soon as possible
Every AI Express, according to the official Weibo account of Guangzhou Futures Exchange on February 20, Zhu Lihong, general manager of Guangzhou Futures Exchange, said recently that the research and listing of green development futures products such as carbon emission rights, electricity, and new energy metals will be actively and steadily promoted.
Guangzhou Futures Exchange is accelerating the research and development of metal futures such as industrial silicon, polysilicon, lithium, rare earth, platinum and palladium, and completes product contract design and preparation of relevant rules as soon as possible to prepare for listing, providing effective risk management for the development of new energy industries such as photovoltaics and energy storage tool.
The Guangzhou Futures Exchange was established on April 19, 2021, capitalised with RMB 3 billion. The shareholders are:
Shanghai Futures Exchange 15% (copper, aluminium, zinc, gold, silver and other metal futures, crude oil, fuel oil, and other energy and chemical products)
Zhengzhou Commodity Exchange 15% (grain, cotton, oil, sugar, fruit, energy, chemicals, textiles, metallurgical products, building materials)
Dalian Commodity Exchange 15% (corn and soybeans, as well as oils & fats, plastics, coal, iron ore, steel)
China Financial Futures Exchange 15% (stock index futures and treasury bond futures)
China Ping An Insurance (Group) Co., Ltd. 15%
Guangdong Zhujiang Investment Holding Group Co., Ltd. 9%
Guangzhou Financial Holding Group Co., Ltd. 9%
Hong Kong Exchange and Clearing Ltd. 7%
Even though there is a glimmer of hope from the minor share held by HKEX, we don’t think that foreigners will be allowed to trade on that new futures exchange, even if China’s leader continuously talks about opening up and globalisation.
In spite of horrifying, dark red numbers, signalling hopelessness in the year that broke a massive scandal of test results having been manipulated to customers’ required specifications at Hitachi’s Neomax Co., Ltd. , investigation of which caused upheavals in Hitachi Metals’ management, Hitachi Metals’ share price entered a remarkable rally from October 1, 2020 (￥1381) until end of April, 2021 (￥2121).
Ever since Hitachi Metals’ share price has been hovering around ￥2100 +/-5%.
On April 28 and 29, 2021, just ahead of Japan’s week-long Golden Week national holiday, it was announced to the general public that Hitachi Ltd agreed to sell its ~53% holding in Hitachi Metals to a group lead by Bain Capital. The shareholder structure of Hitachi Metals until then looked as follows:
The free float of Hitachi Metals is ca. 46%. For the free float the acquiring group under the name of BJC-52 Ltd. was supposed to tender an offer, in order to eventually acquire 100% of Hitachi Metals for the Bain Capital led group of investors.
In late November Hitachi Metals announced, that the tender offer was postponed:
Hitachi postpones the sale of Hitachi Metals to the fiscal year ending March 2011, cannot make the TOB procedure in time
Hitachi, Ltd. announced on the 30th that the timing of selling its shares in Hitachi Metals will be delayed from the originally planned fiscal year ending March 2022 to the fiscal year ending March 2023. Hitachi was planning to start a takeover bid (TOB) for Hitachi Metals shares in late November this year, but it is said that procedures based on competition law have not been completed in some countries.
Along with this, the timing of recording extraordinary income of 328 billion yen in the individual settlement of accounts and other income of 114 billion yen in the consolidated settlement of accounts, and the recording date of 382 billion yen in cash flow related to investment activities in the consolidated settlement of accounts will be in the March 2023 term.
Meanwhile, Hitachi Metals made a fantastic turnaround: During the first 9 months of its financial year 2021 Hitachi Metals swung to a healthy profit. When Hitachi Metals announced the terrific first nine months FY 2021 results, however, the share price moved up a mere 1% - valuation perhaps already too high?
There is some noise in Japan about the sale of Hitachi Metals to foreigners. After all, NdFeB is considered a “Japan original”. During the 1970s Masato Sagawa was working at Fuji Film and was looking for an alternative to using expensive cobalt in magnets. Conventional wisdom at that time was no strong magnets could be produced from iron. Sagawa challenged that. While working on neodymium magnets he left Fuji Film and joined Sumitomo Special Metals in 1982, where he officially invented the NdFeB magnet and worked there until 1988.
In 2003 Hitachi Metals acquired 32.9% of Sumitomo Special Metals. Sumitomo Special Metals Magnetic Division merged with Hitachi Metals in 2004 and was called “Neomax” thereafter. In 2007 Sumitomo Special Metals was fully merged with Hitachi Metals.
Considering the turnaround at Hitachi Metals and the background noise, it would be somewhat conceivable if someone would have second thoughts about the deal.
We will probably never learn which countries sit on the approval of the Hitachi Metals sale to the Bain Capital led group.
In a paper published in the journal Science Advances, the researchers behind the development explain that their flash Joule heating process, introduced several years ago to produce graphene from any solid carbon source, has now been applied to three sources of rare earth elements — coal fly ash, bauxite residue and electronic waste — to recover rare earth metals.
While industrial extraction from these wastes commonly involves leaching with strong acid, a time-consuming, non-green process, the Rice lab heats fly ash and other materials (combined with carbon black to enhance conductivity) to about 3,000 degrees Celsius in a second. The process turns the waste into highly soluble “activated REE species.”
According to James Tour, senior author of the study, treating fly ash by flash Joule heating breaks the glass that encases these elements and converts REE phosphates to metal oxides that dissolve much more easily.
Members overwhelmingly passed both House Bill 4025, which would provide temporary severance tax relief to encourage economic development of rare earth elements and critical minerals.
The Pentagon plans to boost the stockpile of rare earth minerals, cobalt and lithium it manages for the U.S. government to reduce its long-term dependence on China, two people familiar with the plan said.
Sometimes it feels like Groundhog Day.
BEIJING/HONG KONG : Chinese rare earth producer Shenghe Resources Holding Co Ltd said on Friday it planned to buy a 19.9per cent stake in Australian firm Peak Rare Earths to secure more overseas resources amid surging pries.
The stake, which will be sold by Appian Pinnacle Hold Co to Shenghe's Singapore unit, will cost the latter around A$39.25 million ($28 million) or A$0.99 per share, Shenghe said in a filing to the Shanghai Stock Exchange.
Peak Rare Earths operates the Ngualla rare earth project in Tanzania with 18.5 million tonnes of reserves grading at 4.8per cent.
Quite an adequate replacement for Shenghe’s failed engagement with Greenland Minerals for the Kvanefjeld/Sørensen deposits in Greenland.
Peak Rare Earth shareholding structure:
If Appian sell 19.9% to Shenghe Resources, Appian will continue to hold 3,943,218 shares (2%) of Peak after the transaction has been executed.
According to the original announcement by Shenghe Resources, the Special Mining License for Ngualla has not been issued to Peak Resources:
While the Tanzanian cabinet has approved the issuance of the Special Mining License in principle, the Tanzanian minister of mines has not issued the Special Mining License to Peak.
Peak would have already committed to a joint venture with the Tanzanian government, in which the Tanzanian government would hold a non-dilutable share of 16%, as per Tanzanian law.
This joint venture would yet have to be established and it would subject to an economic framework agreement, that Peak seemingly have not yet started negotiating.
Shenghe’s perspective is
The expected investment in the project is about 200 million US dollars, with an annual processing capacity of about 800,000 tons of raw ore. Rare earth concentrate (45% REO) will be about 37,200 tons [per year].
Of course the UK refinery is also being mentioned, major permits obtained, but we guess top priority are concentrate supplies to China.
Imagine the only sizeable rare earth processing facility in Europe being built by the extended arm of Shenghe Resources. What a slap in the face of NATO (No Action, Talk Only)!
On the valuation, we quote from the Shenghe Resources announcement:
Beijing Tianjian Xingye Assets Appraisal Co., Ltd., which is qualified to engage in securities and futures business, issued the "Value Consultation Report” (Tianxingzizi (2022) No. 0015), based on the valuation base date of June 30, 2021 and sensitivity analysis of the combined market approach and income approach to Peak's enterprise value, Peak's value range is 185-233 million Australian dollars, equivalent to 1.1365-1.4303 Australian dollars per share.
Shenghe’s announcement quotes the main points of the agreement with Appian, but, as far as we can see, leaves out at least clauses 4 and 5.
However, The Market Herald reports:
Shenghe will not be entitled to and Appian will no longer enjoy Appian’s previous shareholder rights which included director nomination rights, capital raising notifications and information and consultation rights.
As a result, nominee Appian Director Rebecca Morgan has resigned as a non-executive director.
Peak non-executive chairman Pearson was an appointee of Appian, too.
Since no other shareholder holds more than even 5% of Peak’s shares, it is somewhat likely that other shareholders would simply vote with the largest shareholder if he proposes something, particularly if the fate of the entire company depended on that very shareholder.
So if Shenghe have the explicit right to place people on the board or simply have their own people voted in would not seem to make a lot of difference.
Simply Wall St. put out a risk warning regarding Peak Resources on January 1, 2022:
Geomega to Advance Hydrometallurgy at its Montviel Rare Earths Project with Support from the Quebec Government
Geomega Resources Inc. (“Geomega” or the “Corporation”) (TSX.V: GMA) (OTC: GOMRF), a developer of clean technologies for the mining, refining and recycling of rare earths, is pleased to announce the continuation of hydrometallurgical test work on its Montviel rare earths deposit. The work will be done by Innord, the 100% owned subsidiary of Geomega, with a $400,000 funding contribution from the Ministère de l’Énergie et des Ressources Naturelles (MERN) of Quebec. To complement the working budget for this project, Geomega closed a non-brokered private placement (the “Offering”) of 1,408,055 units (the “Units”), at a price of $0.27 per Unit, for aggregate gross proceeds in the amount of $380,175 with Quebec based institutional investors, including the Société de développement de la Baie James (SDBJ), and insiders of the Corporation. This will allow the Corporation to have a dedicated budget for this project, independent of the budget allocated for the construction of the rare earth magnets recycling plant in St-Bruno, which is progressing towards equipment ordering, and other R&D projects.
Montviel is among the Top 10 rare earth deposits we are tracking worldwide.
Steenkampskraal Holdings Ltd (SHL), the rare earth (RE) mine in South Africa and one of the world’s highest grade RE mines, has announced a substantial investment in the company by Monoceros Mineral Resources (Pty) Ltd (MMR).
SHL chairman Trevor Blench said the MMR investment will be used for mining activities at Steenkampskraal and to list the company on a stock exchange. “SHL shares will soon be available for investors,” he said.
MMR was started by Timothy Crombie, a chemical engineer and data scientist who recognised the need for rare earths in the global transition away from fossil fuels and the important role that Steenkampskraal can play in this transition. SHL has appointed Mr Crombie as a director and project manager.
Steenkampskraal is a “hot” deposit:
According to the NI43-101 Technical Report and Mineral Resource Estimate of 2012, the operating company had all relevant permits/licenses for radioactive materials in place at that time. There is no mention of an expiry or review date.
The quantities assessed in 2012 were in the “indicated” and “inferred” class, not “measured”.
This Timothy Crombie?
Innovation Metals Corp. (“IMC” or the “Company”) announces that the Company’s senior executive-management team, including, IMC Co-founder, Chairman and Chief Executive Officer, Dr. Gareth Hatch; President and Executive Director, Tyler Dinwoodie; Chief Operating Officer and Vice President, Metallurgy, Dr. Kurt Forrester; and, Senior Consulting Metallurgist, David Johnson, formally submitted resignation notices to IMC on February 14, 2022.
Dr. Hatch and Mr. Dinwoodie are both Officers and Executive Directors of IMC. Dr. Forrester serves as an Officer of IMC. The resignations were the result of ongoing operational challenges that involved IMC’s parent corporation, Ucore Rare Metals Inc. (“Ucore”). Ucore’s CEO and IMC board member Pat Ryan remains with IMC.
Could this perhaps be in any way related to the viability of the RapidSX® process?
If so, then Ucore’s process attempts do not seem to be blessed with good fortune: First there was Intellimet’s Solid Phase Extraction, then there was IBC’s SuperLig® and now it would be IMC’s RapidSX® turn.
Do the roots of the process originate in China?
Site Selection Magazine wrote in 2012 “Magnetic Attraction”:
IMC's business model is not confined to North America. Nor is it necessarily aligned against the Chinese business model. In fact, the company initiated research with a Chinese research institute in order to prove viable its concept that "multiple rare-earth concentrates, produced from various REE-bearing mineral sources, can be processed together effectively, resulting in attractive recovery rates."
We did find a rapid solvent extraction process (快速溶剂萃取) in China dating around 2011, but that primarily refers to a sample preparation technique for lab-testing, while supposedly also usable for a wide range of other applications.
The details of RapidSX® remain shrouded in mystery, because there is no patent to protect the process. We were advised by the company to wait 18 months for the publication of the patent filing. Just a few more months to go.
As the name implies – ionic adsorption clay-hosted rare earths – are a mighty rare sight outside of China, so it’s no surprise Meeka has leapt straight in.
The company has acquired the giant 2,068sqkm Cascade project within Western Australia’s Albany Fraser Mobile Belt which is believed to be highly prospective for such mineralisation, generally considered to be one of the lowest-cost sources of heavy rare earths.
The Cascade project is just to the west of Mount Ridley Mines’ namesake project where drilling has intersected significant REE over a strike length in excess of 25km, with a peak total rare earth oxide grade of 10,461ppm.
The merry old, time-honoured, high grade grab sample.
And yet another gold miner heading for rare earth. Soon they will lecture us about the benefits of heap leaching IAC, until also they will figure out there is one distinct difference between rare earth and gold.
Any old project is being dusted off, polished up with a colourful corporate presentation and hyped all-out:
VANCOUVER, British Columbia, Feb. 18, 2022 (GLOBE NEWSWIRE) -- NexOptic Technology Corp. (“NexOptic”) announces that it has granted Selten Metal Corp an extension to their original agreement as announced via a joint news release on December 16, 2021. The purpose of the extension is to allow Selten additional time to finalize its structuring plans prior to listing in Canada. The agreement grants to Selten an option to earn up to a 100% interest in NexOptic’s wholly owned, THOR Heavy & Light Rare Earth Element Project (“THOR”).
If you wonder how this comes about, read this:
Starting in early 2010, a small Canadian company called Elissa Resources spent more than $1.66 million exploring a hilly scrap of desert dotted with cacti, creosote bushes, and Joshua trees, at the southern tip of Nevada. The company was looking for rare earths: obscure metals with magnetic and luminescent properties which are used in such products as high-efficiency light bulbs, smartphones, and TV screens. The metals are also of enormous value to the defense and renewable-energy industries. To find them, Elissa Resources employees mapped the landscape and used special devices to figure out where radiation was unusually high. The firm contracted an aircraft to measure the land’s magnetism, surveyed the area from a helicopter, and drilled twenty-one holes to figure out what was down below. But, in 2013, Elissa Resources halted major work at the site. A slump in the rare-earths market has made it hard to attract the investment needed to continue the investigations.
In addition to rare earth metals, Renault and its partners will develop a new generation electric motor
Renault Group, Valeo and Valeo Siemens eAutomotive have announced that they have signed an interdepartmental agreement to form a strategic partnership to design, co-develop and produce a new generation of electric motors in France without the use of rare earths.
Renault will develop and manufacture EESM (electrically excited synchronous motor) rotor technology. Developed without the use of rare earth metals, this technology will provide higher energy efficiency. In addition to supplying parts based on the knowledge of each company, Renault will also develop the overall architecture of the comprehensive engine for the Renault Group.
We believe that the higher rare earth prices rise, the more efforts will be made to replace NdFeB magnets. In fact, as you have read above, NdFeB magnets were invented to escape high cobalt prices.
One should never underestimate ingenuity and technological development.
Even if there is a replacement for NdFeB magnets in the motors of electric vehicles, the market for NdFeB in all the smaller electric motors in the vehicles, be it windscreen wipers, electric window openers, seat adjustments, etc, will likely remain NdFeB.
And that is part of the business of Neo Performance Materials.
The rare earth prices keep rising, driven also by increasing prices of short raw materials.
As ever, these are ex works China prices incl. 13% VAT for the most common qualities of rare earth oxides/metals and their raw materials, converted at the official onshore RMB/USD exchange rate. Actual offer prices will differ.
There is much more content out there than we can feature this time around. We’ll catch up in a forthcoming issue.
Thank you for reading and have a great, rare earthy week ahead!