China: Hurt feelings, cleaner water and EV anti-subsidy Ju-Jutsu; Africa pushes back; Malaysia to ban RE raw material export; Kyrgyzstan is back; Recycling; Its RE season in China;

Rare Earth 21 September 2023 #129

Correction

Regarding our previous issue referring Vietnam Rare Earth Co Ltd, we update and correct:

• The company referred to in Shenghe Resources annual reports is the former rare earth unit of Chuo Denko in Vietnam, which Shenghe Resources acquired in 2016;

• It is commonly referred to as VREX;

• Vietnam Rare Earth JSC are commonly referred to as VTRE, not officially related to Shenghe Resources.

Open questions:

• Why Integral Materials Investment Vietnam JSC are not mentioned in Shenghe’s mandatory disclosures?

• Who are the current shareholders of VTRE?

• Where does VTRE’s know-how and investment come from?

According to a trusted and highly-valued contributor to this humble blog, VTRE themselves state that Mr. Luu Tuan, his wife and step-sister would own 80% of VTRE and two Vietnamese REE mines would hold the balance.

In spite of our best efforts, we were unable to confirm this statement from official Vietnamese sources.

A Vietnam-based lawyer, whom we engaged in the hope to bring about certainty, wrote:

Welcome to the Land of Opacity!

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CMI September Event - What is All the Ionic Clay Buzz Really About?

CMI is an off-shoot of InvestorIntel, the stock promoter platform.

Chairs Ian Chalmers and Jack Lifton presented on ion adsorption clays (IAC) with a very negative spin:

• IAC are not very well defined. Many junior miners pass off something else as “clay hosted”;

• IAC in-situ leaching would be the only cost effective method of mining IAC, paired with inevitable pollution of water resources. Other methods would be much too costly;

• Even if mined, the recovery rates of the rare earths in the IAC would be rather dismal, as low as 40% - on a lab scale. And anything goes in a lab;

An IAC miner present protested, but had no relevant facts to offer.

We would, however, argue, that IAC mining and tank-leaching can be feasible, if everyone in rare earths would finally accept, particularly Big Auto, that we are under a dictate of artificially low prices. “Everyone” and “we” includes China’s rare earth enterprises.

After 25 years of messing with rare earth prices causing catastrophic results at times, it is perhaps time for the National Development & Reform Commission (better known under its previous name ‘State Planning Commission) and its diligent executor, the Ministry of Industry & Information Technology, to change course and let the market play a role.

NdFeB magnet output

The question was raised, what quantity of NdFeB magnets China produced in 2022. The confirmed total number for rare earth permanent magnet production in China for 2022 is 224,000 t. We put the share of SmCo magnets at 2%, which means NdFeB output should have been 220,000 t.

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Africa pushes back against China's predatory practices in rare earth mineral sector

Resource rich bigger African states are pushing back against Beijing. In August Nigeria, Africa's biggest economy, suspended some of illegal Chinese mining operations in the country. On August 28, Nigeria terminated the operations of Ruitai Mining Company, a Chinese mining firm, for its involvement in illegal mining of titanium ore.

There is no domestic supply of monazite in China (Baotou/China Northern remains 100% in-house). ‘Single element’ monazite mining was banned and sizeable monazite imports began about 7 years ago. In effect, the entire monazite market in China is import product.

By volume about ⅓ of China monazite imports originate in Nigeria and DR Congo. If one goes by TREO, Nigeria and DR Congo are about half of China’s monazite imports. Suppliers in both African countries have sharpened up a lot and counter predatory trade practises.

Unfortunately, these African suppliers operate on a shoestring and so do the miners. Until they can even begin to reach lofty western ESG aspirations it will take a very, very long time.

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US at grave risk of China tech war retaliation

“The vulnerability of supply chains for critical infrastructure is acute and self-inflicted. The US and its allies have allowed themselves to become captive to Chinese cartels that control production of electronic components, high-powered magnets, printed circuit boards, computers, drones, rare earth metals, wind turbines, solar cells, cellular phones and lithium batteries… In fact, nearly every element of the technology-based digital smart grid is dependent on Chinese-made components,” Brien Sheahan, a former top US energy regulatory official, wrote in April.

Hayes added, “Think about the $500 billion of trade that goes from China to the US every year. More than 95% of rare earth materials or metals come from, or are processed in, China. There is no alternative. If we had to pull out of China, it would take us many, many years to re-establish that capability either domestically or in other friendly countries.”

It is not that dramatic, no need for hyperventilation, relax! Leave the panic button alone and rather hit the subscribe-button.

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Joel Kotkin: Mandating EVs while discouraging mining is a recipe for disaster

In the United States, there’s only one operational lithium mine and one for rare earth metals. New projects, including one to tap the enormous lithium deposits in Maine and Nevada, face opposition from both the Biden administration and progressive states, whose governments ironically created the demand in the first place.

This refusal to increase the production of critical minerals, along with ever-more-stringent government mandates, has increased battery prices, with the cost of the materials needed to produce lithium-ion batteries rising threefold last year compared to 2021.

We appear to be reluctant to do the dirty work necessary for clean energy and an electrified transportation network. Instead, North America, despite its resources, now relies largely on developing countries, and China, for these critical minerals.

We have been lamenting about this for years. NIMBY rules. In the EU and in the US.

If the US and the EU want to outsource the detriments of mining to their “strategic partners”, then they’d better set a good example and partially DIY.

In rare earth the US are lucky that a China state-controlled company picked up Mountain Pass, fully financed its restart and continues to provide a market for 100% of MP Materials’ output - else there would be no market and MP’s managers would need to stir their product into their morning coffee.

The EU has nothing to show for - after attending to rare earth for 10 years. The hilarious LKAB “find” in Sweden, concentrate grade <1% (announcing it was Monty Python style humour) and unprocessable eudialyte also in Sweden may offer an excuse. However, EU affiliate Norway has got a monazite deposit that could really make a big dent.

But, the EU’s focus is sustainability and a mine is a self-depleting asset, unsustainable. Therefore, the EU must outsource all things unsustainable, in order for its citizens to feel sustainable.

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Recycling Atlas of the German Raw Material Agency

We quote from the agency’s latest report (in German) in the chapter “Options for action/obstacles”:

Raw Material Availability

The (current) lack of availability of raw materials has been pointed out in several conversations, for example:

– Production waste: Specialised suppliers to the automotive industry sometimes cite bottlenecks in production waste from the automotive industry, which is needed as recycling raw material for foundries. The reasons for this lie in the reduced production capacities of the automotive industry due to problems in the supply chain, but also in the switch to electromobility (by switching the vehicle range to electric vehicles, the amount of scrap produced changes in terms of quantity and composition. For example, due to the lack of a combustion engine, there are less cast parts needed and dropped therefore do not occur in production or EoL scrap.)

– Alloy elements: Due to the shortage of raw materials due to Russia's war in Ukraine, cost increases and a lack of availability, particularly with regard to nickel, are cited.

– Export in combination with transparency requirements: A possible future obstacle may arise due to transparency obligations of the (German) Supply Chain Act. The fear was expressed here that scrap dealers would probably rather export their scrap than disclose the origin of the scrap in detail, as the latter could pose a risk of disclosing trading relationships and thus be counterproductive to the business model.

– Post-consumer products: The lack of collection of old electrical and electronic devices, for example (required collection rate of 65%, Germany is currently around 45%), leads, among other things, to a lack of quantities of metallic pre-concentrates or recycling raw materials. Improved recording and thus collection could increase the existing potential.

Raw Material Quality

Even though metals are fundamentally recyclable, some metal products are not further recycled for economic, energy or legal reasons. This applies, for example, to the ever finer distribution of metals in electrical and electronic scrap due to miniaturisation. Metal-plastic composites that are becoming increasingly complex due to new compounding processes are also affected, leading to high organic loads in the corresponding scrap.

Due to falling quantities or unsuitable qualities available, the proportion of recycled raw materials in production processes can decrease, and higher proportions of alloying elements or primary raw materials have to be used. As an example, exports of higher quality scrap due to limited aluminum melting capacity can lead to less remelting, thereby increasing the need for primary grades. Another example is the compensation of alloying elements (e.g. nickel in stainless steel) from recycled raw materials (e.g. battery recycling), which is currently not viewed as economically possible/sensible because the quality or price of the nickel compounds for battery use is significantly higher than that of nickel as an alloy metal.

Policy makers should begin to see, that the quantity of technology metals we use is unprecedented in history, hence there is not nearly as much available for recycling as policy makers’ ambitious plans are calling for.

Policy makers should also get used to the fact, that not only we are trying to replace fossil energy with renewable energy, we also run into a period of exponentially increasing power demand.

Just look no further than electric vehicles and AI data centers. This creates an ever larger gap between electricity demand and supply. Are you really surprised about China approving 1 new coal-fired power plant per week? We are not.

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Rush for rare earth minerals in Southeast Asia compounding dangers for region's environmental defenders: Report

An unprecedented rush to extract rare earth minerals and metals throughout Southeast Asia is contributing to the risks of death or intimidation for land and environment defenders in the region, according to a new report.

These resources, critical for the development of so-called green infrastructure like renewable energy sources and electric vehicles, are being prioritised for extraction by governments and companies at a rapid rate, jeopardising the safety of those standing in their way, the annual report by international non-governmental organisation Global Witness found.

Global Witness made these remarks in a report where the group and its partners documented the killings of 16 land and environmental defenders in Asia in 2022. Those were among 177 killings throughout the world last year - an average of one every other day.

Although the number was slightly lower than in 2021 - when there were 200 recorded killings - researchers said it was not a reflection of improved conditions or rights for defenders and their communities.

Non-lethal tactics such as intimidation and harassment, criminalisation and digital attacks are widespread tactics used against those defending the environment, the report found.

All this is horrible and utterly unacceptable.